THE IMPACT OF CAPITAL INVESTMENT IN NIGERIA ECONOMY

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

The lack of proper institutional from work to absorb saving could result in saving being channeled into unprofitable ventures. However, as the guest for economic development becomes urgent, the need for an organized and well developed capital market arise to encourage savings and investment and to provide opportunity for saves to participate in the ownership and / or returns of business enterprises which will encourage more capital investment. G.A Akamiokhor in this contributions said that “in ensure that capital is efficiently allocated between competing ends and also to channel saving in to investment for economic growth and development. It is important to develop a well co ordinate capital market and investment will the financial structures.

1.   DEFINITION OF PLAN

The capital market can be defined according to Dr.Mrs. Toyin Philips, as “the complex of institution and mechanisms where by medium and long term funds are pooled and made available to business, governments and individual and whereby instrument already outstanding are transferred”.

In view of this the capital market and investment act as catalyst for the economic development of any nation. This is because the capital market provide a forum for the transfer of funds mobilized from the areas of high need for meaningful investment. When such funds are prudently invested, definitely, it will lead to meaningful economic transformations. Moreover, the capital help to make the need for foreign sources of funds needless which normally have stringent conditions attached to them. Also an active or developed capital market suppose to provide an avenue for indigenes to participate in the ownership of foreign business.

It maybe appropriate to mention that there are a lot of problem making the Nigerian capital markets performance capital investment not living up to expectation and it is in view of this that I have decided to research into the Nigerian capital investment in order to identify these problem and know the impact so far and possibly offer solution to increase capital investment growth for the development of Nigeria.

1.2  STATEMENT OF THE PROBLEM AND PURPOSE OF THE STUDY

Inactivity and not living up to expectation since inception had been the Nigerian capital market critism (by Adam smith in his book “the injury). This is because an active capital market is supposed to mobilize saving effectively for investment purposes. It could be recalled that capital investment is possible in all  ramifications if there is a well articulated capital market to help business communities.

Purpose of the study

In the light of the above problems leading to slow rate of capital investment when compared with 1st and 2nd world countries, the purpose of this study is to investigate through the extent of the Nigerian capital investment and the impact so for in the Nigerian economy with a view to suggesting for improvement.

1.3  RATIONALE OF THE STUDY

It is a known fact that for meaningful economic transformation of a country her capital investment must be virile and the economic strength of nation is measured according to how active or effective her capital is / or are performing its purpose function.

the Nigerian economic is characterized by “a low rate of industrialization, low rate of productivity import dependence visions circle of poverty” which are all characteristics of under development according to Karl Max.

1.4  SIGNICANCE OF THE STUDY

The significance of this study will therefore be of benefit to the government and the central bank for them to plan, initiate programme and actions and a sound frame work on government monetary policies to sustain the economy.This institutional operators of the money and capital markets, tother financial institution like commercial banks, non – banking financial societies like cooperative societies, insurance and reinsurance companies, business communities, government companies and parastatals, including future researchers in the academic filed who will like to share this world of experience will find this project work beneficial.