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The Economic Growth Imperative of Foreign Portfolio Investment for Nigeria


  • Acha, Ikechukwu A

    (Department of Banking/Finance, University of Uyo, Akwa Ibom State, Nigeria)

  • Essien, Joseph M

    (Ken Saro Wiwa Polytechnic, Bori, Rivers State, Nigeria)


This study examined the effect of Foreign Portfolio Investment (FPI) on economic growth in Nigeria. The research design adopted was a combination of exploratory and ex post facto research designs. Secondary data were sourced from the Central Bank of Nigeria (CBN) statistical Bulletin for the period 2005 to 2014. Gross Domestic Product was used as dependent variable while Foreign Portfolio Investment, Market Capitalization as well as exchange rate for the period were the independent variables. Ordinary Least Square (OLS) multiple regression was used to analyze the data. The result indicated that Foreign Portfolio Investment (FPI) and market capitalization have positive effect on Real Gross Domestic Product (RGDP) while exchange rate had an inverse relationship with RGDP. Durbin-Watson Coefficient Test shows that there is absence of auto-correlation. Based on this result, the hull hypothesis is rejected implying that there is a positive relationship between FPI and RGDP. The result agrees with the finding made by Baghebo and Apere (2014). It was therefore recommended that since economic performance is critical to attracting Foreign Portfolio Investment into any country, the Federal Government of Nigeria should create enabling environment that will stimulate the economy and strengthen its fundamentals. The government should also work towards the stabilization of the capital and money markets by putting in place appropriate investor friendly policies to sustain their internationalization and attractiveness to investors.

Suggested Citation

  • Acha, Ikechukwu A & Essien, Joseph M, 2018. "The Economic Growth Imperative of Foreign Portfolio Investment for Nigeria," Noble International Journal of Economics and Financial Research, Noble Academic Publsiher, vol. 3(6), pages 71-77, June.
  • Handle: RePEc:nap:nijefr:2018:p:71-77

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    References listed on IDEAS

    1. Garg, Reetika & Dua, Pami, 2014. "Foreign Portfolio Investment Flows to India: Determinants and Analysis," World Development, Elsevier, vol. 59(C), pages 16-28.
    2. Tokunbo S. OSINUBI & Lloyd A. AMAGHIONYEODIWE, 2010. "Foreign Private Investment And Economic Growth In Nigeria," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 5, pages 105-127, June.
    3. Jarita Duasa & Salina H. Kassim, 2009. "Foreign Portfolio Investment and Economic Growth in Malaysia," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 48(2), pages 109-123.
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