The Nexus between Privatization and Macro- Economic Environment: Evidence from Nigeria

Aims: This study examines the growth link between privatization and macro-economic aggregates in
Nigeria. The growth effects between privatization proceed (privp), government expenditure (govtexp),
per capita expenditure (pexp), unemployment rate (unemr) and inflation (infl) are studied.
Scope of the study: The study covers.
Methodology: We employ structural equation models: Granger Causality Wald Test and Impulse
Response Function. The Ordinary Least Square (OLS) method of estimation is employed using time
series from World Bank Development Indicators (WBI) and Central Bank of Nigeria bulletin 2012.
Result: From the result, impulses from govtexp to a unit structural shock exert a positive growth on
privp and other macro-economic variables. When govtexp produces impulses, the response of privp
to exhr, and privp to gfcap are very low and insignificant. When privp produces impulse, the response
of pexp to privp are emitted at first period but after this period, positive shocks are recorded in a
fluctuating manner. The IRF result also shows that responses and shocks of exhr to impulse produced
by privp are also insignificant. This is the case with privp and gfcap, privp and gdp as wall as privp
and pexp. The causality test on the other hand shows that privp leads growth in all the variables
except infl with a feedback relationship from unemr and gdp.
Conclusion: This implies, privatization cause’s growth in all macro-economic variables except
inflation. The IRF results generally support this but reveal that the growth link between privatization
and macro-economic aggregates is weak and insignificant. Privatization policy should be
strengthened in a more transparent, profitable and responsive manner.