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Saudi Journal of Economics and Finance (SJEF)
Volume-8 | Issue-11 | 378-385
Original Research Article
Domestic Private Investment in Gambia: Are Macroeconomic Fundamentals Potent Determinants?
Sunday Ugbo Owuzo, Peter Chukwuyem Egbon, Chukwugoziem Tom Ezi
Published : Nov. 16, 2024
DOI : DOI: https://doi.org/10.36348/sjef.2024.v08i11.002
Abstract
The Gambia is one of the economies that have made several developmental and industrialization attempts to reposition its economy. One of the channels adopted to enforce these attempts is the channel of domestic private investment. A retinue of statistical and econometric tests such as descriptive statistics, correlation matrix and the Autoregressive Distributed Lags (ARDL) Bounds testing procedure were employed to evaluate the empirical content of the domestic private investment-macroeconomic determinants model. Exchange rate, GDP, credit to private sector, Real Interest Rate, Inflation and money supply were empirically identified as potent exogenous variables in the domestic private investment-macroeconomic determinants model. The results indicated that interest rate, exchange rate and money supply are not statistically significant in explaining the performance of domestic private investment in the Gambia. Real Interest Rate, Real Exchange Rate, Inflation all performed below expectation. Credit to the private sector of the Gambia economy has contributed significantly and effectively to the boosting of domestic private investment in the Gambia due to the quantum of credit channeled to the economy. The study therefore suggests that exchange rate, interest rate and money supply policies should be formulated and implemented to boost domestic investment level in Gambia. The Gambian economy should prioritize the promotion of domestic private investment, as well as debasing and eliminating multi-variate barriers to domestic investment that stifle domestic private investment initiative or involvement of local investors in business ventures.
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