Private Capital, Institutional Governance Quality, and Economic Growth in Nigeria

This study investigates the relationship between private capital and economic growth in Nigeria, with institutional governance quality serving as a moderating variable, over the period 1986–2025. Employing a time-series research design, the study utilises Autoregressive Distributed Lag (ARDL) bounds testing, the Fully Modified Ordinary Least Squares (FMOLS), and the Dynamic Ordinary Least Squares (DOLS) estimation techniques to examine both short-run and long-run dynamics. Control variables including GDP per capita, GDP growth, financial development, energy prices, and trade openness are incorporated to isolate the marginal effects of private capital on economic growth. The empirical evidence reveals that private capital exerts a statistically significant and positive effect on economic growth in Nigeria in the long run, though its short-run impact remains constrained by structural bottlenecks. Critically, institutional governance quality significantly moderates this relationship: higher governance quality amplifies the growth-enhancing effect of private capital, while governance deficits attenuate it. Financial development and trade openness also contribute positively to growth, whereas energy price volatility introduces adverse effects. These findings underscore the primacy of governance reforms as a precondition for maximising the economic dividends of private capital inflows. The study contributes to the emerging literature on the conditional effects of private capital in developing economies and provides actionable policy recommendations for Nigeria's sustainable development trajectory.