IMPACT OF CAPITAL FORMATION ON ECONOMIC GROWTH AND DEVELOPMENT OF NIGERIA

• Christopher Ifeanyi Moemenam

  Department of Banking and Finance, Imo State Polytechnic, Omuma Oru East

• Friday Tom Okoro

  Department of Banking and Finance, Imo State Polytechnic, Omuma Oru East

• Anthony Iwu Amaefule

  Department of Accountancy, Imo State Polytechnic, Omuma Oru East

Capital formation is one of the major determinants of economic growth and development. There is a conventional perception that the most pertinent obstacle to economic growth and development is shortage of capital. Therefore, this study investigates the relationship between capital formation and economic growth and development of Nigeria. It is aimed at proffering solution to the poor economic growth and development of Nigeria. Four research questions and three hypotheses guided this study. The method of data collection was questionnaire in a fixed response type with a Likert Type Response Format. The bench mark was 2.5. Mean and frequency counts were used in analyzing data. A major finding of this work reveals that there is a strong agreement among respondents that increase capital formation increases economic growth and development. This has a mean score of 3.6 which is quite high as compared to the 2.5 bench mark. It shows a high positive relationship between the two variables. Other findings of this research work shows that capital formation have no impact on economic growth and development of Nigeria. Hence, urgent measures need to be in place. It was also discovered that inefficient Capital Formation reduces economic growth and development in Nigeria. further findings reveals that low domestic savings, high inflation, under developed financial markets, high inflation rate, infrastructure deficit, institutional weakness, lack of skilled manpower, over reliance on oil revenue, policy inconsistency, External debt Burden, Socio political challenges, political instability and insecurity are some of the constraint factors militating against capital formation in Nigeria. Among the policy recommendations of this research work are that government should put in place verile polices that will encourage domestic savings so that people will have the propensity to save and make capital available for investment hence capital formation for economic growth and development of Nigeria.

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