ABSTRACT

This work presents an empirical analysis of the impact of capital flight on Nigeria economy. The research work made use of secondary data collected from Central Bank of Nigeria’s Statistical Bulletin. The empirical measurement covers the sample period between 1981 and 2015. An Ordinary Least Square (OLS), Augmented Dickey-Fuller unit root test and Co-integration test were adopted to carry out an extensive analysis of the adopted variables which include Gross Domestic Product, Capital Flight and Exchange rate, foreign reserve and foreign direct investment. The results revealed that capital flight have a negative impact on the economy. However, recommendations were made that the government should create an enabling environment for investments in Nigeria so as to encourage more inflow of funds from abroad and dissuade outflow of funds by providing investment outlets. Consequently, it is recommended that funds from foreign sources in form of loans, gifts, grants and aids should be judiciously used for economic growth of Nigeria. It also recommended fiscal discipline, serious and commitment on the part of government and its functionaries. Also, the Federal Government should intensify effort in the recovery of looted funds in foreign accounts and its anti-corruption campaign as this will improve the country’s image and attract inflow of funds from abroad for investment purposes in Nigeria.