Impact of Institutional Quality on Private Sector Investment in Economic Community of West African States

The objective of the study is to investigate the impact of institutional quality on private sector investment in ECOWAS countries. The study covers the period from 1995 to 2022 and employed the Pool Mean Group (PMG) as its technique for data analysis. The result reveals that accountability and voice, and rule of law have statistical and positive significance influence of private sector investment in the long run, while control of corruption has a negative relationship in the long run with private sector investment in ECOWAS members’ countries. However, the Granger causality test results revealed that there is strong evidence that past patterns of private sector investment predict future political stability, accountability and voice, control of corruption, and rule of law. The study therefore concludes that private sector investment is driven by accountability and voice, and rule of law in ECOWAS countries. The study recommends the need by governments of ECOWAS members’ countries to strengthen mechanisms that promote transparency and citizen participation. Emphasis should be placed on the rule of law by prioritizing legal reforms that create a fair, predictable, and supportive business environment. Ensuring continuous monitoring and evaluation of implemented reforms, collaboration among ECOWAS countries to share best practices and coordinate initiatives that create a more favourable business environment in the region.