Fiscal Policy Uncertainty and its Impact on Business Stability in Emerging Market Economies

Abstract

This study critically examines the impact of fiscal policies uncertainty on businesses in emerging market economies, with Nigeria as a focal point. Given the volatile nature of fiscal policies in such economies, this research aims to provide both quantitative and qualitative evidence on how policy inconsistency affects key economic variables, including exchange and interest rates, trade and investment, imports and exports, and taxation. These disruptions, in turn, shape the operational landscape for businesses across diverse sectors such as manufacturing, agriculture, services, oil and gas, and small and medium-sized enterprises. Utilising a mixed- methods approach, this study integrates empirical data analysis with insights from policy reviews to establish a nuanced understanding of the relationship between fiscal instability and business performance. Findings reveal that inconsistent fiscal policies create an unpredictable business climate, deterring investment, stiffening growth, and undermining job creation, ultimately weakening economic resilience. These results align with existing scholarly perspectives and World Bank reports that emphasise the critical role of stable and business-friendly policies in fostering economic expansion, job creation, and wealth distribution. The practical implications underscore the urgent need for policy coherence to enhance business confidence, drive sustainable economic growth, and improve government revenue through stable taxation frameworks. By offering a comprehensive analysis of fiscal policy volatility, this study contributes original insights into how emerging economies can navigate policy instability to create a more conducive environment for businesses, thereby reinforcing economic development strategies.