Effects of Foreign Exchange Crisis on the Performance of Manufacturing Sector in Nigeria (original) (raw)
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Noble International Journal of Economics and Financial Research, 2021
The study examined the effect of foreign exchange crisis on the performance of manufacturing sector in Nigeria over the period of 35 years ranging from 1985 to 2019. The study proxy foreign exchange crisis by exchange rate of U.S to Nigeria, trade openness and foreign direct investment while performance of manufacturing sector was measured by manufacturing sector gross domestic product. Time series were used and sourced from central bank of Nigeria statistical bulletin for 2019. Ordinary least square (OLS) technique of regression was used to analyze the data. The R-square, T-statistics and F-statistics were used to determine the extents to which the explanatory variables affect the explained variable. The hypotheses formulated were tested at 5% level of significance using t-test. The results reveal that foreign exchange rate has a negative and significant effect on manufacturing sector GDP in Nigeria. Trade openness has a positive and significant effect on manufacturing sector performance while foreign direct investment has a positive and significant effect on manufacturing sector GDP in Nigeria. The study concluded that foreign exchange crisis plays a significant negative role in the performance of manufacturing sector in Nigeria. The study recommended that there should be pursuance of sustainable and stable exchange rate policy and to put in place, measures that will promote greater exchange rate stability.
AFIT Journal of Marketing Research, 2023
This study aims to investigate the impact of exchange rate on the manufacturing sector output in Nigeria. The manufacturing industry plays a crucial role in the economy by boosting productivity, creating employment opportunities, and generating revenue. The study notes that compared to Asian economies like China and Japan, the manufacturing sector in African countries, including Nigeria, has not grown to its potential due to macroeconomic neglect and low productivity. The exchange rate is an essential macroeconomic variable that affects the performance of the manufacturing sector, especially in a flexible exchange rate system like Nigeria's. The research design for this investigation is an ex-post facto approach, and the data collected is secondary, obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin of 2021. The study covers 41 observations from 1981 to 2021. The dependent variable used in the study is manufacturing sector output, proxied by GDPmfg, while the independent variables used are exchange rate (Fx), inflation rate (Inf), and real interest rate (RInt). Linear regression analysis is used to determine the relationship between these variables. The results reveal that the coefficient of FX is very small, with little effect on the manufacturing sector's GDP. The t-statistic for FX is small, and the p-value is large, indicating that the coefficient for FX is not statistically significant. Therefore, the null hypothesis is accepted, indicating that exchange rate have no significant effect on the manufacturing sector output in Nigeria. The study concludes that other variables such as inflation rate and real interest rate should be given more attention to boost the manufacturing sector's performance in Nigeria.
Another Other Side of the Coin: Exchange Rate Movements and the Manufacturing Sector in Nigeria
Journal of Infrastructure Development
This study estimated the impact of exchange rate (EXCH) movements on the manufacturing sector in Nigeria over the period 1981–2016. Time series data and ordinary least square (OLS) estimation technique were employed in this study to address the specified objective. The variables analysed were EXCH, manufacturing GDP (MGDP), government capital expenditure, foreign direct investment (FDI), credit to private sector and value of imports. From the result, it is apparent that EXCH movements play a significant role in the manufacturing sector’s performance in Nigeria. Specifically, the findings showed that EXCH, government capital expenditure (GCEXP), imports and FDI were positively related to MGDP, while credit to private sector was negatively related. Among others, the study recommends that the apex bank keep a closer watch on EXCH developments in order to keep formulating up-to-date policies that will ultimately enhance EXCH stability. This will largely contribute to the development of ...
The effect of exchange rate fluctuations on the Nigerian manufacturing sector
African Journal of Business Management, 2010
This paper examines the impact of exchange rate fluctuations on the Nigerian manufacturing sector during a twenty (20) year period (1986-2005). The argument is that fluctuations in exchange rate adversely affect output of the manufacturing sector. This is because Nigerian manufacturing is highly dependent on import of inputs and capital goods. These are paid for in foreign exchange whose rate of exchange is unstable. Thus, this apparent fluctuation is bound to adversely affect activities in the sector that is dependent on external sources for its productive inputs. The methodology adopted for the study is empirical. The econometric tool of regression was used for the analysis. In the model that was used, manufacturing output employment rate and foreign private investment were used as the explanatory variables. The result of the regression analysis shows that coefficients of the variables carried both positive and negative signs. The study actually shows adverse effect and is all statistically significant in the final analysis. Some recommendations for policy were made based on the findings. Amongst others is the need to strengthen the link between agriculture and the manufacturing sector through local sourcing of raw materials thereby reducing the reliance of the sector on import of inputs to a reasonable level.
Foreign Exchange on the Performance of Nigeria Economy: An Econometric Approach
IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH
The study empirically examined the effect of foreign exchange on the performance of the Nigeria economy. The specific objectives were to; examine the effect of money supply, inflation rate, trade openness on the performance of Nigeria economy. The study employed ex-post facto research. In line with the main focus of this study, secondary sources of data were used. Ordinary least square of multiple regression technique was adopted to establish the effect of independent on dependent variable. Based on the results, the findings showed that exchange rate, money supply, Inflation and trade openness (TO) had significant effect on the performance of the Nigerian economy, while exchange rate and money supply had a negative effect on the performance of Nigeria economy. The study concluded that exchange rate plays a key role in international economic transactions because no nation can remain in isolation. The study recommended thus: In order to address the negative impact of exchange rate on ...
Effect of Exchange Rate Fluctuations on Manufacturing Sector in Nigeria
European Journal of Business and Management, 2013
The title of this research paper is effects of exchange rate fluctuations on manufacturing sector in Nigeria. From current research, the issue of deciding on effective way to stabilize exchange rate of goods and services in manufacturing sector in Nigeria is one of the key elements of a firm's financial strategy. Therefore, proper care and attention need to be given while such decision is taken. Exchange rate of a country plays a key role in international economic transactions because no nation can remain in autarky due to varying factor endowment. The purpose of this paper is to know the effects of exchange rate fluctuations on manufacturing sector in Nigeria over a period of 25 years (1985-2010). This work employed four (4) variables such as manufacturing gross domestic product (MGDP), manufacturing foreign private investment (MFPI), manufacturing employment rate (MER) and Exchange rate (ER). The ex-post facto research design was used for this study. Manufacturing gross domestic product (MGDP) stands as dependent variable while manufacturing foreign private investment (MFPI), manufacturing employment rate (MER) and Exchange rate (ER) as independent variables. The secondary data were obtained from CBN Statistical Bulletin and Nigeria Bureau of Statistics. Descriptive statistics and multiple regressions were employed to find out the effects of exchange rate fluctuations on manufacturing sector in Nigeria. The results of the analysis showed that all the independent variables have significant and positive relationship with dependent variable with R 2 at 80%. It also indicates that manufacturing foreign private investment (MFPI) and Exchange rate (ER) have positive effect on manufacturing gross domestic product (MGDP). Based on the above findings, the researcher recommends that government should stimulate export diversification in the area of agriculture; agro-investment, and agro-allied industries, oil allied industries such will improve Exchange rate fluctuations on manufacturing sector in Nigeria Economy. The government should restrict the importation of similar products manufactured in Nigeria to increase the buying of Nigerian products.
Real Exchange Rate and Manufacturing Performance in Nigeria
Academic Journal of Interdisciplinary Studies
The efficacy of currency devaluation to improve output in Nigeria is under debate, and coupled with an unsatisfactory result in the behaviour of the manufacturing sector performance regenerated interest of this study to investigate the impact of exchange rate on output and employment in the sector. The work uses Structural Vector Autoregression, ECM and Canonical Co-integrating Regression to examine the shock effect, short and long-run elasticities of exchange rate on the manufacturing performance. While employment and output are used as a proxy for manufacturing sector performance. The findings show that changes in the exchange rate are fairly elastic with output and employment both in short and long-run. However, changes in the exchange rate are insignificant with employment in the short run. The variance decomposition form the SVAR shows that forecast error shock of the exchange rate is more prolong on employment than output. Consequently, the result of the estimation of the Impu...
Effect of Exchange Rates on Manufacturing Sector Growth in Nigeria: 1986-2014
Since the adoption of exchange rate deregulation policy in Nigeria, the exchange rate, which is the price of domestic currency in terms of foreign currency, has become so volatile. Aside this also is the snail speed situation of the development of the manufacturing sector of the Nation Nigeria. The study thus undertakes an empirical analysis to examine the impact of exchange rates on the performance of the manufacturing sector in Nigeria between 1986 and 2014 using Ordinary least square (OLS) regression method. Pre-estimation diagnostics test revealed that the variables were stationary at first difference and they all have long-run equilibrium relationship among them. Findings from the study revealed that there is a significant relationship between exchange rates and manufacturing outputs in Nigeria. It was revealed also that exchange rates have a significant impact on manufacturing capacity utilization in-line with our empirical literatures. The study thus suggests that change in exchange rate management strategy should be allowed to run a reasonable course of time. Jettisoning strategies at will and on frequent basis has implication for exchange rate and obvious consequence for a sector that depends on foreign inputs. More so, manufacturing activities should be encouraged by government by giving incentives and subsides to local manufacturers and improving the technological and infrastructural development so as to increase the sector's contribution to gross domestic product and employment within the country.
Effect of Exchange Rates on Manufacturing Sector Growth in Nigeria
Since the adoption of exchange rate deregulation policy in Nigeria, the exchange rate, which is the price of domestic currency in terms of foreign currency, has become so volatile. Aside this also is the snail speed situation of the development of the manufacturing sector of the Nation Nigeria. The study thus undertakes an empirical analysis to examine the impact of exchange rates on the performance of the manufacturing sector in Nigeria between 1986 and 2014 using Ordinary least square (OLS) regression method. Pre-estimation diagnostics test revealed that the variables were stationary at first difference and they all have long-run equilibrium relationship among them. Findings from the study revealed that there is a significant relationship between exchange rates and manufacturing outputs in Nigeria. It was revealed also that exchange rates have a significant impact on manufacturing capacity utilization in-line with our empirical literatures. The study thus suggests that change in exchange rate management strategy should be allowed to run a reasonable course of time. Jettisoning strategies at will and on frequent basis has implication for exchange rate and obvious consequence for a sector that depends on foreign inputs. More so, manufacturing activities should be encouraged by government by giving incentives and subsides to local manufacturers and improving the technological and infrastructural development so as to increase the sector's contribution to gross domestic product and employment within the country.
Impact of Exchange Rate on the Manufacturing Sector in Nigeria
International Journal of Mechanical Engineering and Technology , 2019
This study purposed to find out how the devaluation of Naira has impacted on the productivity and growth of the manufacturing sector in Nigeria. The study was conducted to truly establish the true state of relationship that exists between the two variables; as a measure of the economic relevance of continuously devaluing the Naira. Jo-Hansen co-integration test was used to analyse the obtained data. Study found that devaluation of Naira had a long run relationship with the manufacturing sector. In addition, it was found that devaluation of Naira had negative and significant impact on the manufacturing sector.