Non-Oil Exports, Exchange Rate Management and Economic Growth in Nigeria

Abstract

In Nigeria like most developing countries, especially the sub-Sahara African countries, exports are largely determined by factors other than a country's trade policy, such as world demand and prices with major commodity-exporting nations having high export/GDP ratios even if they have very restrictive trade policies. Oil and gas accounted for over 90 percent of Nigeria's foreign exchange earnings since the oil boom of the 1970s to date. The non-oil exports had shown significant positive trends of improvement beginning from 1960 to 1986 when SAP was introduced in Nigeria. At the instance of SAP, the flexible exchange rate policy was introduced in 1986 with the core objective to reduce over-dependency on imports and diversify the non-oil export base by immediately abolishing the marketing boards. This study empirically examines the effects of foreign exchange management and non-oil exports on economic growth rate in Nigeria. Annual data spanning 1981 to 2021 was used and the Autoregressive Distributed Lag (ARDL) estimation technique was employed in analyzing the data of the study. Findings of the study revealed that foreign exchange rate has a negative and significant impact on economic growth rate in Nigeria.