Sectoral Utilization of Foreign Exchange and the Policy Implications for Economic Growth in Nigeria (1997 – 2022)

Abstract

Purpose: The purpose of this study is to investigate the effect of sectoral utilization of foreign exchange and the policy implications for economic growth in Nigeria.
 Methodology: The methodology involved the use of annual time series data covering 1997 to 2022 for pre-diagnostic tests for unit roots which showed that the variables used in the study: economic growth (proxied by real gross domestic product), visible transactions, invisible transactions, treasury bill rate, and exchange rate, were stationary in the first difference. Hence, after first differencing the data, the Ordinary Least Squares (OLS) estimation method was used to estimate the model.
 Findings: The findings of the study showed that visible and invisible foreign exchange utilization valid for foreign exchange transactions, in addition to exchange rate and Treasury bill rate impacted positively and significantly on economic growth in Nigeria during the study period. The results of the study strengthened the theoretical basis for the use of relevant policies to grow economies generally, and that of Nigeria in particular.
 Unique contributor to theory, policy and practice: By implication, the governments at all tiers should endeavor to provide the enabling environment for greater availability and utilization of foreign exchange to further improve economic growth and sustainable development in Nigeria.