Conference Paper

MACROECONOMIC VARIABLES AND MANUFACTURING SECTOR IN NIGERIA

This study investigates the influence of key macroeconomic variables on the productivity of Nigeria’s manufacturing sector over a 34-year period (1990–2023). Specifically, it examines the effects of exchange rate, inflation rate, and lending rate on the manufacturing sector's contribution to Gross Domestic Product (GDP). The analysis is based on time series data obtained from the 2023 Statistical Bulletin of the Central Bank of Nigeria (CBN), utilizing secondary data sources. Analytical methods employed include descriptive statistics, correlation analysis, unit root tests, and the Ordinary Least Squares (OLS) regression technique. The empirical results indicate that the exchange rate significantly affects the manufacturing sector’s share of GDP. However, no significant relationship was found between either inflation or lending rates and manufacturing output. Based on the F-statistic, the overall model suggests that macroeconomic variables collectively have a significant impact on manufacturing productivity in Nigeria. In light of these findings, the study recommends that the government adopt policies aimed at stabilizing the exchange rate to support manufacturing growth. Additionally, the Central Bank should implement inflation-targeting strategies to mitigate cost-push inflation, especially in relation to input costs for manufacturers.