Impact of Macroeconomic Variables on Exchange Rate in South Africa (Published)
Fluctuation in exchange rate has continued to be a major treat to economic growth and maintaining its stability and competitiveness poses serious concern to government and all stakeholders. Despite series of policies and programmes undertaken by governments of various countries, exchange rate instability remains a menace. This paper evaluated the impact of some macroeconomics variables on South Africa’s Rand using annual time series data from 1970 to 2021. Multiple regression with OLS estimator was adopted for the data analysis and the results showed that exchange rate has positive relationship with interest rate while it has negative relationship with gross domestic product growth rate and net foreign trade. Although these individual relationships are not significant enough to influence the exchange rate but there is evidence the combine effect of these macroeconomic variables has significant influence on exchange rate in South Africa.
Keywords: Exchange Rate, Interest Rate, gross domestic product growth, net foreign trade
Exchange Rate Volatility and Export of Agricultural Produce in Nigeria (Published)
This study examined the effect of exchange rate variation on the export of agricultural produce in Nigeria. The specific objectives of the study include; examining the effects of exchange rate variation; Trade openness; Agricultural financing; and Agricultural employment on the export of agricultural produce in Nigeria. This study adopted the VAR estimation technique in ascertaining the nexus between exchange rate variation and the export of agricultural produce in Nigeria. Data for this study were sourced from World Development Indicators, WDI, a publication of the World Bank; Central Bank of Nigeria, CBN, Statistical Bulletin and Annual Reports for the various years; and the National Bureau of Statistics. The data covered a period of 35 years 1986 – 2021. The analysis began with a descriptive statistic, unit root test and a co-integration test to ascertain the suitability of the data that entered the model. Thereafter, the VAR estimation technique used in estimating the model for this study. The variables of the model include: AGRXPT, EXRV, TOPEN, AGRFIN and AGREMP. The results show that EXRV, TOPEN, AGRFIN and AGREMP exert a positive effect on AGRXPT. The study therefore concludes that EXRV, TOPEN, AGRFIN and AGREMP play a vital role in enhancing the export of agricultural produce in Nigeria. Based on that, the study recommends increased domestic production of agricultural produce, implementation of export oriented policies that will engender increased foreign exchange inflows towards a stable exchange rate system and adequate training and extension services to boost the competence of the labour force in the agricultural sector.
Keywords: Exchange Rate, Export, Nigeria, agricultural produce, volatility
Alternative Securities Market and Long-Term Capital Market Financing in Nigeria (Published)
This study examined the effects of the Alternative Securities Market (ASeM) on long term capital market financing in Nigeria during the period 2013 – 2020. The objectives of the study were to: find out the effects of ASeM equity issues on market capitalization in the Nigerian stock market; to assess the effect of ASeM index on market capitalization; to investigate the effect of interest rate on Market Capilisation; to assess effect of inflation rate on market capitalization; and to ascertain the effect of exchange rate on market capitalization in Nigeria during the period of study. The study adopted ex-post facto research design and made use of secondary data. Time series data for the period 2013 – 2020 from the Central Bank of Nigeria statistical bulletin and well as data from Nigeria stock exchange publications were used. The study employed multiple regression analysis using Econometric-views (E-views) 10.0, to analyse the data. In the analysis, long term capital market financing was proxied by Mcap (market capitalization) and this was the dependent variable. The independent variables of the study included ASeM equity issues, ASeM index, interest rate, inflation rate, and exchange rate. The results showed that ASEM equity issues had a negative but insignificant effect on long term capital market financing (Mcap); ASeM index had a significant positive effect on long term capital market financing (Mcap); interest rate had a negative but insignificant effect on long term capital market financing; inflation rate had negative but significant effect on long term capital market financing; exchange rate had a positive but insignificant effect on long term capital market financing in Nigeria during the period of the study. The study recommended that regulatory authorities (SEC and Nigeria Exchange Group) should encourage greater participation of SMEs in the activities of the alternative securities market through equity share issues to boost or enhance long term capital market financing; regulatory agencies should sustain measures that caused ASeM index to have a significant positive effect on long term capital market financing; monetary authorities (especially, the CBN) should employ policy measures to address the negative effect of interest rate and inflation rate on long term capital market financing in Nigeria among others.
Keywords: Exchange Rate, Index, Inflation, Interest Rate, Market Capitalization, equity issues
Exchange Rate Fluctuations and Economic Growth in Nigeria (1981 – 2020) (Published)
This study examined the relationship between exchange rate and economic growth in Nigeria between 1981 and 2020. The specific objectives are to determine the effects of exchange rate, inflation and interest rate on gross domestic product (GDP). The data on the variables were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and World Development Indicators, and analyzed using descriptive statistics, unit root as well as bounds cointegration tests and ARDL model. The unit root test results showed that the variables are mixed integrated. While inflation is stationary at levels, the other variables in the model were stationary at first difference. The bounds cointegration test showed that long run relationship exists between GDP growth and the underlying explanatory variables. The findings showed that exchange rate and inflation negatively impacted on economic growth. This finding indicates that increase in exchange rate and price level is detrimental to the growth of the Nigerian economy. There is evidence of a significant positive effect of interest rate on GDP growth. This finding explains the reality in Nigeria, where businesses and households tend to borrow even as interest rate increases, but tend to cut corners by reducing the quality of their products and services or pass-on the increased costs of borrowing to consumers by increasing prices. Given the findings, this study recommends amongst others that the federal government through the CBN should ensure that exchange rate policy should is consistent to provide opportunity for a realistic and stable exchange rate capable of driving economic growth in Nigeria.
Keywords: Exchange Rate, Inflation Rate, Interest Rate, economic growth
Oil Resource Abundance and Agricultural Productivity in Nigeria: An Autoregressive Distributed Lag Approach (Published)
This paper analyzed and estimated the impact of oil abundance on agricultural productivity in Nigeria for the sample period of 1980 – 2018. The Autoregressive Distributed Lag model (ARDL) estimated with the Ordinary Least Square technique was used to examine the relationship among the variables. Findings from the model revealed that there was a negative and significant relationship between oil abundance and agricultural productivity in the short run while a negative and insignificant relationship existed in the long run. There was a direct and insignificant relationship between growth rate of GDP and agricultural productivity. The study therefore recommended subsidizing agricultural inputs and setting in place incentives that will keep people in the agricultural sector.
Keywords: Agricultural Productivity, Exchange Rate, Lending Rate, Oil abundance
The Dynamics of Human Capital Development and Industrial Growth in Nigeria (Published)
This article is aimed at providing empirical evidence on the impact of human capital development on industrial growth in Nigeria. Time series data spanning 1976-2016 period on relevant variables were analyzed using both descriptive and econometric techniques. ADF procedures were used to test for stationarity of the variables. The results show that the variables moved towards equilibrium in the long-run. The results also show that recurrent expenditure on education and health has a negative impact on industrial growth. The goodness of fit was encouraging. This article asserts that rigorous pursuance of graduate skill acquisition programmes as well as adherence to the 26 per cent minimum budgetary allocation demanded by UNESCO for education which will spur improvement in human capital development will impact industrial growth positively. More-so, incentives such as tax holidays, pioneer reliefs and exemptions that aids increased investment in industrial growth be vigorously pursued by governments at all levels in Nigeria.
Keywords: Exchange Rate, Human Capital Development, Industrial Growth, Nigeria, expenditure on education, expenditure on health, gross capital formation
Forecasting of Exchange Rate between Naira and US Dollar Using Time Domain Model (Published)
Most time series analysts have used different technical and fundamental approach in modeling and to forecast exchange rate in both develop and developing countries, whereas the forecast result varies base on the approach used or applied. In these view, a time domain model (fundamental approach) makes the use of Box Jenkins approach was applied to a developing country like Nigeria to forecast the naira/dollar exchange rate for the period January 1994 to December 2011 using ARIMA model. The result reveals that there is an upward trend and the 2nd difference of the series was stationary, meaning that the series was I (2). Base on the selection criteria AIC and BIC, the best model that explains the series was found to be ARIMA (1, 2, 1). The diagnosis on such model was confirmed, the error was white noise, presence of no serial correlation and a forecast for period of 12 months terms was made which indicates that the naira will continue to depreciate with these forecasted time period.
Keywords: AIC, Auto Regressive Integrated Moving Average, Autocorrelation Function, BIC, Exchange Rate, Partial Autocorrelation Function