Foreign Exchange Accessibility and Manufacturing Sector’s Growth in Nigeria (1997-2016)

This paper examined the impact of foreign exchange accessibility on the growth of manufacturing sector in Nigeria. The study relied on secondary time series annual data and analyzed the collected data by using inferential statistics. The estimation techniques include Ordinary Least Square (OLS) method, Augmented Dickey-Fuller (ADF) Unit Root test, Johansen Co-integration test and Autoregressive Distributed Lags (ARDL) model. The study revealed that there was an existence of both short run and long run relationships among the variables of interest. The findings of the study revealed that the supply of foreign exchange and by implication, its accessibility is critical to the growth of the manufacturing sector considering the positive relationship of the lags of foreign exchange supply. Similarly, the amount of foreign exchange unutilised by the manufacturing sector (FXUM) was positively and significantly related to the growth of manufacturing sector. In the light of the forgoing findings, it was concluded that the time to time behaviours of foreign exchange supply by the Central Bank of Nigeria, forex utilization by the manufacturing sector and exchange rate all put together had a significant impact on the growth of Nigerian manufacturing sector. Consequently, it was recommended that government should ensure optimal and consistent supply of foreign exchange to the manufacturing sector as this has been found to have positive effect on the growth of the sector in this study. In addition, government should improve on her monitoring activities of the amount and distribution of foreign exchange allocations to the manufacturing sector of the economy in order to ensure that they are utilised for productive purposes only and reduce the incidence of diversion to unproductive and illegitimate purposes.