Macroeconomic Variables and Economic Growth in Sub-Saharan African Countries

Abstract

This study investigated the relationship between macroeconomic variables and economic growth in Sub-Saharan Africa countries from 1993 to 2022. The study specifically examined the influence of exchange, interest, and unemployment rates on gross domestic product. The study utilized data obtained from the annual reports of the Central Bank of Nigeria, World Bank Development Indicators, and Index Mundi. The study employed descriptive statistics, panel unit root test, Hausman test, and Panel Ordinary Least Square (POLS) techniquesat the 5% significance level. The unit root analysis indicated that all variables are stationary at the level, necessitating the use of the Hausman test which demonstrated that the random effect Pools approach is the most appropriate. The result showed that interest and exchange rates are negative and significant to gross domestic product; whereas, unemployment rate is positive and significant to gross domestic product. The study concluded that exchange rate, interest rate, and unemployment significantly influence the economic growth of Sub-Saharan African countries. Amongst others, the study recommended for the expansion of exports to decrease reliance on a limited selection of goods. By establishing a more equitable trading framework and minimizing susceptibility to external disturbances, this measure may effectively stabilize the currency exchange rate.