GPH-International Journal of Business Management

Double Shocks to Trade: Exchange Rate Volatility and Pandemic Effects on Foreign Trade Flows in Nigeria

2026-06-01T11:38:33+00:00

This study investigated the impact of exchange rate volatility and pandemic outbreaks on foreign trade flows in Nigeria using quarterly time series data from 1981Q4 to 2025Q1. Specifically, the study investigated the impact of exchange rate volatility and pandemic outbreak on imports and exports in Nigeria. Exchange rate volatility was estimated using the Generalized Auto-regressive Conditional Heteroskedasticity (GARCH) model, while the Auto-regressive Distributed Lag (ARDL) technique was utilized. The found that exchange rate volatility has a positive and statistically significant effect on both imports and exports in the short run at a 5% level of significance, but in the long run, the impact to exchange rate volatility on foreign trade was negative but statistically insignificant at 5% level of significance; pandemic outbreaks, proxy by COVID-19 pandemic, was found to have a negative but statistically insignificant impact on imports and exports respectively in the short run at a 5% level of significance but in the long run, the impact of the pandemic became positive but statistically insignificant at a 5% level of significance. The study concluded that although exchange rate volatility may temporarily stimulate foreign trade flows in the short run, persistent exchange rate instability poses serious long-run challenges to Nigeria’s import and export sector. The study therefore recommended that the Central Bank of Nigeria should implement policies aimed at stabilizing the exchange rate and minimizing excessive speculative activities in the foreign exchange market. The study also recommended export diversification beyond crude oil and the promotion of domestic production to reduce import dependence and strengthen Nigeria’s resilience against future global disruptions and external shocks.

Trade Liberalization, Export Diversification and Economic Growth in Nigeria

2026-06-03T10:58:11+00:00

This study investigated the dynamic short-run and long-run effects of trade liberalization, export diversification, and economic growth on Nigeria over the period 1981 to 2024, utilizing the Autoregressive Distributed Lag (ARDL) modelling framework. The empirical analysis is structured into three interrelated models. Model 1 examined the impact of trade liberalization— proxied by trade openness) and infrastructure (INFR)—on export diversification (EDIV). The results revealed a positive and statistically significant relationship, indicating that increased openness to trade and improvements in infrastructure significantly enhance Nigeria’s export diversification. Model 2 assessed the influence of export diversification, capital formation (CAP), labour force growth (LAB), and trade liberalization on real GDP growth (GDPG). Findings showed that these variables significantly contribute to economic development by fostering industrial diversification, stimulating innovation, creating employment opportunities, and increasing foreign exchange earnings. Model 3 synthesized the insights from the first two models, showing that export diversification, capital formation, and labour force growth jointly mediate the relationship between trade liberalization and economic growth, with statistically significant effects in both the short and long run. However, the analysis also identified negative relationships between inflation (INF), the real effective exchange rate (REER), and key economic indicators across the models. The study concluded that sustainable economic growth through trade liberalization and export diversification requires robust macroeconomic stability, quality infrastructure investment, strategic FDI targeting, and sound monetary policy.

Global Economic Uncertainty and its Impact on Nigeria's Trade and Investment Outcomes

2026-06-03T11:13:18+00:00

This study investigated the impact of global economic uncertainty on Nigeria’s trade and investment outcomes, addressing a critical gap in the literature regarding African economies. The study employed yearly time series data from1980 to 2022, the analysis employs the autoregressive distributed lag (ARDL) model estimation technique and Bounds test of cointegration and were used to estimate both short-run and long-run relationships between global economic uncertainty (proxied by the World Uncertainty Index) and Nigeria’s trade (balance of payments) and investment outcomes (FDI as a percentage of GDP), controlling for economic growth, trade openness, exchange rates, foreign reserves, interest rates, and inflation. The study found that global economic uncertainty exerts a negative and statistically significant impact on both trade and investment outcomes in Nigeria in the short run. Specifically, a one percent increase in global economic uncertainty leads to a 68.2% decrease in trade outcomes and a 1.6% decrease in investment outcomes in the short run, holding other factors constant. However, the long-run impacts, while negative, are not statistically significant at the 5% level. These results suggest that Nigeria’s trade and investment sectors are highly sensitive to global shocks, particularly in the immediate aftermath of uncertainty events. These findings highlight the vulnerability of Nigeria’s trade and investment performance to global economic uncertainty, especially in the short term. To mitigate these negative impacts, the study recommends targeted trade promotion strategies, simplification of trade procedures, and the development of a robust risk management framework. Additionally, fiscal measures such as targeted tax incentives and investment allowances, alongside monetary interventions including interest rate management and liquidity support, are essential to bolster resilience and sustain economic growth during periods of heightened uncertainty.