Central Bank of Nigeria
Intra-Regional Trade, Economic Integration, Intra-African Trade, African Continental Free Trade Area, Economic Growth, Nigeria
The objective of this paper is to examine the effect of intra-African Trade on Nigeria’s economic growth from 1981 to 2019. To achieve this, the ARDL modeling technique is employed to investigate the short-run and long-run effects of intra-African trade on Nigeria’s economic growth. The study finds that though the short-run effect is positive but not significant; the long-run effect is significantly positive, and robust to alternative estimation techniques. This suggests that expansion of trade among African countries, which is expected to result from the full implementation of the African Continental Free Trade Agreement (AfCFTA), would have positive growth effect on Nigeria in the long-run. Furthermore, positive and significant long-run real output effects of capital formation, exchange rate and population, as well as negative and significant long-run real output effect of inflation are observed. Evidence from out-of-sample simulation based on a three-equation system of simultaneous equations model shows that expansion of intra-African trade will (potentially) contribute to the growth of the Nigerian economy. Based on these findings, we recommend strong commitment to the implementation of the Free Trade Agreement, improvement of the investment climate, moderation of inflation and establishment of a stable exchange rate system, as well as development of a knowledge-base of the population to improve the performance of the Nigerian economy in the years ahead.
CBN Economic and Financial Review
F13, F15, F43, F63
Aigheyisi, O. S. & Iyoha, M. A. (2022). Implications of the African Continental Free Trade Area for Nigeria’s Economic Growth. CBN Economic and Financial Review, 60(1). 25 - 51.