Macroeconomic Variables and Manufacturing Sector Growth in Nigeria

This study explored the impact of key macroeconomic variables on the growth and capacity utilization of Nigeria’s manufacturing sector between 1981 and 2023, using data from the World Development Indicators and the Central Bank of Nigeria. The study adopted the ARDL model, following necessary statistical tests to ensure the reliability of results. Findings indicate that high exchange and interest rates significantly hinder manufacturing growth, while inflation appears to drive growth but negatively affect capacity utilization. Bank credit and lower interest rates, however, support improved capacity utilization. Trade openness, GDP growth, human capital, labour force, and capital formation showed limited or insignificant influence. Based on these insights, the study recommends that policymakers prioritize reducing interest rates and improving manufacturers’ access to affordable credit. Targeted financial support should be extended to industries most vulnerable to inflation and exchange rate fluctuations. These measures can strengthen industrial resilience, enhance production efficiency, and boost overall capacity utilization in the manufacturing sect.