External Sector and Economic Growth of Nigerian and South African Economies: 1986-2016


Faculty: Management Sciences
Department: Banking And Finance


Ogbonna, K. S.
Ibenta, S. N.
Adigwe, P. K.


This study is a comparative evaluation of external sector on economic growth of Nigeria and South Africa economies. The specific objective of this study is to examine and compare the influence (role) of External sector (in External Debt, External Reserves, Exchange rate, Foreign Direct Investment and Trade Integration) on economic growth of Nigeria and South African economies. The study used secondary data obtained from World Bank, IMF and the Central Bank of respective selected countries and subjected them to ADF stationarity test, Johansen co-integration test, Multiple regression analysis and Granger Causality test to analyse the study over the period between 1986to 2016. The findings from the study showed that all the external sector variables except FDI and external reserves had insignificant relationship with the economic growth of South Africa; however, both FDI and external reserves contributed significantly on economic growth of Nigeria, while external debt, exchange rate and trade integration have insignificant implication on Nigerian economic growth but had significant implication and relationship with South African economic growth. The study therefore concludes that external sector variables improves the economic growth of South Africa significantly and have no significant implication on Nigerian economic growth. Hence, the study recommends among others, the building up of external reserves and reduction of external debt so as to manage exchange rate instabilities while improving FDI to facilitate economic growth of Nigeria and South Africa.