Manufacturing sector performance and lending rate in Nigeria

The role of interest rate in influencing the manufacturing sector performance has led to several empirical works in this direction. In this study, the role played by the lending rate in influencing the performance of the manufacturing sector is evaluated. In this study, employed annual data that covered the period from 1981 to 2024 is employed and the estimation technique employed is the ARDL model. Results revealed that lending rate impacted the manufacturing sector performance has positive and significant impact in the long-run. However, the short-run result indicates that the impact is negative and insignificant. The result also indicates a positive and significant impact of the gross fixed capital formation on the manufacturing sector performance, but the impact of trade openness is negative and significant. It is thus recommended that fiscal and monetary policies should be aligned in order to address the problem of high inflation in Nigeria. Other measures should also be adopted to reduce the cost of production such as tax reduction, concessionary exchange rate window and improvements in infrastructure.