EXCHANGE RATE AND ECONOMIC GROWTH OF AFRICAN COUNTRIES

Abstract

It is a general knowledge that exchange rate determines the independence of a nation
and often considered as a sign of economic strength cum a symbol of national pride. And
many countries (developed and emerging) have opted to promote economic growth via
exchange rate liberalization as a major macroeconomic goal. In the light of the
foregoing, this study examines the effect of exchange rate on economic growth in Africa.
Panel data were sourced from World Bank Development Indicator for four countries
(Nigeria, Kenya, South Africa and Egypt) spanning 1980 to 2017. The panel Least
Square (PLS) of random effect estimate as decided by Hausman test multiple regression
techniques were adopted. Findings among other things indicate that: Real exchange rate
has significant effect on economic growth in Africa. Nominal exchange rate has no
significant effect on economic growth in Africa. Interest rate has significant effect on
economic growth in Africa. Trade openness has significant effect on economic growth in
Africa. Thus the study concluded that NEXR, INTR and TOPN contributed more
significantly to economic growth in Africa during the period under review. Hence, they are
significant determinant of economic growth in Africa.