Academy of Entrepreneurship Journal (Print ISSN: 1087-9595; Online ISSN: 1528-2686)

Abstract

Exchange Rate Management and Performance of Nigerian Manufacturing Firms

Author(s): Ezenwakwelu Charity A, Okolie Patrick I, Attah Emmanuel Y, Lawal Kehinde O, Akoh Ojonugwa

This study examined the effects of exchange rate management on performance of Nigerian Manufacturing Firms. The specific objectives sought to assess the effect of exchange rate fluctuations on productivity of the manufacturing firms; ascertain the effect of flexible exchange rate on performance of the manufacturing firms; and determine the effect of bureau de change (BDC) on performance of the manufacturing firms. A balanced panel of annual observations from ten large-scale manufacturing firms listed on the Nigerian Stock Exchange, collected between the periods of 2015–2017. The cross-sectional data set on productivity and performance indicators were obtained from the companies’ annual reports while the data set for exchange rate fluctuations and Bureau de change were sourced directly from Central Bank of Nigeria.  The results from the multiple regression test revealed that exchange rate fluctuations had significant negative effect on productivity of the manufacturing firms; flexible exchange rate had not significantly enhanced performance of the manufacturing firms; and bureau de change had not significantly enhanced performance of the manufacturing firms. Nigerian manufacturing sector depends heavily on import of inputs and capital goods which are paid for in foreign exchange and which rate of exchange is unstable. Under fixed exchange rate regime, performance of fiscal policy is effective and ineffective under flexible exchange rate regime. The manufacturing firms did not have sufficient foreign exchange required to procure inputs and capital goods because of the high exchange rates provided by the bureau de change.