Oil Revenue and Real Sector Performance in the Nigerian Economy

Abstract

The real sector of the economy especially agriculture and manufacturing, have suffered serious neglect due to growing  influence of oil sector performance. This paper analyzed the relationship between oil revenue and real sector  performance in Nigeria between 1980 and 2021. Agricultural and manufacturing sectors’ outputs were used as proxy of  real sector performance, while oil revenue is the independent variable with, exchange rate and inflation as control  variables. Data were collected from CBN publications. The ADF unit roots results showed that the data in agriculture and  manufacturing sectors model were integrated at different order (i.e., I(0) and I(1)), but none was I(2) and the  variables were co-integrated using the Bound Testing Co-integration techniques. Autoregressive Distributed Lag (ARDL)  was used to estimate the agricultural and manufacturing sector models. The outcome revealed that the relationship  between oil revenue and agriculture sector output is positive and statistically not significant in the long-run. There is  also a positive connection between oil revenue and manufacturing sector performance in terms of output. The  coefficients of the current and lag periods of the dependent variables were seen in the dynamic model to be  insignificant, suggesting that oil revenue have not affected manufacturing sector in the immediate period. The study  recommends among others, that, the government should pay serious notice to the agricultural and manufacturing  sectors as they constitute the real sectors of the Nigerian economy, by increasing the level of investments and opening  them up to both domestic and foreign investors in addressing the macroeconomic objectives of the nation.