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THE EFFECT OF RISING INTEREST RATES ON THE PERFORMANCE OF THE NIGERIAN MANUFACTURING SECTOR
Abstract: The performance of the manufacturing sector in Nigeria has been abysmal over the years, and this could be attributed to the inadequacy of available funding windows to support the manufacturing sector, which ultimately has contributed to the reduction in capacity utilization of the manufacturing sector in the country. Three major factors that have contributed to the poor performance of the sector are: First, the continued deterioration in infrastructural facilities, second, lack of access to finance and third, rising interest rate. The study, therefore, examines the effect of rising interest rates on the performances of the Nigerian manufacturing sector. Data for the study spans eighteen years (18) years covering 2000 to 2017. The ordinary least square was used to analyse the models. Findings from the study show that the rising interest rate in Nigeria affects the performances of the Nigerian manufacturing sector. Given these findings, the study recommends that aside from trying to manage interest rate for enhanced economic growth, the Nigerian Government should strive to provide infrastructural facilities particularly power and possibly rail transportation to reduce the high cost of production.
Keywords: Interest Rate; Capacity Utilization; Manufacturing Sector; GDP.