Effect of Maritime Trade on Inflation Rate in Nigeria (1990-2023)

Abstract

This study investigated the effect of maritime trade on inflation rate in Nigeria. The data used for the study were time series data sourced from the National Bureau of Statistics (NBS) annual abstract and Central Bank of Nigeria (CBN) statistical Bulletin, World Development Indicator (WDI), Nigerian Ports Authority (NPA) and Nigerian Shippers Council (NSC) which spanned between the period 1990 to 2023. For the dependent variables, the study utilized inflation rate and the components of maritime trade (oil trade, non-oil trade and containerized trade) served as the independent variables The analytical techniques employed were Augmented Dickey Fuller (ADF) unit root test, Johansen cointegration test and bounds cointegration test. The unit root test revealed that all the variables were non-stationary at level but became stationary at first difference that is, integrated of order one I(1). The evidence of the presence of cointegration amongst the variables formed the basis for estimating the model using error correction model (ECM). The short run results showed that oil trade has a negative and non- significant effect on inflation rate in Nigeria. Also, non-oil trade revealed an insignificant positive effect on inflation rate in Nigeria. Furthermore, the short run result revealed that containerized trade has a negative and statistically insignificant effect on inflation rate in Nigeria. Thus, the study recommended that government should prioritize agriculture, solid minerals, and manufacturing sectors through increased investment and export grants. Also, government should support indigenous businesses through export promotion strategies, trade openness, domestic protection measures. This will help generate employment, reduce inflation rate and put the country on a part to sustainable economic growth.