Impact of macroeconomic factors on cocoa and cashew nut export revenue in Nigeria (1980–2022)

Abstract

This study explores the impact of macroeconomic factors on the export revenue of cocoa and cashew nuts in Nigeria from 1980 to 2022. By employing econometric modelling techniques like Cointegration Analysis and Vector Error Correction Model (VECM), the study investigates how variables such as exchange rates, inflation rates, interest rates, and GDP growth affect the export performance of these vital agricultural products. Results of trend analysis show that cocoa beans experienced higher and more stable production levels, export supply, and export revenue. In contrast, cashew nuts saw a significant increase in production, export supply, and export revenue during the 1990s and 2000s, but with greater variability. While cocoa beans showed gradual and stable trends in these areas, cashew nuts exhibited more dramatic fluctuations. The results of VECM indicate a significant connection between macroeconomic indicators and export revenue, underscoring the importance of stable economic policies in improving agricultural export performance. The study offers valuable insights for policymakers regarding the necessity of maintaining favourable macroeconomic conditions to enhance the competitiveness of Nigeria's cocoa and cashew nut exports in the global market for improved revenue from agricultural exports. Keywords: macroeconomic variables, export revenue, cocoa, GDP growth, Vector Error Correction Model (VECM), cointegration analysis