IMPACT OF OIL PRICE VOLATILITY ON ECONOMIC GROWTH IN SUB-SAHARAN AFRICAN COUNTRIES

Mmadu Benjamin Anabori, Izuchukwu Chetachukwu Okeke, Akponohwiroro Paris Ukpemeku

Abstract


This study examines the impact of the volatility of oil price on economic growth in Sub-Saharan African countries from the period of 2006-2021. Broadly, this study aims to investigate the impact of oil price volatility on economic growth in Sub-Saharan African Countries, looking particularly at Gross Domestic Product and exchange rate, Gross Capital Formation, and FDI as key variables that provide an indication of economic well-being. Four top Net oil exporting countries were selected for the study. The countries selected are Nigeria, Angola, Egypt and Algeria, as they form major oil-exporting countries in Sub-Saharan Africa with stable historical data. Panel data were used for the analysis. Panel Pooled OLS, Panel Fixed Effect Model and Generalized Method of Moment model were employed in the estimation for oil price volatility in sub-Saharan African countries. The estimation of the panel model for the oil exporting countries shows that the volatility of oil price has a positive and significant effect on the economic growth of oil exporting countries. The study recommends, among others, that Foreign Direct Investment (FDI) will increase capital inflows to these oil-exporting countries, promoting growth and employment. More so, corruption must be checked or controlled as it erodes investors’ confidence. Countries in oil exporting countries should invest in human capital, build infrastructure, and create independent institutions dealing with corrupt public officials who steal oil revenues.

 

JEL: Q43; F43; E52; O23

 

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Keywords


oil price volatility, economic growth, Sub-Saharan Africa, macroeconomic stability

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References


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DOI: http://dx.doi.org/10.46827/ejefr.v8i6.1861

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