ABSTRACT

The study examined exchange rate volatility and economic growth in oil producing countries in Sub-Saharan African with a view to ascertaining if exchange rate volatility of oil producing countries in Sub-Saharan African impact on economic growth, again to examine the response of economic growth in oil producing countries in Sub-Saharan African to a shock in exchange rate and other monetary instruments and to identify if institutional factors and exchange rate volatility have any positive impact on economic growth of oil producing countries in Sub-Saharan Africa.  The study utilized annual time series data drawn from five (5) oil producing countries in Sub-Saharan African spanning from a period of 39 years from (1981 to 2019). The pooled fixed effect (FE) model was adopted for objective 1, the GARCH model was used to measure exchange rate volatility in the models the empirical findings revealed that exchange rate volatility and money supply (MS) are positive but shows no significant impact on economic growth for oil producing countries in Sub-Saharan African. Whereas, foreign direct investment, and trade openness have a negative significant impact on economic growth, credit to private sector and capital have a positive significant impact on economic growth for the periods under review. Panel structural vector autoregressive (PSVAR) model was employed for objective 2 the empirical findings showed that period there is a significant impact between the responses of economic growth to a shock in exchange rate so as other monetary response policy variables as money supply, interest rate and inflation. However, the impulse response function results showed that the response of growth to exchange rate is negative, this also applies to money supply and interest rate only inflation proxy by consumer price index has a positive response to a sudden shock in exchange rate for all selected oil producing countries in Sub Saharan African. Panel fixed effect model and the two stage least square model for objective 3 findings revealed that exchange rate volatility has a negative but has a significant impact on growth in the same line institutional factors as political stability and government effectiveness  are both positive and  has a significant impact on economic growth. Going forward the interaction of exchange on control of corruption, political stability and government effectiveness were positive and shows a significant impact to economic growth for selected oil producing countries in Sub Saharan African. The study therefore recommends among others that policy makers within the selected countries should ensure policy consistency that could improve stability of exchange rate, investment outcomes, increased productive capacity, again, maintain political stability as this sends positive signals to investors and help to create more investment friendly climate and hence allow for foreign investment stabilized exchange rate regime and growth in the economy.