External Reserves and Their Impact on Sustainable Economic Development in Nigeria

This study examined the effect of External Reserve Management on the growth of Nigerian economy from 1990 to 2023. The objective is to investigate the relationship between variable components of Nigerian External Reserve and the growth of Nigerian economy. The study used secondary data from Central Bank of Nigeria (CBN) Statistical Bulletin; Real Gross Domestic Product (RDGP) was modified as the function of change in External Reserve (CR), External Reserve Stock (ERS), Foreign Exchange Reserve (FEX), Interest Rate on Reserve (IR) and Reserve Assets (RA). Multiple regressions with econometrics view statistical package and descriptive trend analysis was used as data analysis method. The Ordinary Least Square methods of cointergration, Augmented Dickey Fuller Test, Granger Causality Test and Vector Error Correction Models were used to determine the nature of long and short run relationship that exist among the variables. All the independent variables except Foreign Exchange Reserve have positive relationship with Nigerian Economic growth. The stationarity test showed that the variables were non stationary but stationary at difference. The co-integration result proved the presence of co-integrating equation among the variables while the Granger Causality revealed a bi variable relationship running through the dependent and the independent variable. The study recommends that better domestic and international monetary policy should be adopted to manage Nigerian External Reserve to facilitate the realization of Economic growth