TRADE FINANCE AND MANUFACTURING EXPORT PERFORMANCE IN NIGERIA

Abstract

Nigeria’s drive to diversify its economy has renewed interest in the role of manufacturing exports as a source of sustainable growth. Despite various policy interventions, access to trade finance is still a major challenge for many manufacturing firms engaged in international trade. This study examined the effect of trade finance on manufacturing export performance in Nigeria using annual data covering the period 1990–2025. The analysis was anchored on Manova’s (2013) Credit Constraint Theory and employed the Autoregressive Distributed Lag (ARDL) technique to estimate both the long-run and short-run relationships among the variables. The findings indicate that trade finance, trade openness and the real effective exchange rate have positive and significant effects on manufacturing export performance, whereas lending interest rate has a significant negative effect. Inflation was not found to have a significant influence on manufacturing exports. The error correction result confirms that short-run deviations from equilibrium are corrected within a reasonable period. The study concludes that improving access to trade finance and maintaining a stable macroeconomic environment are important for expanding Nigeria’s non-oil manufacturing exports. It therefore recommends that the Central Bank of Nigeria and the Nigerian Export-Import Bank enhance trade finance support through affordable financing schemes targeted at export-oriented manufacturers.