ABSTRACT

This study analyzed the impact of macroeconomic dynamics on real economy of three sub-Saharan African economies (SSA), for a period of forty years; from 1981 to 2020. These countries were selected based on a troika of shared similarities relating to the economy, colonial history, and pattern of business. Exchange rate, inflation rate, discount rate and unemployment were used as the key macroeconomic variables while the real economy was measured by nominal GDP. Ex post facto research design was used in a multiple regression analysis framework to determine the partial coefficients of the endogenous variables. First, diagnostic tests involving pretesting of data for unit root based on the Augmented Dickey-Fuller (ADF) approach was carried out. The ADF test showed that the series of data were of mixed integration, that a combination of levels and first difference variables which necessitated the application of Autoregressive Distributed Lag (ARDL) model. The ARDL results shed light on the effect of the macroeconomic variables on economic growth in three SSA economies. Chiefly, the results provide evidence that the impact of macroeconomic variables on GDP varied among Nigeria, South Africa and Ghana. The long-run relationship between GDP and macroeconomic variables was confirmed from the F-statistic of the ARDL bounds test. In the long run, the Nigerian economy was negatively and significantly impacted by the exchange rate and discount rate, but inflation had a negative and insignificant impact while the unemployment rate had a positive and non-significant impact on Nigeria's GDP. South Africa’s GDP was significantly and negatively impacted by the exchange rate and inflation in the long run while the discount rate and unemployment rate had a negative and insignificant impact on South Africa's GDP in the long run. The long-run GDP in Ghana was significantly and negatively impacted by the exchange rate, discount rate and unemployment rate while the inflation rate was negative and insignificant. The error correction mechanism of the ARDL model indicated that GDP for all the countries investigated were impacted in different ways by the selected macroeconomic variables. In the short-run, exchange rate, inflation rate, discount rate and the unemployment rate were significant determinants of Nigeria's GDP; in South Africa, GDP was significantly determined by the exchange rate, discount rate and unemployment rate in the short run while Ghana's GDP was significantly determined by inflation, discount rate and unemployment rate in the short-run. From the policy perspective, the findings are of particular interest to government authorities saddled with the responsibility of managing the economy. Since the results indicated that macroeconomic variables play a significant role in influencing economic growth in SSA countries, the economic management teams of these countries need to support measures that will boost productivity in such a way that they should neither create inflationary pressure in the economy, nor fuel exchange rate and interest rate volatility as well as reduce the unemployment rate to the barest minimum.