Impact of Monetary Policy on the Output of Cement Industry in Nigeria (1986-2023)

Abstract

Nigeria has a very high population, and this high population is accompanied by increase in demand for cement but despite the comparative advantage we have in the production of cement we still have traces of cement importation in Nigeria. Thus, this paper investigated the impact of monetary policy on cement industry output in Nigeria, focusing on the relationship between key monetary variables (exchange rate, money supply and inflation) and manufacturing output of the cement industry using annual data spanning the period 1986 to 2023. Employing Autoregressive Distributed Lag model (ARDL), the analysis reveals that exchange rate has a positive and insignificant influence on cement industry. While money supply has a negative and insignificant impact on cement industry. However, inflation rate, exhibits a positive relationship with cement industry, suggesting that attention should be given to inflation rate during project budget development. The findings suggest that policymakers should not ignore inflation in many project especially that of the cement sector. Stability in the exchange rate, sufficient money supply is recommended to support robust cement industry output in Nigeria.