Effects of Exchange Rate Volatility on Food Security in Nigeria

Abstract

Food security remains a pressing challenge in Nigeria, where macroeconomic instability undermines access to affordable and nutritious food. This study was motivated by the need to identify key economic drivers of food insecurity and provide actionable insights for policymakers. Using annual time series data from 1986 to 2023 sourced from the Central Bank of Nigeria, World Bank, and FAO, the study applied the Autoregressive Distributed Lag (ARDL) model, supported by unit root and cointegration tests, to capture both short-run and long-run dynamics. Findings reveal that exchange rate volatility significantly reduces food security, while GDP per capita strongly enhances it. Inflation shows a positive long-run effect, reflecting complex interactions between producer incentives and consumer affordability. Agricultural output does not significantly influence food security, pointing to inefficiencies in the value chain, while unemployment negatively affects food access, particularly in the short run. Policy recommendations include stabilizing exchange rates to reduce import costs, adopting careful inflation-targeting frameworks, promoting inclusive economic growth through infrastructure and investment, reforming agricultural systems to reduce post-harvest losses, and expanding employment opportunities. These strategies are essential for building resilient food systems and achieving sustainable food security in Nigeria.