Currency Devaluation and Importation of Rice in Nigeria

Abstract

Preference for consumption of imported rice by many Nigerians in the face of unstable exchange rate and currency devaluation, informed the determination of the trend of rice importation and the long run equilibrium relationship between naira devaluation and rice importation in Nigeria. Using time series data between 1980 and 2015, the study employed descriptive; and Co-integration and Vector Error Correction Techniques as analytical tools. The descriptive results showed a decreasing, steady and increasing trend in the value of rice importation into the country; while the results of co-integration and vector error correction confirmed a positive long-run equilibrium relationship between naira devaluation and rice importation, with a significant speed of adjustment and convergence to equilibrium in the long run. The study therefore concluded that naira devaluation with fluctuating exchange rate vis-à-vis other currencies positively determined rice importation during the period under review. That is, despite naira devaluation the quantity of rice imported into the country especially by the rich people who can afford it had tremendously increased.