OIL PRICE VOLATILITY, MACROECONOMIC INSTABILITY AND ECONOMIC GROWTH IN SELECTED SUB-SAHARAN AFRICAN COUNTRIES

Abstract

This study was motivated by the persistent macroeconomic instability in Sub-Saharan African (SSA) economies, where output growth remains highly vulnerable to external shocks, particularly oil price fluctuation and inflationary pressures. Despite the region’s substantial revenue generation from oil and its exposure to global commodity markets, economic performance has remained uneven, raising concerns about the channels through which oil price movements influence growth outcomes. Against this background, the study examined oil price volatility, macroeconomic instability and economic growth in selected SSA countries, namely Nigeria, Ghana, Côte d’Ivoire, Angola, and Gabon, over the period 1990 to 2024. The study employed Auto-Regressive Distributed Lag (ARDL) that captures both short-run and long-run relationships. The empirical findings revealed that in the long run, oil price volatility and inflation exhibit significant positive relationships with economic growth, suggesting the presence of oil-driven revenue effects and inflationary growth transmission in the selected economies. However, exchange rate and trade openness were found to be statistically insignificant in explaining long-run growth. In the short run, inflation exerts a significant negative effect on economic growth, while oil price volatility showed a weak positive influence. The error correction mechanism confirms a stable long-run equilibrium with gradual adjustment from short-run disequilibrium. The study concludes that macroeconomic performance in SSA is strongly influenced by oil market dynamics and inflationary conditions, though their effects differ across time horizons. It is therefore recommended that policymakers strengthen inflation management frameworks and improve the utilization of oil revenues to support sustainable and diversified economic growth.