Foreign Capital Flow and Real Sector Performance in Ecowas: A Study of Nigeria

This study investigates foreign capital flow and real sectors performance in ECOWAS with Nigeria economy in focus. Foreign capital flow was proxied by official development assistance (ODA), remittances, real effective exchange rate (REER), foreign direct investment (FDI) and inflation, while real sectors performance was proxied by manufacturing value added. Data was sourced from World Bank Development Indicators between 1993 and 2022 using the ARDL bounds approach. The result revealed a long-run relationship among the variables. Short-run dynamics showed that, remittances and FDI exert negative effects on manufacturing, while exchange rate shocks have mixed effects. Inflation negatively influences manufacturing both in the short and long run. ODA per capita provides modest positive support but remains statistically weak. The error correction term (-0.305) confirms moderate speed of adjustment toward equilibrium. Diagnostics confirm model stability and absence of misspecification. Based on the findings it was suggested that, macroeconomic stability, productive utilization of aid, channeling remittances into investment, and redirecting FDI toward manufacturing are critical for industrial transformation in Nigeria.