Trade Liberalization and Service Sector Performance in West African Monetary Zone: A Study of Liberia and Nigeria

The study examined the relationship between Trade liberalization and service sector performance in West African Monetary Zone (WAMZ). Two research questions with corresponded hypotheses guided the study. The research utilized a descriptive and correlational design. The population comprised 31,675 service sector firms (3,215 in Liberia and 28,460 in Nigeria). The sample size was determined using Cochran's formula for sample size calculation, ensuring a 95% confidence level and a 5% margin of error. This resulted in a sample of 384 firms for Liberia and 384 for Nigeria, totaling 768 respondents. A stratified random sampling technique was employed to ensure representation across various service sub-sectors, including finance, telecommunications, and transportation. Secondary data was sourced from the World Bank's World Development Indicators and the International Monetary Fund's Direction of Trade Statistics, providing macroeconomic context and trade-related variables. The secondary data generated verified by experts in economics. A pilot test was conducted with 30 firms in Port Harcourt which yielded a Cronbach's alpha coefficient of 0.87. Regression analysis and Pairwise Correlations test were used to answer research questions and test the hypotheses at a 0.05 significance level. The study found that reduction of tariffs and liberalization of exchange rates have positive impact on service sector performance in Liberia and Nigeria. The study recommended among others that, trade ministry officials should be coordinating gradual tariff reductions, ensuring local service managers adapt strategies effectively while promoting cross-border trade to improve service sector performance in Liberia and Nigeria.