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IMPACT OF ELECTRICITY CONSUMPTION ON ECONOMIC GROWTH IN NIGERIA
Abstract
The study investigates the impact of electricity consumption on Nigerian economy between 1986 and 2018. The data were sourced from National Bureau of Statistics, World Development indicators and The International Energy Agency. The estimation technique employed for the analysis is Autoregressive Distributed Lag Model. The variables used are Electricity consumption (ELC), Cost of fuel/gas (CFG) and Economic growth rate (GDPR). The variables were subjected to stationarity test. The result showed that GDPR and CFG were stationary at level I(0) while ELC became stationary at first difference I(1). The variables are also free of multicollinearity. The ARDL result confirmed that both ELC and GDPR are positively and significantly correlated in the short-run but in the long-run, ELC impacted negatively and insignificantly on economic growth in Nigeria, while CFG exerts positive but insignificant impact on economic growth. The study therefore, recommends that measures be taken towards electricity conservation to enhance efficient consumption of electricity towards increasing economic growth in Nigeria. The government should enact policies in the sector towards availability of electricity considering the negative influence that electricity consumption has on economic growth in the long-run. The cost of fuel and gas should be at a rate that will accommodate all income class in the economy in order to aid access to electricity consumption which will in turn increase economic growth.
Keywords: Electricity, Consumption, Economic Growth JEL CODE: L94, E21, O4