The nexus between electricity consumption and economic growth in Nigeria

Abstract

This study investigates the effects of electricity consumption on economic growth in Nigeria, with a focus on the period from 1997 to 2021. Utilizing an ex-post facto research design, the study employs a combination of time series econometric techniques, including the Augmented Dickey-Fuller test for stationarity, the Autoregressive Distributed Lag (ARDL) model for long-run analysis, and the Bounds test to assess the existence of a long-run relationship among the variables. The findings reveal a significant positive relationship between electricity consumption and GDP, indicating that increased access to electricity is crucial for driving economic growth in Nigeria. Furthermore, the analysis shows that while gross fixed capital formation contributes positively to GDP, the labor participation rate does not have a statistically significant long-run impact, suggesting potential challenges related to labor productivity. The results underscore the urgent need for policy reforms aimed at enhancing the electricity supply infrastructure and investing in human capital development to maximize economic growth potential. This study contributes to the ongoing discourse on the interconnections between energy consumption and economic development, highlighting the importance of reliable energy access as a key driver of sustainable economic growth in Nigeria.