Electricity Consumption and Economic Growth in Nigeria

Abstract

The study investigates the impact of electricity consumption on economic growth in Nigeria from 1981 to 2021 with three specific objectives; to determine the impact of electricity consumption, gross fixed capital formation on economic growth, and to examine the existence of long run relationship between electricity consumption and economic growth. The study employs time series data, and due to the nature of the data the ARDL model was employed in analyzing the data. The results show that there is long run relationship between electricity consumption and economic growth. Also, electricity consumption has a positive but insignificant effect on economic growth, while gross fixed capital formation has a positive and significant effect on economic growth in both short and long run. Economic growth is expected to converge to stability within a business by 101.3 percent from the errors of instability generated by
electricity consumption in the economy. Also, the estimated model has a good fit and generally significant. However, to boost the growth implication of electricity consumption in the economy, state governments should key into the recent power policy of power generation to enhance their state economic activities rather than depending on national grid. This will create employment and promote national
productivity.