Relationship between Electricity Consumption and Economic Growth in Nigeria

Abstract

This study examined the relationship between electricity consumption and economic growth in Nigeria covering the sample period of 1986 to 2021 using Autoregressive Distributed Lag (ARDL) model and Causality Test. The ARDL results indicated that in the short run electricity consumption is negatively related to economic growth at the 5% level of significance, while electricity generation is positively related to economic growth in the short run at the 5% level of significance. In the long run electricity consumption is positively related to economic growth at the 5% level of significance. The causality test result showed that there is a unidirectional causation from electricity consumption to economic growth in Nigeria during the period covered by the study. The study recommends sustained efforts by both the government and private entities to improve generation, efficient transmission and distribution of electricity to
the key productive sectors such as manufacturing, and small and medium enterprises in order to have sustained growth in output in the long run that would lead to economic growth in Nigeria.