EXPLORING THE RELATIONSHIP BETWEEN THE ELECTRICITY CONSUMPTION AND ECONOMIC GROWTH IN NIGERIA; 1980-2022

Abstract

The electricity sector in Nigeria has a complex history marked by various reforms and initiatives. The sector was traditionally dominated by the state-owned utility, the Nigerian Electric Power Au-thority (NEPA), which faced challenges in providing reliable and affordable electricity to the popu-lation. The study investigated the impact of electricity consumption on economic growth in Nigeria from 1980 to 2023. The study used time series analysis. Real Gross Domestic Product (RGDP) was used as a proxy for Economic Growth while residential electricity consumption (REC) and special tariff electricity consumption (STEC) were used as the explanatory variables. The study adopted ex-post facto research design and the model adopted for the study was Fully Modified Or-dinary Least Square (FMOLS) model. The methods of data analysis adopted for study are the Augmented Dickey Fuller test, Johansen Co-Integration Test, Granger causality, Descriptive Statis-tics and Trend analysis. The findings from the study revealed that there is an impact of electricity consumption on economic growth in Nigeria. The REC has positive and insignificant impact RGDP in Nigeria. The STEC has negative and significant impact on RGDP in Nigeria. The study recommended among others that government should prioritize investments in electricity infrastruc-ture to ensure uninterrupted power supply with a supportive policy to encourage industrialization and value addition on the economy. Also, government should focus on diversifying energy sources, consider electricity efficiency initiatives and implementing tariff reforms to make electricity more affordable and accessible, especially for the vulnerable populations while incentivizing efficient consumption patterns of electricity in order to increase the economic growth Nigeria.