IMPACT OF ELECTRICITY CONSUMPTION ON ECONOMIC GROWTH IN NIGERIA

This study examined the relationship between electricity consumption and economic growth in Nigeria from 1990-2022.The study used total electricity consumption (TEC), government recurrent expenditure (GRE), and inflation rate (INFR) as independent variables while real gross domestic product (RGDP) as the dependent variable. Unit root tests were conducted to check the stationary of the data. The result shows that real GDP, total electricity consumption, government recurrent expenditure, and inflation rate are all stationary at first difference I(1). The study used secondary data and uses auto regressive distributed lag (ARDL) to ascertain both the short-run and long-run dynamic adjustments of the variables included in the model. The result of the findings reveal that total electricity consumption has a positive insignificant relationship with RGDP in the short-run in the long-run. Furthermore, government recurrent expenditure is positively related with the dependent variable and significant both in the long-run and the short-run. Lastly, inflation rate has negative and significant relationship with RGDP both in the long-run but insignificant the short-run. The model passed all diagnostic test for serial correlation, hetroskedasticity, normality, model specification and stability. The speed of adjustment toward equilibrium is 7% (-0.077002) which is very slow. The research recommended that government should improve electricity and increase power consumption to support economic growth in Nigeria. It further recommends that government should encourage the use of renewable energy sources, which can provide predictable electricity prices, and reduce the negative impact of inflation.