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An econometric analysis of electricity consumption and real sector performance in Nigeria

An econometric analysis of electricity consumption and real sector performance in Nigeria The purpose of this paper is to examine the extent at which electricity consumption (EC) has contributed to real sector performance, to identify energy-dependent sectors of the economy for appropriate sector-specific policy interventions and to avoid energy conservation policies that may retard the growth of the real sector and economic growth in general.Design/methodology/approachThis paper used time series data, covering the period between 1981 and 2015. Various time series econometric analyses such as unit root test for stationarity and vector autoregressive and vector error correction models were used to establish the long-run and short-run co-integration relationship among the variables.FindingsThis study finds that EC displays a little and insignificant impact on manufacturing sector output, as well as agriculture and service outputs. The empirical result from causality test suggests a unidirectional causality running from agriculture to EC, as well as service sector to EC, whereas bidirectional causality runs between EC and manufacturing sector. This study therefore recommends adequate power supply to the manufacturing sector, while energy efficiency policy and regulatory reform should address agriculture and service sectors.Originality/valueFew studies have examined the impact of EC on disaggregated gross domestic product. This research gap has strong policy implications on Nigerian economy as the output of real sector plays vital role in driving the economy. Given the pressing needs for Nigeria to boost real sector output and be among the world’s 20 largest economies by 2030, it becomes imperative for this sector-specific research to be conducted to ensure that sectoral purpose-driven energy interventions are formulated to address power supply challenges in the real sector. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Energy Sector Management Emerald Publishing

An econometric analysis of electricity consumption and real sector performance in Nigeria

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References (55)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1750-6220
eISSN
1750-6220
DOI
10.1108/ijesm-04-2020-0003
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to examine the extent at which electricity consumption (EC) has contributed to real sector performance, to identify energy-dependent sectors of the economy for appropriate sector-specific policy interventions and to avoid energy conservation policies that may retard the growth of the real sector and economic growth in general.Design/methodology/approachThis paper used time series data, covering the period between 1981 and 2015. Various time series econometric analyses such as unit root test for stationarity and vector autoregressive and vector error correction models were used to establish the long-run and short-run co-integration relationship among the variables.FindingsThis study finds that EC displays a little and insignificant impact on manufacturing sector output, as well as agriculture and service outputs. The empirical result from causality test suggests a unidirectional causality running from agriculture to EC, as well as service sector to EC, whereas bidirectional causality runs between EC and manufacturing sector. This study therefore recommends adequate power supply to the manufacturing sector, while energy efficiency policy and regulatory reform should address agriculture and service sectors.Originality/valueFew studies have examined the impact of EC on disaggregated gross domestic product. This research gap has strong policy implications on Nigerian economy as the output of real sector plays vital role in driving the economy. Given the pressing needs for Nigeria to boost real sector output and be among the world’s 20 largest economies by 2030, it becomes imperative for this sector-specific research to be conducted to ensure that sectoral purpose-driven energy interventions are formulated to address power supply challenges in the real sector.

Journal

International Journal of Energy Sector Management – Emerald Publishing

Published: Jul 26, 2021

Keywords: Cointegration; Energy production; Energy sector; Time series analysis; Econometric; Electricity; Electricity consumption; Real sector; Vector autoregressive (VAR); Vector error correction (VEC); Disaggregated GDP; Granger causality

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