Energy Consumption and Economic Growth Nexus in Nigeria: A Sectoral Performance Analysis (2012 – 2025)
Keywords:
Energy consumption, Economic Growth, Electricity, Gas Usage, Oil Usage, ARDL Model, NigeriaAbstract
This study examines the nexus between energy consumption and economic growth in Nigeria using annual time series data from 2012 to 2025. The objective of the present study is to determine the linkages between energy consumption and economic growth in Nigeria based on annual time-series data spanning from 2012 through 2025. Electricity consumption, gas consumption, and oil consumption were considered as independent variables whereas GDP growth rate as the dependent variable. An ex-post facto design was used while Augmented Dickey Fuller (ADF) unit root test and Autoregressive Distributed Lag (ARDL) model were applied in analysis. The results indicate that all the energy consumption variables show strong correlations with economic growth in Nigeria. While both electricity consumption and gas consumption demonstrate high significance, the latter one showed the highest level of significance as the main contributor to economic growth because of its contribution to power generation and manufacturing. Oil consumption also demonstrates positive correlation but with lesser significance levels. The long-term relationship among variables was confirmed by the bounds test. In conclusion, it can be stated that energy consumption is one of the major drivers of economic growth in Nigeria. The study recommends that efforts must be made by government to increase energy sources' diversification through investing in renewable energy sources such as solar and wind energy for reduced dependence on crude oil.
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