Causality Nexus Between Electricity Consumption and Growth in Nigeria Manufacturing Sector

Abstract

The study examined the causal relationship between electricity consumption and manufacturing sector’s growth in Nigeria using time series data covering the period 1986 – 2017. Multiple least square regression method was used to capture the effect of electricity consumption and other variables on manufacturing sector’s growth, with the aid of Eview software. Granger causality test was conducted to examine the direction of causality between electricity consumption and manufacturing sector’s growth. The study found that electricity consumption has positive and significant effect on the growth of the manufacturing sector. Also, the study revealed an evidence of unidirectional causality from manufacturing sector’s growth to electricity consumption. It was also infered from the trend analysis that Electricity Consumption in Nigeria has a positive and direct impact on the growth of Nigeria Manufacturing Sector. Since the study shows how electricity is vital to manufacturing sector, any impediment to electricity will grossly affect manufacturing sector’s growth. To enhance sustainable growth in manufacturing sector, appropriate reforms must come up to ensure stable electricity in Nigeria. Keywords: Electricity consumption, Causality, Trend analysis, Manufacturing sector. DOI: 10.7176/RHSS/10-6-04 Publication date: March 31 st 2020