The impact of the petroleum sector on the output of the Nigerian construction sector

Abstract

The petroleum sector plays an important role in the Nigerian economy, as it is the single largest revenue earner of the country and one of the largest contributors to the gross domestic product (GDP). This study estimated the impact of petroleum and gas revenue on the performance of the construction sector using a polynomial distributed lag model. We extracted data on the petroleum and gas sector (PGS), the GDP and construction sector output (CNS) for this study from the Central Bank of Nigeria (CBN) Statistical Bulletin. The analysis employed econometric methodology, which includes testing for stationarity and co‐integration as well as estimating the distributed lag model. The result shows that the petroleum and gas revenue significantly affected construction output for three consecutive years starting from their year of occurrence. The study concluded that the PGS has a far‐reaching impact on the growth and development of the construction sector. It therefore recommends supporting the channelling of funds from the petroleum sector into development of constructed facilities infrastructure.