Electricity Supply Subsidy and Economic Growth in Nigeria
DOI:
https://doi.org/10.14276/2285-0430.4455Keywords:
Electricity subsidy, Electricity supply, Economic growth rate, Nigeria, ARDLAbstract
The purpose of this study is to investigate the impact of electricity subsidies on economic growth in Nigeria from 1990 to 2022 from 1990 to 2022. The long-term relationship among the variables was analyzed using the ARDL (Auto-regressive Distributed Lag) model. A unit root test was performed on various factors, including the economic growth rate and electricity subsidy as a percentage of GDP, which were found to be of order one I(1), while oil prices, gross capital formation as a percentage of GDP, and foreign direct investment as a percentage of GDP were identified as order zero I(0). To establish long-term relationships among the variables, co-integration bound tests were executed. The findings indicate that electricity subsidies and gross capital formation exhibit a negative yet significant correlation with economic growth, whereas oil prices demonstrate a positive and significant relationship with economic growth. Additionally, the results affirm a long-term relationship between economic growth, electricity subsidies, and the other variables analyzed in the study. A serial correlation test was also conducted, revealing no serial correlation among the variables. In light of these findings, the study recommends that the Nigerian federal government should assess the appropriate utilization of funds allocated for electricity subsidies by the Nigerian Electricity Regulatory Commission and Electricity Distribution Companies. Furthermore, it is essential for the federal government to ensure that the private power sector adequately meets the electricity demands of consumers nationwide to alleviate their hardships.
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Copyright (c) 2025 Umunna Godson Nwagu, Micheal Okike, Amos Nnaemeka Amedu
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Accepted 2024-10-06
Published 2025-01-30
