ELECTRICITY CONSUMPTION AND ECONOMIC GROWTH IN NIGERIA: AN ARDL AND GRANGER CAUSALITY ANALYSIS (1990–2024)

ABSTRACT

This study examines the dynamic relationship between electricity consumption and economic growth in Nigeria from 1990 to 2024 using the Autoregressive Distributed Lag (ARDL) bounds testing approach, Error Correction Model (ECM), and Granger causality analysis. Descriptive statistics indicate that electricity consumption averages 133.21 billion kWh, while real GDP (RGDP) averages $329.84 billion, reflecting episodic demand surges and stable macroeconomic growth trends. Unit root tests reveal mixed integration of the variables, validating the ARDL framework for capturing both short- and long-run dynamics. ARDL estimates demonstrate that electricity consumption exerts a significant influence on RGDP in both the short and long run, whereas PMS, coal, and natural gas exhibit no statistically meaningful long-run effects. The ECM term (-0.160) confirms a moderate speed of adjustment toward long-run equilibrium. F-bounds testing confirms cointegration, and Granger causality results reveal a unidirectional causality from electricity consumption to RGDP, underscoring the centrality of power supply in driving Nigeria’s economic growth. Model diagnostics indicate robustness and stability, confirming the reliability of the findings. The study highlights the necessity for targeted electricity infrastructure investment, promotion of energy efficiency, private-sector engagement, and strategic utilization of fossil fuels to enhance economic performance.

Keywords: Electricity consumption, Economic growth, ARDL, Granger causality, Nigeria, Energy policy, Error correction model