Impact of Electricity Power Consumption on Economic Growth in Nigeria: A Threshold Regression Analysis Approach

Ukwenya Shuaib Isah, John Olu-Coris Aiyedogbon and Marvelous Aigbedion
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Ukwenya Shuaib Isah: Economics Department, Faculty of Social Sciences, Bingham University Karu, Nigeria
John Olu-Coris Aiyedogbon: Economics Department, Faculty of Social Sciences, Bingham University Karu, Nigeria
Marvelous Aigbedion: Economics Department, Faculty of Social Sciences, Bingham University Karu, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 8, 64-76

Abstract: Despite the abundance of several electricity sources in Nigeria and Government efforts in attracting private sector investment over the last two decades, the country is still facing several challenges which includes investment, electricity generation, transmission, distribution, and labour related issues that has contributed to dwindling economic fortunes. Therefore, this paper investigated the relationship between electricity power consumption and economic growth in Nigeria from 1990 to 2022. The paper employed a Threshold Regression Approach. The results revealed that the paper observed a negative relationship with economic growth in the regime characterized by low electricity power consumption values of -0.2381. Conversely, higher electricity power consumption values of 0.2556 established a positive relationship in the regime. These findings underscored a nonlinear relationship between economic growth and electricity power consumption following the endogeneously determined threshold value of 0.1301. The study’s implications for policy and investment decisions in Nigeria are profound. The results highlighted the critical role of electricity power consumption growth in shaping economic growth. Policymakers and stakeholders are urged to consider initiatives promoting the expansion and modernization of the power sector, involving infrastructure investment and attracting private sector involvement. Moreover, recognizing the positive influence of labor force growth values of 0.2670 on economic growth, there is an opportunity to harness Nigeria’s abundant labor force. Policy recommendations include a focus on workforce development, education, and training to enhance the skills and productivity of the labor force. In light of the non-significant impact of investment growth (-0.0025) on economic growth, a re-evaluation of privatization efforts in the power sector is recommended. Policymakers should prioritize attracting meaningful investments directed at power sector infrastructural development and create an environment conducive to private sector participation, fostering sustainable economic growth in Nigeria.

Date: 2024
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