Effect of renewable energy consumption and public debt on human capital in Nigeria

Samuel Osei-Gyebi () and Patricia Ajayi ()
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Samuel Osei-Gyebi: University of Ibadan
Patricia Ajayi: University of Ibadan

SN Business & Economics, 2025, vol. 5, issue 3, 1-27

Abstract: Abstract Sustainable Development Goal (SDG) four targets the development of human capital to ensure decent work for people in support of economic growth and poverty reduction. Despite various efforts toward this goal, the majority of countries in the Global South like Nigeria have high illiteracy rates, weak educational and remuneration systems, and inadequate health infrastructure which affect the development of human capital. To enhance human capital formation, recent studies have emphasized the importance of renewable energy consumption (REC) but this requires significant financial support. Yet, the continuous borrowing and its attendant service of public debt deprive Nigeria of funds that could be dedicated to the promotion of renewable energy. Against this backdrop, we provide novel evidence on how public debt moderates the effect of REC on human capital in Nigeria. Using yearly data from 1980 to 2022 within a VECM framework, we found that public debt interacts with REC to negatively affect human capital in Nigeria. Moreover, results from the impulse response functions indicate that human capital responds to shocks from REC, public debt, and government spending in Nigeria. Further results from the Granger Causality tests reveal a one-way causality from public debt to REC as well as from REC to human capital in Nigeria. Based on these findings, the Nigerian government is advised to adhere to prudent fiscal measures to reduce public debt, enhance REC, and improve human capital in Nigeria.

Keywords: Human capital; Renewable energy consumption; Public debt; Nigeria; VECM (search for similar items in EconPapers)
JEL-codes: E21 H52 Q41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s43546-025-00785-z

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