ENERGY CONSUMPTION AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

The study evaluates the impact of energy consumption and economic growth in Nigeria. The study checks for unit root using Augmented Dickey-Fuller (ADF) to determine if the variables are stationary or not. Also, to examine whether or not a long run relationship exists, the study applied the Johansen Co-integration test. This research established a positive relationship between all three major variables (crude oil consumption, coal consumption and electricity consumption) and the growth of Nigeria's economy. Labour and capital also show positive relationships with GDP. Specifically, Coal consumption (CO) has a value of 0.0049 which means that a 1% increase in coal consumption will increase GDP by 0.0049%. Crude oil consumption has a value of 0.0356 which implies that a percentage increase in its consumption increases GDP by 0.0356 percent which is justifiable in the sense that this work looked at its domestic consumption and not its exportation or sale to other countries. Consumption of crude oil products like petrol, diesel, etc. is somewhat limited in that a greater percentage of the population live below the poverty line and cannot afford petrol or diesel powered generating sets and even those who can afford it are usually constrained by the price and availability. Therefore, the major earnings from crude oil come from its export and not its domestic consumption hence its low bearing on GDP.