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ABSTRACT
This study aims at investigating the impact of energy consumption and manufacturing sector output in Nigeria using annual time series data for the period 1990 – 2022. The main objective of this research is to investigate the relationship between energy consumption and manufacturing sector performance and to determine the relationship between energy consumption and manufacturing sector performance. An endogenous growth model is employed for the study with emphases on how crude oil consumption, coal consumption and electricity consumption affect the performance of manufacturing sector in Nigeria. The variable considered are manufacturing sector performance, crude oil consumption, coal consumption and electricity consumption. Manufacturing sector performance is proxied by manufacturing industry productivity which is the dependent variable of the study, while the crude oil consumption, coal consumption and electricity consumption are the independent variables. Augmented Dickey-fuller (ADF) test was used to test for the stationarity of the variables and they were found to be stationary at first difference. Then Johansen co-integration technique was used to establish if the stationary variables are co-integrated in the long run. Further, ECM is employed to correct any form of disequilibrium in the short run. The result of stationarity test reveals that the model is well specified and could be used for policy analysis. The analysis was based on data extracted from Central Bank of Nigeria (CBN) statistical bulletin and World Development Indicators (WDI). The result of the study revealed that all the three independent variables have a positive relationship with manufacturing sector productivity in both short and long run. Consumption of coal, crude oil and electricity are all statistically significant in the determination of manufacturing sector productivity in the long run. In conclusion, energy consumption is an important factor that determine the productivity on the manufacturing sector. The study later recommended that there should be proper funding and management of the energy sector of the country as it has a direct relationship on industrialization.
