Electricity Consumption and Manufacturing Sector Performance: Evidence From Nigeria

Abstract

Adequate supply of energy is important for sustainable growth in an economy. The rate of the growth of the Nigeria's electricity development is very slow and not effective compare to other emerging economies; this on the other hands has discouraged production, most especially in the manufacturing sector. In light of this, the study investigates the long-run impact of electricity consumption on manufacturing sector performance proxy by output, employment and capital using Canonical Cointegrating Regression for the period of 1981-2019. Evidence from the result in the output equation shows that electricity consumption and credit to manufacturing sector have a negative relationship with output. In the employment equation, consumption in electricity and interest rate have negative effects on employment. In the capital equation, electricity consumption is not statistically significant. In conclusion, effects of electricity consumption as input in the manufacturing sector have not improved the performance in the sector. To improve the situation, the study recommends among others the need to create a framework to promote energy efficiency by maximizing output from the power sector and minimize wastage.

Impact of Gasoline and Renewable Energy Consumption on Manufacturing Sector Output in Nigeria: New Evidence From ARDL Model

“…The manufacturing sector is a pivotal driver of economic development in Nigeria (Oni et al, 2023). However, it faces signi cant challenges, including an overreliance on traditional fossil fuel sources like gasoline and an urgent need to transition towards more sustainable energy alternatives (Asaleye et al, 2021;Daniel, 2015;Elias et al, 2017). Despite being one of Africa's top oil-producing nations, Nigeria's continued dependence on fossil fuels exposes the economy to risks stemming from volatile global oil prices and growing environmental concerns over emissions and climate change (Skordoulis et al, 2018).…”

Effects of Interest Rate Structure and Energy Prices on Manufacturing Output in Nigeria

“…The output of the Nigerian manufacturing sector is currently on an increasing trajectory. With average growth of 10.07% in the last twenty years [1], the sector appears to be experiencing long-term booms, having recorded downward pressures for most of the last two decades of the nineteenth century. However, there was a downturn in the Nigerian manufacturing sector in the periods 2008-2009 and 2015-2017.…”

“…However, there was a downturn in the Nigerian manufacturing sector in the periods 2008-2009 and 2015-2017. The former period was associated with the spillover effects of the global financial crash [1], while the latter was connected with the contagious consequence of fall in oil prices [2]. Figure 1 contains these stylized facts.…”

“…According to [4], a country's optimal use of its factor endowment and minimal dependence on manufactured import depends on how well it prioritises its manufacturing sector. Accordingly, the Nigerian government has engaged in concerted efforts towards augmentation and sustenance of productivity of the manufacturing sector [1]. Nevertheless, empirical evidences are not robust enough to credit the governments' efforts [2].…”

Electricity Supply and Manufacturing Sector Output in Nigeria

“…The epileptic electricity supply and its impact on manufacturing sector output in Nigeria have attracted considerable research, albeit with different conclusions. Some studies have shown that the relationship is positive and significant (Akinbola, Zekeri, & Idowu, 2017;Ekene & Mbobo, 2019;Ibrahim, Mukhtar, & Gani, 2017;Onwe & King, 2020;Ugwoke, Dike, & Elekwa, 2016) some revealed that it is positive and insignificant (Agbede & Onuoha, 2020;Chinedum & Nnadi, 2016;Kassim & Isik, 2020) and others showed that the relationship is negative (Asaleye, Lawal, Inegbedion, & Omowumi, 2021;Lawal & Owoicho, 2021). Against this backdrop, this study contributed to the existing debate by investigating the impact of electricity supply on manufacturing sector output in Nigeria.…”