Energy, Industrial Development and Economic Growth in Nigeria
Abstract
Nigeria, Africa’s largest economy is characterized by underutilized industrial potential and a chronic energy deficit, which together impede sustainable economic growth. Industrial output contributing less than 15 per cent of GDP and electricity access at 55 per cent of the population in 2022 (World Bank), the industrial sector struggles to perform optimally. Energy consumption, a key input for industrial production, grew at an average annual rate of 5.2 per cent from 1990 – 2023, yet it remains insufficient to meet the consumption. The motivation lies in addressing this energy–industrial growth disconnects to achieve economic diversification and development. The research is to investigate the impact of energy and industrialization on the Nigeria economy and analysis the bidirectional relationships between energy, industrial development and economic growth. The research covered the period between 1990 – 2023, which encompassing over three decades of economic, industrial, and energy sector transformation. The study uses the method of regression analysis with ordinary least squares (OLS) econometric techniques and a time series secondary data from 1990-2023 to examine the impact of Energy and Industrial development on economic growth. The data was first examined for unit roots using the Augmented Dickey Fuller (ADF) test. A co- integration regression was then used to examine the long run relationship among the variables. The result shows that, industrial Investment and Foreign Direct Investment were statistical significance but Energy Consumption Utilization and Industrial Output failed in the apriori expectations but were statistically significance at 5 per cent level. The study recommendations that, government should expand energy access to increase investment in renewable energy to bridge the energy deficits; introduce incentives for industries to adopt energy efficient technology, promote industrial hup to foster productivity and resource sharing. Lastly, encourage non-oil industrial activities for sustainable economic growth and diversification.
