ELECTRICITY CONSUMPTION AND MANUFACTURING SECTOR OUTPUT IN NIGERIA: AN ARDL APPROACH

Different factors have been adduced for Nigeria’s poor manufacturing sector performance. One of the problems could be the economy’s persistent poor electricity supply to the manufacturing sector over time. Therefore, this study examined the effect of electricity on the growth of manufacturing sector in Nigeria from 1981 to 2022. It employed the Auto Regressive Distributed Lag (ARDL) bounds testing approach to co-integration analysis to establish the long run relationship between the relevant time series data. The result revealed that manufacturing sector output and selected variables of manufacturing sector electricity consumption, electricity generation, electricity price proxied by consumer price index, carbon emission, exchange rate, and commercial bank credit to the manufacturing sector included in the models have a long run relationship with manufacturing sector output performance. It also showed that manufacturing sector electricity consumption, electricity generation and cost of electricity have inverse and significant effect on the growth of Nigeria manufacturing sector while commercial bank credit to the manufacturing sector has direct and significant effect on the growth of Nigeria manufacturing sector. The study recommended that more electric power supply should be generated by Electricity Generation Company to take care of electric power demand by the manufacturing sector and the regulatory bodies in the energy sector should set some energy capacity distribution standards with regards to energy preference to key sectors of the economy such as manufacturing sector.