Impact of Energy Use on the Agriculture Sector in Nigeria

This study investigates the impact of energy use on the agriculture sector in Nigeria using time series data from the World Bank, International Energy Agency (IEA) and Organisation of Economic Cooperation and Development (OECD) National Data Accounts. The findings showed that fossil fuel energy use has a negative and significant effect on agriculture value added in both the short and long run. This finding indicates that the use of fossil fuels as an energy source has a negative implication on agricultural output and its share of the GDP. The results further showed that renewable energy use affected agriculture value-added positively in both the short and long run. The short-term positive effect of renewable energy use on agriculture value added is significant at the 5% level, indicating that the transition to renewable energy creates an opportunity for increased agriculture output growth. In addition, the results showed that alternative energy use has a positive and significant effect on the agriculture value added. The finding suggests that the share of agriculture output to GDP increases following an increase in access to alternative energy. The results further showed that total electricity use has no significant effect on agriculture value added in the short and long run. This finding could be attributed to the poor and unstable electricity supply, which undermines the intended and desired significant contribution of electricity utilisation to the agriculture sector in Nigeria. The error correction coefficient (-0.4826) is negative and significant at the 5% level, indicating that convergence to the long run equilibrium is achieved at the speed of 48.26%. Given the findings, this study recommends that policymakers should reduce fossil fuel dependency as a source of energy by diversifying energy sources to create more opportunities for firms in the real sector to boost their output and value addition to GDP.