ELECTRICITY INFRASTRUCTURE FINANCING AND INCOME INEQUALITY IN NIGERIA

Abstract This study investigated the impact of electricity infrastructure financing on income inequality in Nigeria. The autoregressive distributed lag (ARDL) model was applied to annual data spanning from 1990 to 2024. Further, the study extended this investigation by disaggregating electricity infrastructure financing into government capital investment in electricity and government recurrent electricity expenditure, controlling for the role of governance effectiveness. The study applied the unit root test to examine the stationary of the variables. The study also found evidence for long-run relationship among electricity infrastructure financing and income inequality by applying the bounds test. The findings of the study from the long run results indicate that government capital electricity expenditure has negative significant impact on income inequality in Nigeria. In addition, the study found evidence of negative and significant impact of government recurrent electricity expenditure on income inequality in the long run while the government effectiveness had a negative but insignificant impact on income inequality. In the short run dynamic, government capital expenditure had a negative and insignificant impact on income inequality in Nigeria. The study concluded that long-term public investment and operational financing for the electricity sector has a significant effect in addressing income inequality in Nigeria, and targeted power sector spending is an important instrument for economic inclusion. The study recommended that among others that the federal government should increase significantly its annual budgetary allocation for capital investment in the power sector (generation, transmission and distribution) and ensure that funds are timely disbursed to provide access, particularly in low-income and rural communities. Keywords: Government Capital Electricity Expenditure, Government Recurrent Electricity Expenditure, Governance Effectiveness, Income Inequality