Volume 2 Issue 4 | 2025 | View PDF
Paper Id:IJMSM-V2I4P132
doi: 10.71141/30485037/V2I4P132

Effect of Energy Consumption on Economic Growth: Lessons from Nigeria

Monday A. Gbanador, Obinna Okeke

Citation:
Monday A. Gbanador, Obinna Okeke, "Effect of Energy Consumption on Economic Growth: Lessons from Nigeria" International Journal of Multidisciplinary on Science and Management, Vol. 2, No. 4, pp. 309-318, 2025.

Abstract:
This study investigates the effect of energy consumption on economic growth in Nigeria over the period 1990–2022 using annual time series data. The Augmented Dickey-Fuller (ADF) and Phillips-Perron unit root tests were employed to examine the stationarity properties of the variables, while the Autoregressive Distributed Lag (ARDL) model was used for estimation. Model robustness was confirmed through post-estimation diagnostic tests, including the correlogram of squared residuals, Breusch-Pagan-Godfrey heteroskedasticity test, histogram normality test, and CUSUM stability test. The ARDL estimates reveal a negative but statistically insignificant relationship between fossil fuel energy consumption (FOFEC) and Gross domestic product growth rate (GDPGR), while GDP per unit of energy use (GPUEU) exhibits a positive yet insignificant effect on GDPGR. Similarly, Renewable energy consumption (REECC) shows a positive, though statistically insignificant, impact on GDPGR. Based on these findings, the study recommends that the government should gradually reduce reliance on fossil fuels by diversifying the energy mix and investing more in greener energy alternative.

Keywords: Economic Growth, energy consumption, energy finance, fossil fuels, non-renewable energy, Renewable energy.

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