Energy Consumption And Nigeria's Economic Development

Abstract

This study examines the impact of energy consumption on economic development in Nigeria from 1986 to 2024, a period marked by significant energy sector reforms and persistent developmental challenges. Against the backdrop of Nigeria's paradoxical position as an energy-rich nation plagued by underdevelopment, the research investigates the distinct effects of key energy variables—electricity generation, per capita energy consumption, oil revenue, and total energy consumption—on the Human Development Index (HDI). Employing an ex-post facto research design and utilizing secondary time-series data, the study applied the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration and error correction modeling. The empirical findings reveal a complex and dysfunctional energy-development nexus: oil revenue exhibits a significant negative long-run relationship with HDI, providing strong evidence for the resource curse phenomenon. Similarly, per capita energy consumption shows a counterintuitive negative impact, indicating severe distributional inefficiencies. While total energy consumption demonstrates a positive and significant relationship with HDI, affirming its role as a driver of aggregate economic activity, electricity generation is found to have an insignificant long-run impact, starkly highlighting the critical failure of power sector infrastructure. The study concludes that Nigeria's energy sector is characterized by a triple paradox, where resource wealth undermines development, average energy access does not translate to well-being, and increased power generation fails to impact human development outcomes. It therefore recommends comprehensive policy reforms focused on oil revenue governance, equitable energy access, support for industrial energy demand, and a holistic overhaul of the electricity value chain to realign the energy sector with sustainable human development goals