NEXUS BETWEEN ELECTRICITY GENERATION AND SUPPLY ON ECONOMIC

GROWTH IN NIGERIA

BY
1
C.O ARONU; 2C. A. UDECHUKWU; 3C.N OKOLI; AND 4J.O IKEZUE
1,2,3 FACULTY OF PHYSICAL SCIENCES
DEPARTMENT OF STATISTICS
CHUKWUEMEKA ODUMEGWU OJUKWU UNIVERSITY ULI,
ANAMBRA STATE
EMAIL: amaro4baya@yahoo.com

PHONE NO: +2348064065

&
+2348138979702
udeanthony5@gmail.com
4 FEDERAL SCHOOL OF STATISTICS
BUSINESS ADMINISTRATION DEPARTMENT (BAM)
PHONE NO: +2348037177081
 ABSTRACT
The study examine the nexus between electricity Generation and supply on economic growth in Nigeria. This study was
undertaken majorly to examine the impact of power generation on the economy of Nigeria between 2007 to 2015.
Specific objectives of the study are: To determine the impact of total energy generated on economic growth in Nigeria
and to ascertain whether total energy supplied has significant impact on economic growth in NigeriaSimple linear
regression was employed in testing for the existence of the hypothesis. The findings of the study show that total energy
generated has no significant impact on economic growth in Nigeria. This implies that the total energy generated does not
explain the behaviour or the variation existing on economic growth in Nigeria. Hence the model obtained was found to
be inadequate in explaining economic growth in Nigeria which implies that total energy generated in Nigeria does not
contribute to the economic growth in Nigeria .The findings of this study also show that total energy supplied has no
significant impact on economic growth in Nigeria. It was found that total energy supplied explains about 24.9% of total
variation on level of economic growth in Nigeria. This implies that total energy supplied does not contribute to
economic growth in Nigeria. Even though the study revealed an insignificant impact of total energy generated and
supply on economic growth in Nigeria, there is yet serious need for the government to create favourable policy for
investors who may wish to invest in the area of power generation and supply in Nigeria with the sole aim of boosting the
economic growth in Nigeria.
 INTRODUCTION

Electricity is pivotal to the economic development of nations. Its use is directly correlated with healthy economic

growth. Nigeria is one of the most populated countries in Africa but only about 40% of the people are connected

to the energy grid. The people who actually have power experience difficulties around 60% of the time Anaekwe,

E. N. (2010). These blackouts that is occasioned by poor power generation has crippled the industrial sector. For

example outages in this area of the world also have implications for the mining industry. When power fails,

workers may be trapped in the mines, so as soon as there is a risk of failure the operations are such down, which

leads to economic difficulties (Kaseke & Hosking, 2013). Poor power generation also causes problems for

agriculture. Most irrigation lines are run by electricity, so when the power is cut out then the crop yield decreases ,

and thereby leading to low production in food stuff .Nigerias energy grid is arguably in crisis due to lack of

development. The key to making a more reliable energy sector is to find and use renewable energy resources,

rather than simply relying on the countrys non-renewable resources for power generation. The crisis of power

generation is a complex problem stemming from a variety of issues. This study will cover the Nexus between

Electricity Generation and Supply on Economic Growth in Nigeria between 2007 and 2015.
In Nigeria, the shortfall of electricity leads to the overuse of generators for energy.
It is estimated that about 30% of power generated is produced in this manner (US
Energy Administration, 2013). Currently the only plan the government has in place
to help solve the power generation crisis is to expand the fossil fuel burning sector
(Annual Energy Outlook , 2013). It is rich in natural resources, which should and
does create billions of dollars of revenue; the production of the oil is not shared
with the rest of the country. About 70% of people in Nigeria live below the poverty
line and the unemployment rate is 21%. Alternative forms of power generation are
not used probably because of availability of oil in Nigeria, as it has the worlds
seventh largest oil reserves.
 RESEARCH METHODOLOGY
METHOD OF DATA ANALYSIS
REGRESSION ANALYSIS
Most of scientific studies are directed toward discovering the form of relationships between
variables, and predicting the values of a variable from some functional relationship is one of the
most important areas of applied statistics. Regression analysisis is a statistical tool which helps to
predict one variable from the other variable or variables (Oyeka,1996).
THE SIMPLE REGRESSION MODEL
A regression model may be simple or multiple, and linear or non- linear. It is simple if there is only
one independent variable and multiple if there is more than one independent variable in the model. A
regression model is linear if its parameters do not contain any exponents and are not multiples of other
parameters in the model, otherwise the model is said to be non-linear. The simple linear regression
model is given as: (2.1)

Where n is the number of observations on both X and Y and Yi is the ith

observation on X. Xi is a known constant representing the ith observation on X, i
is an independently and normally distributed random error term with mean 0 and
constant variance 2.
o and 1 are the parameters known as the theoretical intercept and slope
respectively
METHOD OF LEAST SQUARES
One of the methods usually employed to obtain the desired line of fit is known as the method of least
squares, and the line obtained is called the least square line. For each sample, observation (X i, Yi), the

method of least squares considers the deviation of each Xi from its expected values.
Where,
 DATA PRESENTATION AND ANALYSIS
DATA PRESENTATION
Table 1:Table showing distribution of Total Energy Generation (MWh), Total Energy sent
out (MWh) and RGDP from 2007-2015

Year Total energy Generated (MWh) Total Energy supply MWh RGDP

2007 22519330.5 21546192.2 634.3

2008 18058894.9 17545382.5 672.2

2009 18904588.9 18342034.7 716.9

2010 24556331.5 23939898.9 775.3

2011 27521772.5 26766992.00 884

2012 29240239.2 28699300.8 888.9

2013 29537539.4 28837199.8 950.1

2014 29697360.1 29013501.0 955.2

2015 34647104.8 31981771.4 536675.07

Total 234, 683, 161.8 226672273.1 54 3149.97

Source: (NBS) 2015 and (NERC)2015

THE REGRESSION ANALYSIS FOR ACCESSING THE IMPACT OF TOTAL
ENERGY GENERATED ON THE ECONOMIC GROWTH IN NIGERIA
Table 2: Result of regression analysis for estimating RGDP with respect to
TEG

Dependent variable- RGDP

Method- Least square

Sample-2007-2015

Included observation-9
0 1TEG
Model: RGDP=

0 Coeficient Std Error t-Statistic Prob.

1 -436349.775 264870.972
-1.647 0.143

0.019 0.010 1.912 0.097

R-squared 0.343

Adj R-squared 0.249

S.e regression 0.586

Sum squ.Resid 167684781837.678

F-statistic 3.655
 Table 3: The Descriptive Result Of RGDP And TEG

Mean Std. Deviation N

RGDP 60350.2189 178621.85841 9

TEG 26075906.8667 5492328.86482 9
THE REGRESSION ANALYSIS FOR ACCESSING THE IMPACT OF TOTAL ENERGY SENT
OUT ON THE ECONOMIC GROWTH IN NIGERIA
.
Table 4: Result of regression analysis for estimating RGDP with respect to TES

Dependent variable- RGDP

Method- Least square

Sample-2007-2015

Included observation-9
0 1TEG
Model: RGDP=

0 Coeficient Std Error t-Statistic Prob.

1
-378906.710 293485.585 -1.291 0.238

0.017 0.011 1.524 0.171

R-squared 0.249

Adj R-squared .142

S.e regression 165471.32364

Sum squ.Resid 191665312626.681

F-statistic 2.322

Prob(F-stat) 0.171
 Figure 1: Graph of the distribution of RGDP, TES

40000000

35000000

30000000

25000000

20000000

15000000

10000000

5000000

0
1 2 3 4 5 6 7 8 9
RGDP Total energy Generated (MWh)
Table 5: The Descriptive Result Of RGDP And TES
 Figure 2: Graph of the distribution of RGDP, TES

35000000

30000000

25000000

20000000

Total Energy sent out MWh

RGDP
15000000

10000000

5000000

0
1 2 3 4 5 6 7 8 9
 HYPOTHESIS

Ho: there is no significant linear relationship between Total energy

generated and Economic growth in Nigeria between the years under

study.

Hi: there exist significant relationship between Total energy generated

and economic growth in Nigeria.

Ho: there is no significant linear relationship between total energy sent

out and Economic growth in Nigeria between the years under study.

Hi: there exist significant relationship between total energy sent out

and economic growth in Nigeria

 DISCUSSION OF RESULTS
The result of the analysis displayed in table 2 found an F-value of 3.655 and a p-value of 0.097 which
falls on the acceptance region of the hypothesis assuming 95% confidence level (since p-value=0.097 is
greater than =0.05).the result also found a t-value of 1.912 and a corresponding p-value of 0.097 which
falls on the acceptance region of the Hypothesis assuming 95% confidence level. Also, R-square value of
0.343(34.3%) was equally obtained from the analysis which implies that the independence variable TEG
was able to explain 34.3% of total variation in RGDP. This result implies a weak adequacy of the model
obtained in estimating RGDP.
From the descriptive result it is found that the average energy generated is 26075906.8667 and the
average real gross domestic product is 60350.2189 with standard deviation of 178621.85841 and
5492328.86482 respectively.
The graph of the RGDP and TEG show that there was a sharp decrease and increase in the year 2008 and
2015 respectively for TEG. While there exist an increase in the year 2015 for the RGDP.
The result of the analysis displayed in table 4 found an F-value of 2.322and a p-value of 0.171 which falls on the
acceptance region of the hypothesis assuming 95% confidence level (since p-value=0.171 is greater than =0.05).the result
also found a t-value of 1.524 and a corresponding p-value of 0.171which falls on the acceptance region of the Hypothesis
assuming 95% confidence level. Also , R-square value of 0.249 (24.9%) which was equally obtained from the analysis
which implies that the independence variable TES was able to explain 24.9% of total variation in RGDP. This result
implies a weak adequacy of the model obtained in estimating RGDP.
From the descriptive result it was found that the average energy generated was 25185808.1444 and the average real gross
domestic product is 60350.2189 with standard deviation of 178621.85841and 5111582.63494 respectively.
The graph of RGDP and TES show that there was a decrease and increase in the year 2008 and 2015 respectively for TES
While there exist an increase in the year 2015 for the RGDP.
 CONCLUSION
The study examined the contribution of total energy generated and total energy supplied on economic
growth in Nigeria. The findings of the study revealed that total energy generated and total energy
supplied does not significantly contribute to economic growth in Nigeria. This result validates the cry of
the Nigerian masses on the sorry state of energy generated and supplied to consumers in Nigeria
regardless of the reforms and privatization of the industry.
It is obvious that that the privatization of the electricity sector does not impact on the economic growth in
Nigeria within the period under study. Findings showed that the electricity generation in the country has
quite been on the increase over the years under study but the high demand of power supply and increase
in the population with in the country could be a key factor to the non performance of the sector on the
economy.
The findings of the study show that total energy generated and sent out have no significant impact on
economic growth in Nigeria. This implies that they do not explain the behavior or the variation existing
on economic growth in Nigeria. Hence the model obtained was found to be inadequate in explaining
economic growth in Nigeria. This implies that total energy generated and sent out does not contribute to
economic growth in Nigeria.
 REFERENCES

Anaekwe,E.N.(2010).InvestmentOpportunityinNigeria.Retrievedfromwww.
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Kaseke, N., & Hosking, S. (2013). Sub-Saharan Africa Electricity Supply

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Okoli,C.N, Aronu,C.O, Nwosu, C.A, Osuji,G.A, Ugwu,D.N, Ekezie, C.K (2015).

Modern Statistical Methods And Applications For Science And Engineering With
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Onyeka C. A (1996).Introduction To Applied Statistical Methods.

Modern Printers (NIG.). 37 Abakaliki Road Emene Enugu.

Annual Energy Outlook 2013 - US Energy Information Administration

https://www.eia.gov/outlooks/aeo/pdf/0383(2013).pdfDec 23, 2011 - The Annual
Energy Outlook 2013 (AEO2013) was prepared by the U.S. ...Administrator of
Energy Analysis; Paul D. Holtberg (paul.holtberg@.