Can Electricity Consumption Be Useful in Predicting Nigerian Economic Growth? Evidence from Error Correction Model

Abstract

This paper investigates Granger causality between electricity consumption and Nigerian real GDP, using Vector Error Correction (VEC) Granger Causality/Block Exogeneity Wald Test. The empirical result supports long run bidirectional relationship, which means that electricity consumption predicts economic growth and vice versa in the country, though causality from electricity consumption to economic growth is stronger. This finding is evidence in support of the country's electricity deregulation and reform programme, which is a core component of various projects towards the realisation of Transformation Agenda (TA) and Vision 20: 2020, in which Nigeria aims to become one of the 20 largest economies by the year 2020.