Pathway to a Sustainable Energy Economy: Determinants of Electricity Infrastructure in Nigeria

Abstract

This study examines the link between energy (using electricity generation as a proxy) and sustainable economic growth alongside the mediating role of salient socio-political factors, such as education, life expectancy, government effectiveness, and governance structure, among others, based on data about the Nigerian economy from 1980 to 2022. We employed a battery of econometric techniques, ranging from unit root tests to autoregressive distributed lag bound tests for cointegration and a modified version of the Granger causality test proposed by Dumitrescu and Hurlin. We also employed general-to-specific estimation techniques to examine the possibility of substituting renewable and non-renewable energy sources. Our results suggest a bi-directional Granger causality between electricity generation and sustainable economic growth. This supports the validity of the feedback hypothesis, suggesting that electricity and sustainable economic growth are interdependent. Our results further revealed that socio-political factors significantly impact electricity generation. The results of our general-to-specific estimation techniques suggest that no possibility of substitution exists between the two main energy sources in Nigeria. This has some key policy implications.