Economic Consequences of Electricity Crisis on Manufacturing Output in Nigeria

Abstract

This study focused on economic consequences of electricity crisis on manufacturing productivity in Nigeria The National Bureau of Statistics and the CBN statistics bulletin were utilized to provide aggregate time series data for the years 1986 to 2021. Using the Johansen co-integration and error correction mechanism method, the data was examined. Johansen co-integration analysis showed that there is a long-term relationship between electricity crisis variables such as Electricity Distribution Loss, Cost of Maintaining Alternative Source of Electricity, Capacity Utilization, Government Expenditure on Electricity and Exchange Rate while short-term results from the Error Correction Model showed that electricity crisis has a significant negative impact on economic growth. In accordance with the findings the following recommendations were made; government should show serious commitment and spend sufficiently but honestly on electricity sub-sector for its regular and efficient distribution to ensure periodic replacement of worn out and damaged equipment in order to reduce electricity loss especially to manufacturing sector in Nigeria. Government must ensure adequate investment on related capital projects, ensure maximal capacity utilization. policy on energy should guarantee that electricity creates less negative effects on manufacturing performance.

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