Energy Consumption, Inflation and Poverty in Nigeria
Abstract
Nigeria's abundant energy resources are a significant asset; nonetheless, the nation continues to face widespread poverty, persistent inflation, and insufficient energy access. These issues have hindered economic progress and development. This research explores the complex link between energy use, inflation, and poverty in Nigeria from 1986 to 2024. Using the Autoregressive Distributed Lag bounds testing approach and the Augmented Dickey-Fuller unit root test with structural breaks, the study examined variables that were either integrated of order one, I(1), or integrated of order zero, I(0). The results showed a long-term relationship, or co- integration, between energy consumption, inflation, and poverty. The findings showed that both energy consumption and economic growth greatly decrease poverty. Additionally, inflation has a considerable negative effect on poverty in Nigeria. Furthermore, the error correction model found that 54 percent of the disequilibrium is adjusted each year. These results suggest that reducing poverty in Nigeria needs a comprehensive policy approach. This approach should focus on improving access to electricity, controlling inflation, and encouraging economic development that benefits everyone. Consequently, this research suggests that government should allocate resources to renewable energy infrastructure, thereby broadening rural energy access to stimulate productivity and alleviate poverty. Furthermore, government fiscal policy should priorities the advancement of agriculture, manufacturing, and small enterprises to foster inclusive, job-generating economic expansion. Simultaneously, coordinated monetary and fiscal policies are essential to stabilize inflation, while implementing social safety nets to safeguard the vulnerable population.
Keywords
Energy ConsumptionPovertyInflationARDLEconomic Development
References
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