Modelling Household Electricity Consumption and Living Standard in Nigeria

Abstract

Poor standard of living has remained a source of concern in Nigeria despite enormous resources available to the nation. Concerted efforts have been made through intensive power sector reforms and huge budgetary allocations to the sector, yet the performance of the power sector towards improving the standard of living of the Nigerian households has remained a source of doubt. This study investigated the impact of household electricity consumption on the standard of living in Nigeria over the period 1981 – 2018. The study employed the ARDL bound cointegration test to determine the existence of a longrun relation between the standard of living and the chosen explanatory variables, while the Pairwise Granger was used to establish the direction of causality between the household electricity consumption and standard of living. The results show that household electricity consumption is a significant contributor to an improved standard of living in Nigeria and that a feedback causality flows between the household electricity consumption and standard of living in Nigeria. Based on these findings, the study recommends among other things that the government should improve the level of electricity supply especially for the residential consumption by investing more on infrastructural development via the installation of more transformers that will facilitate electricity distribution across the country.