Dynamics of the Energy Sector and Performance of the Manufacturing Sector in Nigeria
Keywords:
Energy Dynamics, Manufacturing Sector, Electricity Power Supply, Industrial Output, Energy EfficiencyAbstract
This study examines the influence of energy sector dynamics on the performance of Nigeria’s manufacturing sector, with specific focus on the Food, Beverage, and Tobacco (FBT), Cement, and Textile, Apparel, and Leather (TAL) industries over the period 1990–2024. Annual time-series data were sourced from the Central Bank of Nigeria Statistical Bulletin (2024). The study employs normalised cointegration analysis to estimate long-run relationships and an Error Correction Mechanism (ECM) to capture short-run dynamics and speed of adjustment. The empirical findings reveal that energy variables exert heterogeneous effects across subsectors and over time. Electric Power Supply (EPS) promotes long-run growth in the FBT sector but constrains long-term performance in the Cement and TAL industries. Renewable Energy (RENE) demonstrates a negative long-run effect on FBT and Cement output, while exerting a positive and significant influence on TAL performance. Oil Prices (OIP) consistently exhibit a strong positive impact across all sectors, suggesting the continued relevance of oil-linked economic channels in Nigeria’s industrial structure. Exchange Rate (EXR) fluctuations generate mixed and sometimes theoretically inconsistent outcomes, reflecting structural rigidities and import dependence within the manufacturing sector. Overall, the study concludes that energy sector dynamics significantly shape manufacturing performance in Nigeria. It recommends the adoption of targeted sector-specific energy policies, sustained investment in electricity infrastructure, strategic integration of renewable energy into industrial production, and strengthened macroeconomic stability to enhance long-term industrial productivity and structural transformation.
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