THE IMPACT OF
ELECTRICITY GENERATION AND SUPPLY ON ECONOMIC GROWTH
TABLE OF CONTENT
Cover page
Title page
Approval page
Dedication
Abstract
Acknowledgment
Table of content
CHAPTER ONE
1.0 Introduction
1.1 Background
of the research
1.2 Statement
of research problem
1.3 Objectives
of the study
1.4 Scope of
the study
1.5 Research
question
1.6 Limitation
of the study
1.7 Definition
of terms
Reference
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
2.1 Source of
literature
2.2 Review of
concept
2.3 Review of
related work
2.4 Empirical
studies
2.5 Summary
of review
Reference
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research
method
3.2 Fact
finding method
3.2 Sources
of Data
3.3 Population
of the study
3.4 Sample
and Sampling
3.5 Research
Instrument
3.6 Method of
Investigation
3.7 Method of
Data Analysis
CHAPTER FOUR
Data presentation and analysis
4.1 Data presentation and Analysis
4.2 Discussion
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
5.2 Conclusion
5.3 Recommendation
References
Bibliography
CHAPTER ONE
1.0 INTRODUCTION
With
the collapse of the World Bank and International Monetary Fund policy’s on
Structural Adjustment Programme (SAP) in Africa, many questions have been
raised by scholars on the factors impeding economic development in leading
African nations including Nigeria (Jega, 2003). They argued that economic
liberalization in other parts of the world have continued to yield anticipated
results, increasing global trade and technological advancements such that by
the end of the 21st century some emergent economies have appeared on the global
capitalist markets. It is no gainsaying the fact that the likes of Indonesia,
China, Japan and Malaysia are now making new waves in the global markets. While
this thinking continues about global capitalist development, researches conducted
by the United Nations and the World Bank has shown that Nigeria’s economic
development is routinely constrained by some inherent cultural factors (NISER,
2000).
Although Nigeria is rich in human and material
resources, its economic and political developments have been fraught with
crises since independence in 1960. Indices of the failure of the Nigerian state
are today evident in the pervasive cases of hunger, inflation, budget deficits,
debt overhang, street begging, prostitution, frauds, high crime rates in major
cities, collapse of manufacturing industries, corruption in public service,
stagnation in entrepreneurial development and epileptic power supply (Fadeyi
and Adisa, 2012). In the face of these crises it becomes difficult for
sustainable development to take place in the country (NISER, 2000 and UNDP,
2006). Our interest in this paper is not all the problems measured, but the
huge expenditure injected annually into the power sector and its attendant
impact on the Nigerian economy.
Nigeria’s power sector had operated for several
decades as a state monopoly then called National Electric Power Authority
(NEPA) until 2005. NEPA controls electricity generation, transmission and
distribution facilities with all the profound problems inherent in public
monopoly. This over centralization made it impossible for electricity supply to
keep pace with the growth in population and economic activities. Nigeria has
the biggest gap in the world between electricity demand and supply, providing
its population of over 160 million with less than 4000 megawatts of
electricity. In contrast, South Africa with a population of less than 50
million people generates more than 40,000 megawatts while Brazil, an emerging
economy like Nigeria, generates over 100,000 megawatts for its 201 million
citizens (FG, 2013). Indeed, the gap in the power sector has far reaching
implications for improving the business climate, sustaining economic growth and
the social wellbeing of Nigerians. About 45 percent of the population has
access to electricity, with only about 30 percent of their demand for power
being met. The power sector is plagued by recurrent outages to the extent that
some 90 percent of industrial customers and a significant number of residential
and other non-residential customers provide their own power at a huge cost to
themselves and to the Nigerian economy. Installed capacity is 8,000 megawatts,
but only 4,000 megawatts is operable of which about 1,500 megawatts is
available to generate electricity. At 125 kWh per capita, electricity
consumption in Nigeria is one of the lowest in the world (AfDB, 2009).
1.1 BACKGROUND OF THE RESEARCH
Energy
is widely regarded as a propelling force behind any economic activity and
indeed industrial production. Therefore, high grade energy resources
willamplifytheimpact of technology and create tremendous economic growth. High
grade resources can act as facilitator of technology while low grade resources can
dampen the forcefulness of new technology. Ojinnaka (1998) argued that the
consumption of energy tracks with the national product. Hence, the scale of
energy consumption per capita is an important indicator of economic
modernization. In general countries that have higher per capita energy
consumption are more developed than those with low level of consumption.
The importance of energy lies in other aspect of
development – increase in foreign earnings when energy products are exported,
transfer of technology in the process of exploration, production and marketing;
increase in employment in energy industries; improvement of workers welfare
through increase in worker’s salary and wages, improvement in infrastructure
and socio-economic activities in the process of energy resource exploitation.
Thus in the quest for optimal development and efficient management of available
energy resources, equitably allocationand efficient utilizationcan put the
economy on the part of sustainable growth and development. Arising from this
argument, adequate supply of energy thus becomes central to the radical
transformation of the nation’s economy.
In Nigeria, energy serves as the pillar of wealth
creation evident by being the nucleus of operations and engine of growth for
all sectors of the economy. The output of the energy sector (electricity and
the petroleum products) usually consolidate the activities of the other sectors
which provide essential services to direct the production activities in
agriculture, manufacturing, mining, commerce etc. Nigeria is endowed with
abundant energy resources but suffers from perennial energy crisis which has
defied solution. The co-existence of vast wealth in natural resources and
extreme personal poverty referred to as the “resource curse” or ‘Dutch disease’
(Auty,1993) afflicts Nigeria. The size of the economy marked by the Gross
National Income per capita is put at $1,190 and ranked 162 out of 213 countries
in the world development index in 2009 (The World Bank, 2011). On economic
growth, the GDP per capita of Nigeria expanded by 132 percent between
independence in 1960 and 1969, and rose to a peak growth of 283 percent between
1970 and 1979. The severity of this malaise led to the restructuring of the
economyin 1986. In the period 1988-1997 which constitutes the period of
structural economic adjustment and liberalization, the GDP responded to
economic adjustment policies and grew at a positive rate of 4 percent. In 2006,
the real GDP growth rate was 7 percent. The economy when measured by the real
GDP, grew by 7.87% in 2010. (National Bureau of Statistics-NBS, 2010 and
Central Bank of Nigeria – CBN, 2010).
The average power per capita (in watts)in USA,
Japan,South Africa, China, Indiaand Nigeria were 1,363, 774, 496, 397, 85, and
12 respectively. These roughly correlate with the GDP per capita of the
countries in 2008 (The World fact book, 2008). Ironically, while Nigerian
energy resources, particularly oil, are exported to other countries; itspeople
and economy suffer from severe shortages of the same product. This is
manifested by the epileptic supply of electricity and perennialshortage of most
petroleum products.
The survey of literature shows that most empirical
studies focus on either testing the role of energy in stimulating economic growth
or examining the direction of causality between these two variables. Although
the positive role of energy infrastructure on economic growth has become a
stylized fact, there are some methodological reservations about the results
from these empirical studies. Some authors have used the autoregressive
distributed lags bounds test, two-regime threshold co-integration models, panel
data approach and multivariate models. A general observation from these studies
is that the literature produced conflicting results and there is no consensus
on the existence and direction of causality between energy consumption and
economic growth. This paper focuses on the causality between GDP and total
energy consumption on one part and each of the basic sub-components of energy
consumption in Nigeria with a view to finding out if different sources of
energy have varying impact on economic growth.
1.2 STATEMENT OF RESEARCH PROBLEM
The
Nigerian government spend so much, spend high cost of money on the electricity
generation and power supply in Nigeria, allocation made to it is relatively
equal to the allocation of education which means that much money is put in to
electricity. Therefore, this research work will explore, to find out if there
is any significance importance to the growth of the economy of Nigeria.
The epileptic nature of electricity has led to
scarcity of petrol and kerosene because the citizens have resulted to using generators
and kerosene powered equipment to provide energy for use at homes. Also, import
content of our domestic fuel usage has grown over the years to about 75%
(International Energy Agency, 2012).This has resulted in the use and
overdependence on fuel-wood which has led to deforestation and attendant
degradation of the environment and worsening desertification (Babanyara&
Saleh, 2010).
1.3 OBJECTIVES OF THE STUDY
The
objective of this research work thus is to investigate whether annual
government huge expenditure on the power sector actually worth it by measuring
the impact of power supply on key indice of growth in Nigeria. Consequently,
the sequence of the research is clear. Following the introduction, section two
contains brief review of related literature. In section three, the method of
study is unveil. Whilst section four presents and analyses result of findings,
section five concludes the research work with brief policy remark.
1.4 SCOPE OF THE STUDY
This
research work covers a limited area or concentration which is on the
electricity generation and supply to the nation. This study access the economic
growth as impacted by the power generated by the power supply– NNPA.
1.5 RESEARCH QUESTION
The
research questions will be tailored towards the purpose of the study such that
if they are answered, one will clearly realize why model architecture is
necessary in the management of staff promotion and remuneration. The questions
are the following:
1.
What is the government expenditure on
electricity generation per anume?
2.
What are the problems facing the electricity
generation in Nigeria?
3.
What possible effects can be made to increase
or boost the electricity supply off the country so as boost the country economy
too?
1.6 LIMITATION OF THE STUDY
During the course of
performing/researching this project work, the researcher encountered a lot of
challenges as well as opposition which ranges from financial constraints, time
factor. this factors in their own ways, slowed down the speedy progress of this
work that resulted to the researcher not being able to finish the research work
on time as is required
Also, within
the area of study the researcher was faced with some other forms of constrains
that contributed to the limitation of this researcher work, like accessibility
to data, information and facts concerning the present study due to some reasons
or the other, some not willing to give out information that it is to be within
the workers.
1.7 DEFINITION OF TERMS
Electricity: is the set of physical phenomena
associated with the presence and flow of electric charge. Electricity gives a
wide variety of well-known effects, such as lightning, static electricity,
electromagnetic induction and electric current.
Economic growth: is the increase in the
inflation-adjusted market value of the goods and services produced by an
economy over time. It is conventionally measured as the percent rate of
increase in real gross domestic product, or real GDP.
GDP: the gross domestic product (GDP) is one of the
primary indicators used to gauge the health of a country’s economy. It
represents the total dollar value of all goods and services produced over a
specific time period; you can think of it as the size of the economy.