Power Supply, Average Manufacturing Capacity Utilization and Unemployment in Nigeria

Abstract

This study examined power supply; average installed manufacturing capacity utilization and unemployment in Nigeria from 1980 to 2013. Unemployment and unsteady power supply are two common challenges confronting most developing economies. Its impact leads to compounded social vices especially in developing country where there is high rate of its prevalence, against developed economies that are able to support unemployed class with subsidies and social security allowances. Therefore, this research work using trend analysis and advanced econometrics test, ascertained the significant long-run relationship between average manufacturing capacity utilization and power supply in Nigeria and examined the significant causal relationship between average manufacturing capacity utilization and power supply in Nigeria. The result of our analysis shows that there is long run significant relationship that exists among unemployment rate, average manufacturing capacity utilization and power supply in Nigeria but there is no significant causal relationship between average manufacturing capacity utilization and power supply. Based on our findings, the study recommends that government should strengthen the power sector to provide constant electricity to the sector in Nigeria as this will help to lower the total variable cost of the manufacturing sector and increase the net returns as well as the capacity utilization of the sector.