Abstract
This paper investigates the impact of energy prices on human development in Nigeria, using the Human Development Index (HDI) as a proxy. The study analyzed the influence of the log of international crude oil and natural gas prices, as well as the log of domestic prices of Premium Motor Spirit (PMS) and Automotive Gas Oil (AGO), on the log of HDI. Secondary data from the UNDP Human Development Report, National Bureau of Statistics (NBS), CBN statistical bulletin and the World Bank from 1990 to 2024 were utilized. The study employed the Autoregressive Distributed Lag (ARDL) estimation technique to model to identify both short-run and long-run effects. It was found that in the short run lnOP, lnNGP and lnAGO had significant influence on lnHDI at 5 percent level of significance. However, they had no long run impact. On the other hand, lnPMS exerted no significant impact on lnHDI in the short or long run. Post estimation tests using Serial Correlation LM test, Heteroskedasticity Test, and Ramsey RESET test, and the Cumulative Sum of Squares (CUSUMSQ) Recursive Plots showed that the model, at 5 percent level, had no problems of serial correlation, heteroskedasticity, and misspecification. It also had had structural stability. The study concludes that energy prices significantly influence Nigeria’s HDI in the short term but does not translate to sustained long-term development. The study recommends that Nigeria should adopt transparent oil revenue management and channel revenue from oil sales into poverty reduction and development initiatives. She should also implement a phased removal of subsidy accompanied by targeted safety nets to protect vulnerable households.
References
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