Project Materials

ABSTRACT

The effects of public expenditure on Nigeria’s agriculture industry are the subject of this research. In agriculture, natural food webs are simplified and energy is redirected for human planting and animal consumption. To what degree has government spending contributed to the growth of Nigeria’s agriculture industry was the overarching goal of this research. From 1986 to 2017, the statistics were taken from the CBN statistical bulletin. The study was directed by two research questions. Multiple linear regression was used to analyse the gathered data. Government spending in Nigeria boosted the agriculture industry, which in turn boosted the country’s economy, according to the results.The results led to the recommendation that the government of Nigeria enhance the value of its agricultural sector transactions and establish solid regulatory guidelines to assist farmers improve their production capacity, both of which would contribute to the growth of the economy.

Agriculture, governance, economics, expansion.

CHAPTER ONE
INTRODUCTION

1.1 Background of the study

Because it provided sustenance and income for a large portion of the population before the oil boom of the 1970s, agriculture played a pivotal role in Nigeria’s economic growth. Since agriculture was the mainstay of economic development in the first decade after independence, Nigeria’s economy may be characterised as agricultural [Ogen, 2003]. Up until the 1980s, when oil deposits were first exploited, agriculture constituted the backbone of Nigeria’s economy. The practice of cultivating crops and livestock for human use is known as agriculture, according to Akinboyo [2008]. What we’re seeing here is the redirection of energy from natural food webs to our own agriculture and animal consumption. To say that agricultural advancement is crucial to a nation’s progress and prosperity would be an understatement. The agricultural sector has been crucial to Nigeria’s economic success.

Considering the agriculture sector’s job possibilities and financial repercussions, its contribution to any economy is immeasurable. Nigeria is able to cultivate a diverse array of food and income crops due to its very variable environment. Since many Nigerians relied on agriculture for both subsistence and income, the sector played a crucial role in the country’s economic growth.

According to Muftau and Gafar (2003) and Aina (2015), over 80% of Nigeria’s rural population was involved in agriculture in the 1960s. From 1963 to 1964, the agricultural sector contributed up to 65% of the nation’s GDP. Despite the fact that most small-holder farmers in Nigeria do not have access to inputs that would boost their production, Nigeria was the world’s leading exporter of kernel and palm oil during this time, and the second-largest producer of cocoa overall [Ogen, 2003]. Credit facilities and fertilisers are inaccessible to farmers in rural areas.

Massive importation of basic foodstuffs has replaced agriculture’s dormant role in the economy over the last two or three decades, which is a direct result of the agricultural sector’s inability to fulfil its responsibility of food production [Egbuna, 2003]. The government’s spending, the backbone of agricultural funding, has been steadily falling. In 2008, researchers from the International Food Policy and Research Institute (IFPRI) and the World Bank worked together to find out that public spending on agriculture in Nigeria amounts to less than 2% of the overall federal budget. The government has recognised this and has implemented a number of programs and policies to help the sector thrive so that it can keep fulfilling its functions.

Starting in 1975, the government made the decision to actively engage in the commercial cultivation of food crops in an effort to rectify this anomaly. To help direct oil revenues into the country’s agricultural sector, the government of Nigeria set up the Nigerian Agricultural and Corporative Bank (NACB) in 1973 [Olagunju, 2000]. In an attempt to revive agricultural performance, a number of development programs were also implemented. Despite these and large financial investments, agricultural production remains dismally low [Ojo, 1991].

Productivity has remained stagnant despite the implementation of many agricultural programs, such as the Agricultural Credit Support Scheme of 2006 and the FADAMA Development Programmes (Oriola, 2009). For example, Nigeria continues to spend a substantial amount on rice imports, even though FADAMA Rice initiatives have received a substantial amount of funding.

Agricultural output averaged 32% of GDP from 1996–2000 and 42% from 2001–2009, despite low investment levels (CBN, 2010). Although it received only one percent of all commercial bank loans in 2011, the country’s GDP was forty percent attributable to agriculture, according to the CBN governor (People’s Daily, 2011). Agricultural production is vital in Nigeria, even if the country’s oil industry has an envied position.

1.2 Problem Statement

Despite Nigeria’s abundant natural resources, the agriculture sector’s impact on the economy has been shrinking for some time. This abrupt shift occurred in the early 1970s, when crude oil revenues skyrocketed. Agricultural production in Nigeria is still sluggish and undeveloped compared to the country’s rapidly expanding population, and this is mostly attributable to a lack of investment from both the public and private sectors. As a result, the sector’s productivity has taken a hit, and it has been unable to fulfil its historic function of producing food, among other things.

Increasing agricultural production is hindered by insufficient investment for the industry. According to FAO (2008), between 1970 and 1980, an average of 4.74 percent of Nigeria’s capital was allocated to agriculture. While it did improve to 7% from 1980–2000 and 10% from 2001–2007, it is still not enough to meet the guideline of the Food and Agricultural Organisation (FAO), which is that 25% of the government capital budget should be allocated to agricultural development.

The purpose of this research is to ascertain the extent to which public funds in Nigeria have boosted agricultural output.

1.3 Research Questions

The following research questions will form the basis of this study:

• How does the Nigerian government’s spending affect the country’s agriculture sector?
• How will the expansion of Nigeria’s agriculture industry affect the country’s GDP?

1.4. Research Objectives

The overarching goal of this research is to examine the relationship between Nigerian government spending and agricultural production. The following particular goals will be considered in order to accomplish this overarching purpose.

• To find out how the Nigerian government’s spending has affected the country’s agriculture industry.
• To analyse the effects on the Nigerian economy of the expansion of the agricultural sector.

1.5 Postulates for Future Study

Agricultural production is unaffected by government spending (H0).

Hypothesis 1: Government spending greatly affects the agriculture sector

The expansion of Nigeria’s agricultural industry does not significantly affect the country’s

financial system

Hypothesis 1: The expansion of Nigeria’s agricultural sector greatly affects

financial system

1.6 Significance of the study

Because it will aid in the formulation of economic policy in Nigeria, this research is going to be crucial for both private investors and the government. One of the goals of this investigation is to have a bird’s-eye picture of how the agriculture industry functions. It will add to the current body of knowledge by conducting an empirical investigation on the impact of the agriculture sector on national development. Beneficiaries of this research include;

Researchers and Scholars: This study will be useful for researchers and scholars in the academic community as it will provide a foundation for future studies and serve as a reference for existing literature.

The government should use these insights to formulate and execute policies that would guarantee growth.

Investors: Additionally, investors will find this research important since it will help them make informed judgements about their private investments.

1.7 Scope/Limitations of the study

The purpose of this study is to analyse how the Nigerian government’s spending habits have affected the country’s agriculture industry. The years 1986–2017 were included in the research.

 1.8: Study Structure

The research is organised into five sections. First, there is the introduction, which includes things like the study’s rationale, a problem statement, research questions, hypotheses, study goals, study significance, study constraints, scope, and methodology. The literature review, which includes conceptual, theoretical, empirical, theoretical framework, and gaps in literature, is discussed in Chapter 2. Data analysis methodologies, data kinds and sources, estimating methods, and model specifications are all covered in Chapter 3 of the study approach.Presentation and analysis of outcomes comprises the fourth chapter and includes presenting the results, interpreting the data, and summarising the main findings. The summary, conclusion, and suggestions are presented in Chapter 5.

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