ABSTRACT
This
research work investigates the Roles of Agricultural sectors on Economic Growth
and Development in Nigeria using the multiple regression analysis method. The
data utilized spanned between 1981 - 2010.
The
research work analyses and describes the past methods of agricultural
development In Nigeria and this helps to
know the current
dispensation and the possible direction that could be followed in the future.
From the
finding of this research work, it was observed that if the sector is well funded, it
will provide the
needed raw materials for the industrial sector, increase capacity utilization,
reduce unemployment rate in the economy and will guarantee food security. Also,
the revenue from the sector has influence on economic growth in Nigeria.
Thus, the
paper conclude by recommending that government needs to participate and play major roles in the agricultural sector in other to
promote and
enhance the performance of the sector and invariably add to economic growth of the
nation
TABLE OF
CONTENT
v Title Page
v Certification
v Dedication
v Acknowledgement
v Abstract
v Table of Content
CHAPTER ONE:
INTRODUCTION
1.1
Background of the
study
1.2
Statement of the
problem
1.3
Objective of the
study
1.4
Research Question
1.5
Research Hypothesis
1.6
Significance of the
study
1.7
Scope of the study
1.8
Methods of Analysis
1.9
Structure of the
study
1.10 Definition of terms
CHAPTER TWO:
LITERATURE REVIEW
2.1 Introduction
2.2 Overview of Government Policy on
Agriculture 1986-2009
2.3 Problems of Nigeria Agricultural Sector
2.4 Roles of banks in financing the
Agricultural Sector
2.5 Empirical Review of Literature
2.6 Theoretical Framework
CHAPTER THREE:
RESEARCH METHODOLOGY
3.0 Introduction
3.1 Restatement of Research Hypothesis
3.2 Data and Data Collection
3.3 Data Analysis Method
3.4 Variables in the Analysis
3.5 Model Specification
3.6 Limitation of Study
CHAPTER FOUR: DATA
ANALYSIS & INTERPRETATION
4.0 Introduction
4.1 Data Presentation
4.2 Analysis of Result
CHAPTER FIVE:
SUMMARY, CONCLUSION AND POLICY
RECOMMENDATION
5.0 Introduction
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendations
REFERENCES
APPENDIX
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND
TO THE STUDY
The role of agricultural sector in an
economy cannot be overemphasized. The forward and backward linkages to the rest
of the domestic economy, to the international market and with poverty
alleviation are very strong. A bad year for agriculture due to natural
calamities, like drought has extremely adverse effect on GDP growth, living
standard of the population, manufacturing output, industrial output, price
level, exportable surplus and balance of payments.
The primary purpose of agriculture to
development and growth is to feed the people of the country. This role in food
production is irreplaceable because the availability of adequate food supply
disables scarcity that leads to higher prices and also most people must work to
produce enough food for the population (Begg, 2003). Also maintaining a good
food supply implies good health for the people hence increased, productivity
which will promote economic growth. Output from the agricultural sector serves
as input for the activities of the manufacturing, external and the industrial sector - which contributes
greatly to economic growth. For example timber from trees is used to make
paper, furniture, etc. Also secretions from some plants and trees have healing capabilities
and are used to make medicine for the sick. Agricultural products include
export goods like cash crops which serve as a source of foreign revenue for the
country. In fact these other sectors need the agricultural sector in order to
thrive. Agriculture also employs a greater percentage of the inhabitants of the
area that is before the discovery of petroleum in Nigeria. This is largely
because of the transition from subsistence agriculture to commercial
agriculture which is concerned with the production for food for the growing
population, provision of raw materials for agro-allied industries (like those
engaged in textiles, tobacco, sugar, leather, etc.) and generation of foreign
exchange earnings.
The agricultural sector is a prominent feature in the Nigerian economy and it
has basically remained the same since 1960. This was before the discovery of
oil. Sustaining agricultural production is one of the pre-requisites for
improving the living standard in any economy. "The Nigerian economy
underwent profound structural changes during the 70's and 80's. It was once an agriculturally-based economy
and a major exporter of cocoa, peanuts and palm products. Today, Nigeria relies
mostly on oil for more than 90% of its export earnings, 30% of its GDP, and 70%
of its federal budget resources. Neglected sectors like agriculture has caused
the Nigerian economy to be in economic stagnation and decline" (Todaro and
Smith, 2003).
From the mid-1970s, crude oil became
the main export product of the Nigerian economy. The economy has said to be
suffering from the Dutch Disease because of the over-reliance on the oil sector
at the expense of other sectors hence the need for the diversification of the
economy. The diversification is especially important because of the volatility
of the international oil market on which we solely depend on. This has
necessitated the examination of the role of the agricultural sector in our
country. Despite the huge amounts invested in agriculture and the various
policy measures aimed at the re-activation of agriculture, such as the Operation
Feed the Nation and the Green Revolution by various governments since the
1980's, no meaningful headway was observed. Food production has not been
keeping pace with the rapid population growth rate. The introduction of the
Structural Adjustment Programme (SAP) in 1986 by the Babangida administration
laid much emphasis on sustaining agricultural production in which several
measures were taken to revive this sector, to which no sustainable growth has
been recorded. The purpose of this study therefore is to examine the role of
agriculture in economic development of Nigeria.
1.2 STATEMENT OF THE PROBLEM
Although the impact of agriculture in
an economy is great, the neglect of this sector in Nigeria especially by the
government, has led to many problems ranging from increased food prices to
unemployment, low standard of living, low national income. The neglect of this
sector is evident in the various problems that plague the agricultural sector
including farm mechanization, primitive implements, transportation and storage
problems, low productivity, inadequate infrastructure, little or no
credit/finance facilities, land tenure system etc.
It is regrettable that after about 37
years of oil and gas exploration in Nigeria, the country has not been able to
effectively develop other resources/sectors to complement the role of crude oil
in the economy. The backbone of the economy plus the other sectors, including
the manufacturing and industrial sector, have been neglected to cause the total
reliance on the oil sector. The volatility - unstable and unpredictable nature
of the crude oil market specifically the declining oil prices - has been known
to impact the economy adversely. Experience has also shown that the nation
cannot continue to rely on a single resource for its economic development.
Hence the challenge is how to develop and harness the potentials of Nigeria's
agricultural sector towards economic growth.
The agricultural export earnings have
been falling, virtually continually from a level of $389.58million in 1961, a
rate of 2.45% per annum to $218.41million in 2008 which is below 2%. (CBN
Annual Report 2008 and Statistical Bulletin 2008). The fall became rapid in the
mid-seventies of the oil-boom era. The foreign exchange earnings in millions of
Naira were more or less stagnant until after 1985 when the Naira depreciated
considerably against the US dollar and other foreign currencies. So the nominal
growth in earnings represented a fall in real terms, as inflation rates
exceeded this growth. Hence there is the need for revolutionary change In
policy formation and implementation in this sector.
1.3 OBJECTIVES OF THE STUDY
The broad objective of this study is
to evaluate the role of the agricultural sector in the economic growth and
development in Nigeria. The specific objectives of the study are:
v To examine the impact that the
agricultural sector plays in the Nigerian economy.
v To assess the trend of government
expenditure on agricultures in Nigeria
v To examine the role that banks' loans
and advances on agricultural sector plays in the growth of the agricultural
sector
v To proffer policy recommendations for
economic growth through the agricultural
sector.
1.4 RESEARCH QUESTIONS
The research questions relevant to
this study are:
1. How
does the agricultural sector affect economic growth?
2. How
do banks' loans and advances affect the agricultural sector?
3. What is the trend of
government expenditure on agriculture in Nigeria?
1.5 STATEMENT OF HYPOTHESIS
The following hypothesis would be
tested empirically for these studies are;
Hypothesis 1:-.
Ho: The
Nigeria's agricultural sector has not contributed significantly to the economic
growth and development of the country.
H1: The
Nigeria's agricultural sector has contributed significantly to the economic
growth and development of the country.
Hypothesis 2:
Ho: There is no
significant impact of agricultural earnings on economic growth in Nigeria
H1: There is
significant impact of agricultural earnings on economic growth in Nigeria
Hypothesis 3:
Ho: There is no
significant relationship between government expenditure on agriculture and
agriculture earnings in Nigeria.
H1: There is significant relationship between government expenditure on agriculture and
agriculture earnings in Nigeria.
1.6 SIGNIFICANCE
OF THE STUDY
It would be wrong to assume that lack
of growth of the agricultural sector is solely responsible for the lack of economic
growth and development in Nigeria; however it can be used to know the extent to
which growth has been achieved over the years. "Even with the discovery of
the oil market in the mid- 1970s, the Nigerian economy has continued to perform
below its capabilities characterized by low output growth, high unemployment
rate and rising inflation" (Jhingan 2001). The economy's reliance on the
international oil market leaves it vulnerable to external shocks which can
cripple the economy. It is therefore essential to study the contributions of
the agricultural sector as it was considered the mainstay of the economy. This
study will show the interrelationship between the sector and the industrial
sector of the economy.
This study will be of benefit to the
government officials in charge of the budgetary allocation to the agricultural
sector. By understanding the importance and crucial role played by the sector to the economy, especially to
the industrial and manufacturing sector, more attention by the government will
be felt and more functional reforms will be established in favour of the sector
and overall economy.
This study will also show how much
the agricultural sector has contributed to the economy in terms of export earnings, food prices, inflation rate, raw
materials, hence, it will reveal the growth of the economy and how the economy
can grow via the agricultural sector.
This study will reveal the various
opportunities for growth in the industrial sectors of the economy through the
agricultural sector hence investment prospects for both private and public
enterprises. Also the results from this study will lead the society into a more
balanced economy i.e. equal development of the individual sectors of the
economy.
1.7 SCOPE
OF THE STUDY
The study is limited to the years
1981-2010 on the role of agricultural sector in the economic growth and
development in Nigeria. It is limited to thirty years because of data availability.
Another major limitation of this
study is the reliability on secondary data. Different governmental agencies
like the Central Bank of Nigeria, National Bureau of Statistics often present
similar data on the same items. Most government related data are often
influenced for political purposes and this may jeopardize the findings of the
study.
1.8 METHOD
OF ANALYSIS
In order to analyze the data, it will
be estimated and interpreted using regression analysis. This is carried out so
as to know the relationship between the dependent and independent variable. The
model is later re-specified to get a true picture of the event that has taken
place between the variables by introducing the standard error test which will
help to justify the use of the ordinary least square method of estimation.
Also, the coefficient of
determinations is estimated to know the percentage of total variation on the
dependent variable explained by the independent variable. The higher the
coefficient of determination the more useful the model will be for policy and
predictive purpose.
The F-Statistics helps to determine
whether or not the entire partial regression coefficient is equal to zero. An
evaluation of the model equation on these Criteria further supports the significance
of the explanatory variable.
1.9 SOURCE
OF DATA
Secondary data will be obtained from
the Central Bank of Nigeria (CBN) - Statistical Bulletin, Annual Reports on
major economic indications and National Bureau of Statistics, Annual Abstract
of Statistics.
1.10 STRUCTURE
OF THE STUDY
The study will be divided in to five
chapters broken down as follows:
Chapter 1: Introduction consisting of
the background to the study, the statement of the problem, significance of the
study, the objectives, research questions, hypotheses, model specification,
source of data and method of analysis, definition of key terms and the scope of
the study. This chapter will provide the basis for the study.
Chapter 2: Literature Review and
theoretical framework involving the perspective for the study and topical
consideration of previous research, comparisons and contrasts among several
studies. This is to make clearer the place of the present study in the overall
research effect.
Chapter 3: Methodology
Chapter 4: Data presentation,
analysis and interpretation will be covered in this chapter.
Chapter 5: Summary, Conclusions and
Recommendations
1.11 DEFINITION OF
TERMS
v Agricultural Sector - the portion of
the economy comprising agriculture, forestry, hunting, and fishing. (Todaro and
Smith, 2003)
v Gross Domestic Product (GDP) - this
is the monetary value of the total goods and services produced in an economy
over a specific period usually one year. (Jhingan 2001)
v Dutch Disease - this is the economic
concept that tries to explain the apparent relationship between the
exploitation of natural resources at the expense of other sectors of the economy specifically the
manufacturing or industrial sector. (Wikipedia encyclopedia)
v Agricultural extension services -
services offered to farmers, usually by the government, in the form of
transmitting information, new ideas, methods, and advice about, for instance,
the use of fertilizers, control of pests and weeds, appropriate machinery, soil
conservation methods, and simple accounting, in a bid to stimulate high farm
yields. (Todaro and Smith, 2003)
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