ABSTRACT
This study examined and analysed the impact of
agriculture on economic growth in Nigeria. It adopted the secondary data
sourced from Central Bank of Nigeria covering the period 1985 to 2010. The
study employed the modern Time Series of the Ordinary Least Square to test for
the relationship between agriculture and economic growth in Nigeria. The
results derived infer that there exists a significant relationship between
agriculture spending and economic growth. The null hypothesis stated for this
study does not hold. What this implies is that agriculture revolution is a
determinant to economic growth. Thus, it is important that the
government placed greater emphases on
this sector by increasing budgetary allocation to agriculture in Nigeria
in other meet the recommendations of both Food and Agriculture Organization
(FAO) and African Union (AU). It is recommended that more funding be provided for agricultural universities in the country
to carry out more research on all aspect of agricultural output, such as livestock,
crops, fishing and forestry, crop preservation and also establishment of more
research institutes to improve seedling production, encourage the use of
irrigation farming system and provision of storage facilities for seasonal
products as means of improving the country’s agricultural output. Further recommendations include the need for
the Central Bank of Nigeria to come out with stable policy guideline to enable
the commercial banks disburse loans to farmers at a very lower interest rate,
in order to help them expand their production capacity. More so, the need for
government to encourage more exportation of agricultural output as this in turn
will enhance external foreign exchange earnings and improve the competitiveness
of Nigerian agricultural produce in the international markets.
TABLE OF CONTENTS
Page
Title page i
Certification ii
Dedication iii
Acknowledgements iv
List of Tables/ figures viii
Abstract ix
CHAPTER ONE-
INTRODUCTION
1.1
Background
to the Study
1.2
Statement
of the Problem
1.3
Objectives
of the Study
1.4
Research
Questions
1.5
Hypothesis
for the Study
1.6
Significance
of the Study
1.7
Brief
Methodology
1.8
Plan
of the Study
CHAPTER TWO- LITERATURE
REVIEW AND THEORETICAL FRAMEWORK
2.1
Introduction
2.2 Empirical
review
2.3 The Profile
of Agriculture in Nigeria
2.4 Budgetary
Allocation to Agricultural sector of Nigeria
2.5 Effect
of Neglect of Agriculture in Nigeria
CHAPTER THREE-
ANALYTICAL FRAME WORK AND RESEARCH METHODOLOGY
3.1 Introduction
3.2 Analytical
Framework
3.3 Methodology
3.4 Sources
of Data
3.5 Re-
statement of Hypothesis
3.6
Specification of Model
3.7 Model
Estimation Techniques
3.8 Unit
Root Test
3.9 Integration
Analysis
CHAPTER FOUR- EMPIRICAL
RESULT AND DISCUSSION
4.1 Description
of Data
4.2 Unit
Root Test
4.3 Co
integration Test
4.4 Long run
Static Regression Analysis
4.5 Error
Correction Model
4.6 Short
Run Regression Coefficient
4.7 Coefficient
of determination
4.8 Short
Run Model’s Goodness of Fit
4.9 Stability
Test
CHAPTER FIVE- SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.1 Summary
5.2 Conclusion
and Recommendations
5.3 Suggestion
for further studies
References
Appendix
List of Tables/ Figures
1.
Agriculture
share of the total GDP at Current Basic Prices (1985-2010)
2.
Growth
Rate of Real GDP- Agriculture
3.
Proportion of the Nigeria’s annual budget in Agriculture:
1985-2010
4. Descriptive Statistics
5. Unit Root at a level
6. Unit
Root at First Difference
7. Johansen
Co integration
8. Static Regression
9. Error Correction Model Estimate
List of figure
1
Trend
in Agricultural output (RGDPAG) and Government Budget to Agricultural
sector(BUDGAG)in Nigeria
2
Cumulative
Sum of Square at 5 percent significance test of stability
CHAPTER ONE
INTRODUCTION
1.1 Background
to the Study
The
term Agriculture is derived from the Latin words, “ager,” meaning field, and
“Cultura”, meaning cultivation. This suggests that the earliest form of
production agriculture was crop production (Are, Igbokwe, Asadu, Bawa, 2010;
Erebor, 2003). It may be noted that Agriculture is more than crop production.
It also includes animal production, processing of primary products (or value
addition) and marketing of produce and products. Erebor (2003) defines
agriculture as the art and science of cultivating the soil, processing crops
and livestock products for man, and the process of selling excess crop and livestock.
Meanwhile,
(Kricher,1997) defines agriculture in a more advanced way by saying that,
agriculture or farming is the simplification of nature’s food webs and the rechanneling of energy for
human planting and animal consumption. To simplify, agriculture involves redirecting
nature’s natural flow of the food web. The natural flow of the food web is the
sun provides light to plants convert sunlight into sugars which provide food
for the plants (this process is called photosynthesis). Plants provide food for
herbivores (plant-eating animals) and the herbivores provides food for carnivores
(meat-eating animals). This simple
illustration of food web provides the basis for analyzing the impact of
agriculture on economic growth.
In
literature, economic history provides us with ample evidence that agricultural
revolution is a fundamental pre-condition for economic growth, especially in
developing countries. Development economists have focused on how agriculture
can best contribute to overall economic growth and modernization. Todaro and
Smith (2003) look at Lewis theory of development, and reported that the
underdeveloped economy consisted of two sectors. These sectors are the
traditional agricultural sector characterized by zero marginal labour productivity
and the modern industrial sector. In Rostow’s linear stages of economic growth,
agricultural revolutions is a pre-condition for take-off and take-off stages
The
importance of a vibrant and robust agriculture is reminiscent on its role in
providing employment opportunities for the teeming population, eradicates
poverty and contributing to the growth of the economy. The linkage between
agriculture and economic growth is well documented in literature (Ogen, 2007;
Okongwu, 1986; Atte and Muhammed- Lawal, 2006 to maintain few). According to
Izuchukwu (2011), agriculture has been the backbone of the economy in Nigeria
providing employment and source of livelihood for the increasing population,it
accounts for over half of the GDP of the Nigerian economy as at independence in
1960.
However, the role it plays in the regional and
economic development of the country has diminished over the years due to the
dominant role of the crude oil sector in the economy. With the increasing food
demand in Nigeria, the country has available natural resources and potential
for increasing the volume of crop production towards meeting the food and
nutritional requirement of the rapidly increasing population and guarantee food
security in the country. Therefore, the source of national wealth is
essentially agriculture.
Unquestionably,
the neglect of agriculture in Nigeria owing to the discovery of oil has
retarded the growth of the economy for the past decades. The effect of this neglect could be felt in
the poor quality of life of people as average
Nigerian was quoted as living in US$ 1 per day; if translated to Naira, this
amount to N165 day at present. It may not be wrong to say that such a remark is
a political cover. The faces we see daily on our streets and those we may not
be able to see because of their inability to muster enough strength to walk up
to the street as a result of several days of hunger and starvation, or even
food associated ill-health and avoidable deaths of tens of people everyday, a
better, more sincere and realistic assessment of the situation would be put an average
income at US $0-0.5 per day. Studies in literature reveal that seven out of
every 10 Nigerians live in abject poverty; hardly able to feed, cloth or house
themselves. It is an indisputable fact that Nigeria and her sub-Saharan African
neighbors have been dubiously christened by the world political and economic powers
as citadels of hunger, poverty, ignorance, diseases, misery, debts, filths and
crises. This unquestionable imagery will for long remain indelible in the
world's archives unless a reasonable step is taken by people and Government of
this doomed sector of the global village. It is against this backdrop that the
study seeks to assess the impact of agriculture on economic growth.
1.2 Statement
of the problem
Besides
oil, the major strength of the Nigerian economy is its rich agricultural
resource base, its human resource and its huge markets. However, these
resources have to be effectively mobilized so as to diversify the economic base
and reduce dependence on oil and import. The economy remains vulnerable to
external shocks emanating from fluctuation in the world prices of crude oil and
the rising prices of imports. The resulting external and internal in balances
are manifested in the adverse balance of payment position, unemployment and low
capacity utilization in virtually all sectors as well as the deteriorating
purchasing power of the populace (Atte and Muhammed- Lawal, 2006).
The
contribution of agriculture to the Nigerian economic growth is very low
compared to what it used to be in the past 14 years. Nigerian agriculture to a
large extent still possesses the characteristics of a peasant economy that was
prominent in the pre-independence period. Given the information above, this
study seeks to assess the impact of agriculture on economic growth in Nigeria
from 1985-2010
1.3 Objectives
of the Study
The
purpose of this study is to assess the impact of agriculture on economic growth
in Nigeria.
However,
the study will:
1. Examine
the effect of agricultural practice in Nigeria on agricultural productivity.
2. Assess
the impact of budgetary allocation and agricultural policies on agricultural
productivity.
3. Estimate
the trend of growth of agricultural sector in Nigeria since 1985 up to 2010.
4. Determine
the relationship between agriculture and economic growth in Nigeria.
1.4 Research
Questions
The
following questions will guide the study.
1. What
is the growth of Agricultural sector between 1985-2010?
2. To
what extent has budgetary allocation and agricultural policies affected
agricultural productivity in Nigeria?
3. Is
there any significant relationship between agriculture and economic growth in
Nigeria?
1.5 Hypothesis
of the study
The
hypothesis of no significant difference will be used to estimate the
relationship between agriculture and economic growth.
1.6 Significance
of the Study
The
study is relevant in a true sense that it will help to promote agriculture in
Nigeria. The study will help bring radical transformation for national growth,
especially through its effect on rural incomes and provision of resources for
transformation into an industrialized economy. This present study will help
policy makers and government to address the challenges of climatic change,
global recession and dwindling revenue which threatens food security. The
Nigerian populace will benefit from this study because agricultural revolution
will be able to provide the quality and quantity of food.
Industrial
and Manufacturing firms will also benefit from steady supply of raw materials
and provide large markets for industrial products. Government will benefit
because the study will help it to put political will in promoting agriculture
in order to achieve full economic growth in Nigeria.
1.7 Brief Methodology
The study relied on
secondary data sourced from the Central Bank of Nigeria (CBN) from 1985 to 2010
reported in their statistical bulletin. It adopted the descriptive and
analytical statistics to analyse the data employing different econometric methods
such as unit root test, co integration and Error Correction Model among others with
the support of E-view statistical package.
The Ordinary Least Square was utilized to test the relationship between
agriculture and economic growth in Nigeria.
1.8 Plan of Study
This study was divided
into five chapters. Chapter one covers the introduction of the study, the
statement of the problem, the objectives of the study, research questions and
hypothesis among others. The review of relevant and related studies covering
the theories that explain the relationship between agriculture and economic
growth are in Chapter two, while Chapter three discusses and explains the analytical
framework and methodology adopted for the study. Chapter four concentrated on
the empirical result and discussion of the study and Chapter five focuses on the
summary, conclusion and recommendations on the basis of the study’s findings.
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