ABSTRACT
This
project study the empirical investigation of the relationship between the
Agricultural sector and the industrial sector as a strategy for economic Growth
and development in Nigeria.
The
major objective and aims of this project work is to look at the effect of
agricultural sector and the industrial sector in Nigeria. The data used in this
project are mainly from primary survey data (by the use of questionnaire),
personal interview with the respondents and secondary survey data.
The
finding shows, contribution of agricultural sector in Nigerian economy of the
Gross Domestic product (GDP) from 1947-1958 (before independence) and from
1964-1992 (after independence) in 1960 ad how industrial sector adds to the
demand for goods by the agricultural sector and this may increase productivity
in agriculture. Higher agricultural product will provide capital and market for
new industries while industries will absorb the surplus labour; there are
recommendation for producer, suppliers, consumers and the government on how to
improve the tools, implement, pesticides.
TABLE
OF CONTENTS
Title page
Certification
Dedication
Acknowledgment
Proposal
Table of contents
CHAPTER ONE
1.1 Introduction
1.2 Industrial
and agricultural growth
1.3 Statement
of problem
1.4 Objective
of study
1.5 Rationale
of study
1.6 Hypothesis
1.7 Methodology
of research and sources
1.8 Scope
of study
1.9 Organization
of work
CHAPTER TWO
2.1 Literature
Review
2.2 Theoretical
Framework
2.3 Agricultural
Sector
2.3.1 Agricultural
Exports
2.3.2 Domestic Demand
for and consumption of major Agricultural products
2.4 Industrial
Sectors
2.4.1 Manufacturing
industry
2.4.2 Performance of
selected federal government core industrial projects (CIPS)
CHAPTER THREE
3.0 An overview of
agricultural role, policies in industrial development in Nigeria
3.1 Introduction
3.2 Synthesis
of agriculture outlook from the 80’s
3.3 Some
specific policies to boost agricultural outlook
3.3.1 The national
Accelerated food production programme
3.3.2 Operation
feed the nation (OFN)
3.3.3 The
Green revolution
3.3.4 Macroeconomic
policies
3.3.5 Sector
specific policies
3.3.6 Farm
settlement
3.3.7 Land
use degrees
3.3.8 Directorate
of food, roads and rural infrastructure (DFRRI)
3.4 Interdependence
among the different sectors of an economy
3.5 Need
for a structurally balance economy
CHAPTER FOUR
4.1 Economic
analysis of agricultural and industrial relations in Nigeria
4.2 The analysis of
the regression of the relationship between agricultural and industry
4.2.1 Model
specification
4.2.2 Model
interpretation
4.2.3 Re-statement
of the hypothesis
4.2.4 Standard
error test
4.2.5 T-test
4.2.6 F-test
CHAPTER FIVE
5.0 Summary,
Conclusion and Recommendations
5.1 Summary
5.2 Conclusion
5.3 Recommendation
References
CHAPTER
ONE
1.1 INTRODUCTION
Changes in the relative
importance of agriculture and industry have been recognized as the core of the
process of growth. Hence agricultural process is a prerequisite for industrial
development which metamorphosed to economic growth and development. In industry
it is the role of manufacturing sector that appears to be the strategic factors
in modern economic growth. One of the issues confronting many developing
countries is sectorial balance, determining which area of development most to
the economy as a whole.
Except for few countries, the
discernible patterns are overwhelmingly agricultural and industrial
interdependence. Agriculture involves the cultivation of land, raising and
rearing of animals for the purpose of production of food for man, feed for
animals and raw materials for industries. It involves forestry fishing,
processing and marketing of those agricultural products. The role of
agriculture in transforming both the social and economic work of an economy
cannot be put off with wave of hand.
On the other hand, an industry
refers to a number of rims producing broadly similar commodities. Thus,
industrialization is the process of building up a nation’s capacity to convert
raw materials and other inputs to finished goods and to manufactured goods for
other production or for final consumption. Agriculture provided the needed
surplus for industrialization processes in most developed countries and lately
in south Asian and Latin American countries. The industrial sectors adds to the
demand for goods produced by the agricultural sectors and this may increase
productivity in agriculture. Higher agricultural product will provide capital
and market for new industries, while industries will absorb the surplus labour,
which agriculture must release in its process of improvement.
Before and immediately after
interdependence in 1960, agriculture was the mainstay of the Nigerian economy
accounting for more than one-half of the Gross Domestics Product (GDP) and more
than three-quarter of exports earnings. The contributions of agriculture to GDP
moved from 50 percent in 1970 to 38.8 percent in 1991 and by 1995 this has
declined further to only 32 percents. In fact, by mid 1980’s Nigeria has
moved from a position of self-sufficing in basic foodstuffs to one of heavy
dependence on inputs, as mush emphasis was shifted to the petroleum sector.
Thus, the observed drop of relative share of agriculture in aggregate output
reflects the period of windfall from petroleum income when farm production was
depressed by the massive urban boom and movement of rural workforce to cities.
On the other hand, emphasis on
industrialization as a means of diversifying production patterns and
import-substitution and semi-processing of cash crops for export and later on
the establishment of light intermediate and heavy industrial complexes in the
70s and 80s. consequently, the manufacturing sub-sector accounted for about 4
percent of an annual average of less than 10 percent between 1983 and 1995.
Struthers (1990) described
this simultaneous decline in the agriculture and industry as ‘Dutch Disease’
which could be attributed to poor linkage between the sectors, despite the huge
earnings from the petroleum sectors. Moreover when the two sectors wait for
each other to perform the thrust and feedback expected of them, the pace of
economic growth tends to slow down or stagnate.
Economic historians have shown
that all economically advanced countries today were once predominantly
agricultural at their early stages of development. They repeatedly emphasized
that an expanding agricultural sectors forms the basis for industrial expansion
and development by raising the level of real income in the agricultural sector
thereby extending the potential market for manufacturing goods, opening a new
source of capital for the establishment of industry and making possible the
purchase of foreign tools and equipment necessary for industrialization.
1.2 INDUSTRIAL AND AGRICULTURAL GROWTH
On attaining independence in 1960, the
agricultural sector maintained its dominant position as the major foreign
exchange earner. The sector accounted for more than half of the GDP and
provided enough food for the teeming population. Traditional small holder
farmers who use simple techniques of production and the bush-fallow system of
cultivation, account for about two-thirds of Nigeria’s total agricultural
production. Before 1939, there was virtually no manufacturing industry in Nigeria. Cotton
was partially processed and cigarettes were manufactured at Ibadan, but there was very little else. In
recent years however, and particularly since 1948, there has been a rapid and
important growth of factory industry. A major objective of the country’s
economic policy is to promote the growth of industry, both to increase the
wealth of the country and also to provide new sources of employment.
The highest industrial growth
was achieved during the period of 1966-70 when the sector recorded an average
growth rate of 25.9 percent, compared with 12.4 and 13.4 percent achieved in
the preceding periods of 1971/75 when the country was just recovering from the
devastating effect of civil war Nigeria’s economics history can be said to have
been pre-determined by the industrial expansion of Europe at that time. For
instance, crop such as palm kernels and groundnut provided and invaluable
source of raw materials for appropriates industries of Europe he said “it takes
more than industry to industrialize” this the more developed these industries
were the more the raw materials were required and the more country like
Nigerian will produce.
In 1960 about 80 percent of
the country used to regard agriculture as their principle occupation, although
a large percentage of them might have produced for mere subsistence. The
country is endowed with a good climate and plenty of fertile land and this has
made it possible to produce a wider range of agricultural resources, which are
being used as raw of self-sufficiency in food production. Sugar refining,
textiles, breweries, rubber, fertilizer, footwear, paper, cigarette and general
food processing industries have continue to record reasonable levels of
capacity utilization rates.
1.3 STATEMENT OF THE PROBLEM
The development of a sound
industrial base depends on the proper harnessing of agricultural and water
resources of the country. Undoubtedly, agricultural progress is a prerequisite
for industrial development and by extension for economic growth and development.
The agricultural sector has been described by a host of economic historians as
been indispensable in achieving industrial development in an economy. However,
the problem of food supply and demand and their implications for Nigeria’s
overall development have become major national issues. The amount of resources
that have been allocated to agriculture in general and the food sub-sector in
particular, the supply of local raw materials for industrial development would
seem justified only if the anticipated increased in agricultural production and
supply are realized. Opinion have been expressed on the linkage between
agricultural sectors and industrial sectors as been interwoven judging from the
sense that all nineteenth century industrialization were accompanied in their
early stage by an increased in agricultural output.
Therefore one can assume that
industrialization and agricultural development are not valid alternatives, but
rather effective developmental plans must embrace both goals. Thus it remains an
empirical issue for verification in Nigeria whether in the country’s
development process the agricultural sector is really complementing to the
industrial sector’s development given past and present antecedents, if the
answer is in the affirmative, we need to establish the link between these two
man sectors and the extent of their linkage in Nigeria. Moreover, the importation
of finished goods to the country brings about the low growth in industrial
sector. However the role of agriculture since independence in the economy has
been on the downward trend especially its contribution of Gross Domestic
Product (GDP). Its share top GDP fell from 39.9 percent in 1970/71 to 20.0
percent (based on constant prices) in 1988. This situation has been partly due
to the mergence of oil as an important commodity and partly to the poor
performance of the sector.
1.4 OBJECTIVE OF THE STUDY
The general objective is to
look into how industrial development could be attained through effective
resources mobilization from the agricultural sector, given the country’s
social, economic and political constraints.
The specific objectives are
to:
1. Analyzing the
agricultural and industrial production growth rates in order to determine if
the performance of the agricultural influences the growth and performance of
the industrial sectors, because the growth of industry brings about economic
growth and development.
2. Analyze
agriculture’s contribution to developments materials for sustaining the
production of manufactured goods up till today. This period could be said to
mark the birth of the agro-allied industries in Nigeria. Sugarcane is used in sugar
producing industries, maize is used in beer production with coca serving in the
production of beverage in the beverage industries. Agriculture affects and
influence industrialize when we consider in terms of its impact on the
operations of our food industries it provides the food requirement of the
rapidly growing rural and urban Nigeria
population.
Agriculture provides
employment for over 70% of Nigerian labour force. The agricultural sector has
been contributing substantially to the gross domestic products of Nigeria. This
contribution has been declining over the years in some countries because of the
discovery of some mineral resources and in Nigeria case with the oil boom era,
which reduced the emphasis on agriculture also in development plans, for
example agriculture contributed 63% to the Nigerian GDP in 1960 but declined to
23.4% in 1975 (United Nation year Book of National Account 1979). Agriculture
also provides raw materials which implies a growth and adaptation of
agricultural production. With the decline of the oil boom era, the stage is now
set for agriculture to take up the prominent role it used to play then.
However, the structural
adjustment programme (SAP) embarked upon in lake 1986 by the government to
stabilize the economy had a salivary effect on the industrial sector, as the
sector recorded an annual average growth of 10.4 percent between 1986 and 1990,
with positive growth rates in each of the years. The pace continue but at a
decreasing rate, accounted for by sharp fall in manufacturing component, which
experienced very low capacity utilization as a result of lack of raw materials,
spare parts and other production bottlenecks. For instance, the annual average
growth rate of manufacturing component increased form 14.4 percent during
1971/75 to 19.4 and 17.6 percent during 1976-80 and 1981/85 periods
respectively. Thereafter the rate of growth of this sub-sector decelerated as a
result of factors enumerated above. Indeed, for the first time during the
period of analysis, this sub-sector recorded a negative growth rate of 2.4
percent compared with all industry average growth rates of 4.8 percent.
The year to year changes have
been uneven in industrial sector, therefore, government has reacted to the
declining trends in the manufacturing output by the creation of raw materials
research and development council and a raw materials data bank. Through these
institution and others, the government hope to improve the capacity utilization
through available local raw materials manufacturing using raw materials from
local sources were at a strong advantage after the 1986 reforms. By 1989,
manufacturers with locally sourced inputs achieved relatively high levels of
capacity utilization, tyres (59.8%) leather products (60.3%). Beer and stout
(53.4%) textiles (60%) and industrial chemicals (46%). Agro business grew rapidly
due to the government policy.
3. Investigate
into the problem of agriculture in industrial development in Nigeria.
4. Proposed
policy measure on how agricultural productivity can be improved.
1.5 RATIONALE OF STUDY
Agriculture is still the main
stay of the Nigerian economy with about 70% of the country’s labour force there
in. at independence (1960) the percentage contribution of the sector to GDP was
about 70%. And over view of the Nigerian economy shows that agriculture is
still predominant in spite of the increased industrial growth over the years.
The agricultural activity dominated the economy between 1950-1974 contributing
N1,342 million to GDP in 1959 and N1,308.7 million in 1974. It highest
contribution was in 1971/72 when it stood at N1982.9 million as revealed by the
federal office of statistics, national account of Nigeria (Lagos, 1976). In
1995 the agricultural sector contributed N520,999.4 million to the GDP, while
the industrial via manufacturing sector contributed N116,820.6 million to the
GDP. The fall in the share of the agricultural sector between 1960 and 1980 is
partly due to the normal growth pattern and the neglect of the sectors as a
result of large return accruing from crude oil production.
Fall in the share of
manufacturing sub-sector of the industrial sector in 1980s that made the
procurement of imported raw materials difficult and expensive. The continue
poor performance of the external sector especially the crude oil has forced the
government to re-order his priority such that agriculture and self-reliance is
given emphasis. Although by 1995 the increase in agriculture’s share in GDP was
quite small as it managed to move to 35.4% yet it is quite better than the
industrial sectors share of 70.9%. In essence this shows that in spite of the
fact that the decline in agricultural activity appears natural in many
development process, it is obvious that in Nigeria, agricultural activity will
remain the most single sector for some time to come, hence more attention
should be directed to the agricultural sector to enable it move to heights that
would help it play its role in the industry.
1.6 HYPOTHESIS
The relationship between the
agricultural sector and the industrial sectors has accounted for a large
proportion in the strategy for economic growth and development. In an attempt
to understand the degree of inter-dependence among the different sectors of an
economy and therefore the relative importance of each sector, a number of
devices have been employed to measure movement of resources among sectors. One
of these devices is the input-output table, which measures the degree of
inter-dependence among the different sectors of the economy.
1.7 METHODOLOGY OF RESEARCH AND SOURCES
The techniques to be used in
this study will be descriptive analysis in which table will be employed. The
data needed for this study will be collected from published and unpublished
works, the central bank of Nigeria,
economic and financial review, central bank annual report and statement of
account, the CBN statistical bulletin.
The technique of analysis is
descriptive in nature, the analysis used tables being the most frequently used
method of data analysis tables used in the form of general descriptive tables,
which are in use in summarized and condensed data, the data used have already
been compiled by CBN.
1.8 SCOPE OF THE STUDY
The study will cover the
output of the agricultural sector (crops) and industrial sector
(manufacturing). The work will critically examine the role and contribution of
agricultural sector in the industrial development in Nigeria, the project will focus on Nigeria, but
many scathingly sight example from some other countries in analyzing some
points.
1.9 ORGANIZATION OF WORK
For ease of presentation the project
has been divided into chapters. Apart from chapter one, which deals with the
introduction, there are four other chapters.
Chapter two review existing
literature and theoretical framework on agricultural sector and industrial
sector. Chapter three consist of the overview of the role of the agricultural
sector to economic development and growth, also the contribution to industrial
sector. Chapter four is on data analysis and in which the
agricultural-industrial relation in Nigeria is explored. Chapter five
comprises of the summary, recommendation and conclusion on the role and
significance of the agricultural sector contribution to industrial sectors.
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