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Full Project – THE EFFECTIVENESS OF AGRICULTURAL SECTOR ON THE GROWTH OF NIGERIAN ECONOMY

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Abstract

This study examined and analysed the effectiveness of Agricultural sector on the Growth of Nigerian economy. 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. 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.

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 effectiveness of Agricultural sector on the Growth of Nigerian economy.

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to analyze the effectiveness of Agricultural sector on the Growth of Nigerian economy. But for the successful completion of the study, the researcher intends to achieve the following sub-objectives;

To analyze the effectiveness of Agricultural sector on the Growth of Nigerian economy.
To evaluate the contribution of the agricultural sector on economic development

To evaluate the relationship between agricultural sector and economic development

To proffer solution to the identified problems

1.4 RESEARCH HYPOTHESES

For the successful completion of the study the following research hypotheses were formulated by the researcher

H₀: agriculture has no significant impact on the economic growth of Nigeria

H₁: agriculture has a significant impact on the economic growth of Nigeria.

H₀: Agricultural sector does not have any significant contribution to the economic development of Nigeria.

H₂: agricultural sector does have a significant contribution to the economic development of Nigeria

1.5 SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study, the findings will be of great importance to the federal ministry of agriculture, as the study seeks to evaluate the contribution of the agricultural sector to economic growth in Nigeria. The study will also be of great importance to all agriculturist as the study will guide them to take advantage of the tremendous opportunity that is available in the agricultural sector and contribute their own quota to economic growth and development. The study will also be useful to researchers who intend to embark on research in similar topic, Finally the findings of this study will also be immense benefit to government, academia, scholars, researchers and the general public.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the effectiveness of Agricultural sector on the Growth of Nigerian economy. But in the cause of the study, there are some factors which militate against the scope of the study

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study.
b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
c) FINANCE: The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover

1.7 DEFINITION OF TERMS

Agriculture

Agriculture or farming is the cultivation and breeding of animals, plants and fungi for food, fiber, biofuel, medicinal plants and other products used to sustain and enhance human life.

Economic growth

Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP, usually in per capita terms

Economic development

From a policy perspective, economic development can be defined as efforts that seek to improve the economic well-being and quality of life for a community by creating and/or retaining jobs and supporting or growing incomes and the tax base

Government sector

The general government sector includes all institutional units whose output is intended for individual and collective consumption and mainly financed by compulsory payments made by units belonging to other sectors, and/or all institutional units principally engaged in the redistribution of national income and wealth

1.8ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows. Chapter one is concern with the introduction, which consist of the (background of the study), statement of the problem, objectives of the study, research questions, research hypotheses, significance of the study, scope of the study etc. Chapter two being the review of the related literature presents the theoretical framework, conceptual framework and other areas concerning the subject matter. Chapter three is a research methodology covers deals on the research design and methods adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study.

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