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THE IMPACT OF GOVERNMENT FUNDING ON AGRICULTURAL OUTPUT AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT

The impact of public expenditure on agriculture in Nigeria is enormous. Government having recognized agriculture as the second highest sector after oil of which the country depends for food, employment and foreign exchange. This project work would summarize the magnitude and composition of governments’ expenditure on agricultural sector since 1960  The project also examines that contribution of agriculture towards Gross Domestic Product (G.D.P), between the year 1960 when Nigeria got independent and up till the beginning the oil boom in the early 1970s. Underutilization of revenue derived by the government could bring about a downturn in the economic growth, it is with this in mind that the study intend to achieved by examine the impact of public Agriculture Expenditure on the Agriculture output and the economic growth (G D P), an objective was  set to address the problem stated; The review of the Theoretical and Empirical literature provided a basic for the selection and specification of the model that was used to ascertain whether public Agriculture Expenditure have any significant impact on Agricultural output and Economic Growth or not. To put an abrupt end to the problem, policies were recommended as a lasting solution to the deficiencies recorded over the years.

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Agriculture, in whatever form it comes or exists-food and cash crops production, livestock, poultry, animal husbandry, hunting and Horticulture-has its roles to play in any Nations Economic growth and devolvement is crucial. Among these roles are sources of food for the growing population, raw material for the manufacturing sector, reduction of inflationary pressure, earner of foreign exchange, empowerment of the labour force, source of income and savings for the farmer and improvement in their living standards, and market for products of the manufacturing sector. (Jhingan, 1975). But, unfortunately for Nigeria as a developing Nation, these roles are hardly met by the Agricultural sector because of the internal and external factors facing farmers in Nigeria. A catalogue of reasons has been advanced for the relatively poor performance of Nigeria’s agricultural sector. Key among this macroeconomic disequilibrium including interest and foreign exchange rate volatilities, poor infrastructure base, policy inconsistency and unnecessary intervention by the public sector which sends wrong (crowding out) signal to the private sector. (Eboh, 2003).

Other important constraints include inadequate public agricultural expenditure, over dependence on crude oil revenue, rural-urban migration, inadequate processing and storage capacity, smallness of farm holdings, ageing population, use of inefficient traditional technology, inadequate agricultural extension services, policy inconsistency and increasing population pressure etc. In an attempt to solve these problems of agricultural sector, the Federal and State governments of Nigeria intervene through some agricultural policies and programmes. Notable among the these policies are the operation field the Nation (OFN), the Green revolution (GR), land use degree, fertilizer company of Nigeria (NAFCON) and the National Agriculture land development authority (NALDA) and the latest is the agriculture development project (ADP). Meanwhile, these policies have not helped much in improving significantly the agricultural sector as the costs involved are still more than the benefits realized. Perhaps, for the impact of public expenditure, surplus public agricultural expenditure allocation on the sector itself in Nigeria, is to be more effective, efficient workable and successful in some of these agricultural policies.

STATEMENT OF THE PROBLEM

The agricultural sector has been affected with numerous problems which has been the result of the poor performance of the sector itself. This has attracted various strategies including expansion of public expenditure on agricultural activities. Overtime this expenditure has been on the increase without expressly translating to a corresponding expansion in agricultural output. The question that comes to mind are:

1.    What is the impact of public agricultural expenditure on agricultural output in Nigeria?

2.    What is the impact of public agricultural expenditure on economic growth in Nigeria?

OBJECTIVES OF THE STUDY

The overall objective of this study is to determine how public expenditure can improve agricultural output. However, the specific objectives are as follows:

1. To determine the impact of public agricultural expenditure on agricultural output.

2. To determine the impact of public agricultural expenditure on economic growth.

HYPOTHESES OF THE STUDY

The hypothesis tested in this study are as follows:

1.  Public agricultural expenditure has no significant impact on agricultural output.

2.  Public agricultural expenditure has no significant impact on economic growth.

SIGNIFICANCE OF THE STUDY

Once regarded as the mainstay of the economy and also the provider of employment, food and foreign exchange thus; adequate public agricultural expenditure on the agricultural sector is significant. This study is intended to determine the trends of public agricultural expenditure on agricultural output in Nigeria in order to ensure food security to and reduce poverty in the economy. This study will also show the impact of public agricultural expenditure on the economic growth of Nigeria over time. The result of the study will be of great benefit to the federal republic of Nigeria because economic growth is the vehicle of development. Development is the sustained elevation of an entire society and social activities towards a better and more human life. The result of this study will be significant in the following ways:

1. It will help the Nigerian government and her policy makers to restore fiscal  

    Discipline in Nigeria.

2. The study will be important in debt management in Nigeria.

3. It will also have implications for formulating a workable model.

SCOPE AND LIMITATION OF THE STUDY

This study covers the period of 1980-2015, a period of twenty-nine years; basically, this research focuses on the trend of public agricultural expenditure and some contributions of agriculture to the economy itself (GDP). The scope also comprises of some inherent problem facing the agricultural sector, its prospects and policy recommendation to attain a high level of productivity.

There is no end of knowledge and like (Anumudu C.N) will say; there is no failure anywhere only that people have just failed to succeed. In the bead of trying to succeed and failing to fail that this work become a success if not many factors without our ability to achieve a desired result some of which include the bottlenecks prevalent in the mobilization of data, which was a major concern to the essence of this work.

There is also lack of strong evidence in the theoretical framework of this topic that would have provided a reliable foundation for us to stem from a particularly Nigerian case. There is also the limitation of the small sample size which has its attended drawbacks. The dearth of required statistics and limited access to literature, some journals and publications which could have been of immense help to this work were unavailable.

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