Download The-Role-Of-Agricultural-Sector-As-An-Accelerator

ABSTRACT
The development of agriculture since 1960 and its contribution to the growth
of the economy has been discussed in the course of this study. It is however
obvious from the analysis that though agriculture has contributed positively to
economic growth, there are fundamental problems attributable largely to the
characteristics of Nigerian agriculture. It is also evident that unfavourable
environments as well as poor implementation of economic policies were
detrimental to output increase in the sector. Thus, the pace of modernization of
the sector has been very slow. These problems and other outstanding
constraints discussed in detail in this work have prevented the sector from
contributing to the achievement of the set objectives including laying a solid
foundation for Nigerians agrarian base. Taking advantage of the ordinary least
square method (OLS), through which the research was carried out by means of
secondary data and using independent variables: agricultural total production,
agricultural import, agricultural export, foreign direct investment, and interest
rate re-examines the question of whether agriculture could serve as an engine
of growth for the Nigerian economy. Results from the empirical analysis shows
that the productivity in agricultural sector has impacted positively on economic
growth in Nigeria.
CHAPTER ONE
1.1 BACKGROUND
OF
THE
STUDY
By the time Nigeria became politically independent in October 1960, agriculture was
the dominant sector of the economy, contributing about 70% of the Gross Domestic
Product (G.D.P), employing about the same percentage of the working population
and accounting for about 90% of foreign exchange earnings and the federal
government revenue (C.B.N 2005).The early period of post independence up until
the mid 1970’s saw a rapid growth of industrial capacity and output as the
contribution of the manufacturing sector to G.D.P rose from 4.8% to 8.2%. This
pattern changed when oil suddenly became of strategic importance to the world
economy through its supply price nexus.
Crude oil was first discovered in commercial quantity in Nigeria in 1956, while actual
production started in 1958. It became the dominant resources in the mid 1970s.The
massive increase in oil revenue as an aftermath of the Middle East war of 1973
created
unprecedented,
unexpected
and
unplanned
wealth
for
Nigeria.
Notwithstanding the enviable position of the oil sector in the Nigerian economy over
the past three decades, the agricultural sector has remained the largest and arguably
the most important sector of the economy. Agricultures contribution to the Gross
Domestic Product (G.D.P) has remained stable at between 30 and 42 percent, and
employs 65 percent of the labour force in Nigeria (Aigbokhan, 2001). It is estimated
to be the largest contributor to non-oil foreign exchange earnings. This means
agriculture holds abundant potentials for enhancing and sustaining the country’s
foreign exchange.
A strong agricultural sector, as it is recognized is essential to economic development
both in its own right and to stimulate and support the growth of industries. Economic
growth has gone hand in hand with agricultural progress. Stagflation in agriculture is
the principal explanation for poor economic performance, while rising agricultural
productivity has been the most concomitant of successful industrialization (Ukeje
1999). The labour intense character of the sector reduces its contribution to the
G.D.P. Nevertheless agricultural exports are a major earner of foreign exchange in
Nigeria.
Like in most developing countries agriculture remains the backbone of the Nigerian
economy. Typically it is the largest sources of employment often two third or more of
the population is dependent on this livelihood on farming. It is a well known fact that
Nigeria comparative advantages in the production of certain foods and other
agricultural commodities that can earn foreign exchange for imports of other foods.
It has long been recognized that sustained agricultural development requires striking
an appropriate balance between investments that are directly productive in
agriculture and investment in infrastructures. Poor infrastructural services in
developing countries lead to low productivity. Much of the high productivity of
agriculture in the developed countries is as a result of massive form of investments’
over many years in physical and institutional infrastructure.
Conversely, the low productivity of agriculture in many developing countries reflects
among other things, limited investment in rural roads and electricity. This stems from
the concentration of public investments in urban areas where the unit cost of
providing services is typically less and logistic problems fewer.
1.2 STATEMENT OF THE PROBLEM
One of the constraints of the growth in Nigeria has been the slow development of
the agricultural sector. The performance of the sector was undermined by
disincentives created by the macroeconomic environment.
The economic stabilization Act enacted in 1982 affected expenditures on agriculture
and restricted imports of the agricultural products and inputs. A major problem
confronting the agricultural sector however is in its inability to contribute to foreign
exchange earnings as well as its price and income elasticity of demand. It would be
extremely difficult to attain long run sustainable growth, If not impossible without
addressing the problem of the agricultural sector. This raises the questions of what
need to be done to develop the Nigeria agricultural sector in order to realize the
potentials of the sector. This calls for new thoughts and limitations.
1.3
OBJECTIVES OF THE STUDY
 To investigate the major causes of low productivity in agriculture in Nigeria.
 To find out if the various policies and programs used are effective or not.
 To identify and analyze the constraints facing the agricultural sector as an
accelerator for economic growth.
 To examine the prospect of agricultural sector in Nigeria.
 To find out the ways to improve the competitiveness of agriculture in
Nigeria and alleviate their supply-side constraint.
1.4 STATEMENT OF HYPOTESIS
HO:
That Nigeria’s agricultural sector has not contributed significantly to the
economic growth at the country.
1.5 SIGINIFICANCE OF THE STUDY
The fundamental importance of this study is to examine the relationship or
correlation that exists between economic and agricultural growth in Nigeria. So far,
little has been done to determine the impact of agricultural sector on economic
growth in Nigeria, but a number of studies have been carried out on cross country
analysis of less developed countries. This approach assumes that the impact of
foreign inflow is constant across countries that are the same in all less developed
countries (L.D.C’s). Most studies in this area consider only a small number of
variables trying to establish agricultural growth.
The basic significance of this study is that it employs econometric models with strong
theoretical under pinning that relate agriculture and economic growth in Nigeria and
that growing concern of the agricultural sector. It would be useful to explore this
come up with result that would help in the policy building of the Nigerian economy.
1.6
SCOPE AND LIMITATION OF THE STUDY
The study will explore the possible ways through which the agricultural sector affects
growth and inspects the direction and examine the transmission channel of the
relationship between growth and agricultural index to be used for the study.
To achieve this objective, the period range from 1960-2008 data will be used. This
period is chosen because published data for the variable included in the model are
available. The result of this study could be limited by the quality of the data series
available. This limitation arises from the problem of inconsistency of data as reported
by different institutions.