Long-run and short-run responses of agricultural sector growth to its determinants in Nigeria

C.N Okoye,S.I Audu,H.S Umar

doi:10.4314/as.v20i1.8

Abstract

The study examined the long-run and short-run responses of agricultural sector growth to its determinants in Nigeria using time series data (1981 2015). Dynamic Ordinary Least Square (DOLS) method was employed in the analysis of the data. Jarque-Bera Normality Test, Breusch-Godfrey serial correlation LM test, Engle Granger 2-Step Test for Co-Integration and CUSUM of Squares Test were used to test for normality, serial correlation and structural dynamic stability of the data. The trend of agricultural sector growth revealed that sustained growth of the sector has been experienced since 2001 up till 2015. The results revealed that agricultural sector growth was positively and significantly influenced by capital expenditure in the sector, which was proxy by Total Government Agricultural Expenditure (TGAE), in the long-run; while in the short-run, the sector growth was positively and significantly influenced by labour employment. It is therefore recommended that for sustained agricultural sector growth and development in the country, increased capital expenditure in the sector should be pursued with sustained vigour. Since agriculture sector shows immediate and significant response to employment, it should be made attractive to youth employment by provision of incentive. This would ensure dual gain of tackling unemployment problem in the country and ensure agricultural sector growth.

Highlights

Nigeria’s agricultural sector, which has potential of providing national economic growth and development in terms of employment creation, export market creation, poverty eradication and largest contribution to GDP, remain a showdown of itself
Many financial windows have been made available through the intervention of the Central Bank of Nigeria (CBN), Bank of Industry (BOI), Bank of Agriculture (BOA), and Federal Government Small and Medium Enterprises (SMEs) Loans Scheme
To ensure improved funding in line with its diversification drive, the Federal Government budgeted ₦123.44 Billion for agriculture in 2017 as against ₦75.80 Billion for 2016 (Federal Government Appropriation Bill, 2017). These efforts were further strengthened with the launch of an Agriculture Promotion Policy (APP), which seeks to address the drawbacks of the Agricultural Transformation Agenda (ATA) set by the previous administration

Summary

Introduction

Nigeria’s agricultural sector, which has potential of providing national economic growth and development in terms of employment creation, export market creation, poverty eradication and largest contribution to GDP, remain a showdown of itself. To address the poor growth rate, the government took a receptive stance towards diversification and began initiating agricultural reforms and implementing diverse intervention programmes for the sector such as Operation Feed the Nation launched in 1976, Green Revolution Programme launched in 1979, and the establishment of agencies like the National Agricultural Land Development Authority (NALDA), River Basin Development Authority (RBDA) and the Directorate of Food, Road and Rural Infrastructure (DFRRI) just to mention a few These interventions and reforms saw agriculture expenditure (% of total government expenditure) increase from about 3% in 1980 to as high as 16.8% in 1985 (Central Bank of Nigeria, 2012).

Methods

Results

Conclusion