ABSTRACT
In recent decades,
the potential contribution of agriculture to economic growth has been a subject
of much controversy among development economists. While some contend that agricultural
development is a pre-condition for industrialization, others strongly disagree
and argue for a different path.
Taking advantage of
Ordinary Least Square Method (OLD), the research carried out by means of
secondary data and using independent variables: Agricultural Development,
Capital Accumulation, Inflation Rate 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 not
appreciably impacted positively on the economic growth in Nigeria.
TABLE OF CONTENTS
Cover
Page .. .. .. .. .. .. ..
Title
Page .. .. .. .. .. .. .. ..
Certification .. .. .. .. .. .. .. .. i
Dedication .. .. .. .. .. .. .. .. .. ii
Acknowledgement .. .. .. .. .. .. .. iii
Abstract .. .. .. .. .. .. .. .. iv
Table
of Contents .. .. .. .. .. .. v-vii
CHAPTER ONE
INTRODUCTION .. .. .. .. .. ..
1.1 Background of the Study .. .. .. .. .. 1
1.2 Statement of Problem .. .. .. .. .. .. 12
1.3 Objectives of the Study .. .. .. .. .. 15
1.4 Statement of Hypothesis ... .. .. .. .. 16
1.5 Significance of the Study .. .. .. .. 16
1.6 Scope and Limitations of the Study .. .. .. 17
CHAPTER
TWO
LITERATURE REVIEW
2.1 Theoretical Literature .. .. .. .. .. 18
2.1.1 Agriculture
As A Passive Contributor to
Economic
Development (Classical School
of 1950s and
1960s). .. .. .. .. .. .. 30
2.1.2
Agricultural led Industrialization
(Classical School
of 1970s and 1980s) .. .. .. 31
2.1.3
Agricultural Linkages And Growth and
Development .. .. .. .. .. .. .. 32
2.1.4 Problems Associated with Agricultural Development 36
2.1.5 Empirical Literature .. .. .. .. .. .. 45
2.2.1 Agriculture and Poverty Reduction .. .. .. 46
2.2.2 Agriculture and Nutrition .. .. .. .. .. 47
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Methodology .. .. .. ..
.. . . ..
51
3.2 Area of Study and Coverage .. ... .... .. 52
3.3 Model Specification .. .. .. .. .. .. 52
3.4 Data Sources .. .. .. .. .. .. .. 53
3.5 Method of Evaluation .. .. .. .. .. 54
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF
RESULTS
4.1 Unit Root Test .. .. .. .. .. .. 59
4.2 Co-Integration Test .. .. .. .. .. .. 61
4.3 Economic Opinion, Interpretation .. .. .. 63
4.4 Statistical Criteria of the Result .. .. .. .. 65
4.5 Econometric Criteria of the Result .. .. .. 68
CHAPTER FIVE
SUMMARY, RECOMMENDATION AND
CONCLUSION
5.1 Summary of Findings .. .. .. .. .. 67
5.2 Policy Recommendation .. .. .. .. .. 68
5.3 Conclusion .. .. .. .. .. .. .. 70
Bibliography .. .. .. .. .. .. .. ..
Appendix .. .. .. .. .. .. .. .. ..
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Agriculture is concerned with the husbandry of crops and
animals for food and other purposes. It
is the foundation upon which the development of stable human communities, such
as rural and urban communities has depended on in many parts of the world. The study of economic history provides us
with ample evidence that an agricultural revolution is a fundamental
pre-condition for economic development.
The agricultural sector has the potentials to be the industrial and
economic springboard from which a country’s development can take off. Indeed, more often than not, agricultural
activities are usually concentrated in the less developed rural areas where
there is a critical need for rural transformation, redistribution, poverty
alleviation and socio-economic development.
The agricultural sector has the potentials to shape the
landscape, provide environmental benefits such as conservation, guarantee
sustainable management of renewable natural resources, preserve biodiversity
and contribute to the viability of rural areas.
Through its spheres of activities at both the macro and micro levels,
the agricultural sector is strategically positioned to have a high multiplier
and linkage effect on any nation’s quest for socio economic and industrial
development.
The growth of the agricultural sector in Nigeria was not
smooth.
Anyanwu (1967) held that during the colonial period
between 1861 – 1960, attention was given to agricultural research and extension
services. Among the activities that was
done, the first was the establishment of a research station in Lagos by Sir Claude McDonald in 1893. Landmarks of 10.4 km was acquired by the
British Cotton Growing Association (BCGA) in 1899 for experimental purposes
strictly for cotton and was named Moor Plantation in Ibadan.
In 1912, the Department of Agriculture was established in
each of the then Southern and Northern Nigeria,
but the activities of the department were virtually suspended between 1912 and
1921 as a result of the First World War and its aftermath. The period 1929 and 1945 was a difficult one
for the agricultural sector of Nigeria. This was the period of great depression when
the world prices on commodities fluctuated.
This affected the agricultural sector negatively because the volume of
agricultural produce increased but the value did not increase proportionately.
The period 1945 – 1954 marked the period of export boom,
because countries were just recovering from the Second World War and countries
that needed to develop their destroyed industrial sector were many. They depended on primary product for the
beginning stage of industrialization.
They needed to revitalize their industrial sector by demanding primary
goods. Prices of primary products rose
higher again because there were speculations that there would be a Third World
War due to the outbreak of the Korean War.
However, after this period, there came another period of price instability. This made the reliance on agriculture and its
products to fall, leading to the establishment of a market board. This board bought these products from the
local farmers and sold them overseas.
In spite of all the periods, Nigeria made a great revenue from
agriculture. In the pre-Independence
era, the agricultural sector contributed most to the GDP of Nigeria. Helleiner (1966) said that in 1929, export
production amounted to 57% of Nigeria’s
revenue and in that 57%, agriculture made up about 80% of the export. On attainment of political independence in
1960, the trend was still very much the same, the Nigerian economy could
reasonably be described as an agricultural economy, because agriculture served
as the engine of growth of the overall economy (Ogen, 2003: 231-234), from the
stand point of occupational distribution and contribution to the GDP. Nigeria was the world’s second
largest producer of cocoa, largest exporter of palm oil. Nigeria was also a leading exporter
of other major commodities such as cotton, groundnut, rubber and hides and
skins (Alkali, 1997: 15-16). Between
1964 – 1965, agriculture accounted for 55% of GDP and employed 70% of the adult
workforce (Matton, 1981). In 1970,
agricultural export crops like cocoa, groundnut, cotton, rubber, palm oil, palm
kernel, etc. accounted for an average of between 65% - 75% of Nigeria foreign
exchange earnings and provided the most important source of revenue for the
Federal as well as State governments through export products and sale taxes
(Ekundare 1973), despite the reliance of Nigerian peasant farmers on
traditional tools and indigenous faming methods, these farmers produced 70% of
Nigeria’s exports and 95% of its food needs (Lawal, 1997: 195).
However, the 1967 – 1970 Civil War in Nigeria
coincided with the ‘Oil Boom’ era, which resulted in extensive exploration and
export of petroleum and its products.
This led Nigeria
to neglect its strong agriculture in favour of an unhealthy dependence on oil
(United States Department of State, 2005).
Ever since then, Nigeria
has been witnessing extreme poverty and insufficiency of basic food items. The agricultural sector contributions now
account for less than 5% of Nigeria’s
GDP (Olagbaju and Fashola, 1996: 263).
It is against this back drop that we set out to research on the impact
of agricultural development on Nigeria
economic growth.
As noted earlier, the neglect of the agricultural sector
and the dependence of Nigeria
on a mono-cultural crude oil based economy had not augured well for the
well-being of the Nigerian economy. In a
bid to address this drift, the Nigerian government as from 1975 became directly
involved in the commercial production of food and cash crops.
Several large scale agricultural projects specializing in
the production of grains, livestock, dairies and animal feeds, to mention but a
few, were established (Fasipe, 1990: 129-130).
Sugar factories were also established at Numan, Lafiagi and sunti
(Lawal, 1997: 196).
The Nigerian Agricultural and Co-operative Bank (NACB)
was established in 1973 as part of government’s effort to invest oil wealth
into the agricultural sector through the provision of credit facilities to
support agriculture and agro-allied businesses (Olagunju, 2000: 90). By 1995 the bank had granted the sum of
$3,179.6 million as loan to the Private Sector.
-
The River Basin
Development Authorities (RBDA) were conceived in 1963 and were to cater for the
development of land and mineral resources potentials of Nigeria.
-
Operation Feed The
Nation (OFN) was commissioned in the 1970s with the main objectives of:
1)
Mobilizing the nation
towards self sufficiency and self reliance in food.
2)
Encouraging the
sector of population which relies on buying food to growing its own food.
3)
Encouraging general
pride in agriculture through the realization that a nation which cannot feed
itself, cannot be proud etc.
The OFN which was launched in 1976 to generate public
awareness of the importance of agriculture to national development, and
mobilize both rural and urban dwellers to participate in agriculture, be it in
conventional crop farms, fish farms, backyard gardens or poultry did not
realize the objectives of reducing or eliminating food imports and achieving
self-sufficiency so in 1980 it was replaced with the Green Revolution Programme.
- The Green
Revolution; This was a more deliberate and calculated approach to the food
production problem. The programme was
followed by the mounting of food strategies mission for Nigeria by the
Federal Ministry of Agriculture, which estimated the level of food production
needed to achieve self-sufficiency. Much
of the recommendations of the programme, such as the expansion of the
Integrated Agricultural Development Programme (ADP) to cover all States of the
Federation, support for artisanal fishers and aquaculture and the establishment
of grain storage facilities, among others, are still being implemented.
- The Directorate
of Food, Roads And Rural Infrastructure (DFRI):
This was established by the Federal Military Government in 1986 and was
intended to bring development to the rural areas where over 70% of the
population reside and work principally as farmers. The mandate given to DFRI is as follows:
1)
To improve the
quality of life and standard of living of the people in the rural areas.
2)
To use the enormous
resources of the rural areas to lay a solid foundation for the security,
socio-economic growth and development activities of the rural areas to those of
the Local Government Areas; the States and the Federal Government.
3)
To ensure a deeply
rooted and self-sustaining development process based on effectively mobilized
mass participation.
In spite of all these efforts, it is heartrending to note
that as from the mid 70s, Nigeria
became a net importer of various agricultural products. In 1982 alone, Nigeria imported 153,000mt tons of
palm oil at the cost of 92 million USD and 55,000mt tons of cotton valued at 92
million USD (Alkali, 1997:10). Between
1973 and 1980, a total of 7.07million tons of wheat, 1.62 million tons of rice
and 431,000 tons of maize were imported.
Thus from N47.8
million in the 60s, the cost of food imports in Nigeria rose to N88.2 million in 1970 and N1,027.0 million in 1988 (Alkali,
1997:19-21). Since the 1990s till the
ban of rice importation, Nigeria
has been spending an average of 60 million USD on the importation of rice
annually. In 1994, the agricultural
sector performed below the projected 7.2 per cent of budgetary output. (Lawal, 1997:197-198).
Beginning from year 2000, Nigeria import expenditure on both
food and live animals rose to N113,489.8
million in the year 2000 from N103,489.8
in 1999. The cost of importation
continued in its upward trend, in 2002 it was N144,297.6,
N201,648.3 in 2003, then N178,747.4 in 2004, N193,259.1 in 2005 and N235,440.0,
N271,679.7 and N355,287.0 from 2006 to 2008 respectively. (National Bureau of
Statistics, and CBN Statistical Bulletin Golden Jubilee Edition, 2008).
Between 1995 and 1998, the Government further embarked on
the reformation of lending policies of the Agricultural Credit Guarantee Scheme
(ACGS) for easier access to agricultural credit. It also established the Calabar Export
Processing Zone (EPZ) and initiated the Enugu,
Kaduna, Jos and
Lagos EPZs with each specializing in specified food and export crops.
In fact, the National Rolling Plan for 1996 – 1998
assumed that by the year 2000, Nigeria would have been able to feed its
population, develop the capacity to process agricultural raw materials both for
local industries and for export and significantly increase the contributions of
the agricultural sector to the GDP (Lawal, 1997:193). These objectives have turned out to be a
mirage mainly because of official corruption.
In order to get out of this, the Nigerian Government need
to actively promote the establishment of the kind of agro-based industries that
are capable of processing Nigeria’s agricultural raw materials in a most
efficient manner. Thus the emphasis
should be on the local processing of raw crops for local industries as well as
for exports. This will create more
employment opportunities and additional income will be generated. The provision of agricultural subsidies for
fertilizer, farm implements and equipment would also boost agricultural
production. In addition, there is the
need to protect the agricultural sector from foreign imports and
competition. It is also necessary to
provide replanting grants to cash crops farmers so that they can replace their
old trees with newer varieties.