Spread the love


| Format: Ms Word | 1-5 Chapters | Table of Content|


Study Level: BTech, BSc, BEng, BA, HND, ND or NCE

Amount: ₦3,000.00

Account Details


Revamping the image of Nigeria's agricultural sector to ensure consistent sustainable growth 1 | The Guardian Nigeria News - Nigeria and World News — Features — The Guardian Nigeria News – Nigeria and World News




1.1 Background of  the Study

The importance of manufacturing and agriculture in a nation’s economic growth and development cannot be overstated; the reason a nation has sustainable food security is because it produces enough food to feed its citizens and even exports these goods to other needy countries, generating foreign exchange and thus increasing national income in the long run. Manufacturing and agriculture support all other sectors of the economy, particularly the industrial sector. The difficulty confronting Nigeria’s manufacturing and agricultural economies is a lack of capital and credit for start-up, investment, and expansion. Monetary policy, through its influence on the financial sector, plays a significant role in increasing credit availability to the manufacturing and agricultural sectors.

The age of free market economy began in 1986, when a fundamental policy shift occurred. Prior to the introduction of the Structural Adjustment Programme (SAP) in early 1986, the Nigerian economy was characterized by excessive government control of production, financial intermediation processes, and foreign trade variables through administrative determination of interest rates, prices, and exchange rates. The adoption of Keynesian economic doctrine was based on the necessity to maintain the rate of economic growth and development in the face of a shallow and weak entrepreneurial class. However, the country’s excitement for this plan gradually waned, owing mostly to its failure to deliver on its most significant promise of continued economic growth and development. As a result, economic performance suffered (Udah, 2011; Ndebbio and Ekpo, 1991).

Available statistics show that during the first few years of the reform, the share of the banking system’s credit to the private sector increased dramatically, from 34% on average in the 1980s prior to the reform to around 49% in the 1990s and early part of 2000. The majority of loans extended to the private sector was for short-term investment. Contrary to expectations, the depth of the financial industry as measured by the M2/GDP ratio did not improve in the early years of the reform (1990s). It fell from 32.6 percent on average in the 1980s to 26% in the 1990s. This appears to imply that the financial sector’s expansion lagged behind the tempo of economic activity, and that the financial sector may not have been the source of economic activity increase at the time (Udah and Frances, 2011).

In terms of GDP contribution, the agriculture sector contributed 40.87% in 2010, down from 42.13% in 2008 and 41.70% in 2009. As a result, agriculture is the most important sector of the Nigerian economy. Crop production was the most important component of the Nigerian agricultural industry in terms of contributing to output development and as a source of employment and livelihood for the majority of rural people. The subsector’s output increased by 5.77% in 2010, compared to 5.83% in 2009 and 6.22% in 2008. In terms of contribution to growth, crop production accounted for 26.89% of total GDP growth in 2010 compared to 31.45% in 2009 and 38.96% in 2008. The subsector’s share of real GDP was 37.16% and 36.40% in 2009 and 2010 respectively (Annual Performance Report of the Nigerian Economy, 2011).

From N985.38 billion in 2009 and N866.60 billion in 2008, the output of the livestock, forestry, and fishery subsectors was N1,114.65 billion in 2010. It contributed 4.47% of the GDP in 2010, 4.54% in 2009, and 4.57% in 2008. In contrast to 6.48% in 2009 and 6.80 in 2008, livestock production increased by 6.45% in 2010. The output of fishing also increased quickly, going from 5.96% in 2008 to 6.17% in 2009 and 6.57% in 2010, respectively. Similarly, forestry output decreased from 5.85% in 2009 and 6.10% in 2008 to 5.77% in 2010 (Annual Performance Report of the Nigerian Economy, 2011). Cement, oil refining, and other manufacturing subsectors are included in manufacturing activity. In terms of the volume of manufacturing activity, the Other Manufacturing subsector dominates. At current basic prices, the value-added of manufacturing operations increased from N612.31 billion in 2009 to N520.88 billion in 2008, reaching N643.07 billion in 2010.  From 7.85% in 2009 and 8.89% in 2008, the manufacturing value-added growth rate decreased to 7.57% in 2010.   Manufacturing contributed to growth at a rate of 3.96% to the 7.98% overall GDP growth rate in 2010 and 4.67% to the 6.96% real GDP growth attained in 2009. In contrast to 4.17% in 2009 and 4.14% in 2008, the manufacturing sector provided 4.16% of the real GDP in 2010 according to the size of the economy. Cement and oil refining output growth fell from 10.83% and 6.95% growth rates in 2009 to 10.56% and 7.28%, respectively, in 2010. According to the 2011 Annual Performance Report of the Nigerian Economy

This study aims to evaluate the relationships between the financial system reforms and performance in the agricultural and manufacturing sectors, as well as to empirically document the advancements made in the financial system reform of Nigeria throughout the years.

1.2 Statement of the Problem

Nigeria was a major exporter of agricultural products prior to the rapid increase in oil export revenue, particularly cocoa, groundnuts, cotton, palm oil, palm kernel, and rubber. However, both the volume and diversity of agricultural exports have fallen substantially since then, while agricultural imports have surged dramatically.

High bank lending rates, which are a major deterrent to new investment and a death sentence for current ones, particularly for SMEs, a shortage of long-term investible cash for manufacturing activities, and inconsistency in government policy.

Low agricultural output has a detrimental impact on the economy as a whole, as there is a decrease in raw material production for industry. The failure to meet the financial services needs of farmers and agribusiness owners, who account for around 70% of the population, is a big concern for Nigeria. Farmers require capital to buy land and equipment, as well as to invest in the creation of new products, services, manufacturing technologies, and marketing strategies. However, due to a lack of creditability and collateral, banks are frequently hesitant to lend money to farmers for agricultural companies.

The issues raised above constitute a considerable departure from the features and standards of a favorable business climate that the financial sector need in order to fulfill its function as a growth and development engine. As a result, there is a need for research in order to effect necessary changes because financial authorities’ activities through financial sector reforms affect financial institutions and credit availability to the agricultural and manufacturing sectors in no small measure, which will positively affect manufacturing and agricultural output.

1.3 Objectives of Study

The primary aim of this research is to examine the effect of financial sector reforms on agricultural and manufacturing sectors in Nigeria. The specific objectives are:

  1. To examine the effect of financial sector reforms on manufacturing and agricultural.
  2. To examine the impact of prime lending rate, on manufacturing and agricultural output.
  3. To document empirically the progress made so far in reforming the Nigerian financial system over the decades.

1.4 Research Questions

The following research questions will guide the study;

  1. What effect(s) will financial sector reforms have on agricultural and manufacturing output?
  2. How can we use prime lending rate, to enhance agricultural and manufacturing output?
  3. Has there been any progress made so far in reforming the Nigerian financial system over the decades?


1.5 Hypothesis of the Study

The following statement of hypotheses will be tested in the course of the study;

Ho:        Financial sector reforms has not impacted positively on manufacturing and agricultural output.

Ho:        Prime lending rate has no effect on agricultural and manufacturing output.

Ho:        There has not been any progress made so far in reforming the Nigerian financial system over the decades.

1.6 Significance of Study

Most studies on the Nigerian agricultural and manufacturing sectors have not been specific enough in terms of emphasizing credit availability in relation to financial sector reform and the Central Bank of Nigeria’s actions as they affect manufacturing and agricultural businesses, which affect total agricultural and manufacturing output in the economy.

This study is distinctive in that it focuses on the impact of the government’s activities through financial sector changes on agricultural and manufacturing production, which will greatly contribute to current knowledge on the subject under consideration.

1.7 Scope of Study

This study aims to experimentally document the progress made in restructuring the Nigerian financial system throughout the years, as well as to examine the relationships between these reforms and performance in the agricultural and manufacturing sectors. The study will be conducted utilizing secondary data for a period of 15 years, from 1997 to 2011, which is sufficient and appropriate for conducting research, discovering new discoveries, and providing pertinent suggestions.

1.8 Operational Definition of Terms

Agriculture: Is the cultivation of animals, plants, fungi, and other life forms for food, fiber, bio-fuel and other products used to sustain life.

Manufacturing: Is the production of goods for use or sale using labor and machines, tools, chemical and biological processing, or formulation. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale.

Reform: Is to change and improve something by correcting faults, removing inconsistencies and abuses, and imposing modern methods or values.