THE IMPACT OF GOVERNMENT FUNDING ON AGRICULTURAL OUTPUT AND ECONOMIC GROWTH IN NIGERIA
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This study is on the impact of government funding on agricultural output and economic growth in Nigeria. The total population for the study is 200 staff of ministry of agriculture, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made planning officers, rural finance officers, senior staff and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
1.1 Background of the study
The growth and development of any nation depend to a large extent, on the development of agriculture according to Iganiga and Unemhilin (2011). Most of the world active but poor people live in rural areas and are primarily engaged in agriculture. Nigeria is a vast agricultural country, endowed with substantial natural resources which include: 68 million hectares of arable land, fresh water resources covering about 12.6 million hectares, 960 km of coastline and an ecological diversity which enables the country to produce a wide variety of crops, livestock, forestry and fishery products. Bakare (2013) observed that despite the articulation of government policies, strategies and programmes and the commitment of Government and donors to the broader framework of sustainable agriculture and pro-poor rural development, the rural communities in Nigeria remain underdeveloped and many complex issues regarding the design, implementation, and monitoring and evaluation remain unresolved. According to Nwankwu (1981) the role of agriculture in reforming both the social and economic framework of an economy cannot be over-emphasized. It is a source of food and raw materials for the industrial sector. It is also essential for the expansion of employment opportunity, for reduction of poverty and improvement of income contribution, for speeding up industrialization and easing the pressure on balance of payment. World Bank in a report (2014) concluded that in many developed and developing countries agriculture has been the main source of gainful employment, a source of basic food supply with which the nation can feed its teeming population, a regenerative source of foreign exchange earnings, means of providing the nation’s industries with local raw materials, and as a reliable source of government revenue. Generally, the agricultural sector contributes to the development of an economy in four major ways- product contribution, factor contribution, market contribution and foreign exchange contribution. In realization of this, the Nigerian government has formulated various policies and programmes aimed at strengthening the sector in order to continue to perform its roles. Ehui and Tsigas (2013) mentioned that Nigeria has a highly diversified agroecological condition, which makes possible the production of a wide range of agricultural products. Hence, agriculture constitutes one of the most important sectors of the economy. Despite Nigeria’s rich agricultural resource endowment, the agricultural sector has been growing at a very low rate. Productivity is low and basically stagnant. Farming systems, which are mostly small in scale, are still predominantly subsistence based and for the most part depend on the vagaries of the weather. Many agricultural policies have also been ineffective, either because they have been misguided, or because their impacts have been swamped by macro policies affecting inflation, exchange rates, and the cost of capital. It is recognized that agricultural commercialization and investment are the key strategies for promoting accelerated modernization, sustainable growth and development hence, poverty reduction in the sector. However, to attract investment into agriculture, it is imperative therefore to examine the empirical relationship between agricultural output and economic growth in Nigeria and the policy concerns it engenders in Nigeria.
1.2 STATEMENT OF THE PROBLEM
In spite of Nigeria’s rich agricultural resource endowment, there has been a gradual decline in agriculture’s contributions to the nation’s economy. The agricultural sector during the 1960s, accounted for over 70% of the total exports in Nigeria. According to Olajide, et al (2012), the agriculture sector fell to 40% in the 1970s, and got worse in the late 1990s by less than 2%. The sudden decline in the agricultural sector was largely due to the rise in crude oil revenue in the early 1970s. As a result of this, today, small scale farmers are constrained by lots of problems including poor infrastructure, poor access to modern inputs and credit, land and environmental degradation, inability to capture the financial service requirements of farmers and agric-business owners. Categorically, the state of agriculture in Nigeria remains poor and largely underdeveloped which is constrained by the lack of synergy between public and private expenditure in boosting agricultural production, the sector rely on primitive methods to sustain a growing population without efforts to add value. This has reflected negatively on the productivity of the sector, its contributions to economic growth as well as its ability to perform its traditional role of food production among others. According to Falola and Haton (2008), the state of this sector has been blamed on oil glut and its consequences on several occasions. Hence, the pattern was not an outcome of increased productivity in the non-agricultural sectors as expected in the industrialization process (Christiansen & Demery, 2007); rather it was the result of low productivity due to negligence of the agriculture sector. It is evident that the agricultural sector especially the small scale farmers constitute about 70% of the population in Nigeria, yet agricultural output has been very low due to government’s neglect in form of financial aid, and soft loan to boost agricultural output which in turn has a negative effect on the Nigerian economy as a whole.
1.3 OBJECTIVE OF THE STUDY
The objectives of the study are;
- Examine the relationship that exists between government expenditure on agriculture and economic growth in Nigeria.
- To ascertain the contribution of agriculture to Nigeria economy
- To evaluate the effects of National funding and investment in agriculture on Nigeria agricultural share of GDP.
1.4 RESEARCH HYPOTHESES
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
H0: there is no relationship that exists between government expenditure on agriculture and economic growth in Nigeria
H1: there is relationship that exists between government expenditure on agriculture and economic growth in Nigeria
H02: there is no contribution of agriculture to Nigeria economy
H2: there is contribution of agriculture to Nigeria economy
1.5 SIGNIFICANCE OF THE STUDY
This study will give a clear insight on the impact of government funding on agricultural output and economic growth in Nigeria. The study will be beneficial to students, ministry of agriculture and the general public. It will also serve as a reference to other researchers that will embark on this topic
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study covers the impact of government funding on agricultural output and economic growth in Nigeria. The researcher encounters some constrain which limited the scope of the study;
- a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
- b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
- c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.
1.7 DEFINITION OF TERMS
GOVERNMENT FUNDING: Government funding refers to financial assistance received by non government entities in the form of federal, state, or local government grants, loans, loan guarantees, property, cooperative agreements, food commodities, direct appropriations, or other assistance.
AGRICULTURAL OUTPUT: Agricultural productivity is measured as the ratio of agricultural outputs to agricultural inputs. While individual products are usually measured by weight, their varying densities make measuring overall agricultural output difficult.
ECONOMIC GROWTH: An increase in the amount of goods and services produced per head of the population over a period of time
1.8 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy understanding, as follows
Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and recommendations made of the study
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