THE
REGIME AND CONTRIBUTIONS OF AGRICULTURAL SECTOR TO ECONOMIC GROWTH IN NIGERIA.
CHAPTER ONE
INTRODUCTION
1.1
Background
to the Study
Agriculture
is the foundation and bedrock upon which the development of stable human
community has depended on throughout the whole universe such as rural and urban
communities. It is concerned with the husbandry of crops and animals for food
and other purpose. The study of the history of economics provides us with ample
evidence that can 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 need for rural transformation, redistribution,
poverty alleviation and socio-economic development.
Agriculture
has often been touted crucial in the economic development of most third world countries.
Recent researches on the causes of development and underdevelopment have
identified agriculture as key to the economic emancipation of ailing states. In
this perspective, the words of Gunner Myrdal that “it is in the agricultural
sector that the battle for long-term economic development will be won or lost”,
could be considered a truism. However, how we go about the contest for economic
development using agriculture as weapon, and how we hope to win, indeed, remains
a moot issue. Okolo (2004) described agricultural sector as the most important
sector of the Nigeria economy which holds a lot of potentials for the future
economic development of the nation as it had done in the past. Notwithstanding
the enviable position of the oil sector in the Nigerian economy over the past
three decades, the agricultural sector is arguably the most important sector of
the economy. Agriculture’s contribution to the Gross Domestic product (GDP) has
remained stable at between 30 and 42 percent, and employs 65 per cent, of the
labour force in Nigeria (Emeka 2007).
Nigeria is generously
endowed with abundant natural resources including biological and non-biological
resources. The resources of the entire world should be developed to the fullest
extent possible with available means as a whole can progress only by the efficient
and rational use of the natural resources. Resources depend on importance
attached to it. Hence, agriculture constitutes one of the most important
sectors of the economy. The significance of agriculture resource in bringing
about economic growth and sustainable development of a nation cannot be
underestimated. Agriculture contributes to the growth of the economy, provides
employment opportunities for the teaming population, export revenue earnings
and eradicates poverty in the economy. Oji-Okoro
(2011) is of the opinion that agriculture resource has been an important sector
in the Nigerian economy in the past decades, and is still a major sector
despite the oil boom; basically it provides employment opportunities for the
teeming population, eradicates poverty and contributes to the growth of the
economy.
In
Nigeria agricultural policies and programmes have undergone changes especially
in the postcolonial era. These changes have been a mere reflection of changes
in government or administration (Amalu, 1998). This is because these policies
and programmes vary only in nomenclature and organizational network. They
emphasize almost same objectives like: to provide food for the inhabitants of
the nation (food security and sufficiency) and export excess to other countries
and to provide rural dwellers and farmers with extension services, agricultural
support and rural development services etc. Despite all the policies and
laudable programmes with challenging themes, Nigeria is yet to achieve food
security. Agriculture also continues to suffer from inertia associated with
these policies and programme reformation that pervade Nigeria. To be
successful, Nigeria’s reform and agricultural programmes in particular need to
be backed up or initiated through a policy or policies coupled with increased
and better co-ordinated technical and financial assistance. It should also be a
programme selected based on a rational, national and institutional structure
that come from a national consensus on how best to achieve sustainable and
equitable rural/ agricultural development.
Even though Nigeria has
a high poverty rate, it still has a higher GDP in comparison to other countries
of Africa. Till now Nigeria has been trailing behind Western economies. Today,
almost fifty years after gaining independence, Nigeria should compete with
economies of the world rather than just African economies. The country is rich
in natural resources and has identified the fact that taking appropriate measures
can speed its economic development. With this foresight, it crafted the vision
20-20-20 program. This program aims to make Nigeria one of the twenty largest
world economies by the year 2020. The seven points in the 20-20-20 program are:
power and energy, food security and agriculture, wealth creation and
employment, mass transportation, land reforms security and functional
education.
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 between 1929 and
1945 was a difficult one for the agricultural
sector of Nigeria. This was the period of great depression when the world
princes on commodities fluctuated. This affected the agricultural sector
negatively because the volume of agricultural product increased but the value did
not increase proportionally. The period 1945 to 1945 marked the period of
expert boom, because counties were just recovering from the Second World War
and these countries needed to develop. They depended on primary production 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 period, Nigeria made
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 of which agriculture contributed about 80% of the export. On
attainment of political independence in 1960, the trend was still very much the
same, the Nigeria economy could reasonably be described as an agricultural
economy, because agriculture served as the engine of growth of the overall
economy (Ogen 2003). According to Alkali (1997) Nigeria was the world’s second
largest producer of cocoa, largest exporter of palm oil during the period. And
was also a leading exporter of other major commodities such as cotton, groundnut,
rubber and hides and skins. Between 1964 and 1965, agricultural output
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% and
75% of Nigerian foreign exchange earnings and provided the most important source
of revenue for the federal as well as state government through expert products
and sale taxes (Ekund are 1973). Despite the reliance of Nigerian peasant farmers
on traditional tools and indigenous farming methods, these farmers produced 705
of Nigerian’s exports and 95% of its food needs (Lawal, 1997). However, the 1967
to 1970 civil war in Nigeria coincided with the oil boom era, which resulted in
extensive exploration and exportation of petroleum and 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
accounts for less than 5% of Nigeria’s GDP (Olagbaju and Fashola, 1996). It is
against this backdrop 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. It becomes therefore imperative to study the impact of agricultural
development on the Nigeria economic growth.
1.2
Statement
of the Problem
The literature has reported that inspite of Nigeria’s
rich agricultural resource endowment, there has been a gradual decline in
agriculture's contributions to the nation's economy (Manyong et al., 2005). The
agricultural sector has suffered from years of poor management, inconsistent
and poorly implemented government policies, government neglect and lack of
basic infrastructure. Agriculture accounted for 65-70% of total exports in
1960s, fell to about 40% in the 1970s, and collided to less than 2% in the late
1990s. Nigeria is no longer a major exporter of cocoa, groundnut, rubber and
palm products, cocoa production mostly from outdated varieties and over-aged
trees are stagnant at around 150,000 tones annually. Low agricultural output has a negative effect
on the Nigerian economy as a whole. Several factors have been identified to
enhance or retard growth in the agricultural sector;
1.
The problem of finance: The agricultural
sector is poorly financed in Nigeria. They do not get credit easily from
financial institutions, like commercial banks. The agriculturists find it
difficult to finance projects which are capital intensive. The commercial banks
cannot grant loans easily to a small scale
2.
The Nigerian agriculture is
characterized and surrounded by bunch of illiterate farmers who live in rural
areas, producing over 90% of the total food consumed and other agricultural
products and with regards to their educational status giving little or no room
for improvement through scientific research.
3.
The Nigerian agriculture lacks storage
facilities and these have led to so much wastage and high cost of storage. This
hinders the availability of source perishable agricultural produce through the
year, therefore hindering agricultural development.
Another
problem of Agriculture in Nigeria is soil infertility, the major problems that
affects soil fertility is soil erosion, wind erosion, strong winds expose
seeding lings and crops root system by blowing away loose, fine grain soil
particles in drifts, which can cover crops. Water erosion is another type of
erosion that affects soil fertility; we have two types of water erosion: rill
and splash erosion. Rill erosion occurs when channels of water carry soil
downstream and Splash erosion occurs when rain drops impact the soil. It is
quite clear that the agricultural sector, as one of the Nigeria economy has
really got a lot to contribute to the economic growth of the country.
In
view of the problem above, the following research questions were raised;
1. What
is the trend of agricultural on Nigerian economy?
2. What
is the effect of agricultural sector on employment creation?
1.3
Objective
of the Study
The broad objective of
this study is to examine the regime and contributions of agricultural sector to
economic growth in Nigeria. and the study thus seeks specifically to;
1.
To determine the trend of Agriculture in
Nigeria Economy.
2.
To determine the effect of agricultural
sector on employment creation in Nigeria.
1.4
Significance
of the Study
The
fundamental importance of this study is to examine the regime and contributions
of agriculture on economic 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. This work stands
to benefit Nigeria as a whole: The research work intends to bring firth ways to
increase agricultural output both for the purpose of consumption and
exportation which ultimately will bring an increased favorable balance of
payment (BOP) for the nation.
1.5 Research Hypothesis
Hypothesis
One
Ho:
There is no significant contribution of Agriculture on Nigeria economic growth.
H1: There is a significant contribution of
Agriculture on Nigeria economic growth.
Hypothesis
Two
HO:
There is no significant impact of Agriculture on unemployment in Nigeria.
H1: There is a significant impact of Agriculture
on unemployment in Nigeria.
1.6
Scope of the Study
This research work
focuses on the impact of agricultural development on the economic growth of
Nigeria. Its objectives roles and modus operandi and also what it can do as an
economic sector in the development process in Nigeria. This research will be between
the periods of 1980-2010. It covers the period before and after economic reform
(SAP). The study is, however, constrained so as to reduce the biased level that
may arise when a short period is researched.
1.8 Plan of the Study
The
remainder of the project is organized as follows: In chapter two, we present a
discussion on the prior literature review, which include the conceptual issues,
theoretical framework and the review of empirical study, chapter three focuses
on research methodology, chapter four focuses on the quantitative presentations
and interpretations of empirical findings for stock returns and trading volume.
Finally, chapter five entails summary, conclusion and recommendations of the
study.
