IMPACT OF AGRICULTURAL SECTOR ON NIGERIA ECONOMIC GROWTH

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

By the time Nigeria became politically independent in October 1960,agriculture was the dominant sector of the economy, contributing about 70% of the Gross Domestic Product (GDP) employing about the same percentage of working population and accounting for about 90% of foreign exchange earnings and the federal government revenue (CBN, 2005). The early period of post-

independence up until the mid-1970’s saw a rapid growth of industrial capacity and output as the contribution of the manufacturing sector to GDP rose from 4.8% to 8.2%. This pattern changed when oil suddenly became of strategic importance to the world economy though its supply price nexus.

Crude oil was first discovered in commercial quantity in Nigeria in 1956, while actual production started in 1958. It became the dominant resources in the mid 1970’s. The massive increase in oil revenue as an aftermath of the Middle East war of 1973 created and unprecedented, unexpected and unplanned wealth of Nigeria. The relative attractiveness of the urban centres made many able bodied Nigerians to migrate from hinder land, abandoned their farm lands for the cities and hoping to partake in the growing and prosperous (oil driven) urban economy. This created social problems of congestion, provision, unemployment and crimes.

Still on ,,, Impact of Agricultural Sector on Nigeria Economic Growth and development 1981-2015.

Notwithstanding, the enviable position of the oil sector in the Nigerian economy over the past three decades, the agricultural sector has remained the largest and arguably the most important sector of the economy. Agriculture contributes to the gross force in Nigeria (Aigbokhan, 2001). It is estimated to be the largest contributor to the non-oil foreign exchange. A strong agricultural sector is essential to economy development both in its own rights and to stimulate and support the growth of industries. Economy growth has gone hand in hand with agricultural progress stagflation in agriculture is the principal explanation for poor economy performance, while rising agricultural  activities has seen the most concomitant of successful industrialization (Ukeje 1999). The labour-intensive character of the sector reduces its contribution to the GDP.

Nevertheless, agricultural exports are a major earner of foreign exchange in Nigeria, in the non-oil sector. Still on ,,, Impact of Agricultural Sector on Nigeria Economic Growth and development 1981-2015.

Like in most developing countries, agriculture remains the backbone of the Nigeria economy. Typically, it is the largest source of employment often two third or more of the population is dependent on this livelihood on farming. Its is a well-known fact that Nigeria’s comparative advantage in the production of certain food and other agricultural commodities that can earn foreign exchange for imports of other food.it has been recognised that sustained agricultural development requires striking an appropriate balance between investments that are directly productive in agriculture and investment in infrastructure. Poor infrastructural services in developing countries will lead to low productivity. Much of the high productivity of agriculture in the developed countries is as a result of massive form of investment over many years in physical and institutional infrastructure (Manyong, et al, 2003).

Conversely, the low productivity of agriculture in many developing countries reflects among other things, limited investment in rural roads and electricity. This streams from the concentration of public investments in urban areas, where the unit cost of providing services is typically less and logistic are problems fewer.

1.2 Statement of the Problem

One of the constraints of the growth in Nigeria has been the slow development of the agricultural sector. The performance of the sector was undermined by the disincentives created by the macro-economic environment. The economic stabilization Act enacted in 1982 affected expenditure on agriculture and restricted income. Indeed, the contribution of the sector to total GDP has been falling, not necessarily because a strong industrial sector is displacing agriculture as a result of low productivity. Emerging problem which constraint the full realisation of the potentials in the agricultural sector includes inadequacies in the supply and delivery of farm input, shortage of working capital, low level of technology, diseases and pest infestation, poor postharvest processing and shortage, environmental hazard, labour and land use constraint.

Still on ,,, Impact of Agricultural Sector on Nigeria Economic Growth and development 1981-2015.

There is need to correct the existing structural distortions in Nigerian agricultural sector and put the economy on the part of sustainable growth. This study seeks to find answers to the following research questions:

1.3 Research Questions

In the course of the study, the stated question below is sought to be answered.

To what extent has agricultural sector impacted on Nigeria’s economic growth? Is there any observed longrun relationship between agricultural sector and Nigeria economic growth?

1.4 Objective of the Study

The main objective of this study is to evaluate the role of the agricultural sector as an accelerator for economic growth and development in Nigeria. However, the specific goal is to:

Evaluate impact of agricultural sector on economic growth of Nigeria. Examine the longrun relationship between agricultural sector and Nigeria economic growth.

1.5 Statement of Hypothesis

Based on the objectives of the study, the hypothesis was formulated.

Ho: Agriculture sector has no significant impact on Nigeria economic growth in Nigeria.

Ho: Agriculture sector has no long run relationship on Nigeria economic growth.

1.6 Significance of the Study

The significance of this study depends on the fact that with improved economy, Nigeria stands to gain in its effects towards development. It is advantageous to both the government and citizens; in the sense that its serves as a guide for future governmental policy on agriculture and when this is well implemented, we will notice that the welfare and standards of living of the citizens will be improved.

1.7 Scope and Limitation of the Study

This study examines the role of the agricultural sector in the economic growth and development of Nigeria. The performance of Nigeria’s agricultural sector since 1981 to 2015 shall be evaluated in detail as well as effects of the government at revamping the sector examined. The study is therefore limited to the core economic growth in Nigeria and not the socio- political factors of the foreign exchange rate. The research was further limited by data inconsistency and unavailability, financial constraints, and time factors.

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