The Role Agricultural Financing plays in enhancing the Performance of the Agricultural Sector in Nigeria from 1981 to 2017

THE ROLE AGRICULTURAL FINANCING PLAYS IN ENHANCING THE PERFORMANCE OF THE AGRICULTURAL SECTOR IN NIGERIA FROM 1981 TO 2017

Aim and Objectives of the Study: This study aims to examine the impact of agricultural financing on the performance of the agricultural sector in Nigeria during the period 1981-2017. Specifically, the study examined the following:

1. The trend in government expenditure in the agricultural sector, bank credit to the agricultural sector, and output from the agricultural sector;
2.  The Impact of government expenditure in the agricultural sector on output from the agricultural sector; and
3. Impact of bank credit to the agricultural sector on output from the agricultural sector.
   CHAPTER ONE: INTRODUCTION

   • Background to the Study

   The role of agriculture in economic growth and development in any nation is crucial and it is a sign of prosperity and development. These roles include sources of food for the general population, raw materials for the manufacturing sector, reduction of inflationary pressure, earner of foreign, improvement in their living standard, and market for producers of the manufacturing sector (Mathew and  Mordecai 2016).

   According to Anyanwu et al, (1997), the role of agriculture in transforming both the social and economic framework of economic growth of a country cannot be over-emphasized. Agriculture is fundamental to the sustenance of life and it is the bedrock of economic development; especially in the provision of adequate nutrition as food which is vital for human development as well as industrial raw materials

   Agriculture is the art and sciences of crop and livestock production. It involves cropping, livestock, foresting, fishing, processing and marketing of agricultural products. In the opinion of Anyanwu et al (1997).agriculture includes farming livestock rearing fishing and forestry.  The contribution of agriculture to the development of any nation has been acknowledged since the time of Ricardo (Wilson 2002). Ihugba, Nwosu and Njoku (2013) state that the agricultural sector has the potential to be the industrial and economic springboard from which the country’s development can take off. Kuznets (1965) asserted that agriculture makes it feasible for other sectors to emerge and grow.

   Klein (1974) defined policy as a government course of action designed to influence the future behaviour of the economy. Agricultural policies represent public action taken to improve the standard of living and economic opportunities of farmers as well as the economy.

   In the opinion of Mitchel (2005), sustainable agricultural development is propelled by agricultural policies and programmes.

   According to the Agricultural Research Council of Nigeria (ARCN), Nigeria’s agricultural policy is the synthesis of the framework and action plans of the government designed to achieve overall agricultural growth and development. The policies and programmes are aimed at the attainment of self–sustaining growth in all sub-sectors of agriculture and the structural transformation necessary for the country as well as the improvement in the quality of life in Nigeria.

   Beginning from the era of the Commodity Board in the 1960s the country has witnessed a myriad of policies and programmes; ostensibly introduced to address problems in the agricultural sector. Such policies and schemes have focused on enhancing agricultural output, improving the expected linkages (backwards and forward) with the manufacturing sector, increasing earning and employment opportunities, increasing food security etc. they have therefore basically touched on the availability of supplies and equipment production, incentives to farmers transportation, agricultural credit, land reform, food preservation, extensive services infrastructural facilities etc. Government involvement in agriculture, not only goes beyond providing supportive services, it also includes direct participation in the production of agricultural products (Rogers, 1999).

   According to Olayemi (1998) agricultural policies and strategies that have been adopted in Nigeria can be categorized into four namely exploitative strategies, agricultural market strategies, direct government production strategies and integrated rural development strategies.

   These policies and programmes are aimed at establishing a system of sustainable agricultural financing schemes that could provide macro and micro-credit facilities. Today only paltry evidence is witnessed in terms of agricultural output.

   These policies usually have an impact on the profitability of the agricultural system and the welfare of the farmers as they affect the flow of funds to the sector from budgetary allocation, credit, subsidies, taxes etc. (Olayide 2015). They must therefore be in harmony and mutually reinforcing with the government policies and programmes. Sustainable agricultural development is propelled by agricultural policies and programmes, however, a critical look at these programmes and policies reveal that successive government have demonstrated varying levels of commitment to agricultural development. This according to Rogers (1999) accounted for the uncoordinated and stunted growth in this sector of the Nigerian economy.

   Public expenditure, which serves as the bedrock of financing of the sector has consistently fallen short of the public expectation.

   Despite numerous laudable agricultural programmes like the National agricultural and development authority (NALDA), National Fadama Development Projects (NFDP), the Agro Youth Centre, and Agricultural Credit Support Scheme among others, productivity has not improved.

   The saying that agriculture is the mainstay of the Nigerian economy may have become a cliché. It nevertheless underscores the emphasis placed on agriculture as the engine of growth in the Nigerian economy. Generally, the sector contributes to the development of an economy in four major ways product contribution, factor contribution, market contribution and foreign exchange contribution.  (Ewubare 2015).

   In realization of this, the government has embarked on various policies and programmes aimed at strengthening the sector to continue performing its roles, as well as measures for combating poverty. Notwithstanding the enviable position of the oil sector in the Nigerian economy over the years, 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% and employs about 75%, of the labour force in Nigeria (Mitchel 2005).

   The study, therefore, is set to determine the contribution of agricultural policies and programmes to agriculture and their implications for economic growth in Nigeria between 1981-2015 and also compare with some other factors on which agricultures output depends as well.

   1.2.    Statement of the Problem

   The background of the research investigation shows the trends of agricultural policies and programmes and their implication for economic growth in Nigeria.

   The population involved in farming is between 60 and 70% (Nwajiuba 2012). The sector contributed an average of 32% to the GDP during the years of study 1981-2015. Since the 1980s the approach or strategy is yet to succeed in transforming Nigeria’s agriculture nor has Nigeria achieved self-sufficiency in food production. The continued absence of progress in these policies and programmes in agriculture in Nigeria is the consequence of non-interaction between the government and the various stakeholders within a particular programme as well as a lack of opportunities for decision-making and policy dialogue with other stakeholders (www.iiste.org). In addition, the Nigerian government has initiated a plethora of policies and programmes which were aimed at restoring the agricultural sector to its pride of place in the economy. However, various efforts at promoting investment and diversification in the agricultural sector have not yielded appreciable dividends.

   Many factors have been identified to retard growth in the agricultural sector. Although the government of Nigeria has embarked on a lot of policies and programmes between 1981 and 2015, according to Okezie et al.,(2012) the reason for the low success was not because the projects and programmes were mere paper and pencil solutions, but because the methodology of their implementation seems to have missed some vital links. The aspect of institutional policy which affects the agricultural sector and these policies are underemployed themselves (Moro 1994).

   Consequently, there is an urgent need for the government to revamp the agricultural sector to its past glory through proper funding of agricultural policies and programmes.

    

   1.3.    Aim and Objectives of the Study

   This study aims to examine the impact of agricultural financing on the performance of the agricultural sector in Nigeria during the period 1981-2017. Specifically, the study examined the following:

   1. The trend in government expenditure in the agricultural sector, bank credit to the agricultural sector, and output from the agricultural sector;
   2. Impact of government expenditure in the agricultural sector on output from the agricultural sector; and
   3. Impact of bank credit to the agricultural sector on output from the agricultural sector.

   1.4. Hypotheses

   The following null hypotheses were tested in the study:

   1. H₀: Government expenditure in the agricultural sector has no significant impact on output from the agricultural sector.
   2. H₀: Bank credit to the agricultural sector has no significant impact on output from the agricultural sector.

   1.5. Scope of the Study

   This research work focused only on government and bank financing of the agricultural sector during the period 1981-2017. Moreover, this research work did not attempt to investigate the impact of the selected agricultural financing options on the various agricultural sub-sectors.

   1.6.    Significance of the Study

   The output of the study is relevant to the government, farmers, and investors in the agricultural sector. The study will pave way for better ways of implementing viable agricultural policies and programmes, that will help improve the Nigerian farmers and the growth of the economy.

   1.7.    Organization of the Study

   This study is divided into five chapters for coherence and consistent presentation. Chapter one contains the introduction, background of the study, statement of the problem, the purpose of study, significance of the study, research questions, hypothesis, the scope of study and organization of the study. Chapter two focuses on reviewing related literature. Chapter three focuses on the method adopted for the study. Chapter four focuses on data presentation and interpretation of results. While in chapter five, the summary, recommendation, contribution to knowledge and limitation of the study will be stated.