Agricultural Financing - Agricultural Sector Output Nexus: A Case Study of The Nigerian Economy

Falaye Motunrayo Helen

doi:10.47747/ijfr.v4i1.1103

Authors

Falaye Motunrayo Helen Afe Babalola University, Ado Ekiti, Nigeria

DOI:

https://doi.org/10.47747/ijfr.v4i1.1103

Keywords:

Agricultural Financing, Agricultural Output, ARDL, Nigerian Economy

Abstract

The study “Agricultural Financing -Agricultural sector output nexus: in Nigeria” investigated the effect of agricultural financing, both public and private on the outputs of two main sectors of agriculture: crop production and livestock production. Three objectives were formulated to provide guide to this study: examine the long and short run relationship of agricultural financing on crop production output and livestock production output, and to examine the causal relationship between agricultural financing and agricultural sector output. To achieve these objectives, the study employed two models, each using ARDL Test, Bounds Test, and Granger causality test using time series data from 1981 to 2019.Data was obtained from CBN and World Bank data base. Dependent variables were Crop Production output and Livestock Production output respectively and independent variables were Public Finance, Commercial Bank Credit to Agriculture, Inflation Rate and Interest Rate. The model was tested using descriptive statistics to analyse the significance of the relationship between the dependent and independent variables. The results show that both public and private finance were positive but insignificant in the short run. In the long run, public finance remained insignificant whereas private finance was positive and significant. Thus, private financing is more effective at improving agricultural output than public finance. The study also revealed a negative long run relationship between interest rate and the outputs of crop and livestock production during the period. It is therefore recommended that the government encourages private investment in agricultural activity, and puts measures in place to curb corruption and embezzlement. Government should also ensure that credit facilities are provided to farmers at low interest rate to reduce detrimental influences.

References

Abubakar, H.I. (2000). The growth of federal government expenditure in Nigeria (1962- 1995): A Structural and institutional analysis. (Unpublished Doctoral Dissertation, Ahmadu Bello University, Zaria). Retrieved from kubanni.abu.edu.ng/jspui/

Akintola, G. (2017). Problems of agricultural development in Nigeria Accessed online on May, https://www.naij.com/1097406-problemsagricultural-development-nigeria.html

Alkali R.A. (1997) the World Bank and Nigeria: cornucopias or pandora box? Kaduna: Baraka press, 10 -21

Al-yusif Y, (2000). Does government expenditure inhibits or promote economic growth; some empirical evidence from Saudi Arabia, Indian economic journal

Anríquez, G. and K. Stamoulis (2007): Rural Development and Poverty Reduction: Is Agriculture Still the Key? ESA Working Paper No. 07-02. FAO, Rome.

Antle, J. M. 1983. Infrastructure and Aggregate Agricultural Productivity: International Evidence Economic Development and Cultural Change.

Awokuse, T.O. (2009): Does Agriculture Really Matter for Economic Growth in Developing

Countries? Selected Paper prepared for presentation at the American Agricultural Economics Association Annual Meeting, Milwaukee, WI, July 28, 2009.

Bhatia, H.L., 2008. Public finance; 25th Edition, Vikas Publishing House, PVT Ltd,Indian

CBN (2004)’’ Changing the structure of the Nigerian Economy and implication for development ”Realm communication Lagos. Central Bank Annual Report statement of account, 2005.

Bhatia H.L (2002). Public Finance, 25th Edition, Vikas Publishing House, PVT Ltd, India.

CBN (2013). “Statistical Bulletin”. www.cenbank.org.

Bhatia, H. L. (2012). Public Finance (27th Ed.). New Delhi: Vikas.

Brown, E., & Ajayi. E. (2015). The effects of public expenditure on agricultural production output in Nigeria. Journal of Research in Humanities and Social Science, 3(11), 07–23.

Central Bank of Nigeria . Agricultural Credit Guarantee Scheme Fund of Nigeria(ACGSF): An impact assessment. A study conducted by Centre For Resource Analysis And Management for Central Bank of Nigeria Abuja 2007:15-6.

CBN (Central Bank of Nigeria) (2010): Annual Report and Statement of Accounts for the

Year Ended 31st December 2010. Available at: http://www.cbn.org.ng. Accessed 15th March 2021.

Central Bank of Nigeria, (2009) Statistical Bulletin: Volume 18, December 2009, Section B, Public Finance Statistics.

CBN (Central Bank of Nigeria) (2008): Annual Report and Statement of Accounts for the Year Ended 31st December 2008. Available at: http://www.cbn.org.ng. Accessed 15th March 2021.

CBN Statistical Bulletin. (2017). 2017 Statistical BulletinReal SectorFinal. Retrieved from statistics.cbn.gov.ng/cbn-onlinestats.

CBN (Central Bank of Nigeria) (2011): Annual Report and Statement of Accounts for the Year Ended 31st December 2011. Available at: http://www.cbn.org.ng. Accessed 15th March 2021.

Chidinma, E & Kemisola, C. (2014). Government expenditure on agriculture and economic growth in Nigeria. International Journal of Science and Research (IJSR), 3(9), 188–194.

CIA (2013). The world fact book. Retrieved March 3, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/ni.html

Daneji, M. (2011). Agricultural development intervention programmes in Nigeria (1960 to date). Savannah Journal of Agriculture. A Review, 6(1), 101– 107.

De, U. K., & Dkhar, D. S. (2018). Public expenditure and agricultural production in

Meghalaya, India : An application of bounds testing approach to co-integration and error correction model. International Journal of Environmental Science & Natural Resources, 8(2), 001–008. https://doi.org/10.19080/IJESNR.201 8.08.555735.

Eboh, E., M. Oduh and O. Ujah (2012): Drivers and Sustainability of Agricultural Growth In Nigeria. AIAE Research Paper 8. African Institute for Applied Economics, Enugu

Emmanuel .O.E. (2008). Macroeconomic Environment and Agricultural Sector Growth in Nigeria. World Journal of Agricultural Sciences. Vol.8, No.16.

FAO (Food and Agriculture Organization) (2012): The State of Food Insecurity in the World. Economic growth is necessary but not sufficient to accelerate reduction of hunger and malnutrition. FAO, Rome, Italy.

IFPRI (2004).Annual Report 2003 - 2004. International Food Policy Research Institute, Washington, DC.

Ike, D. (1982). Surplus Labor in Agriculture and the Theory of Disguised Unemployment: Empirical Evidence from Egypt, India and Nigeria. Indian Journal of Economics 63, (1).

Lawal, A. A. (1997). “The Economy and the State from Pre-Colonial Time to the Present ‘’In the Osuntokun, A. and Olukoju, A. (Eds) Nigerian Peoples and cultures, Ibadan: Davidson. 195-196

Mgbanya, J.C., Onwumere, J. C., Eze, A.V., Nwokenekwu, A.V., &Igwe, E.O. (2018). Impact of national recurrent expenditure on Nigeria agricultural growth. Asian Journal of Agricultural Extension, Economics & Sociology,28(4),1-9.

Modebe, N.J, Okafor, R.G, Onwumere, J.U &Ibe, I.G (2012). Impact of recurrent and capital expenditure on Nigeria’s economic growth. European Journal of Business and Management, 4(19), 66-74

Mohammed, R. (2018). Impact of government capital expenditure on the agricultural development of Yobe State (M Phil Thesis, Ahmadu Bello University, Zaria). Retrieved from kubanni.abu.edu.ng/jspui/

Musgrave, R.A., Musgrave, P. B. (1984). Public Finance inTheory and Practice (4th edition) (pp. 7-12), McGraw-Hill,New York.

Njoku, P.O. (2009). Public Finance: Sources, administration, and management. Enugu; Eldemark

Obinna, O. E. (2003) Public Finance, Nsukka, Ap and P Press Ltd. 210p

Ogen, O. (2003) “Pattern of Economic Growth and Development in Nigeria since 1960”in S.

O Aritalo and Gboyega Ajayi (Eds) (2003.) Essay in Nigerian Contemporary History, Lagos First Academic Publishers Ogen O. The agricultural sector and Nigeria’s development: Comparative perspective from the Brazilian agroindustrial sector economy (1960-1995). Nebula: Noble World Archives; 2007

Ojong, C. M., Ekpo, S., & Anthony, O. (2016). Government Expenditure and its implications on Nigerian economy. Journal of Humanities and Social Science, 21(1), 50–55. https://doi.org/10.9790/083721125055

Okoro A. S.(2013). Government Spending And Economic Growth In Nigeria (1980-2011). Singaporean Journal Of Business Economics, And Management Studies VOl.2, NO.5, 2013

Olagbaju J. &Falola, T., (1996). “Post Independent Economic Changes and Development in West Africa. Oguremi G.O., Faluyi. E.K (Eds) an Economic History of west Africa since 1975 Ibadan Rex Charles pg 263

Olagunju. M. A., (2000). “Economic Issues in Nigeria’s Development” in Akinbi. J.O (Ed) towards a better Nigeria. Ibadan: Ben Quality press. pg 98

Olajide, O. T. Akinlabi, B. H. & Tijani, A. A. (2012). Agriculture Resource and Economic Growth in Nigeria. European Scientific Journal. 8, 22

Rufus, O. J. O., &Oyewole, A. O. (2018). Public expenditure on agriculture and output growth in Nigeria. International Journal of Arts and Commerce, 7(4), 60–78.

Schaffnit-Chatterjee, C., Lanzeni, M. L., AG, D. B., & Hoffmann, R. (2014). Agricultural value chains in Sub-Saharan Africa. From a development challenge to a business opportunity. Deutsche Bank Research, Frankfurt, 1-28.

Sekunmade, A. (2009). The effects of petroleum dependency on agricultural trade in Nigeria: an error correlation modeling (ECM) approach. Scientific Research and Essay, 4(11), 1385-1391.

Sohail N. Okwoche, V. A, (1991). Evaluation of Agricultural Credit Utilization by cooperative Farmers in Benue State of Nigeria. European journal of Economics, Finance and Administrative Science. Issues 47.

Uremadu, S. O., Ariwa, F. O., & Uremadu, C. E. D. (2018). Impact of government agricultural expenditure on agricultural productivity in Nigeria. Current Investigations in Agriculture and Current Research.5(3) 632–641. https://doi.org/10.32474/CIACR.201 8.05.000215.

Yusuf, H.A & Mohammed, R. (2017). Assessment of the effect of public expenditure on crop production in Yobe state. ABU Jounal of Public Administration, 6(1), 445–465.

Zeller, M., A. Diagne and C. Mataya. 1998. Market Access by Small Holder Farmers in Malawi. Implication for Technological Adoption, Agricultural Productivity and Crop Income. Agricultural Economics. Special Issue.