impact of agricultural development on economic growth in Nigeria

CHAPTER
ONE
INTRODUCTION
Background
of the Study
          Agriculture 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. Economic history provides us with ample evidence that agricultural
revolution is a fundamental pre-condition for economic growth, especially in
developing countries (Woolf and Jones, 2007; Oluwasanmi, 2006; Eicher and Witt,
2014). Ukeji (2003) submits that in the 1960‟s, agriculture contributed up to
64% to the total GDP but gradually declined in the 70‟s to 48% and it continues
in 1980 to 20% and 19% in 1985, this was as a result of oil glut of the 1980‟s.
Historically, the root of the crises in the Nigerian economy lies in the
neglect of the agricultural sector by the Federal Government towards developing
dependence on a mono-cultural economy based on oil.
           The objective of this paper is to investigate
the contribution of domestic savings, government expenditure on agriculture and
foreign direct investment on agriculture and the general impacts of
agricultural sector on the Nigerian economy bearing in mind that the sector is
fundamental to the sustenance of life and the bed rock of economic growth.
          According to Jerzy W. (2013)
agriculture is that kind of activity which joins labour, land or soil, live
animals, plants, solar energy and so on; the Minister of Agriculture is the
Minister of the beginning of life. So people who are involved with that kind of
activity are involved in something special. In recognition of this prominent
role the Minister of Agriculture and Federal Government of Nigeria has taken a
giant stride to treat agriculture as serious political, economic and investment
issue in Nigeria. Majority of people in Nigeria live and work in rural area.
Almost 75% are rurally based compared to less than 25% in urban area.
Similarly, over 58% of the labour force engaged in agriculture. In Nigeria, the
sector contributes about 55% of gainful employment and almost 40 % of the share
of GDP, before the discovery of oil, this sector contributed as high as between
75 – 80% of the GDP. Nevertheless, this current figure for the GDP share of
agriculture sector is quite high when we compared it with the average of 27%
for low income nations in Sub-Sahara Africa (WDI, 2010).
          In
terms of pace of the sector development and contribution to the
industrialization, the agricultural sector in thi
s part of the world is still
lack
ing
behind because of its failure to produce the food to the level of marketable
surplus to feed itself, the other sectors (above subsistence level) and provide
the inputs required for the industrial development of the nation and consequent
growth in foreign exchange earnings through export and conservation of foreign
exchange through imports substitution of competitive imports. As long as it has
been established that developing countries like Nigeria has comparative advantage
over the other countries in the production of agricultural output than the
industrialized countries, it is important to emphasize that there is need for
such economy to focus its attention on the agricultural sector liberation so
that it can support development of the nation. This is the only sector that
provides the           ready-made means
for country like Nigeria to facilitate industrial development because all the
other sectors directly or indirectly depend on agriculture output either for
food to sustain their workforces or as crucial input in their production
process. Meanwhile, the sector can do this by supplying relatively cheap food
to the urban industrial sector which will go a long way in checking
inflationary tendency of workers‟ wages where inadequate food supply may lead
to rising food prices as a result industrial unrest as workers continue to
demand for increase in wages to meet basic needs of life. Important of food is
not viable for any ambitious country for several reasons which might be political,
economical and strategic. So, it is needful of agricultural sector to provide
food beyond the subsistence level (marketable surplus). In a nutshell, the
prominent roles expected to be of agricultural sector in developing country
like Nigeria cannot be over emphasized. There is no gain saying that
agriculture plays significant role in the growth and development process.
Consideration of the reality that the sector plays the role of a way of life in
the developing countries like Nigeria and the fact that this sector of the
economy, as imperative it is, has not been receiving adequate attention by
Government officials, political office holders and policy makers to the extent
that there is excessive reliance on the non-renewable crude oil as the means of
sustaining the national needs demand serious attention of the researchers in
one hand. At the other hand, to the best of the researchers knowledge, many
studies that have worked on this issue suffered one methodological problem or
the others most especially omission of variables bias by excluding the
important variables in the analysis of agricultural productivity viz a viz the
growth which are Labour and Capital (Adegbenro H., 2010; Onunze M. T, 2012;
Olajide et al, 2013; Olajide, 2013; Muhammad L. and Atte O., 2006; Abogan O. P.
et al., Uma K.E. et al., 2013 etc).
Statement of Problem
          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 30% of the GDP in 2010 (World Factbook, January 9, 2012).
          Nigeria is no longer a major exporter
of cocoa, groundnut, rubber and palm products. Coca production mostly from
obsolete varieties and over-aged trees are stagnant at 150,000tones annually.
There is also a decline in groundnut, palm oil and other major export crops
(United States Department of State, 2005). The decline in agriculture
production was largely due to the rise of oil shipments (A.B Sekumade 2009).
          The Nigerian agricultural sector is
faced with numerous problems but few will be discussed, 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. And also more than 90% of the
consumed food in Nigeria is provided by the small-scale farmers. The Nigerian
agriculture lacks storage facilities and these have led to so much wastage and
high cost of storage. This hinders the availability of some perishable
agricultural produce through the year, therefore hindering agricultural
development. Another negative force is Dependence on weather which affects the
increase in agricultural supplies water all through the year.
          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 farmer because of
low produce and low profit which results to a failure in paying back the loan.
          Food processing problem is estimated
that about 20 to 40% of the yearly harvest is lost during processing. The
primary cause is the lack of efficient harvesting techniques. According to and
with the information above, 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.
Objectives
of the Study
          The broad objective of this study is
to determine the impact of agricultural development on economic growth in
Nigeria. The specific objectives are as follows:
1.     To
determine the impact of agricultural sector on the economic growth in Nigeria.
2.     To
access the effect of agricultural sector on employment creation in Nigeria.
3.     To
investigate the role of agriculture in the attainment of food sustenance in
Nigeria.  
Research Questions
(i)               
What is the effect of agricultural on
economic growth?
(ii)            
What is the effect of agricultural
sector on employment creation?
(iii)          
What is the role of agriculture in the
attainment of food sustenance in Nigeria?
Statement
of Hypothesis
          For the purpose of this study, the
following hypothesis is tested;
H1:
Agricultural development has significant impact on economic growth in Nigeria.
H0:
Agricultural development has no significant effect on employment creation in
Nigeria.
Significance
of the Study
          The significance of this study depends
on the fact that with improved economy Nigeria stands to gain in its effects
toward development. This work attempts to answer the question: What is the
relevance of agriculture in economic growth? The cause of agricultural
backwardness and how the present state of our agricultural productivity will be
improved. This will form the basis upon which suggestions and contributions
will be made as to how the full potentials of agriculture can be harnessed.
This work stands to benefit:
i.                  
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.
ii.                
This work will be advantageous to
schools (staffs and students) and will help them understand the importance of farming
no matter how small the scale of production may be.
Scope
and Limitations
          This research work
focuses on the impact of agricultural development on the economic growth of
Nigeria between the period of 1980 to 2010.
In the process of carrying out this research work, some
problems were encountered. The problems include the following
, time
factor, poor finance, environmental constraints like free movement to research
outside the school premises etc.
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