Impact of Government Spending on Agricultural Sector in Nigeria

Impact of Government Spending on Agricultural Sector in Nigeria

CHAPTER ONE

Objectives of the Study

The general objective of this study is to investigate government expenditure on agricultural output in Nigeria. To achieve this general objective, the following specific objectives will be examined.

To examine the impact of government expenditure on agricultural sector in Nigerian.
To examine the impact of agricultural sector growth on Nigerian economy.

CHAPTER TWO

LITERATURE REVIEW

Conceptual Literature

Government Expenditure

Government expenditure is defined as the expenses incurred by the government in carrying out its responsibilities. It includes all government consumption, investment and transfer payments. Okoh (2015) government expenditure is defined as those expenditures incurred by government in the course of maintaining the society and improving the economy.

Government expenditure refers to money spent by public sector on the acquisition of goods and provision of services such as healthcare. It includes public consumption and public investment. Government expenditure refers to expenses incurred in the public sector. It refers to expenses incurred by the government at various levels which include the Federal, State and local government levels in Nigeria (Siyan, 2002). Public expenditure is used to provide public goods and services to the populace through which economic growth is induced (Bello, 2003).

Government expenditure is categorized into recurrent and capital expenditure (Ogba, 2011). Recurrent expenditures are goods, which includes all consumption items that occur in a year. Capital expenditure relates to payments for the use of non-financial assets used in production which contributes to long-term development. Examples of capital expenditure include spending on agriculture, building of health facilities, building of educational facilities, construction of roads and electricity.

Agriculture

Agriculture is the science or practice of farming, including cultivation of the soil for the growing of crops and rearing of animals to provide food. It is the production of food, feed, fibre and other goods by the systematic growing and harvesting of plants and animals. It is the science of making use of the land to raise plants and animals. It is the simplification of nature’s food webs and the rechanneling of energy for human planting and animal consumption (Akinboyo 2008).

Agriculture is the backbone of any country economy; in broad sense it comprises the entire range of agricultural technology related production of plants and animals, including crop production, soil cultivation and livestock [Ebere and Osundina, 2014].

Agriculture encompasses a wide variety of specialties and techniques, including ways to expand the lands suitable for plant raising, by digging water-channels and other forms of irrigation. Cultivation of crops on arable land and the pastoral herding of livestock.

CHAPTER THREE

RESEARCH METHODOLOGY

Types and Sources of Data

Data and the literature for this study were obtained from secondary sources, the CBN statistical bulletin were instrumental in the collection of statistical information used in carrying out this research.

Method of Estimation

The study adopts an econometric model in determining the effect of government expenditure and agricultural sector in Nigeria. The Generalised Least Square (multiple linear regression) model was used to evaluate the relationship between government expenditure and agricultural sector in Nigeria.

The multiple regression model is stated thus; Yi = B₀ +B₁X_1i + B₂X_2i + u Where; Y is the dependent variable, X₁and X₂are the explanatory variables, u is the stochastic error term, and i is the ith observation since the data are time series (Porter and Gujarati, 2009).

Model specification

The model specified in this research work is on the critical assessment of government expenditure, its impact on agricultural sector in Nigeria from 1986 to 2017. In this study, agricultural output (AGO) is proxied for agricultural sector growth and is used as the dependent variable while government recurrent expenditure on agricultural output (GRE) and government capital expenditure (GCE) are the independent or explanatory variables.

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF RESULTS

Presentation of Results

From the regression result, agricultural output (AGO) was the dependent variable and proxy for agricultural sector growth while government recurrent expenditure on agricultural sector (GRE) and government capital expenditure (GCE) were the independent variables. The regression results obtained are presented in the table below.

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

Summary

This Research work was carried out to examine the relationship between government expenditure and agricultural sector in Nigeria. The study is in five chapters. In the first chapter, a general background of the study was undertaken. In view of the background, the problems of study were identified and stated, the research questions, the objective, scope and significant of the study were outlined and discussed.

Chapter two contains the review of various literatures on the concept of government expenditure and agriculture. Also in the second chapter is the empirical and theoretical reviews. In the third chapter of this work, the type and sources of data, the method of estimation, model specification and evaluation criteria were all discussed.

In the fourth chapter, data collected were presented and analysed using regression method (generalised least square) to answer the research questions. After the analysis, the findings are as follows:

Government recurrent expenditure on agricultural sector was insignificant and had no impact on agricultural output in Nigeria.
Government capital expenditure was significant and had impact on agricultural output in Nigeria.

Conclusion

This study has underscored the impact of government expenditure on agricultural output in Nigeria. Findings from this research uncovered that the agricultural sector has contributed greatly to the economic growth of the country. This is done through its role in providing employment opportunities, source of food and raw materials to local industries. This study is in consistent with the findings of Ebere and Osundina (2014) which revealed a significant relationship between government expenditure in the agricultural sector and the economic growth in Nigeria. This position was also reiterated in the findings of Iganiga and Unemhilin (2011) and corroborated that government capital expenditure positively influence output in the agricultural sector.

Thus, in the light of the foregoing, this study reliably concludes that government expenditure will influence the level of agricultural output. The data analysis and its study have given a good picture of the level of government expenditure and contribution to agricultural output. As a sector that provides basic foundation to the Nigerian economy, the findings of this study have clearly shown that increased improvement in agricultural production would not only enable Nigeria to feed its citizens but return to its former position as an exporter of agricultural products.

Recommendations

For the agricultural sector output to be increased, government expenditure on agricultural sector is important in Nigeria. On the strength of the observations and findings made in this study the following recommendations have been made.

Government should increase its government to the agricultural sector, since it has significant impact on agricultural output.
Government should come up with stable policy guideline to enable farmers’ increase their capacity of production as this will help boost the economy.

REFERENCES

Aina, G.O. (2015). Government Spending and Agricultural Output in Nigeria (1980-2013). An unpublished M.Sc Thesis. Department of Economics, University of Port Harcourt, Nigeria
Akinboyo, O.L., 2008. Five decades of agricultural policies: What role has statistics played? CBN Bullion, 32: 134-165.
Alkali, A., 1997. An assessment of the sustainability of Nigeria’s fiscal deficit, 1970- 1990. Journal of Africa Nigeria. Economics, 2(2).
Alpuerto, V Diao, X; Slan, S and Nwafor M (2009). Agricultural Investment for Growth and Poverty Reduction in Nigeria International Food Policy Research, Abuja.
Anyanwu, S. O., Offor, U. S., Adesope, O. M. and Ibekwe, U.C. (2013). Structure and growth of the GDP (1960-2008): implication for small and medium enterprises in Nigeria.Global Advanced Research Journal of Management and Business Studies, 2(6), 342-348.
Bernard O.A. (2009). The effect of Agricultural Government Expenditure, Government and Economic Growth.
CBN, 2007. Changing the structure of the Nigerian economy and implication for development. Realm Communication Ltd Lagos. Central Bank Annual Report and Statement of Accounts, 2005.
Central Bank of Nigeria (2010). Comprehensive for Banks and State Governments. Guidelines for Large Scale Agricultural Credit Scheme CBN Publication, Abuja, Nigeria.
Colin Thirtle, Lin Lin and Jenifer Piesse. The Impact of Research-Led Agricultural Productivity Growth on Poverty Reduction in Africa, Asia and Latin America World Development, 2003, vol. 31, issue 12, 1959-1975
Domar, E. (1946). Capital Expansion, Rate of Growth, and Employment. Econometrica, 14(2), 137-147.
Ebere, C. and K.C. Osundina, 2014. Government expenditure on agriculture and economic growth in Nigeria. Int. J. Sci. & Res., 9(3): 188-194.
Eicher, C. and L. Witt, 1964. Agriculture in economic development. New York: McGraw Hill, London.
Egbuna, J., 2003. Long road to food security. Business Concord, 5(370).

Related Topics:

Other Topics