IMPACT OF PUBLIC EXPENDITURE ON AGRICULTURAL SECTOR IN NORTH WESTERN NIGERIA

CHAPTER ONE

INTRODUCTION        

BACKGROUND OF THE STUDY

Agriculture involves the cultivation of land, raising and rearing of animals for the purpose of production of food for man feed, and raw materials for industries (Anyawu, 2013, cited in Ebomche, 2010). Majorly, it comprises of growing of crops, rearing of animals, forestry and fishing. The agricultural sector is the industrial and economic springboard from which a country’s development can take off. Nigeria is generously endowed with abundant natural resources. Human and natural resources being its reserves, Nigeria has the tendency to build a prosperous economy and provide for the basic needs of the population. This large resource base if properly managed could enhance a vibrant agricultural sector capable of ensuring the supply of raw materials for the industrial sector as well as providing profitable employment for the larger population (Ukeje 2012).Public spending (e.g. Budget) is one of the most direct effective instruments used by governments to promote agricultural growth and poverty reduction. (Ukeje2012). Public spending at the federal level and sub-national level follows a basic structure-recurrent spending and capital spending. This spending structure is characterized by different expenditure categories depending on the ministry, department or agency. The nature of support given to agriculture by various governments in the country varied over the years. Before independence, the assistance to the sector was generally aimed at developing the export crops required by the overseas industries. After independence when the national development plans were prepared, agricultural support took a much formal form, and thus presented a more serious impression of what government intended doing for the sector. However what most of the efforts later turned out to be as can be inferred from the allocations made in the various national development plans and annual budgets, leave much to be desired. When compared to other sectors like mining, manufacturing, education, and health, agriculture virtually received the least annual allocations that are often inadequate to put the sector on sustainable grounds. This accounts to a large extent for the poor performance of many institutional reforms and strengthening which were over the years undertaken in the sector (Nwajiuba, 2012). Average total annual expenditure on agriculture, has been increasing over the years. Total annual expenditure on agriculture increased on the average from N0.02 billion through an average of N0.2 billion per annum to N1.84 billion. Total annual expenditure on agriculture increased significantly to N16.97 billion and further to N37.13 billion, but fell to N36.19 billion(CBN, 2014). Despite these huge sums of money allocated to the sector over the years, the state of agriculture in Nigeria still remains poor and largely underdeveloped. Agricultural sector output has fluctuated widely and productivity has also declined. In terms of contribution to GDP, Available statistics from the CBN shows that the agricultural sector’s share of GDP increased from 28% to 32%, dropped to 31%, rose again to 37% but fell significantly to 24% and increased to 37%. It was 32% and rose to 40%, dropped again to 27%, increased to 37% and fell to 31%. The percentage contribution of the agricultural sector to GDP fell persistently from 0.37  to 0.22 and to 0.20 (CBN, 2014).The poor state of the sector has been blamed on oil glut and its consequences on several occasions, as this pattern was not an outcome of increased productivity in the non-agricultural sectors as expected of the industrialization process; rather it was the result of low productivity due to negligence of the agriculture sector (Christaensen and Demery, 2014; and Falola and Heaton, 2015). The agricultural sector has a definite effect on any nation’s socio-economic and industrial fabric because of the multifunctional nature of agriculture (Ogen (2014).Based on his report, agricultural financing in Nigeria shows positive relationship between interest rate and loanable funds on the level of agricultural output. Using time series data, Lawal (2011) attempted to verify the amount of federal government expenditure on agriculture in the thirty-year period 2013 to 2014. Analysis showed from the Statistical evidence obtained that government spending does not follow a regular pattern and that the contribution of the agricultural sector to the GDP is in close relationship with government fund release to the sector. Adofu (2012) in their work; effects of government budgetary allocation to agricultural output in Nigeria show that the percentage, degree or amount of budgetary allocation to agricultural sector has a positive relationship with the total agricultural production in the country. This implies that the more the public spending on agricultural sector, the more the improvements in the performance of the agricultural sector. Also, a large degree of change in agricultural output is accounted for by change in budgetary allocation to agricultural sector. Thus, public expenditure on agriculture has a large impact on agricultural sector.

STATEMENT OF THE PROBLEM

Prior to the discovery of oil in the late 1950s and early 1960s, agriculture was the dominant sector of Nigeria economy. It consisted over 65 per cent of the country's Gross Domestic Product (GDP) and provided the bulk of the foreign exchange earnings through the export of cash crops. But with the emergence of oil as a major source of government revenue and exchange earning, the sector was neglected and hence led to its decline in output (Ukpong and Malgwi 2012; Iwayemi 2012; Ijaiya 2011).Having realized the declining of agriculture output, government over the years has put in place certain policy measures and, programmes with a view to increasing the output. However a peep into the Federal Government capital expenditure on agriculture; as a ratio of the total Federal Government capital expenditure shows a gloomy future for sector development in the country. Overtime, this expenditure has been on agriculture without expressly translating to a corresponding agricultural output. Therefore the interest of this research work is to investigate the impact of public expenditure on agricultural sector in north western Nigeria.

AIMS OF THE STUDY

The major aim of the study is to examine impact of public expenditure on agricultural sector in north western Nigeria.  Other specific objectives of the study include;

1. To examine the level of public expenditure on agricultural sector in North western Nigeria.
2. To examine how agricultural programmes organized by government improve the agricultural sector in north western Nigeria.
3.  To examine the development challenges faced by agricultural sector in north western Nigeria
4. To examine the impact of public expenditure on agricultural sector in north western Nigeria.
5. To examine varieties of agricultural programmes organized by the government in north western Nigeria.
6. To examine the relationship between public expenditure and agricultural sector in north western Nigeria.
7. To examine ways the ways government policies on agriculture will enhance farmers output in north western Nigeria.

RESEARCH QUESTIONS

1. What is the level of public expenditure on agricultural sector in North western Nigeria?
2. How do agricultural programmes organized by government improve the agricultural sector in north western Nigeria?
3. What are the development challenges faced by agricultural sector in north western Nigeria?
4. What is the impact of public expenditure on agricultural sector in north western Nigeria?
5. What are the various agricultural programmes organized by the government in north western Nigeria?
6. What is the relationship between public expenditure and agricultural sector in north western Nigeria?
7. In what ways do government policies on agriculture enhance farmers output in north western Nigeria?

RESEARCH HYPOTHESES

Hypothesis 1

H0: There is no significant impact of public expenditure on agricultural sector in north western Nigeria

H1: There is a significant impact of public expenditure on agricultural sector in north western Nigeria

Hypothesis 2

H0: There is no significant relationship between public expenditure and agricultural sector in north western Nigeria.

H1: There is a significant relationship between public expenditure and agricultural sector in north western Nigeria.

SIGNIFICANCE OF THE STUDY

This study is considered significant because it will contribute in providing the decision makers, and other key actors in the government with the road- maps that will necessitate prompt, responsive and efficient policy making in Nigerian agricultural sector. It will also suggest the panacea through which frequent failures in Nigerian agricultural policies can be effectively tackled. The study would also be of immense benefit to students, researchers and scholars who are interested in developing further studies on the subject matter.

SCOPE AND LIMITATION OF THE STUDY

The study is restricted to impact of public expenditure on agricultural sector in north western Nigeria.

LIMITATION OF THE STUDY

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

DEFINITION OF TERMS

Agriculture: Is the production of food, feed, fiber and other goods by the systematic growing and harvesting of plants and animals.

Public expenditure: Is defined as the expenses incurred by the government in carrying out its responsibilities, that is, in the provision of social services and defense, to mention just a few