Agricultural Policies And Economic Growth In Nigeria

Project and Seminar Material for Agricultural Economics and Extension

Abstract

This study assesses the impact of agricultural policies and development on economic growth in Nigeria. The data used in this study was collected from both primary and secondary sources. The primary method or sources of data collection included the use of a research instrument, (the questionnaire) and interview. Some research questions were asked as guide to the respondents in order to elicit first hand information on the subject matter. The questionnaire contained twenty eight structured questions designed in both open and close ended style. In addition, the questionnaire was validated and administered accordingly. Secondary sources of data collection on the other hand, included textbooks, journal, government documents and internet materials; the study formulated three hypotheses to guide the data analysis using simple percentage, tables, pie chart and chi-square statistical method for data analysis. The data analysis revealed that; agricultural policies are not supported with adequate data at the stage of formulation by the policy makers; there are implementation problems that affect agricultural policies and efforts in achieving their intended results; the provisions of agricultural micro-credits are still insufficient to farmers especially those in the rural areas; there are implementation leakages which divert benefits to unintended beneficiaries especially those outside agricultural dominated activities. Based on these findings, we recommended that the formulation of agricultural policies should endeavour to adequately into consideration the social, economic, political and environmental impact analysis. Also the implementation strategies should be broadened to surmount some implementation challenges that affect the achievement of goals and objectives of agricultural policies.

Chapter One

Introduction

1.1 Background to the Problem

Agriculture in the context of the economy is tied with the various sectors and is essential for generating broad based growth necessary for development. Agriculture is fundamental to the sustenance of life and it is the bedrock of economic development, especially in the provision of adequate and nutritious food so vital for human development and industrial raw materials.

Sustainable agricultural development is propelled by agricultural policies. The first national policy on agriculture was adopted in 1988 and was accepted to remain valid for about fifteen years, that is, up to year 2000. Also, in year 2001, a new policy document on agriculture, was lunched. The new policy document has most of the features of the old ones, but with more focused direction and better articulation. Agricultural policies are supported by sub-policies that facilitate the growth of the sector. Implementation of agricultural policies is however moderated by macro-economic policies which provide the enabling environment for agriculture to grow pari passu with the other sectors. These policies usually have major impact on profitability of the agricultural system and the welfare of farmers as they affect the flow of funds to the sector in terms of budgetary allocation, credit, subsides, taxes and therefore, must be in harmony and mutually reinforcing with the agricultural policies. The macro-policies comprise the fiscal, monetary, trade budgetary policies and other policies that govern macro-prices.

Agriculture contributes immensely to the Nigeria economy in various ways, namely, in the provision of food for the increasing population, supply of adequate raw materials (and labour input) to a growing industrial sector, a major source of employment; generation of foreign exchange earnings, and, provision of market for the products of the agrarian sector (Okumadewa, 1997). The agrarian sector has a strong relationship with the economy; hence, concern for agricultural policies and the economy. Support for agriculture is widely driven by the public sector, which has established institutional support in form of agricultural research extension, commodity marketing, input supply and land use legislation, to fast-track development of agrarian sector to achieve the aim of economic development. The importance of the agrarian sector, also suggests the intervention of the private sector through sponsorship of research and breakthrough on agricultural issues in Universities, capacity building for farmers and, most importantly, the provision of fund for farm businesses. International governmental and non-governmental agencies including the World Bank Fund and Agricultural Organization of the United Nations, also contribute through on farm and off-farm support in form of finance, input supply strengthening of technical capacity of other support institutions.

Agricultural policies provide among others, for adequate financing of agriculture. The role of agricultural sector in diversification of economy cannot be over emphasized, given that it guarantees food security of any nation. Public expenditure on agriculture has, however, been shown not to be substantial enough to meet the objectives of Government agriculture policies (IFPRI, 2008). For a developing country with a mono-product oil economy such as Nigeria, Government’s indifferent to agriculture portends great danger to the economy for many reasons. For instance, fluctuating food prices are a precursor of inflation. Secondly, from the expenditure approach to national income accounting, it is likely that Engel’s Law that a large chunk of expenditure in developing economics goes to food-holds meaning that shocks to the domestic agricultural production and supply could be damaging to price stability. There is also the perspective of food security, in an era when food has been used as a weapon of War (United Nations Oil for food Deal in Iraq) and as bargaining tool (North Korea- United States Food Deal), even within Nigeria, the federal military government during Nigerian Biafran War used food blocked as a tool of war.
This paper examines Nigeria’s agricultural policies and its impact on the economy. It is interesting to note that this area of study has generated a lot of research. Be it as it may, current thinking, particularly in Nigeria seems to focus on how to improve on agriculture as oil has taken sole control of Nigeria economy.

1.2 Statement of the Problem

Agriculture is the main-stay of the Nigerian economy. According to about 80% (percent) of the Nigerian population engage in agricultural dominated activities. In other words, agricultural sector in Nigeria from right sense of judgment suppose to be the major source of revenue to government as well as the Nigerian citizens especially the (agriculturalist). This was exactly the case in 1960s to 1980s, considering the achievements made from the earnings of agricultural sector in the then three regions of Nigeria, namely, Eastern, Western and Northern regions (Anyanwu,1997). However, with the discovery of crude oil in Nigeria, agriculture has gradually been neglected. Soludo (2004:678) captures this when he stated that:

Despite the dominant role of the petroleum sector as the major foreign exchange earner, agriculture remains the mainstay of Nigeria’s economy. In addition, to contributing the largest share of GDP, it is the largest nonoil export earner, the largest employer of labour, and a key contributor to wealth creation and poverty alleviation, as a large percentage of the population derives its income from agriculture and related activities…. Over the years the rate of growth in agricultural production has stagnated and failed to keep pace with needs of a rapidly growing population, resulting in a progressive increase in import bills for food and industrial raw materials.

Implicit from the above quotation is that the potential of the agri-business sector as a major employer of the growing labour force and an earner of foreign exchange has also been undermined. As a result, the large majority of Nigeria’s population, many of whom live in rural areas, remain poor. In a similar view, the Nigeria Poverty Assessment 2007 attributed the galloping increase in the rate of Nigerian poverty rate as a result of low and declining yield/ productivity in agriculture and this contributes significantly to rural poverty. The Nigerian Poverty Assessment Report further contended that in the light of the poor state of agriculture, as the survey results show, households whose heads are engaged in the sector tended to have the highest level of poverty incidence, over to per cent in 2004 compared to other occupations where the incidence was less than 50 per cent. The sector thus accounts for a significantly large proportion of the poor in Nigeria. Farming households experience greater poverty due to low income from farming activities. As a matter of fact, some of key reasons identified by some scholars such as Anyanwu (1997), Onah (2006), Umoh (2001) and Ayatse and Akuva (2009) that have contributed and hindered agricultural productivity and income from agriculture in Nigeria are linked to poor policy formulation and implementation in the sector.

For instance Anyanwu (1997) observed that most of government policies on agricultural have failed to address the issues of land tenure system, provision of adequate agricultural facilities to farmers, access to agricultural micro credits, access to markets for the sale of agricultural provision of agricultural education to rural farmers on mechanized farming, among others. Eze et al (2010) noted that access to credit is a problem for all farmers and is particularly acute for poor farmer. It is on this note that the Report of the Nigerian Poverty Assessment 2007 stated that:

None of the existing credit sources on agriculture appear able to provide credit to poor farmers, without which it is unlikely that they will invest heavily in productivity-increasing inputs. Given that poor farmers are less likely to have assets for collateral, innovative ways need to be found to provide credit, perhaps based on the group credit systems operating in other countries.

On the other hand, improving agricultural extension services as well as providing adequate agricultural infrastructures have remained poor. Over 85% (percent) of the Nigerian farmers have no access to agricultural extension services and lack of necessary agricultural infrastructures that increase productivity. We cannot understand why outside the poor agricultural policies in Nigeria. The implication of this has been poor impact of the agriculture on Nigerian economy. Therefore there is no empirical evident to show for the enormous resources put into the agricultural sector as a means diversifying the Nigerian economy from its crude oil based economy. The truth is that the beneficiaries of these agricultural policies are mainly people who are outside agricultural occupation. This situation has always present the introduction of any agricultural policy or programme as illusive and deceit on the view farmers and all others who wish to take occupation in agriculture. As a matter of fact, the initiation of these policies do not take into consideration, the environmental Impact Analysis (EIA) the economic impact analysis (EIA) and the social impact analysis (SIA) to give the problems of agriculture in Nigeria a holistic approach.

Apparently, the intended goals and objectives of agricultural policies such as generating massive employment through agriculture and agro-based businesses, reduction of high poverty rate, ensuring sufficiency in the supply of food for the Nigeria’s teeming population, improving per capital income of Nigerians who engage in agriculture, taking comparative advantage on the Nigerian agricultural products in the international markets among other have remained partially unachievable considering some research findings on the assessment of agriculture in Nigeria. The national Economic Empowerment and Development Strategy (NEEDS) 2004 report give that the Gross Domestic Product (GDP) of Nigerian agriculture has continue to decline drastically. This indeed is worrisome considering the number of agricultural policies and programmes which have been introduced by government to boost agricultural productivity in Nigeria such as the National Accelerated Food Production Project (NAFPP), the Nigerian Agricultural and co-Operative Bank (NACB), the River Basin Development Authorities (RBDAs), Operation Feed the Nation (OFU), Agricultural Credit Guarantee Scheme (ACGS), Green Revolution Programme (GRP), Agricultural Development Project (ADPs), among others.

It is therefore against this backdrop that this study will investigate on the topic, the impact of agricultural policies on Nigerian economy. It is in view of the fore-goings that this study tends to raise the following questions:

Have agricultural policies made significant impact on Nigeria economy?
Have the agricultural policies reflected on the growth and development of agricultural sector in Nigeria?
If not, what are the constraints militating against the agricultural policies in Nigeria?
Do the formulation and implementation of agricultural policies follow?
What are the measures to be adopted in improving formulation and implementation of agricultural policies in Nigeria?

1.3 Objectives of the Study

For purpose of clarity, the objectives of this study are grouped into two categories namely: Broad and specific.

– Broad objective of the study is to evaluate the impact of agricultural policies on Nigerian economy.

– Specific objectives of this study are to:

Ascertain the impact made by agricultural policies so far on the Nigerian economy.
Examine whether the impact of agricultural policies have reflected on the growth and development of agricultural sector in Nigeria.
Identify the constraints militating against the agricultural policies in Nigeria.
Proffer solutions towards improving the formulation and implementation of agricultural policies in Nigeria.

1.4 Hypotheses

The following hypotheses have been formulated to guide this study:

The extent of growth and development in the agricultural sector determine the impact of agricultural policies on Nigerian economy.
The beneficiaries of government agricultural policies in Nigeria are not the actual targeted population group in the agricultural dominated activities. (iii) High incidence of corruption and weak implementation strategies are key militating factors against agricultural policies in Nigeria.

1.5 Significance of the Study

The significance of the study presents the value or contribution which the research will make to the existing knowledge. Obasi (1999:73), asserts that research is most important tool for advancing knowledge and enables man to relate more effectively to his environment.

The significance of this study are categorized into theoretical, empirical and practical significance.

Theoretical Significance:-

Theoretically, this study has the potential of contributing greatly to the growth of existing theories in social sciences particularly in public administration by helping to enrich the bank of knowledge through its reliable findings on the assessment of the impact of agricultural policies on Nigerian economy. This is to say that our study would assist in improving the frontiers of knowledge especially in the management of the public policies in Nigeria especially in the agricultural sector. The study will be of immense significance in ascertaining the progress so far made by the government in improving Nigerian economy through agriculture. On the other hand, the study will assist in unveiling the challenges or factors militating against effective implementation of government policies and programmes on agriculture and will make useful suggestions towards ensuring the achievement of goals of such agricultural policies and programmes. This is important because it is only through viable agricultural policies that the government can revamp the agricultural sector and ensure its target goals and objectives in national development.

This study also has the potentials of contributing immensely to the existing body of literature on this subject matter. Literature on the assessing the impact of agricultural on Nigerian economy are richly available but few have been able to justify the current poor state of agriculture in Nigeria from policy perspectives.

Empirical Significance:-

Empirically, this study will serve as a foundation or base for future researchers who may in due course of time wish to embark on the investigation on assessing the impact of agricultural policies on Nigerian economy.
In other words, this research will serve the academia as a useful and veritable bibliographical reference which will stimulate research for other related studies in relation to agricultural policies and their impact in Nigeria economy.

Practical Significance:-

Practically, 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. Last, but not the least, this study has the potential to strategically improve the practical steps in implementations of the government agricultural policies through its advocacy on reforming the public bureaucracies in Nigeria especially those concerned with the implementation of government policies on agriculture. In this regard, this work is a practical pain staking “post mortem” surgical examination of the problems of Nigerian agricultural sector as well as the way forward.

1.6 Scope and Limitations

This study focuses on the evaluation of the impact of agricultural policies on Nigerian economy. This study covers in detail, past and present government policies and programmes on agriculture in Nigeria.

Nevertheless, a study of this magnitude cannot be completed successfully without the researcher encountering some constraints or limitations. Therefore, this work will not pretend to be containing all holistic information on the government policies and programmes on agriculture, rather it will endeavour to highlight the dominant issues and their impact in the Nigerian economy. Another obvious limitation is the effort to trim the paper to a sizeable and acceptable volume for a Master of Public Administration Degree. This obviously has not been easy considering the subject matter of this research which boarder on sensitive issues on the government agriculture policies, though this has in no way affected the quality of this research work.

It is also pertinent to mention that inadequacy of data or near absence of a reliable and up to date central data bank on the theme of this study, which has been compounded by the inability of public bureaucracies to grant full access to the researcher nearly mar the effort of the researcher. In other words, paucity of literature on the impact of government agricultural policies on Nigerian economy almost mar the effort of the researcher. Also most of the relevant information collected so far, for this study is in piece-meal and need serious effort to trim to the required standard. On the other hand, some information are said to be classified information and out of bound to non staff. Considering this, the researcher seek other means to supplement and consolidate the information through the use of internet materials, text books, journals, newspapers, magazines and past research projects by students and research institutes. Further information were collected from the (civil servants in the Ministry of Agriculture and governmental agencies on agriculture) using questionnaire and interview.

Also considered as a limitation in this study hinges on our inability to elicit information from the top government officials especially the Minister, Commissioner, and Permanent Secretaries who failed to grant access to the researcher to interview them face- to- face. Others who availed themselves for interview still exhibited signs of fear to provide answers to some questions asked while some questions were said to be top civil service secret. This as we all know is common in Nigeria public sector organizations, because a country where freedom of expression is problematic, it will be difficult getting the unbiased views of some civil servants on apparently sensitive issues on government policies on agriculture. As it is also a well known fact that critics of government policies in the country had always suffered one form of victimization or the other, such as loss of employment, suspension from their jobs and at times harassment by the top government officials. In other words, it is of concern to mention that it was difficult to maintain the researcher’s neutrality in trying to be non-judgmental as this is an essential factor to avoid, since the subjectivity of respondents invariably breeds a consequential loss of objectivity. In other words, some respondents seek to force the researcher to express his own opinions, particularly as he sought to know theirs because it enables them to identify the researcher’s mind in order to adapt responses. Impartial neutrality to some extent rendered the research colourless as if one is a spy on managerial activities.

However, the researcher ensured that the limitations/constraints did not affect the outcome of the study by supplementing the available information through internet material, text books, journals and administration of questionnaire and oral interview.

Chapter Five

Summary, Recommendations and Conclusion

5.1 Summary

This study has attempted the assessment agricultural policies and economic growth in Nigeria. The study critically reviewed the past and current government agricultural policies in Nigeria with the aim of ascertaining their impact on the economic development. In addition, the study covered the key dominant issues in formulating, implementing and evaluating agricultural policies which are the broad objectives of the policies. It is from assessing the outlined objectives of agricultural policies that led us to other key issues on the subject matter such as the achievements and failures of government agricultural policies, Nigeria’s funding of agricultural policies, and programmes, especially from the budgetary allocations in the agricultural sector, the Gross Domestic Product (GDP) from Nigeria’s agricultural sector, agricultural policies in relation to rural farmers in Nigeria, challenges of agricultural policies and prospects of agricultural policies in Nigeria.

The study however maintains that poor impact of agricultural policies on Nigerian economy is largely due to policy formulation faults/deficiency and poor implementation. At the formulation stages, policy makers usually carry out a crossroad assessment of social, economic, environment and political impact analysis of agricultural problems especially as they affect the rural agriculture in Nigeria. The issue is that for agricultural policies to succeed in Nigeria, the agricultural problems of rural communities which are the custodians of agriculture need to be addressed and agricultural policies need to adopt integrated approach in order to solve the multiple problems of agricultural sector.

Therefore the major objectives of carrying out this research is to evaluate the impact of agricultural policies on Nigerian economy, but for emphasis, other specific objectives of the study are; to ascertain the impact of agricultural policies so far on the Nigerian economy; examine whether the impact of agricultural policies have reflected on the growth and development of agricultural sector in Nigeria, identify the constraints militating against the agricultural policies in Nigeria; examine whether the formulation and implementation of agricultural policies follow intended policy directives and to proffer solutions towards improving the formulation and implementation of agricultural policies in Nigeria. The study delves into the views, opinions and ideas of scholars to present a holistic investigation on the subject matter. The study inclined itself to the Estonian’s approach of the system theory to showcase the place of agriculture in any economy. The theory has it that the economy of any nation is like a system with many parts and subparts. It is difficult to understand one part without the other. Agricultural policies are integral parts of Nigeria’s development plans with it impact spreading to other sectors. In the methodology, the study utilized both primary and secondary sources of data collection. The use of simple percentage and chi-square were used to analyze the date collected. However, the critical examination of the problem under review made the following findings:

Agricultural policies are not supported with adequate data at the stage of formulation by the policy makers.
There are implementation problems that affect agricultural policies and efforts in achieving their intended results.
The provisions of agricultural micro-credits are still insufficient to farmers especially those in the rural areas;
There are implementation leakages which divert benefits to unintended beneficiaries especially those outside agricultural dominated activities.

5.2 Recommendations

Based on the findings of the study and taking cognizance of the importance of the subject matter under review, the researcher is inclined to make the following recommendations:

Formulation stage of public policies involves identification of problems. Therefore, formulation of agricultural policies should endeavour first to identify the problems of Nigeria’s agricultural sector in areas of social, economic, environmental/physical and political problems that affect the outcome of agricultural policies in Nigeria.
Also adequate assessment on social economic and environmental impact analysis of agricultural policies should be carried out before formulation. This will help in providing pragmatic solutions to the problems of agricultural sector.
It is important that agricultural micro-credits be made available to farmers in order to assist them purchase necessary agricultural inputs for mechanized farming. One way of achieving this by adequate funding of the agricultural sector especially the implementing agencies such as Nigerian Agricultural and Co-operative Bank (NACB).
The implementation of agricultural policies should be well monitored by both government and non-governmental agencies. This is because implementation is the most sensitive stage of the success or failure of agricultural policies and programmes. And from our research findings, there were evidence that agricultural policies record implementation leakages. This tends to create a scenario, where by unintended beneficiaries hijack the benefits of agricultural policies ad programs.
There is need to strengthen the administrative capacities of the implementing agencies in order to effectively discharge their duties. Also government should ensure motivation of staff of the implementing agencies by providing incentives
to them and urge them to pursue vigorously the goals and objectives of agricultural policy. One aspects of the motivation of staff of the implementing agencies should including staff training and re-training.
Government should endeavour to improve the marketing of agricultural produce both at local and international markets. At the local level, government should build more local markets and establish more agro-industries to enable the rural farmers’ sale their produce. On the international level, it is good to guarantee export subsidies in order to encourage farmers’ sale their produce in the international markets.
Establishment of agricultural research institutes across the country will also go a long way to solve most of the problems of the agricultural sector. The establishment of research institutes will help in providing reliable information on agricultural issues. In other word, the findings record by these research institutes will be immensely valuable to policy-makers during the formulation of agricultural policies.

5.3 Conclusion

The Nigerian government has over the years formulated good agricultural policies meant to encourage food production and other economic benefits to enhance economic development but such policies have been found inefficient and ineffective since the intended results were not realized. From the research findings, some evidence were established to show that the formulation of the agricultural policies often does not take critical analysis of the social, economic, physical/environmental and political impact on the target intended beneficiaries. On the other hand, the implementation of agricultural policies is characterized with implementation problems one of which is implementation leakages.

Equally, findings showed that poor funding to agricultural policies and porgrammes affect the impact of these policies and programmes on Nigerian economy. Poor funding affects the implementation of agricultural policies in so many ways. It limits the availability of agricultural micro-credits, provisions of agricultural infrastructures in the rural communities and creates administrative incapacities to the implementing agencies. In concluding, the study make bold to state that agricultural policies can only impact significantly on Nigerian economy if the trinity of problems that affect their implemented are surmounted.

Project Material Download