Impact Of Agricultural Funding On Unemployment Reduction In Nigeria (1985 -2016)

ABSTRACT

This paper investigated the impact of agricultural funding on unemployment reduction in Nigeria for the period of 1985-2016. The data was collected from secondary sources from CBN statistical bulletin, journal and government documents. To carry out this work, the study employed the Ordinary Least Square (OLS) estimation technique. To test for the properties of time series, the Augmented Dickey-Fuller (ADF) test was used to determine the stationarity of the variables and Johansen Cointegration test was employed to test for the long-run relationship of the variables. It was discovered that there exist a long-run relationship between the variables in the series. The empirical findings was apparent from the result of the regression analysis that inflation (INF) and interest rate(INR) have negative effect on unemployment(UNPR),banking sector credit to the agricultural sector(BSCR) and government Agricultural Expenditure(GVEX) has positive effect on agriculture. Hence the joint effect of the selected variables has an impact on UNPR. Therefore proper attention should be placed on the implementation of major agricultural policies and Government funds directed towards agriculture should be monitored by various agencies to ensure that there is no diversion of funds and implementation.

CHAPTER ONE

INTRODUCTION

Unemployment is one of the developmental problems that face every developing economy in the 21st century. Gbosi (1997) defined unemployment as a situation in which people who are willing to work at the prevailing wage rate are unable to find jobs. In recent times, the definition of unemployment by the International Labor Organization states that “the unemployed is a member of the economically active population, who are without work but available for and seeking for work, including people who have lost their jobs and those who have voluntarily left work (World Bank, 1990). The application of this definition across countries has been faulted, especially for the purpose of comparison and policy formulation, as countries characteristics are not the same in their commitment to resolving unemployment problems, the definition of the age bracket all stand as limitations to the definition by ILO (Douglason et al., 2006). According to the Central Bank of Nigeria (2003) the national unemployment rate, rose from 4.3 percent in 1970 to 6.4 percent in 1980. The high rate of unemployment observed in 1980 was attributed largely to depression in the Nigerian economy during the late 1970s. Specifically, the economic downturn led to the implementation of stabilization measures which included restriction on exports, which caused import dependency of most Nigerian manufacturing enterprises, The analysis from agricultural point of view suggests that people who have been majorly affected by unemployment are a great proportion of underprivileged Nigerians in rural areas where agriculture is primarily subsistence, land is not easily accessible or not fully utilizable, credit facilities are lacking and improved production methods are not practiced.

Agriculture as a Solution to eradicate unemployment and poverty in Nigeria, innovative methods need to be used to successfully tackle unemployment and poverty. Improvement in agricultural production by making land available to private and public organizations to set up industries in the most economically depressed areas of Nigeria, and providing training in setting up industries (especially cottage industries) to unskilled or economically deprived Nigerians would make ownership of small scale industries a viable source of income.

Agriculture funding is mainly a long-term financing (that is, capital structure) that aims at inducing agriculture-led growth and development in an economy. Agricultural funding includes public or private resources (in form of equity, gift or loan) for improving social welfare through development of agricultural sector (Shreiner and Yaron, 2001). It encompasses not only government funds but also funds of non-governmental organizations that use matching grants to attempt to promote community and sector development, income equality and local empowerment. Public funds are subsidized funds and private funds regardless of their price, are not subsidized.

Over the years, the Nigerian government has made efforts to eradicate poverty, create employment by introducing and funding agricultural programmes that gives loans to farmers. Despite all these efforts unemployment remains a visible footprint in sands of Nigerian. Agricultural programmes like the National Accelerated food Production programme(NAFPP), was initiated by the federal department of agriculture during General Yakubu Gowon regime in 1972,this programme focused on funding farmers to boast the production of maize, cassava,  rice and wheat in the northern state through subsistent production within a short period of time. The mini-kit,  production-kit and mass adoption stages where the three phases of the programme. This programme had lapses because farmers sponsored the last two phases of the programme which discouraged them from participating in the programme.

The Agricultural Development Projects (ADP) formerly known as Integrated Agricultural Development Projects (IADP) was established later in 1974.The earlier impressive result of the programme led to its replication in 1989 to the entire nineteen states of the federation. This approach to agricultural and rural development (Amalu 1998), was based on collaborative efforts and tripartite arrangement of the federal government, state government and World Bank. IADP helped in a long way to create employment but failed to actualize all its objectives due to low funding as a result of shortage of fund or reduction in oil prices.

Despite the failures of these programmes, Nigerian Government has intensified efforts by introducing more programmes which includes, Operation Feed The Nation (OFN) established in May 1976, River Basin Development Authorities (RBDA) established also in 1976,Green Revolution(GR) inaugurated by shehu shagari in april 1980.These programme were geared towards funding agriculture to promote crop yield, livestock, rearing,  self-sustainability and employment opportunity to the masses.

Furthermore, in the early 1990,National Fadama Development Project(NFDP) was established followed by the introduction of National Economic Empowerment and Development Strategy(NEEDS) which was initiated by Olusegun Obasanjo in 1999.The key element of this strategy included poverty eradication, employment generation, wealth creation and value orientation. NEEDS offered farmers improved irrigation, improved livestock breeds, machinery and crop varieties which would help provide employment and self-sustainability in agriculture.

It is regrettable to note that despite these funding programmes established by the government, private individuals and international organization to boast agriculture and create employment, it is seen that according to (NBS 2016) the number of people that were unemployed or underemployed increased from 24.4 million as at the end of the first quarter to 26.06 million persons in 2016.This shows that unemployment rate has risen from 12.1 percent in the first quarter of 2016 compare to its lower rate of 4.3 percent in 1970 and 6.4 percent in 1980(CBN2003).

Nevertheless in Nigeria, agriculture remains the mainstay of the economy since it is the largest sector in terms of its share in employment (Philip, Nkonya, Pender and Oni 2009). In an effort to diversify her oil base economy, Nigeria is placing much emphasis on funding other sectors most especially agricultural sector, since agriculture has the potential to stimulate economic growth through provision of raw materials, food, employment opportunity and increased financial stability. Funding is required by agricultural sector to purchase land, construct buildings, acquire machinery and equipment, hire labor, irrigation etc. In certain cases such loans may also be needed to purchase new and appropriate technologies. Not only can funding remove financial constraints, but it may also accelerate the adoption of new technologies. Agriculture funding is one of the most important instruments of economic policy for Nigeria, in her effort to stimulate development in all directions.

The “Go Back To Agriculture” which is a current policy of the federal government if properly implemented will herald in a new policy direction via new policy strategies that will lay the foundation for sustained improvement in agricultural productivity and output.  Functional investment by individuals, government and organized labour on crop productivity, livestock and animal rearing will help solve the problems of employment and poverty in Nigeria.

Agriculture, if properly embraced and funded will guarantee food security, reduction of poverty and unemployment rate in Nigeria. Diversification of the Nigerian economy through a functional investment in agriculture by individuals, government and the organize private sector will help solve the problem of unemployment and poverty in Nigeria.

Agriculture was known to be one of the major contributors to national development, but suffering from neglect that has led the country to heart aching unemployment and poverty. In spite of the existence of a well- articulated agricultural policy document for Nigeria since 1988, the country has never established a systematic focus in her agricultural planning history that shows a consciousness to purposely priorities her agricultural production based on component that constitute modern agriculture.

Indeed more often than not, agricultural activities are usually concentrated in the less developed rural areas where there is critical need for rural transformation, redistribution, poverty alleviation and socio-economic development. The neglect of the agricultural sector and the dependence of Nigeria on a mono-cultural, crude oil – based economy have not augured well for the well-being of the Nigeria economy.

Nigeria, which is the biggest black nation in the world, ought to have a strong economy capable of employing almost all employable citizens, but unfortunately, the unemployment in Nigeria is alarming as unemployment rate keeps increasing yearly. The National bureau of statistics (NBS) says that the country’s unemployment rate has risen from 13.3 percent in 2^nd quarter to 13.9 percent in the 3^rd quarter of 2016.

Over the years the Nigeria government has tried to solve the problem of unemployment by funding agriculture through initiations of agricultural programmes and intervention that could eradicate poverty and create employment.

Few of this programmes introduced includes, The National Accelerated Food Production Programme  (NAFPP) which was in 1972 focused on funding agriculture to boast the production of maize, cassava, rice and wheat in the northern state of the country.  This could not solve the problem of unemployment which leads to the introduction of Agricultural Development Project (ADP) in 1974, Operation Feed The Nation (OFN) in May 1976, National Fadama Development Project (NFDP) in 1990 and National Economic Empowerment and Development Strategy (NEEDS) in 1999.

However, these programmes did not yield result as expected.  When they were introduced they were seen as a solution to unemployment to the country. Blames has been laid on policy makers for they failed to take into consideration of certain factors as this programmes where planned from Top to Bottom.

It is regrettable to note that despite these funding programmes of the federal government unemployment still persists. However there seems to be a light at the end of the tunnel as government has introduced a “Back To Agriculture” policy making agriculture a leading means to create employment in Nigeria.

1.3   Objectives Of The study                        

This study focuses on the impact of government funding on unemployment reduction in Nigeria. To this end, the specific objectives are as follows:

1. To examine the effect of agricultural funding on unemployment reduction in Nigeria.
2. To ascertain if there is a sustainable long run relationship between agricultural funding and unemployment reduction in Nigeria.

In consideration of the above objectives, this research tends to provide answers to the following questions:

1. What is the effect of agricultural funding on unemployment reduction in Nigeria?
2. Is there a sustainable long run relationship between agricultural funding and unemployment reduction in Nigeria?

1.5   Research Hypotheses

This study will be guided by the following research hypothesis;

Hypothesis One         

H₀: Agricultural funding has no effect on unemployment reduction in Nigeria.

H₁: Agricultural funding has effect on unemployment reduction in Nigeria.

Hypothesis Two

H₀: There is no significant relationship between agricultural funding and employment in Nigeria.

H₁: There is a significant relationship between agricultural funding and employment in Nigeria.

1.6   Significance Of The Study

This study will be significant in the following ways:

• It will review how agricultural funding can facilitate agricultural activities thereby creating employment and reduction in the number of unemployment in Nigeria, also how facilitation of agricultural activities can aid to boast Nigerian economy and bring about economic growth.
• This research work will be beneficial to Nigerian farmers as it deals with the issue of funding which is needed by these farmers to boast their productions and create employment.
• On the aspect of policy makers, this work will serve as a guide in decision making towards funding of agriculture and unemployment eradication in Nigeria.
• This research work is of great relevance to researchers who will find it worthy to be part of their research work.
• Since most funding programmes have failed in the past, various ministries in agriculture need to work to understand the impact of agricultural funding and subsequent ways and method they could adopt to create employment through agriculture.

1.7   Scope Of The Study

This study is aimed at accessing the impact of agricultural funding on unemployment reduction in Nigeria between 1985 to 2016. This study shall capture the extent to which agricultural funding has created employment and will access major effort made by the government in the past to fund agriculture and create employment.

 

The secondary data to be used for this study will sourced from Central Bank of Nigeria Statistical Bulletin and Annual Reports 2015 edition.

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