Role Of Agriculture In Economic Growth And Poverty Reduction In Nigeria

ABSTRACT

The purpose of the study was to determine the role of agriculture in economic growth and poverty reduction in Nigeria. The data used were collected from the statistical bulletin of the Central Bank of Nigeria and World Bank’s development indicators, and covered the period of 33 years ranging from 1981 to 2014. Multiple regression was used to analyze the data. The result showed that agriculture has significant impact on economic growth in Nigeria. It was also showed that agriculture has significant impact on poverty reduction in Nigeria. The other variable included in the model which is non-agriculture output did not have significant impact on poverty reduction. The study therefore recommends among others that government provides more funding for agriculture universities in Nigeria to carry out researchers on all area of agriculture production; this will lead to more exports and improvement in the competitiveness of Nigeria agriculture reproduction in international markets. The Central Bank of Nigeria should also come up with a stable policy for loan disbursement to farmers at a reasonable interest payback.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The role of agriculture in economic growthand poverty reduction has become an issueof great concern in developed and developing countries. Nnadi (2005) stated that agriculture is indispensable in addressing economic growth and poverty reduction, which are the most difficult challenges facing many countries in the world especially developing countries where on the average, majority of the population are considered poor.Evidences in Nigeria show that the number of those in poverty has continued to increase. The author stressed further that the rising profile of poverty in Nigeria is assuming a worrisome dimension as empirical studies have shown. In consonant with this, Ojo, (2008) opined that, Nigeria, a sub-Saharan African country, has at least half of its population living in abject poverty. The UN Human Poverty Index in 1999, credited Nigeria with 41.6%, captured the phenomenon more succinctly as the figure placed the nation as amongst the 25 poorest nations in the world. As at 2004, the HPI (Human Poverty Index) value for Nigeria, 40.6, ranks 76th among 102 developing countries for which the index has been calculated. The country has increasing rate of poverty both at the regions and at the national level, high unemployment rate, high income inequality, low quality human capital, high percentage of population on welfare and high out migration in the face of high economic growth.

Agriculture is the production of food, feed, fibre and other goods by the systematic growing and harvesting of plants and animals (Akinboyo, 2008). According to, Brandt (2011), agriculture is the cultivation of land, raising and rearing of animals for the purpose of production of food for man, animals and industries. It involves crop production, livestock and forestry, fishery, processing and marketing of those agricultural production (Umaru&Zubairu, 2012). The present study defines agriculture as the cultivation of land, raising and rearing of animals, for the purpose of production of food for man, feed for animals and raw materials for industries.Agriculture is ideally indispensable as it enhances economic growth.

According to Romer (2008), economic growth is an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Weil (2008) averred that economic growth is a long-term expansion of the productive potential of the economy. Acemoglu and Robinson (2012) posited that economic growth is a positive change in the output, or production, of a country or an economy. This description, according to the authors, involves all aspects of an economy, from profits to taxes and wages, to such things as production rates. This present study defines economic growth as an increase in the output that an economy produces over a period of time.

Economic growth is important as it could have effect on the state of poverty.Poverty is the failure to achieve basic capabilities such as being adequately nourished, living a healthy life, possession of skills to participate in economic and social life, permission to take part in community activities to mention a few (Oyeranti&Olayiwola, 2005). According to Alfa, Audu and Otaida (2014), poverty is a condition in which an individual or a group of individuals or community are unable to meet their basic material needs such as foods, potable water, clothing, shelter, basic health care, education, lack of participation in the prevailing social standard of living, dignity and having limited chance of advancing their welfare just to the limit of their capabilities. Poverty describes a state where the people are deprived of the good things of life, and deprives the people of the ability to achieve the desired state of wellbeing and socially acceptable standard of living (Omobowale, 2014). In this study, poverty is a situation in which an individual is unable to attain an acceptable minimum standard of living giving rise to several material deprivation, absence of recreational opportunities, lack of access to economic as well as political power and inferiority complex, isolation and social deregulation.

In an effort to stem down poverty, poverty reduction is indispensable. Poverty reduction, according to Smith (2010), is an attempt to restructure the battered economy and reduce the widespread of destitution through government policy intervention in order to give power to the poor and improve their general standard of living. (Zimmerman, 2013) defined poverty reduction as the creation of general conditions which allow man to live in dignity, where people are free to take their own decisions in life, where the poor gets increasingly empowered enough to participate in social, political and economic decision making.

Poverty reduction is a major issue on the policy agenda of government of many countries most especially in developing countries where the incidence is very high. It is widely acknowledged that the fight against poverty is necessary condition for sustainable long run economic growth and development. In this regard, Nigeria is making efforts to enhance economic growth and reduce poverty through sectoral and multi-sectoral approaches. Sectoral approaches include agriculture, health, education, transport, housing and the financial sectors, while the multi-sectoral approach includes the Directorate of Food, Roads and Rural Infrastructures (DFRR1), the National Directorate of Employment (NDE), Better Life for Rural Women, Family Support Programme and many others. Agriculturewas noted to have outperformed other sectors of Nigerian economy in reducing poverty in recent times as it is responsible for most of the employment, especially among the poor. The recent agricultural growth rate in Nigeria is close to the 6% target set for Africa by the Comprehensive Africa Agriculture Development Program (CAADP) initiative and with this achievement, the Nigerian government has even set a higher target of 10% for overall agricultural growth (Olajide, Akinlabi&Tijani, 2012).

In an effort by the Nigerian government to sustain this growth rate and increase the sectoral contributions of agriculture to GDP, it has put some policies in place. The New Agricultural Policy (NAP), the National Food Security Program (NSFP), the National Economic Empowerment and Development Strategies (NEEDS), the Comprehensive Africa Agriculture Development Programme (CAADP), the National Agricultural Land Development Authority (NALDA), the Rural Sector Development Strategy (RSDS) the Strategy Grains Reserves Programme (SGRP), the development of fishery, small ruminant production and pasture grazing reserve, are some of the policies being implemented by the government in order to enhance agricultural productivity in Nigeria towards improving incomes and standard of living of the poor. The growth in agriculture has been found to be more beneficial to the poor than growth in other sectors of the Nigerian economy (Osayemi, 2003).

The role of agriculture in economic growth and poverty reduction cannot be undermined. According to Haggblade (2004), the significant poverty reduction will not be possible without rapid agricultural growth since the majority of the poor are in agricultural sector. People in agricultural sector are poor because they earn relatively lower incomes. This explains why many people are poor in Nigeria. As a result, agricultural growth is more likely to involve and benefit the poor than the non-agricultural growth. Thus, raising agricultural production and productivity remains crucial to reducing poverty in Nigeria especially with the rapid rate population is growing in Nigeria. Iheke (2006) noted that growth in population combined with rapid urbanization has fuelled an increased demand for agricultural goods that regional production is increasingly failing to meet.

In the Nigerian economy and many developing countries, poverty is more pronounced in the rural sector where agriculture is practiced at subsistence level. Almost all rural dwellers depend on income from agricultural output for survival. About 70% of the total labour force is employed by the agricultural sector, therefore, agricultural transformation means a lot in reducing poverty and aiding economic growth.  Invariably, every increase in income or per capita agricultural output enhances the incomes of the poor and reduces the number of people living on less than US$1 a day in this area, leading to increase in capital formation (Anyanwu, Ibekwe&Adesope, 2010).

Agriculture contributes to the growth of the economy, provides employment opportunity for the timing population, export revenue earnings and eradicate poverty in the economy.  Agriculture basically is the rearing of animals and cultivation of plants (crop). Resource in 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 timing population eradicate poverty and contribute to the growth of the economy (Oji-Okoro, 2011). A strong and efficient agricultural sector would enable a country to feed its growing population, generate employment, earn foreign exchange and provide raw materials for industries. Agriculture is the main-stay of many economies and it fundamental to the sock-economic development of a nation because it is a major elements and factor in national development. Agriculture is indeed a key part to enhance economic development, reduce poverty and achieve millennium development goals.

Poverty reduction is one of the eight Millennium Development Goals (MDGs) of Nigeria in year 2000 aiming at reducing extreme poverty in the country by 2015. This is a very laudable and achievable macro-economic objective particularly in a country endowed with abundance of human and natural resources. However, achieving this Millennium Development Goal of poverty reduction is becoming more challenging for the country as the poverty situation is becoming more precarious. More Nigerians are becoming victims of economic hardship as the gaps between the rich and the poor keep getting wider than at any time in the recent past. This implies that the country is characterised by a trend of increasing rate of poverty in the midst of economic prosperity as millions of Nigerians wallow in abject poverty. For example, in the last six years, Nigeria economy has been growing at around 6 percent, while the country’s poverty rate has increased from 52 percent in 2004 to 63 percent in 2011 (Odetola&Etumnu, 2013).

Nigeria is categorised as one of the poorest twenty countries in the world in terms of her per capita income levels despite her richness in both natural and human resources. Nwaobi (2003) asserts that Nigeria presents a paradox of a rich country with poor people. This is evident by the statistics released recently by the Nigeria Bureau of Statistics (NBS, 2014) rating the country’s economy as the largest in Africa and the 26th largest in the world.This rating was however faulted by many Nigerians judging from the high level of poverty ravaging the land. Even if this rating was based on reliable statistics with the level of greed and indiscipline characterising the country’s leadership, the associated economic benefits are concentrating in few hands while majority continues to wallow in abject poverty. Bad governance over the years has deprived an average Nigerian of access to education, food, health, medical services, good sanitation, good transportation, regular power supply, water services and many other social and infrastructural services, which has resulted to inability of many Nigerians to live a healthy and active life and even afford conveniently, three square meals per day. Evidences have shown that the number of those living with poverty in Nigeria has being on the increase yearly. The Federal Office of Statistics (FOS, 2006) reveals that poverty has become so massive and pervasive to have engulfed a large portion of the Nigerian society. In the light of this,Abiola and Olaopa (2008) stated that the scourge of poverty in Nigeria is an incontrovertible fact, which results in hunger, ignorance, malnutrition, disease, unemployment, poor access to credit facilities and low life expectancy as well as a general level of human hopelessness.

Given this prevailing condition of poverty in Nigeria, it is therefore necessary to assess agriculture as a key sector of its economy growth and to poverty reduction in the country which is the main objective of this study. Agricultural growth that generates employment, increases wages, provides access to adequate food in terms of both quantity and quality and upgrades the quality of lives especially among the poor is of crucial importance for economic development and poverty reduction in Nigeria. According to Adebayo and Okuneye (2005), the importance of agricultural is more pronounced in developing countries like Nigeria, where it is the main thrust of national survival, employment, income and food. Agriculture has the ability to contribute significantly to economic development and poverty reduction in a country because of its direct link with income generation among the rural poor whose sources of income are mainly from agricultural production and by extension its effect on the purchasing power of the urban poor who depends on food from agriculture and tend to spend a substantial proportion of their income earned from non-agricultural sources on food coming from agricultural output. The implication is that poverty reduction in a country depends largely on per capita gross domestic product from agricultural and non- agricultural sectors of the economy.Therefore, this study assesses the role of agriculture in economic growth and poverty reduction in Nigeria.

1.2       Statement of the Problem

The promotion of the rural economy in a sustainable way has the potential of increasing employment opportunities in rural areas, reducing regional income disparities, stemming pre-mature rural-urban migration, and ultimately reducing poverty at its very source (Anríquez&Stamoulis, 2007). In countries where the share of agriculture in overall employment is large, broad-based growth in agricultural incomes is essential to stimulate growth in the overall economy, including the non-farm sectors selling to rural people. Hence, the ability of agriculture to generate overall GDP growth and its comparative advantage in reducing poverty will vary from country to country (Food & Agriculture Organization [FAO], 2012). Agricultural output in Nigeria has witnessed appreciable acclivity over the years; the period under review also witnessed simultaneous rise in food prices, growth in food production and worsening poverty levels.

However, despite the improvement in the sectors output growth, corresponding improvements were not recorded in the standards of living and poverty measures in the country. Either that the rise in global food crisis more than outweighed the benefit from output growth or that the growth did not trickle down to the lowly placed farmers. Manyong et al. (2005) has reported that in spite of Nigeria’s rich agricultural resource endowment, there has been a gradual decline in agriculture’s contributions to the nation’s economy. In the 1960s, agriculture accounted for 65-70% of total exports; it fell to about 40% in the 1970s, and crashed to less than 2% in the late 1990s. The decline in the agricultural sector was largely due to rise in crude oil revenue in the early 1970s.

Following the above, one cannot but wonder what the real impact of agricultural output is on economic growth and poverty reduction in Nigeria. Thus this study set to study the impact of agriculture on economic growth and poverty reduction.

The study attempts to address the following research questions:

1. Does agriculture have a significant effect on economic growth in Nigeria?
2. Is there a relationship between agricultural outputand poverty reduction in Nigeria?

1.4       Objectives of the Study

The main objective of this study will be to determine the role of agriculture in economic development and poverty reduction in Nigeria.The following specific objectives will also be achieved:

1. To determine the effect of agriculture on the Nigerian economy.
2. To determine the effect of agriculture on poverty reduction in Nigeria.

 

1.5       Research Hypothesis

The following null hypotheses were formulated to guide the study and were tested at .05 level of significance at appropriate degree of freedom.

Ho­_1:  Agriculture has no significant effect on economic growth in Nigeria.

Ho­_2:  Agriculture has no significant effect on poverty reduction in Nigeria.

1.6       Significance of the Study

Achieving significant results in economic growth and poverty reduction often hinges on what is done, how it is done, when it is done and whom it is targeted at. It is obvious from several studies that poverty reduction strategies in Nigeria have failed to achieve their stated objectives. It therefore requires concerted efforts by all to contribute to the success of this all-important but elusive goal. Such efforts can only be meaningful if it stems from an empirical study in order to support the government to realize the global lofty objective of eradicating poverty by the year 2020 and also increase economic growth.

The study is expected to be a concerted effort to identify, articulate and highlight the role of agriculture in ensuring economic growth and poverty reduction in Nigeria. It is a quest to streamlining economic growth and poverty reduction strategies towards making them more potent.

The study is also expected to be of benefit to a number of groups especially stakeholders of economic growth and poverty reduction efforts such as public and private sectors strategists, economists, planners, managers, coordinators and monitors of poverty reduction agencies and the poor who are the ultimate beneficiaries of the efforts and indeed the general public. The research is expected to be part of data bank for operators as well as policy makers/analysts for decision making in poverty reduction and agricultural sector. It will also serve as a bed rock for further research by students and other researchers.

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