CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria has a wealth of natural resources, ranging from solid minerals to fertile land with a diverse range of agricultural products such as palm oil, cocoa, peanuts, beans, melon, corn, and rice, to name a few. Agriculture was the backbone of the Nigerian economy prior to the commercialization of oil, but with the arrival of oil, the country's focus shifted from being agriculturally dependent to crude oil dependent. Nigeria has been a victim of a monolithic economy since the era of the oil boom in the 1970s, and has since been experiencing crude fall without effectively developing a strong policy that will put the nation's economy on a firm foundation for steady growth. Oil money now provides for almost 90% of the country's gross export revenue. With the fluctuation of oil prices and a subsequent steep decrease in the international oil price in recent periods, it is clear that overdependence on oil as a key source of revenue could fail the country, as it will be unable to finance the budget as usual. (Ikpor, 2016). According to Ewubare and Eyitope (2015), any economy's growth and development is largely dependent on the development of its agricultural sector. Lewis identified five roles of agriculture in the development process in his model of limitless labor supply-product contribution, factor contribution, source of employment, foreign exchange contribution, and means of technological advancement (Ayesha, n.d). According to Ayunku and Etale's (2015) analysis, the agricultural sector in Nigeria is the most important for achieving the illusive objective of a diversified economy. Recent studies on the causes of development and underdevelopment have identified agricultural transformation as a crucial to a country's economic freedom. Agriculture's functions, and in particular its linkages with other sectors of the economy, are responsible for most countries' growth and development (Oluwatoyese, Applanaidu & Abdul Razak, 2015). Nigeria's economy is dominated by petroleum production and exports, which account for around 90% of the country's gross profits. Agriculture, which had been the economy's basis since the early 1950s and 1960s, has been pushed to the background by this dominant position. Nigeria entered recession in 2016 due to decreasing pricing and output, which were compounded by militant attacks on oil and gas facilities in the Niger Delta, as well as unfavorable economic policies, such as foreign exchange restrictions. As oil prices recovered and output steadied, GDP growth turned positive in 2017. The economy becomes particularly sensitive to unanticipated external shocks as oil prices fluctuate. This necessitates a shift in concentration away from oil and toward agriculture. This study adds to previous research on the relationship between government spending on agriculture and Nigerian economic growth.
1.2 STATEMENT OF THE PROBLEM
Nigeria's agricultural sector used to be the country's main source of foreign cash. Nigeria was self-sufficient in food production prior to the civil war. Agriculture, on the other hand, has been unable to keep up with Nigeria's rapidly rising population, and the country now relies on food imports to survive. Nigeria imported agricultural items for a total of US $231,550,000 between 2010 and 2018. (Central Bank of Nigeria Statistical Bulletin, 2018). Regardless of Nigeria's participation in international trade, hunger, malnutrition, mass poverty and income among individuals, groups of businessmen and politicians, unemployment, and a lack of executive capacity, the country's overdependence on petroleum and import goods and services continues to deteriorate, delaying the Nigeria's agricultural sector used to be the country's main source of foreign cash.
The study's main goal is to look into the impact of government agriculture spending on economic growth. Other specific goals include:
I. To determine the influence of government agriculture spending on Nigeria's economic growth.
II. To look at the relationship between government agriculture spending and economic growth.
1.4 RESEARCH QUESTIONS
I. What is the influence of government agriculture spending on Nigeria's economic growth?
II. What is the relationship between government agriculture spending and economic growth?
I.5 RESEARCH HYPOTHESIS
H0 = Government agricultural expenditure has no impact on economic growth in Nigeria.
H0 = There is no causal relationship between agricultural expenditure and economic growth in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The importance of this study stems from the economic importance of agriculture. Because farming employs the majority of the population, economic progress is nearly impossible to achieve without expanding this sector. As a result, research on this topic is critical to assisting policymakers in making decisions about how to allocate public funds. Future academics will be able to use these findings to learn more about the relationship between government agriculture spending and economic growth. The study will aid in identifying the barriers to the effective implementation of government agricultural policies and programs, as well as provide practical recommendations for achieving the objectives of such policies and programs. This is significant because the government can only rebuild the agriculture sector and achieve its national development goals and objectives through effective agricultural policy. Furthermore, this research has the potential to address not only the agricultural sector, but a slew of other issues that Nigeria is grappling with, including unemployment, a low standard of living, rekindling the link between agriculture and other sectors through raw material supply, and the country's Unemployment rates will fall as more individuals participate in agricultural activities, improving the economy's standard of living. Agri-products can also be used as a source of raw materials in the manufacturing sector. Cotton, timber/wood, fur, wool, skins and skin, and other materials could be used.
1.7 SCOPE OF THE STUDY
The scope of this research is limited to examining the impact of government agriculture spending on economic growth. As a result, the research will span thirty-eight years, from 1981 to 2019. During the time period under consideration, this study focuses on the trend of government agricultural expenditure as well as some contributions of agriculture to the Nigerian economy's production. The study period was chosen based on the availability of data.
1.8 LIMITATION OF STUDY
The study was limited given the short duration of the study and the budget.
1.8 DEFINITION OF TERMS
EXPENDITURE: the action of spending funds
ECONOMIC GROWTH: Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
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