ABSTRACT
The study assessed the trend, structure, composition,
determinants and effectiveness of Federal Government agricultural expenditure
policies and the implications of these policies from 1960-98.The study covered
the Nigerian nation and used federal level time series data to achieve the set
down objectives. The primary analytical method consisted of descriptive analysis,
appropriate pictorial diagrams, line and pie charts. Stationarity, co –
integration /error correction model (ecm) and granger causality approaches were
also employed to verify the characteristics of the data, ascertain the
existence of causality/determinants of agricultural expenditure and long run
relationship, while the Tin Bergen Model was employed to determine the
effectiveness of Federal Government agricultural expenditure policies. The
study revealed that the real Federal Government expenditures on agriculture
increased enormously since 1970, from N152.0 m to a peak of N
2,473.0m in 1980 due to the oil boom. The proportion of the Federal Government
expenditure on GDP fluctuated during the study period, rising from 0.1 per cent
in 1960 to a peak of 3.4 per cent in 1987, followed by gradual decline to 0.4
per cent in 1998, implying a decline in agricultural growth. The recurrent
capital expenditure ratio stood at 33: 67 in the last decade of the study
period, compared to a ratio of 88:11 obtained from 1960-67. The dwindling
proportion of recurrent expenditure, particularly overheads, had grave
consequences for the sustenance of the numerous agricultural projects on board.
The structure of expenditure was generally weakened, with undue emphasis on investments
in inefficient parastatals, which prior to SAP engaged in direct production.
The crop sub-sector was observed to have crowded other sub sectors such as
livestock, fisheries and forestry. The mean civilian total expenditure put at N664.90m
was about 1.5 times the average under the military regimes, even though the
t-test of significance carried out on these means revealed that they were not
significantly different from each other. Expenditure volume during the 1970-85
was about twenty three and two times those of the immediate preceding and
proceeding periods, respectively. The Coefficient of Variation (COV) analysis
showed that expenditures were more stable and less volatile during the first
era (1960-69). The review of expenditure relative to selected sectors of the
economy showed that the mean defence and administration expenditures were four
times and two times those of agricultural expenditures. The share of
agricultural expenditure in total expenditure was an average of three per cent
compared to ten per cent, nine per cent, six per cent and two per cent for
defence, administration, education and health respectively. The Product Moment
Correlation analysis indicated a positive correlation, implying that these
expenditures tended to move in the same direction and went to confirm the use
of the “across – the – board addition/cut expenditure technique” which had been
a disincentive to sectoral peculiar expenditure needs. The causality tests
indicated that the real government agricultural expenditure in Nigeria had been
largely determined by the level of public financial resources in the Country,
while the ecm revealed that there was no long term neutrality of change between
agricultural expenditures and the tested determinants. The policy effectiveness
elasticity further showed that public expenditure policy on agriculture was
generally ineffective, contributing a marginal increase of 0.03 per cent to
agricultural output from every 10 per cent increase in agricultural
expenditure.
CHAPTER ONE
INTRODUCTION
1.1 Background
Information
Agricultural
expenditure policies in Nigeria have undergone many changes since independence
in 1960. These changes were mainly a reflection of changes in government
philosophy to agricultural development, while the philosophical changes were in
themselves, often brought by changes in government.
Between 1960
and 1998, the country witnessed six military regimes and three civilian eras
(spanning 29 and 10 years, respectively), which implemented varied policy
measures in line with the priority of the government. A review of the Federal
Government agricultural expenditures by the type of government showed that the
average real annual agricultural expenditure on total expenditure was higher
under the civilian regimes, averaging about 3.82% compared to the 2.94% under
the military regimes. The annual average real civilian government agricultural
expenditure was also about 1.5 times that of the military, while the percentage
of agriculture’s contribution to GDP average about 47.10% under the civilian
regime compared to 38.90% under the military. The total Federal Government
agricultural expenditure figure, which reached peak of N2,473 million in
1980, fell to N286.0 million in 1984, after the military came to power.
In a broad
sense, however, Federal Government expenditure policy on agricultural
development had undergone three major phases, the first, which was the period
of decentralized approach to agricultural development, was from 1960 to about
1969. The second from 1970 to 1985, witnessed increased Federal Government
participation, while the third, which is still unfolding, from 1986 to the
present time is the era of economic reforms (Olayemi and Dittoh, 1995).
A comparison
of real Federal Government (FGN) expenditures on agriculture by philosophical
orientation revealed that the average real Federal Government expenditure on
agriculture of N867.06m recorded during the 1970 - 85 era was higher
than the N398.0m and N37.3m obtained under the reform and
decentralized era respectively. Also, the annual growth of real government
expenditure on agriculture was higher (50%) under the era of increased Federal
participation compared to the 16.67% observed for the 1960 – 1969 period and
the 11.43% recorded during the 1986 – 1998. Ironically however, the percentage
contribution of agriculture to GDP was higher during the decentralized era,
averaging about 57.67% compared to 36.25% and 34.04% recorded in the last two
periods.
In spite of
all these efforts and huge budgetary allocations, the overall agricultural
situation deteriorated creating a wide gap between the supply and demand for
food. Revenue from agricultural export dwindled (See Appendix 1) and government
was faced with mounting food import bills. At the same time, industries
increasingly resorted to imports of agricultural raw materials, thus putting
lot of stress on foreign exchange. Ojo and Akanji (1996) also noted that the
results were inadequate, not only in relation to the committed financial
resources, but also with regard to the nation’s minimum needs of agricultural
products. Thus, raising questions as to the level, structure, determinants and
effectiveness of government expenditure policy on agriculture.
1.2 Problem
Statement
The ultimate
objective of any public policy on agriculture is to increase total production
and enhance agricultural growth. Specifically, both the agricultural credit
policy and government direct spending are generally geared towards making
farmers more productive and efficient through the provision of the appropriate
facilities.
An analysis
of the real public sector spending for agricultural development indicates that
substantial increases have been recorded. From N373.0 m during the
1960-69 fiscal periods, real Federal Government expenditures (recurrent and
capital) rose by about 26 folds N9,672.0m between 1980 and 1989, thus
reflecting the broad pattern of Federal Government intervention in agricultural
development.
In spite of the increased resource flow to the sector,
however, total agricultural production stagnated and eventually declined in the
pre-SAP era, while moderate growth was witnessed in the wake of the SAP induced
reforms (Ukpong, 1993). Vincent (1981) also affirmed that in spite of the
increased flow of funds to the agricultural sector, supplies of agricultural
production for consumption, the manufacturing industry and exports also
declined with adverse effects on the country’s inflow and outflow of foreign
exchange. Also, the results in the market place and on the tables of consumers
have been worrisome. Food prices have been rising persistently over the years
with the average price of garri, a major staple food, rising to about N63.3/kg
in December, 2007, compared to N5.80/kg in August, 1992 (APMEU, 1993;
NFRA, 2008). The World Bank (1996) also argued that even though social and
economic indicators had been improving somewhat, it remained far below
acceptable levels and below levels that should have been expected on the basis
of previous high expenditures. It, however, noted that key programmes related
to poverty reduction....
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Item Type: Postgraduate Material | Attribute: 105 pages | Chapters: 1-5
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