CHAPTER ONE
1.1BACKGROUND OF THE STUDY
By the time Nigeria became politically independent in October 1960,agriculture
was the dominant sector of the economy, contributing about 70% of the Gross
Domestic Product (GDP) employing about the same percentage of working
population and accounting for about 90% of foreign exchange earnings and the
federal government revenue (CBN, 2005). The early period of postindependence up until the mid-1970’s saw a rapid growth of industrial capacity
and output as the contribution of the manufacturing sector to GDP rose from
4.8% to 8.2%. This pattern changed when oil suddenly became of strategic
importance to the world economy though its supply price nexus.
Crude oil was first discovered in commercial quantity in Nigeria in 1956, while
actual production started in 1958. It became the dominant resources in the mid
1970’s. The massive increase in oil revenue as an aftermath of the Middle East
war of 1973 created and unprecedented, unexpected and unplanned wealth of
Nigeria. The relative attractiveness of the urban centres made many able
bodied Nigerians to migrate from hinder land, abandoned their farm lands for
the cities and hoping to partake in the growing and prosperous (oil driven)
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urban economy. This created social problems of congestion, provision,
unemployment and crimes.
Notwithstanding, the enviable position of the oil sector in the Nigerian
economy over the past three decades, the agricultural sector has remained the
largest and arguably the most important sector of the economy. Agriculture
contributes to the gross force in Nigeria (Aigbokhan, 2001). It is estimated to be
the largest contributor to the non-oil foreign exchange. A strong agricultural
sector is essential to economy development both in its own rights and to
stimulate and support the growth of industries. Economy growth has gone
hand in hand with agricultural progress stagflation in agriculture is the principal
explanation for poor economy performance, while rising agricultural activities
has seen the most concomitant of successful industrialization (Ukeje 1999). The
labour-intensive character of the sector reduces its contribution to the GDP.
Nevertheless, agricultural exports are a major earner of foreign exchange in
Nigeria, in the non-oil sector.
Like in most developing countries, agriculture remains the backbone of the
Nigeria economy. Typically, it is the largest source of employment often twothird or more of the population is dependent on this livelihood on farming. Its
is a well-known fact that Nigeria’s comparative advantage in the production of
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certain food and other agricultural commodities that can earn foreign exchange
for imports of other food.it has been recognised that sustained agricultural
development requires striking an appropriate balance between investments
that are directly productive in agriculture and investment in infrastructure.
Poor infrastructural services in developing countries will lead to low
productivity. Much of the high productivity of agriculture in the developed
countries is as a result of massive form of investment over many years in
physical and institutional infrastructure (Manyong, et al, 2003).
Conversely, the low productivity of agriculture in many developing countries
reflects among other things, limited investment in rural roads and electricity.
This streams from the concentration of public investments in urban areas,
where the unit cost of providing services is typically less and logistic are
problems fewer.
1.1 STATEMENT OF THE PROBLEM
One of the constraints of the growth in Nigeria has been the slow development
of the agricultural sector. The performance of the sector was undermined by
the disincentives created by the macro-economic environment. The economic
stabilization Act enacted in 1982 affected expenditure on agriculture and
restricted income. Indeed, the contribution of the sector to total GDP has been
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falling, not necessarily because a strong industrial sector is displacing
agriculture as a result of low productivity. Emerging problem which constraint
the full realisation of the potentials in the agricultural sector includes
inadequacies in the supply and delivery of farm input, shortage of working
capital, low level of technology, diseases and pest infestation, poor postharvest processing and shortage, environmental hazard, labour and land use
constraint.
There is need to correct the existing structural distortions in Nigerian
agricultural sector and put the economy on the part of sustainable growth. This
study seeks to find answers to the following research questions:
1) What role does the agricultural sector play in the development of
economic growth in Nigeria?
1.1 Objectives of the study
The main objective of this study is to evaluate the role of the agricultural sector
as an accelerator for economic growth and development in Nigeria. Specifically,
this study aims to achieve the following objectives:
1. To access the impact of the agricultural sector on the Nigerian economic
growth.
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1.2 STATEMENT OF HYPOTHESIS
H0: That Nigeria’s agricultural sector has not contributed significantly to the
economic growth of the country.
1.3 SIGNIFICANCE OF THE STUDY
The significance of this study depends on the fact that with improved economy,
Nigeria stands to gain in its effects towards development. It is advantageous to
both the government and citizens; in the sense that its serves as a guide for
future governmental policy on agriculture and when this is well implemented,
we will notice that the welfare and standards of living of the citizens will be
improved.
1.4 SCOPE OF THE STUDY
This study examines the role of the agricultural sector in the economic growth
and development of Nigeria. The performance of Nigeria’s agricultural sector
since 1960 to 2011 shall be evaluated in detail as well as effects of the
government at revamping the sector examined.
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