Sumerianz Journal of Economics and Finance
Online ISSN: 2617-6947
Print ISSN: 2617-7641
Journal Website: https://www.sumerianz.com/?ic=journal-home&journal=26
Volume 2 Issue 9 (2019)
Impact of Government Expenditure on Agricultural Productivity in Nigeria
Authors: Eneji Mathias Agri ; Habila Haruna ; Haruna Fumen DowchemAbstract:
This study examined the impact of government expenditure on agricultural productivity in Nigeria within the period 1981 to 2018. The motivation for this study is the need to understand whether such impact affects agricultural productivity positively or negatively, and by implication, agricultural value chain through government spending on agriculture, health, infrastructure, and food imports. The study employed the Ordinary Least Square (OLS) technique for the analysis of the time series data with the Augmented Dickey Fuller (ADF) Unit Root Test amongst others for the preliminary tests. The Error Correction Mechanism (ECM) was used to determine the speed of adjustment of the dynamic short-run to the long-run equation,while the post diagnostic tests were performed using the ARCH, Breush-Godfrey LM, Jarque-Bera and the CUSUM of square tests. The study found that a positive and significant relationship exist between government expenditure (on agriculture, health & infrastructure) and agricultural productivity in Nigeria. Although, the result showed that government expenditure on agriculture has positive and significant impact on agricultural productivity, the coefficient of 18.34% is not strong enough as compared with the importance of the agricultural sector to the Nigerian economy. On the other hand, food imports have a negative impact on agricultural productivity in Nigeria with a coefficient of -17.50% and probability value at 0.3890. Based on the findings, the study recommends amongst others that more budgetary allocation should be channeled to the agricultural sector, which will help in subsidizing the cost of farm inputs and machineries such as fertilizer, seedling, agro-chemicals, tractors, harvesters, processing machines etc. Government should also implement policies that will encourage the production and consumption of domestic agricultural product, while discouraging or minimizing food imports, this can be achieved by placing embargo on the importation of certain food crops or high custom duty be taxed on food imports.