CHAPTER ONE

1.1 BACKGROUND OF THE STUDY

By the time Nigeria became politically independent in October 1960agriculture

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 post-

independence 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 two-

third 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 post-

harvest 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

H

0

: 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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