Government Expenditure on Agriculture and Economic Growth in Nigeria

Abstract

The impact of agriculture being the principal source of employment for substantial sectors of the population in most emerging countries, as well as the key to the countries' long-term economic growth has been an issue of discussion. Thus, this article looked at Nigeria's agricultural expenditure proxy by agricultural credit guarantee scheme fund and government expenditure on agriculture; and economic growth proxy by real GDP using secondary data from CBN Statistical Bulletin from 1981 to 2021, as well as Ordinary Least Square regression method to analyze the data. Various literatures were reviewed with conflicting results. However, the findings from the empirical analysis of the current study from the long run normalize equation showed that the variables government expenditure on agriculture and agricultural credit guarantee scheme fund have positive and significance impact on economic growth in Nigeria) for the period of study. Using the adjusted R square, the explanatory variables accounted for 71.3 per cent contribution to economic growth in Nigeria. Again, based on the conflicting results of the previous findings on the relationship between government expenditure and economic growth, this study empirically affirmed the findings of Asmau (2020), Akanbi and Onuk (2018) Cletus and Sunday (2018), and Dahun and Utpal (2018) that government expenditure on agriculture has positive and significant impact on economic growth in Nigeria. Thus, the study therefore recommended that government should evolve policies toward diversifying the economy and encourage the campaign for improvements in the non-oil sectors of the economy especially agricultural sector. More so, government should be more proactive in insisting on the private sector, especially, the financial sector to set aside funds annually for agricultural financing to compliment government efforts, as well as making efforts through its agencies to enlighten farmers of the availability of such credit facilities.