CHAPTER ONE
1.1 BACKGROUND 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 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 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 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?