Public Sector Spending and Agricultural Sector Performance in Nigeria: A Disaggregated Approach
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Agriculture plays an important role in the development of a country's economy. However, the functioning of the sector in Nigeria has been disappointing. It is being argued that the poor functioningof the agricultural sector in Nigeria is as a result of government neglect, especially, in terms of funding. This study therefore, investigated the effect of government spending on the functioning of the agricultural sector in Nigeria. The study disaggregated total government spending on agriculture into its recurrent and capital components. Annual data from 1986 to 2017 were used. The data were obtained from Central Bank of Nigeria Annual Statistical Bulletin for 2017 and Central Bank of Nigeria Annual Report and Statement of Accounts (various years). A variety of analytical techniques including Augmented Dickey-Fuller (ADF) unit root test, Johansen cointegration test, and Error Correction Mechanism (ECM) was applied. The main conclusion from the study is that there exist a long-run equilibrium relationship between public sector spending and agricultural sector functioning in Nigeria. It is recommended that the government should increase its budgetary allocation (especially capital spending) to the agricultural sector.