EFFECT OF GOVERNMENT AGRICULTURAL SPENDING ON AGRICULTURAL PRODUCTIVITY IN NIGERIA: 1986-2021

Abstract

The study examined the effect of Government agricultural spending on agricultural productivity in Nigeria using time series data covering 1986 to 2021. The study used expost-facto design with time series data collected from the Central Bank of Nigeria (CBN) publications and World Development Indicators (WDI). The study used government total spending on agriculture (GTSA), Government capital spending on agriculture (GCSA) and government recurrent spending on agriculture (GRSA) as explanatory variables of government spending on agriculture, while agricultural sector productivity (ASP) was proxied by agricultural sector contributions to the Gross Domestic Product (GDP) in Nigeria. The unit root test revealed different order of integration as it was only GCSA had 1(0) orders of integration, the rest had 1(1)order. The Bounds Cointregretion test revealed shows the presence of long-run relationship and. The ECM test revealed an adjustment speed of 24.36 percent. The disaggregated findings showed that government total spending insignificant positive effect, government recurrent spending on agriculture had an insignificant negative effect, while government capital spending had a significant negative effect on productivity in the sector. The Adjusted R Square indicated that 97.74 percent of the changes in ASP was due to changes in GTSA, GCSA and GRSA in the economy. The study concluded that agricultural spending has effect on agricultural productivity and recommends that government should take into cognizance the previous productivity level of the agricultural sector in formulating agricultural sector budgetary allocations policies and government should increase its capital spending on agriculture to improve agricultural sector productivity in Nigeria.