Abstract:
The study examined the impact of monetary policy on foreign direct investment in agricultural
sector performance in Nigeria, using annual data spanning the period 1985 to 2020. Given its
significant role in providing employment to about 60 % of the economically active population and
70% of the country's poorest communities, agriculture has huge potential for achieving poverty
reduction in Nigeria as many live below $1 dollar a day. The sector is bedevilled by problems such
as organisational and weak policy, limited access to improved technologies in the form of improved
seeds and the use of mainly crude farm tools such as hoes and cutlasses and underfunding leading
to the problem of high food importation. The objective of this paper is to find out the significant
relationship between foreign direct investment in agriculture and exchange rate, interest rate and
money supply which are monetary policy variables in Nigeria. In this regard, the study employed
the Autoregressive-Distributed Lag (ARDL) approach and established a long- run relationship
between agriculture and interest rate, exchange rate and money supply. Specifically, the findings
suggested that in the long-run only interest rate and money supply have significant effects on
foreign direct investment in agriculture. Given the important role of interest rate and money supply
in promoting agricultural sector performance, the study recommends that a significant decrease in
interest rate and an expansionary money supply will lead to an increase in investment to the
agricultural sector of the Nigerian economy.
