The Effect of FDI on Economic Productivity in Nigeria’s Agricultural Sector
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Background of the Study
Agriculture remains a cornerstone of Nigeria’s economy, providing livelihoods for a significant portion of the population and contributing to food security. FDI in agriculture can play a transformative role by introducing modern farming techniques, advanced machinery, and improved management practices, thereby boosting productivity. In recent years, there has been a concerted effort to attract foreign investment into Nigeria’s agricultural sector, aiming to overcome the challenges of low yields, outdated practices, and supply chain inefficiencies (Oluwaseun, 2023).
The theoretical underpinnings of this study are based on the diffusion of innovation and productivity growth models, which suggest that FDI can enhance technological adoption and lead to efficiency improvements. Empirical evidence from other developing countries indicates that FDI in agriculture not only increases output but also fosters sustainable practices and value chain integration. In Nigeria, however, the impact of FDI on agricultural productivity is affected by factors such as access to credit, rural infrastructure, and local technical expertise (Akinola, 2024). Recent policy measures, including agricultural incentives and modernization programs, have sought to maximize the benefits of FDI, yet results have been mixed.
This study aims to assess the effect of FDI on economic productivity in Nigeria’s agricultural sector by analyzing output data, technological adoption rates, and productivity metrics across key agricultural sub-sectors. The objective is to determine whether FDI has significantly improved productivity and to identify the conditions under which its impact is most pronounced (Ibrahim, 2025).
Statement of the Problem
Despite efforts to attract FDI into the agricultural sector, Nigeria continues to face low productivity and persistent inefficiencies. Many agricultural enterprises remain dependent on traditional practices, and the expected technological spillovers from foreign investment have been limited. Structural issues such as inadequate rural infrastructure, limited access to modern farming inputs, and a shortage of skilled labor hinder the effective utilization of FDI (Chinwe, 2023). Moreover, disparities in the distribution of FDI across different agricultural regions and sub-sectors have resulted in uneven productivity improvements.
This disconnect between FDI inflows and agricultural productivity raises concerns about the ability of foreign investment to drive sustainable improvements in the sector. Policymakers and stakeholders need to understand why the positive impacts of FDI are not uniformly realized and identify the barriers preventing effective technology transfer and efficiency gains. Addressing these issues is crucial for enhancing food security, improving rural livelihoods, and fostering economic diversification. This study seeks to identify the underlying factors limiting productivity gains from FDI and to propose actionable strategies for overcoming these challenges.
Objectives of the Study
• To evaluate the impact of FDI on productivity in Nigeria’s agricultural sector.
• To identify structural and operational barriers to effective FDI-induced productivity improvements.
• To recommend policy measures that enhance the positive effects of FDI on agricultural output.
Research Questions
• How does FDI influence productivity levels in Nigeria’s agricultural sector?
• What barriers limit the effective impact of FDI on agricultural productivity?
• Which policy interventions can improve the productivity benefits of FDI in agriculture?
Research Hypotheses
• H1: FDI inflows are positively correlated with increased productivity in Nigeria’s agricultural sector.
• H2: The impact of FDI on productivity is moderated by rural infrastructure and access to modern inputs.
• H3: Policy reforms that enhance technical training and input accessibility amplify the productivity effects of FDI.
Scope and Limitations of the Study
The study focuses on agricultural productivity data, FDI inflow statistics, and regional performance metrics in Nigeria over the past decade. Limitations include data gaps in rural areas and the difficulty of isolating FDI effects from other agricultural policies.
Definitions of Terms
• Agricultural Productivity: The output produced per unit of input in the agricultural sector.
• FDI: Foreign Direct Investment—capital from foreign entities invested in agriculture.
• Value Chain Integration: The process of connecting agricultural production with processing, distribution, and marketing.
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