FISCAL POLICY AND AGRICULTURAL DEVELOPMENT IN NIGERIA
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Background to the study
A good financial power of a nation is a function of satisfactory and efficient fiscal policies. Fiscal and monetary policies are the twin policy instrument used by a nation to regulate the level of government spending, taxation and public debt aimed at influencing economic activities in a desired manner. The past failure of fiscal policies in Nigeria in contributing to growth wealth creation and poverty reduction can better be analyzed within the framework of a commonly known term "Natural Resource Curse". Natural resources curse depicts a situation-where a country endowed with verse amount of natural resources fails to translate such wealth into meaningful economic growth and development, Sham sudden Usman (2008).
The failure of fiscal policy in Nigeria in the past to insulate the economy from the volatility of oil revenue has led to undue real exchange rate appreciation, with negative impact on the competitiveness of the economy.
Procyclical fiscal policy, with adverse impact on the quality of government expenditure with detrimental effect on investment and growth. Rent-seeking behaviour, leading to inefficiency in resource allocation with negative impact on growth and development. The problem of quality of spending with Inefficiency and leakages in both the capital and current budgets.
The problem of ill-conceived projects. However, agricultural sector has been invaluable in supporting economic growth and development since 1960. In fact before the discovery and exploration of petroleum in Nigeria, the Nigeria economy depended on funds generated from agricultural export expansion for the development of other sectors of the economy. Due to its important role in nation building, agricultural sector has continued to be a target of government policies over time.
Furthermore, some economic analysts have suggested that the indirect effect of economy-wide policies on agricultural incentives have been greater than the impact of policies directed specifically towards agriculture. Conversely, in some cases, agricultural policies have had significant effects on macro-economic variables.
Again the competitiveness of agricultural sector in the world market was eroded by over-valued naira exchange rate, inadequate pricing policies, rural-urban migration and neglect arising from the oil syndrome. Thus its share of the 400/0 in early 1970s falls below to 20% in 1980. In fact, low productivity in the agricultural sector became so acute that Nigeria became heavily dependent on imported food and Agro-allied industries inputs.
1.2 Statement Of The Problem
Macroeconomic policies have been used in Nigeria which has directly and indirectly influenced agricultural output growth. There is an indication that the country's exchange rate regime has not encouraged agricultural export lately.
The failure of fiscal policy in Nigeria in the past to insulate the economy from the volatility of oil revenue, has led to certain economic disturbances like, undue real exchange rate appreciation with negative impact on the competitiveness of the economy. The problem of quality of spending, with inefficiency and leakages in both the current and capital budgets. Rent-seeking behaviour, leading to inefficiency in resource allocation with negative impact on growth and development the neglect is arising from oil syndrome. Inadequate pricing policy and lastly the rural-urban migration, thereby reducing the size of labour, hence resulting in low agricultural productivity. Economic analysts thereby suggest that the indirect effect of economy-wide policies on agricultural incentives have been greater than the impact of policies directed specifically toward agriculture.
1.3 Objective Of The Study
1. The study aims at examining the trend in fiscal and agricultural policy overtime.
2. The study is aimed at examining the relationship between fiscal policy and agricultural sector development.
3. The study aim at examining the policy instrument that will encourage research and technological advancement and agricultural extension services.
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