Effect Of Selected Macroeconomic Variables On Agricultural Output In Nigeria (1986-2017)
Morah Chinenye Christiana
Department of Banking and Finance, Chukwuemeka Odumegwu Ojukwu University (COOU), Igbariam Campus
Ikeora Joseph Jackson Emeka PhD
Department of Banking and Finance, Chukwuemeka Odumegwu Ojukwu University (COOU), Igbariam Campus
Keywords: Selected Macroeconomic Variables and Agricultural Sector in Nigeria, Monetary Policy rate
Abstract
The study examined the effect of selected macroeconomic variables on the agricultural sector in Nigeria from (1986-2017). This is necessitated by the fact that no nation on earth can survive without agriculture. Data for the study were obtained from the Central Bank of Nigeria, Statistical Bulletin, CBN Annual Reports and Statement of Accounts and the National Bureau of Statistics (NBS). The data were analyzed with econometric techniques, Augmented Dicky Fuller and Philip, Perron tests for unit roots and Ordinary Least Square (OLS). The study found that while gross domestic product and money supply have positive and significant effect on agricultural output, interest rate and exchange rate exert negative and insignificant effect on agricultural output. The study concludes that the above named macroeconomic variables have positive effect on agricultural output in Nigeria and this has contributed to the county's growth and development. The study recommends that government should accelerate the rate of economic growth by investing heavily on the agricultural sector. Government should review downwards, the monetary policy rate in order to reduce the cost of borrowing. Low interest rate will enable famers access funds for the purpose of agricultural investment and hence increase their productive capacity. The CBN should give incentives to banks who are agriculture sector friendly by reducing their statutory liquidity ratio and reimbursing part of the losses incurred by banks who lend to the agricultural sector This will increase investment in that sector and enhance agricultural production which will ultimately promote growth and development