Effect of public spending on agricultural productivity in Nigeria (1981-2018)

Abstract

This study examines the effect of public spending on agricultural productivity in major agro-ecological regions in Nigeria (1981-2018). Using public finance data from agricultural and the non-agricultural sectors at a national level, agricultural productivity returns were analysed. Public spending on drivers of agricultural growth such as education, farm feeder roads and health care facilities and their effect on agricultural productivity were also examined. Data were analysed using descriptive statistics and three-stage simultaneous equations. Descriptive statistics analysis results indicated that agricultural public spending as a part of total public spending averaged 4.88% between 1981 and 2018 across zones in Nigeria. Less than 25% of this allocation was spent on agricultural developmental/capital project. Elasticity results computed from the 3-stage simultaneous equation showed that the access to moderate farm feeder roads variable was 0.045, the access to education variable was 0.071 and the access to health care facilities (within 15-30 minutes’ walk to health facility) variable was 0.013. These variables were all significant at 1%. Such outcomes suggest that a 1% increase in the funding of education, farm feeder roads and health care facilities will enhance agricultural productivity per capita by 0.043. Hence, the results revealed an estimated benefit-cost-ratio of 4.3:1. Consequently, public expenditure on education, farm feeder roads and health care facilities of 4.3% would enhance agricultural productivity by 1%. However, the assessed marginal consequences and returns vary for four agro-ecological regions. Hence, harmonizing along with quality public spending on access to health care facilities, education and farm feeder roads would enhance agricultural productivity