CHAPTER ONE

INTRODUCTION

Nigeria is endowed with abundant natural resources ranging from solid minerals to arable land with varieties of agricultural produce such as palm oil, cocoa, groundnut, beans, melon, corns, and rice, among others. The hub of Nigeria economy before the advent of oil in commercial quantity was agriculture, but with the emergence of oil, there were focus shift from being an agricultural dependent country to crude oil dependent nation. Since the era of the oil boom in the 1970s, Nigeria has been a victim of the monolithic economy and since then have been enjoying crude crash without adequately evolving a sound policy that will put the nation’s economy on a firm foundation for steady growth. Today, oil revenue accounts for about 90% of the nation’s gross export revenue. From the 1970 oil boom era in the country to date, heavy reliance was on oil revenue and with the fluctuation of oil prices and a subsequent the sharp decline in the world oil price in the recent periods, it is obvious that over-dependence on oil as a major source of revenue could fail the country as it can’t finance the budget as usual (Ikpor, 2016) Ewubare and Eyitope (2015) stated that the growth and development of any economy, to a large extent, depends on the development of its agricultural sector. In Lewis’s model of economic development with unlimited supply of labor, he discussed five roles of agriculture in the development process – product contribution, factor contribution, source of employment, foreign exchange contribution, and means of technological advancement (Ayesha, n.d).

Ayunku and Etale’s study (2015) identifies the agricultural sector in Nigeria as the segment that is most critical to the achievement of the elusive goal of a diversified economy. Recent researches on the reasons for the development and underdevelopment haven distinguished agricultural transformation as key to economic liberation of worsening countries. The growth and development for most nations arise from the functions of agriculture and basically from its relationships with other sectors of the economy (Oluwatoyese, Applanaidu & Abdul Razak, 2015). Petroleum production and export play a dominant role in Nigeria’s economy and account for about 90% of her gross earnings. This dominant role has pushed agriculture, the traditional mainstay of the economy from the early fifties and sixties, to the background.

Nigeria entered a recession in 2016 as a result of lower prices and production, exacerbated by militant attacks on oil and gas infrastructure in the Niger Delta, coupled with detrimental economic policies, including foreign exchange restrictions. GDP growth turned positive in 2017 as oil prices recovered and output stabilized. With oil price volatility, the economy becomes highly vulnerable to unpredictable external shocks. This brings about the need to shift the focus from oil to the agricultural sector. This study is an improvement on other studies on the relationship between government expenditure on agriculture and economic growth in Nigeria.

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