Impact of Nigerian Agricultural Expenditure on Agricultural Sector Output

Abstract

This research examines the impact of Nigerian agricultural expenditure on agricultural sector output. To achieve this, time series data obtained from the Central Bank of Nigeria were analyzed using the Error Correction Model (ECM). The findings indicate that both government capital and recurrent agricultural expenditures have positive relationships with agricultural sector output. However, only capital expenditure had significant impact on agricultural sector output in Nigeria. The implication of this finding is that if the federal government channels more budgetary allocation to the agricultural sector, agricultural sector output will increase in the long-run. The findings also showed that there was an inverse relationship between interest rate and inflation rate against agricultural sector output. This implies that the monetary authorities should consider lowering interest rate and combating inflation a monetary policy priority. In conclusion, the study recommended that agricultural budget execution rate should be improved through quick budget passage and timely implementation. More importantly, such expenditures should be closely monitored.