DETERMINANTS OF GOVERNMENT AGRICULTURAL EXPENDITURE IN NIGERIA FROM 1999 TO 2025 (THE FIRST 26 YEARS OF THE UNINTERRUPTED DEMOCRATIC ERA)

Abstract

This study was undertaken to analyse the impact of government agricultural expenditure on agricultural growth in Nigeria from 1999 to 2025. Annual time series data on agricultural Gross Domestic Product (GDP) growth rate, government agricultural expenditure, inflation rate, exchange rate, population growth rate, interest rate, export rate, private investment, public investment and foreign direct investment collected from the records of Central Bank of Nigeria (CBN) publications and annual reports, National Bureau of Statistics (NBS) database, Federal Ministry of Agriculture and Rural Development, Food and Agriculture Organization Statistics (FAOSTAT) and World Bank database were analysed using descriptive statistics and inferential statistics such as unit root, Johansen co-integration, growth model and vector error correction model (VECM). The result showed an instantaneous growth rate of -1.7% for agricultural GDP, with a compound growth rate of -3%. It also showed that the growth rate of agricultural GDP decelerated over the period under review, and that agricultural expenditure had a statistically significant impact on agricultural GDP growth at the 1% significance level in both the short run and the long run, with coefficients of 0.02270 and 0.003055, respectively. This implies that a unit increase in agricultural expenditure would increase agricultural GDP growth by 0.02270 in the short run and 0.003055 in the long run. The coefficients for inflation (0.890787) and private investment (0.004469) were both positive and significant at the 1% significance level. This means that acceleration in inflation and private investment lead to acceleration in agricultural expenditure by 0.890787 and 0.001617, respectively, in both the short run and the long run. The coefficient on public investment (0.004469) was positive and significant at the 1% significance level. This means that acceleration in public investment leads to acceleration in agricultural expenditure by 0.004469 in the short run only. The study concludes that Government agricultural expenditure had a statistically significant positive impact on agricultural GDP in both the short run and the long run. Thus, the government should increase its expenditure on agriculture to boost growth in this sector and its contribution to the domestic economy, and government expenditure needs to be closely monitored to ensure its proper implementation.