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Abstract:
The study examined public sector financing and agricultural output in Nigeria from 1980 to 2014. The objectives of the study were to examine the impact of; government capital spending on agriculture and agricultural output in Nigeria, government recurrent spending on agriculture and agricultural output in Nigeria and credit to agriculture sector and agricultural output in Nigeria. The study used the unit root test, co-integration/ECM methods to analyze the data collected from CBN statistical bulletin. The estimated ADF unit root and Johansen co-integration tests showed that all the variables were stationary and co-integrated. The estimated parsimonious error correction result shows that the overall model is satisfactory with an R2 of 71 percent. The coefficient of the ECM is negatively signed and is statistically significant at the 5% level. Thus, the parsimonious error correction model will correct the deviation from the short run to long-run equilibrium. Moreover, the coefficient of the independent variables (government capital spending on agriculture and government recurrent spending on agriculture) were positively signed. Moreover, the coefficient of the independent variable, (credit to agriculture sector) is statistically significant at 5% level. The results revealed that governments financing in the agricultural sector have greater implication on agricultural output in Nigeria during the period of study. To this effect, since agricultural sector driven economy is key to sustainable development, it is therefore overdue for the Nigerian economy to diversify. Based on these findings, it is therefore recommended that: Government should increase her budgetary allocation to the agricultural sector in a consistent manner because of its potential to diversify from the oil sector. Also, there should be continuity of sound macroeconomic policy measures in the agricultural sector especially in area of sectorial allocation of credit.
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