CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Nigeria is largest oil exporting
country in Africa and has a rapidly growing economy. The country follows a
resource based growth strategy driven by the production and exporting of oil.
With the volatility of global oil prices and often volatile growth of Nigeria’s
economy, the country has wasted much of its opportunities to break away from
underdevelopment despite its massive natural and human resources endowments. It
has dwelled only on its huge crude oil resources as the major source of
revenue, driving a monolithic economy for years in spite of the enormous
developmental challenges it faces (Ojo, 1994). Regrettably, the oil resources
are being mismanaged and a substantial part of it has gone on rent seeking and
red-tapism common in Nigerian bureaucracy. For more than a decade now, Nigeria
has been enjoying high levels of economic growth, human development, and
relative political stability. As it continues along the path of economic
progress, it is imperative that the country finds ways to diversify its economy
by boosting non-traditional sectors, expanding its range of products for
exports and engaging new economic and trade partners. The economic nerve centre
of Africa shifted northward this year when Nigeria took South Africa’s
long-held position as the country with the continent’s largest Gross Domestic
Product (GDP). While GDP neither reflects the wealth distribution nor accounts
for the size of the population, it is a significant indication of Nigeria’s
emerging economic power. If these growing resources are invested intelligently,
the country can benefit and exceed the International Money Fund’s estimated GDP
growth of seven per cent. As a matter of priority, Nigeria government must
encourage the diversification of Nigeria’s economy (Jonathan, 2013). It is the
only viable way to survive the current environment of global economic
uncertainty with the volatility of oil price. It is crucial that government do
not believe that oil provides an endless source of revenue.
At the advent of democracy in
1999, Obasanjo’s first full national budget in 2000 was under N600bn naira but
now we have as much as 800% increase over this, yet we can only see little
development but surplus of preaching’s and governance by billboards while
vision 20-2020 is in a state of rest like Newton’s first law of thermodynamics.
We say unequivocally that resource looting and wastage is much concentrated at
the state levels, because most of our Governors are not just most wanting but
problematic and the very impediment to development.
Diversification presents the most
competitive and strategic option for Nigeria in light of her developmental
challenges and given her background. Diversification has a lot of benefits for
Nigeria to maximally utilize her abundant resource – base to rebuild the
economy and enjoy the benefits of all the linkages, synergy, economies of
scale, grow national technology and foreign investment profile, build human
capital, exploit new opportunities, lessen averagely operational costs,
increase national competitiveness and grow the standard of living and
confidence of the citizens for national renaissance.
Diversification does not occur in
a vacuum. And, the need to have in place an enabling environment to make
diversification possible remains necessary. A number of key drivers have
already been identified. Agriculture was the main stay of the Nigeria economy
before the discovery of crude oil in 1956. Adequate funding of agriculture
willbe an appropriate option in the diversification of the nation’s economy.
Diversification implies “movement
into new fields and stimulation and expansion of existing traditional
products.” Diversification does not discourage specialization, but requires
that resources be channeled into the best alternative uses (Iniodu, 1995). In
macroeconomic planning, diversification promotes growth and development through
the mobilization of savings from surplus sectors for use in the development of
deficit sectors of the economy.
1.2 STATEMENT OF THE PROBLEM
Options for diversifying
aneconomy abound, such as agriculture, entertainment, financial services,
industrialization, information and communication technology, tourism, mining,
etc. However, it is worthy to notethat country-specific circumstances ought to
as a matterof necessity, be considered. This is cogent, since dueto structural
differences, a model that fits an economy perfectly well may prove irrelevant
in another. With a major objective of diversifying the productive base of the
Nigerianeconomy with a view to reducing dependence on the oil sector, this
study zero in on ‘agriculture’ as imperatives. The choice of this approach is
informed by Developmental Policy in Nigeria and the huge successes recorded by
some Asian countries–which are collectively referred to as ‘Asian Tigers’–in
applying these imperative, as well as the fact that these countries were
basically at the same level of national development with Nigeria, atthe time of
their respective take-off and still share certain similarities with Nigeria.
The effects of diversification in an economy (Eko, et al. 2013)
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this study:
1. To
examine the benefits accruable from the diversification of the Nigerian
economy.
2. To
determine the prospects of agricultural funding in the diversification of the
Nigerian economy.
3. To
determine the contribution of agriculture in the growth and development of the Nigerian
economy.
1.4 RESEARCH QUESTIONS
1. What
are the benefits accruable from the diversification of the Nigerian economy?
2. What
are the prospects of agricultural funding in the diversification of the
Nigerian economy?
3. What
is the contribution of agriculture in the growth and development of the
Nigerian economy?
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
1. The
results of this study will educate the general public on approaches by which
agricultural funding can be used a s a tool for the diversification of the
Nigerian economy.
2. This
research will be a contribution to the body of literature in the area of the
effect of personality trait on student’s academic performance, thereby
constituting the empirical literature for future research in the subject area.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study will cover the effect of agricultural
funding on the diversification of the Nigerian economy.
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the
efficiency of the researcher in sourcing for the relevant materials, literature
or information and in the process of data collection (internet, questionnaire
and interview).
Time constraint- The researcher will simultaneously
engage in this study with other academic work. This consequently will cut down
on the time devoted for the research work