REVIEW OF RELATED LITERATURE

2.1INTRODUCTON

Nigeria has relied so much on agriculture after her independence in 1960, given its stage of economic development. The growth dynamics of the Nigerian economy have been propelled by the existence and exploitation of natural resources and primary products. At the onset, the agricultural sector was the base, as the country needed food and cash crops for advancement. Actually, Nigeria has been left by her contemporaries in the quest for development. A look at the Nigerian economy vis-a-vis that of China in recent past showed that, Nigeria was better in 1970. Nigeria had a GDP per capita of US$233.35 and was ranked 88th in the world while China was ranked 114th with a GDP per capita of US$111.82. But today, China is very far from Nigeria in terms of economic advancement. The problem of „growthlessness‟ can be attributed to inconsistent government policies, political instability, lack of creativity on the part of leaders, mismanagement of resources, under utilization of resources, brain drain, geometrical increase in population, lost of interest in agriculture as a means of livelihood, corruption, among others. The abundance of food production and raw materials for industries were among the attraction of colonial masters to Nigeria. Subsistence farming was predominant and agriculture provided a large proportion of the population with easy source of livelihood. Points out that Agriculture have been the backbone of the Nigerian economy, providing employment and source of livelihood for the increasing population. It accounted for over half of the gross domestic product (GDP) of the Nigerian economy as at independence in 1960. Undoubtedly, one of the sources of national wealth and real income is essentially from agriculture. Consequently, development economists devoted much attention on how agriculture can best contribute meaningfully to aggregate economic expansion and modernization. However, in spite of the neglect of agriculture by the Nigerian government over the years, it remains the highest employer of labour in the country .Over seventy per cent of Nigerians are into one form of agriculture or the other. However, subsistence farming is inadequate to provide required food consumption level of the large population of the country. Really, many scholars have investigated on the agricultural situation in Nigeria and came up with varieties of remedial steps. One thing observed in Nigeria is not lack of policies and programmes rather the political will to implement and logically follow it to achieve the goal. In addition, there exist a lot of man-caused environmental problems debilitating agricultural practices in Nigeria. Notes that a lot of human activities like bush fallow, inappropriate technologies, overpopulation, transhumance, overgrazing, deforestation without adequate reforestation and profligate exploitation of mineral resources, are often not in tune with proper environmental management practices. Consequently, these bring about the increasing inability of the environment to provide the necessary sustenance to agricultural and rural development programs because of erosion, desertification and pollution. This is a critical situation that has imposed great challenges to agriculture in Nigeria over the years. Besides, government capital expenditure on agriculture has been low and fluctuating. In 1970, the capital expenditure on agriculture and water resources was N5.6 million, in 1980, it stood at N 413.3 million, by 1990, and it was N258.0 million. Over the years, it has been fluctuating and this considerably affected agricultural production in Nigeria. Studied agriculture as an index of socio-economic development of Delta state of Nigeria employing descriptive statistics for the data analysis. They found among others that agricultural practice in Delta State is gender sensitive with more males than females participating in the sector. Besides, fish farming and live-stock production are falling, while crop farming is the major interest of the farmers. The swampy areas of Delta state are grossly underutilized with respect to agricultural productivity. In their study of effects of agricultural reforms on the agricultural sector in Nigeria, note that agriculture contributed minimally during the period in terms of output, market, foreign exchange and capital formation or transfer as a result of policy instability, poor coordination of policies, poor implementation and mismanagement of policy instruments and lack of transparency. Actually, they pinpointed some factors which have been impediments to revamping the agricultural sector in Nigeria. Besides, the attitude of many Nigerians is that agriculture is mainly for the illiterates and poor people. This is basically out of ignorance. Studied the contributions of the agricultural sector to Nigeria’s economic development between 1986-2007 using multiple regression to analyze the data. The result showed a positive relationship between Gross Domestic Product and domestic saving, government expenditure on agriculture and foreign direct investment. The outcome also denoted that 81% of the variation in GDP could be explained by Domestic Savings, Government Expenditure and Foreign Direct Investment. The various regions in Nigeria are known for different agricultural production. Nigerian farmers are also into livestock production, fisheries, forestry and wildlife. The Northern part of the country is very good in cereal production such as sorghum, maize, millet, groundnut and cotton; the Middle Belt and the South have the potentials to produce root tubers such as cassava, yam, cocoyam and other crops such as plantain, palm oil, maize and so on. In their study of the Nigerian economy: response of agriculture to adjustment policies embarked on the estimation of price and non-price supply response coefficients for nine individual crops, sub-sectorial aggregates and commodity exports using two-stage least square and seemingly unrelated regression method. They found, among others that the responses of food crops are sensitive to Nigeria’s agro-climate and the traditional cropping patterns of Nigerian farmers, who are mainly smallholders. Besides, individual crops and sub-sectorial aggregates do not respond significantly to capital expenditure on agriculture, possibly due to action lags, weak choice of agricultural infrastructure and corruption. In his study of the agricultural sector and Nigeria’s development: comparative perspectives from the Brazilian Agro-Industrial Economy, 1960-1995 revealed that the successive Nigerian governments have only been paying lip service to agricultural development.

CONCEPTUAL FRAMEWORKS

ECONOMIC GROWTH

Economic growth include changes in material production and during a relative short period of time, usually one year. In economic theory, under the concept of economic growth implies an annual increase of material production expressed in value, the rate of growth of GDP or national income. Growth can be achieved, for it does not achieve the developmental course of the economy. So economic development amounts involves not only an increase in material production, but also all the other socioeconomic processes and changes caused by the influence of economic and beyond economic factors.

Sources of Economic Growth

Economists are not satisfied with just trends and theories, but portray the sources of economic growth. They attach special importance to the calculation of growth, so that the ingredients are thoroughly calculated that caused growth trends. Japan and previously the Soviet Union in the period 1930-1960. Years have had enormous economic growth. With the help of calculating economic growth economics experts have discovered that the GDP of Japan grew at a rate of 10% per year (astonishing but true) due to the growth of inputs with rapid technological change (much faster than in other countries). When analyzing the growth of the Soviet Union in the mentioned period resulted primarily from an increase in forced inputs of capital and labor. Labour productivity is the most important factor of economic growth. It represents the ratio of total output divided by the number of worker-hours in a particular sector, or at the level of the economy. If it slowed down the search are the reasons, and as a justification cited the following reasons: (Ilić, 2005)

Investment Enterprises in nature conservation, improving health and safety in the workplace. This was particularly true of mining, construction and services.

Increases in energy prices, especially after 1970 and 1990, when the company began replacing other energy inputs, capital and labor. The result is a reduction in the productivity of labor and capital in relation to previous growth rates.

After the 70s, there was a change of generations of workers who are inexperienced and inadequately trained to work with low wages, which is particularly applicable to the non industrial sectors, such as areas in the preparation of fast food and the like. In addition to these basic factors that caused lower productivity, it should be noted smaller size allocations for civilian research and development, to reduce investment in plant and equipment, increased the rate of inflation and the like. These are just some of the factors that have slowed productivity. In that sense, there is a need to explore the possibility of increasing labor productivity. In order to achieve this it is necessary to increase national savings and investment, which is the most difficult to achieve.

CONCEPT OF POVERTY

Poverty is defined by the World Bank (Haughton and Khandker, 2009, p. 1) as a ‘pronounced deprivation in well-being’. It can be defined narrowly or more broadly, depending on how well-being is understood.

Narrow definitions of well-being are typically linked to commodities, i.e. whether households or individuals have enough resources to meet their needs. In this case poverty is seen largely in monetary terms in relation to household’s income or consumption (Haughton & Khandker, 2009. Income and consumption are generally defined at household level and do not take account of intra-household variations which obscures individual poverty, see Sen in Chant, 2010; Coudouel-et-al-2002). Broader definitions of well-being include items such as physical and mental health, close relationships, agency and participation, social connections, competence and self-worth, and values and meaning (Wellbeing & Poverty Pathways, 2013).

Absolute poverty is poverty below an official line set at the ‘absolute standard of what households should be able to count on in order to meet their basic needs’ (Coudouel et al., 2002, p. 33). Poverty is often defined this way in developing countries, as it focuses attention on vital human needs, and helps with measurement and cross country comparisons (Hulme, 2010). However, it does not account for differing nutritional needs and costs per person of acquiring food and other essential needs, or of human’s needs as social actors (Hulme, 2010). The most commonly used global comparative poverty lines were USD 1.25 (updated in October 2015 to USD 1.90) and USD 2.00 (updated to USD 3.10) a day.

Children are often hardest hit by poverty: it causes lifelong damage to their minds and bodies. They are therefore likely to pass poverty on to their children, perpetuating the poverty cycle. Poverty reduction must begin with children. The well-being of children is a key yardstick for measuring national development. Indeed, the ultimate criterion for gauging the integrity of society – or the international community, for that matter – is the way it treats children, particularly the poorest and most vulnerable ones. Global prosperity is at an unprecedented level. Yet the promise to give every child a good start in life remains unfulfilled. More than half a billion children – representing a staggering 40 per cent of all children in developing countries – are currently struggling to survive on less than $1 a day. Poverty is the main cause of millions of preventable child deaths each year. It also causes tens of millions of children to go hungry, miss school or be exploited in hazardous child labour. The worst manifestations of poverty can be eradicated in less than a generation. The knowledge and techniques needed to achieve this goal already exist. Through the investment of a very modest share of the world’s annual income, all children could achieve a minimum standard of living, including access to adequate food, safe water and sanitation, primary health care and basic education. The investment needed is estimated at $80 billion per year – less than a third of 1 per cent of global income.

Seldom has the international community had an investment opportunity so noble in its objective and so productive in its potential. Over the past decade, the international community’s concern with poverty has been rising in tandem with the increased attention accorded to the realization of human rights. The goal of reducing the proportion of people in developing countries who live below the international poverty line of $1 per day has received widespread support. The near universal ratification of the Convention on the Rights of the Child is an indication of governments’ political commitment to end child poverty. Lifting the world’s poor out of poverty, however, will require the translation of good intentions and promises into concrete action. This action must do more than merely boost incomes. As a precondition for reducing poverty, every person must receive the opportunity to lead a long, healthy, creative and productive life and to enjoy an adequate standard of living, freedom, dignity, self-esteem and the respect of others. These aims are further complicated by poverty’s many and changing faces, which can make it difficult to decide where to start, let alone how to monitor progress.

Poverty is a denial of human rights

Poverty remains among the most important human rights challenges facing the world community. Based on the equal worth and dignity of every individual, human rights are central to well-being. Freedom from want and fear constitutes the fundamental condition to enjoy that well-being, while freedom from discrimination forms the basis for social protection and effective participation in society. UNICEF pursues a human rights approach to poverty reduction because it responds to poverty’s multifaceted nature. This approach can be distinguished from a welfare approach in terms of the relationship between the State, on the one hand, and local communities and individuals, on the other. Participation is central to the human rights approach: the poor are the principal and engaged actors of development, rather than its passive subjects. Rather than ‘target groups’, they are considered central partners in pursuit of human rights entitlements. A human rights-based approach means that the situation of poor people is viewed not only in terms of welfare outcomes but also in terms of the obligation to prevent and respond to human rights violations.

For example, any action that excludes a specific group of children from school or discriminates against girls constitutes such a violation. The human rights approach aims to empower families and communities to secure assistance and advocates a fair and just distribution of income and assets. Human rights instruments – such as the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights, and the Convention on the Rights of the Child – provide a coherent framework for practical action aimed at poverty reduction at the international, national and sub-national levels. Enforcing compliance with human rights standards, however, can be difficult in practice. Indeed, a holistic approach can be daunting, even to the most committed and least resources-constrained government. Reasons range from weak political commitment and silent resistance by certain social groups with vested interests in discriminatory practices, to the lack of institutional and administrative capacity and financial resources for implementing necessary reforms.

THEORETICAL FRAMEWORK

Marxian theory of poverty

This is a theory based on the fact that poverty comes about as a result of the situation a poor person finds himself or herself in. The poor person is therefore a victim of circumstances resulting from a number of factors, critical of which is the production system. Karl Marx points out that the entrepreneurial practices of the owners of means of production (capitalists) to move away from labour to capital intensive means of production in order to boost production and increase profits lead to massive unemployment. Capital intensive production forces the capitalist to retrench workers in order to increase profitability. Retrenchments lead to massive unemployment. The retrenched persons can either migrate to reengineer themselves in urban areas or change professions. Those who fail to re-engineer end up at home as paupers and form what Karl Marx calls a reserve army of labourers (Harvey and Reed,1992:277). These paupers finally end up poor. Continued retrenchments lead to increased number of paupers in the economy and in the long run increases poverty levels.

A series of structural failures give rise to an increase in the number of the poor. Gordon et.al (1982:1) identify these structural failures as racial and gender discrimination and nepotism resulting in deprivation of certain groups of peoples’ opportunities for jobs, education and social assistance. Albrecht and Milford (2001:67) contribute to this theory by pointing out that massive restructuring of economic systems leads to increased economic and social marginalization of an entire group of people. Such groups end up poorer due to the lake of access to opportunities.

The Marxist theory recommends poverty alleviation through improved structures of production and increased education and training to those rendered irrelevant by technological improvement to adapt through change of environment to change of profession. Education also ensures that the retrenched persons embrace change and adapt (Winch, 1987:32-35). The theory also advocates for a kind of government welfare programme to aid those who are unable to reengineer themselves through education so that they can access basic requirement for upkeep such as food rations, health programmes and subsidies (Coser, 1969; Harvey & Reed, 1992:280).

This theory does not apply in our specific case of Gorongosa rural communities as it is more concerned with the production and retrenchments due to the intensive use of capital at the expense of labour.

Cultural Theory of Poverty

This theory was developed by Oscar Lewis in 1968 and builds on the Marxian theory of poverty by pointing out that as retrenchments continue, driven by the capitalists’ quest for improving means of production and profitability, paupers emerge. The paupers collectively group up into a specific geographical environment or class. The grouping can emerge as a result of either formerly instituted government welfare programmes or setting up of formal national boundaries such as districts or provinces for effective governance. An example is the result of policy initiative under the ‘Sessional Paper No. 10 of 1965 on African Socialism and its application to planning in Kenya where Kenya was classified into high potential and low potential areas.

Since the culture of poverty is only based on material deprivation and not specific to any ethnic or religious marginalization, it is possible for a person to be poor without living in a culture of poverty. Reforms aimed at poverty alleviation should not focus on immediate gains because culture takes a long time to change because of its relative autonomy. Over the years, the culture of poverty can be modified without necessarily focusing on having the objective of poverty alleviation as is seen in societies taken over by revolutionary or nationalistic movements where many of the key traits of the culture of poverty are altered ideologically (Lewis, 1968: 190).

The Malthusian paradigm recommends provisions of moral education to curb over-population as a good solution to the problem of poverty. Moral education results in sexual restraints, delay in marriage, practicing abstinence prior to marriage. Poverty can also be reduced through improved production technology (Winch, 1987: 32 – 35). An initiative by an individual to migrate to other areas in search of survival can also eliminate this culture of poverty through change in social groupings.

Neo-Conservative Theory of Poverty

This theory is predominantly influenced by the Malthusian paradigm developed by Thomas Robert Malthus (1766-18834) and later improved upon by Robert Brenner in 1976 (cited in Harvey & Reed, 1922:281). This theory attributes poverty to economic factors resulting from the tension between population pressures and subsistence. This poverty therefore is based on material wealth where over-population of the poor coupled with poorly managed capitalistic systems result in poverty. This theory is therefore based on two axioms; firstly, poverty is attributed to a mismatch between production capacity of the previous years and demographic trends in what is referred to as demographic catastrophes. Poverty is caused by geometric growth in population mismatched with arithmetical growth in means of subsistence. Unless regulated by positive checks, the mismatch continues producing an increased number of poor people. Positive checks include war, famine, plague and misery which constantly curb over-production. Since these positive checks rarely occur, poverty continues to increase. Secondly, marginal productivity of land, labour and technology, and the way that these affect the supply of food and other resources also explains poverty over the years. Prices influence the affordability of commodities among the population and result in factors such as retrenchments which in turn explain poverty (Harvey & Reed, 1922:281). Although this theory applies to Mozambique as it has experienced the so called positive checks but poverty continues unabated thus clearly showing that positive checks alone cannot alleviate poverty.

In order to alleviate poverty, Neo-Conservative theory of poverty recommends provision of moral education to curb over-population. Moral education results in sexual restraints, delay in marriage and practicing abstinence prior to marriage. Poverty can also be reduced through improved production technology to ensure that production of goods and services satisfy demand at affordable prices (Winch, 1987: 32-35).

The Social Democratic Theory of Poverty

This theory was advanced based on experiences in Britain in the 1920s. The theory assumes that poverty is a class based concept and it comes about due to class struggles in the society and not on the basis of means of production. Piero Sraffa who advanced this theory argued that class struggles went beyond production spheres and therefore restricting poverty explanations to productions means as was the case in Marxian theory of poverty would be limiting the scope needed to understand poverty. The politics around the manner in which goods and services are produced and distributed has an effect on poverty just like the means of production used (Sraffa, 1926:550).

The politics of distribution of goods and services go a long way in explaining reasons as to why certain classes of the society are poor. In the Social Democratic theory of poverty, poverty is both a class issue and also a market based factor. Elimination of poverty requires distributive justice to ensure that goods and services produced are equitably distributed .to ensure that all classes of society are fairly involved in the enjoyment of these goods and services (Harvey & Reed, 1992:283). Sen (1981:7) concludes that poverty is a function of entitlement and notes that “starvation …is a function of entitlement and not of food availability.” Entitlement refers to legal claim on existing resources and such entitlements are functions of a political process aimed at improving market forces or failures of such forces. The researcher finds the social democratic theory of poverty making a lot of sense and being very relevant to this particular study of the impoverished rural communities of across the Nigeria country.

2.2 NIGERIA’S AGRICULTURAL SECTOR IN THE TRANSITION PERIOD

Nigeria is the single largest geographical unit in West Africa. It occupies a land area of 923,768 square kilometers and lies entirely within the tropics with two main vegetation zones; the rain forest and Savannah zones, reflecting the amount of rainfall and its spatial distribution. Structurally, the Nigerian economy can be classified into three major sectors namely primary/agriculture and natural resources; secondary processing and manufacturing; and tertiary/services sectors. The economy is characterized by structural dualism. The agricultural sector is an admixture of subsistence and modern farming, while the industrial sector comprises modern business enterprises which co-exist with a large number of micro-enterprises employing less than 10 persons mainly located in the informal sector. The agricultural sector has not been able to fulfill its traditional role of feeding the population, meeting the raw material needs of industries, and providing substantial surplus for export. Indeed, the contribution of the sector to total GDP has fallen over the decades, from a very dominant position of 55.8 per cent of the GDP in 1960-70 to 28.4 per cent in 1971-80, before rising to 32.3, 34.2 and 40.3 per cent during the decades 1981-90, 1991-2000 and 2001 – 2009, respectively. The fall is not because a strong industrial sector is displacing agriculture but largely as a result of low productivity, owing to the dominance of subsistence farmers and their reliance on rudimentary farm equipment and low technology

2.3 NIGERIA’S AGRICULTURE SECTOR

Originally an agriculture dependent country, Nigeria shifted focus to oil exports in the 1970s and decades of slow economic growth later; there is a need to refocus on agriculture. With the pressure to attain the MGDs, it is important to investigate the contribution of the sector to Nigeria's economic growth. Agriculture contributes 40% of the Gross Domestic Product (GDP) and employs about 70% of the working population in Nigeria (CIA, 2012). Agriculture is also the largest economic activity in the rural area where almost 50% of the population lives. Nigeria suffers from the resource curse4 (Aluko, 2004; Otaha, 2012). Given the enormous resource endowment both in human capital and natural resources, the performance of the economy has been far below expectation. The most populous nation in Africa, with a population of over 150million and a labour force of 53.83million (2012 estimates; CIA, 2012), Nigeria is blessed with ample source of labour to fuel economic growth. Besides being Africa’s largest producer of oil, Nigeria’s gas reserves ranks 6th globally and it has the 8th largest crude oil reserve in the world (Sanusi, 2010). About 31 million hectares of the land area is under cultivation and the diverse climate makes production of a variety of products, from tropical and semitropical areas of the world possible (Chauvin, Mulangu and Porto, 2012). Despite these endowments, the nation ranks among the world’s poorest economies. The agriculture sector has been the mainstay of the economy since independence and despite several bottlenecks; it remains a resilient sustainer of the populace. In the 1960s, Nigeria was the world’s largest exporter of groundnut, the second largest exporter of cocoa and palm produce and an important exporter of rubber, cotton (Sekunmade, 2009). More recently, agriculture employs about two-thirds of Nigeria’s labour force, contributes significantly to the GDP and provides a large proportion of non-oil earnings (CIA, 2013, Sekunmade, 2009). The sector has several untapped potential for growth and development in the availability of land, water, labour and its large internal markets. It is estimated that about 84 million hectares of Nigeria’s total land area has potential for agriculture; however, only about 40% of this is under cultivation (FMARD, 2012). Productivity in the cultivated lands is also low due to small farm holdings and primitive farming methods. Nigeria has therefore become heavily dependent on food imports. In addition to diverse and rich vegetation that can support heavy livestock population, it also has potential for irrigation with a surface and underground water of about 267.7 billion cubic meters and 57.9 billion cubic meters respectively (Chauvin, Mulangu and Porto, 2012; Lipton 2012). Nigeria’s large and growing population provides a potential for a vibrant internal market for increased agricultural productivity. In spite of these opportunities, the state of agriculture in Nigeria remains poor and largely underdeveloped. The sector continues to rely on primitive methods to sustain a growing population without efforts to add value. This has reflected negatively on the productivity of the sector, its contributions to economic growth as well as its ability to perform its traditional role of food production among others. This state of the sector has been blamed on oil glut and its consequences on several occasions (Falola & Haton, 2008). In 1960, petroleum contributed 0.6% to GDP while agriculture’s contribution stood at 67%. However by 1974, shares of petroleum had increased to 45.5% almost doubling that of agriculture which had decreased to 23.4% (Yakub, 2008). It should be clarified that this pattern was not an outcome of increased productivity in the non-agricultural sectors as expected of the industrialization process (Christaensen & Demery, 2007); rather it was the result of low productivity due to negligence of the agriculture sector. Furthermore, the nation was self-sufficient in food production and exports of major crops accounted for over 70% of total exports in 1960. However, due to fall in local production among other things, importation of food began to increase and food items like bread made from imported wheat flour began to replace cheap staple foods. In 2012 alone, importation of wheat was valued at $1billion (Nzeka, 2013). Largely due to significant fall in the output of export products like cocoa, palm oil rubber and groundnuts, the share of agricultural products in total exports decreased to less than 2% in the 1990s (Olajide, Akinlabi & Tijani, 2012). The subsectors of the agriculture sector in Nigeria have potentials that give the sector opportunity for growth. According to CBN (2012), between 1960 and 2011, an average of 83.5% of agriculture GDP was contributed by the crops production subsector making it the key source of agriculture sector growth. The food production role of the agriculture sector depends largely on this subsector as all the staples consumed in the nation comes from crop production, 90% of which is accounted for by small-scale, subsistent farmers. The major crops cultivated include yam, cassava, sorghum, millet, rice, maize, beans, dried cowpea, groundnut, cocoyam and sweet potato. The second largest is the livestock subsector contributing an average of 9.2% between 1960 and 2011. This sector is the largest source of animal protein including dairy and poultry products. The economic importance of the subsector is therefore evident through food supply, job and income creation as well as provision of hide as raw material. Despite this, the sub-sector has been declining in its contribution to economic growth, according to Ojiako and Olayode (2008). Between 1983 and 1984, the share of livestock in agricultural GDP was about 19% but this dropped as low as 6% between 2004 and 2005. In the fishery subsector, local production is inadequate for domestic demand and consumption. Nigeria imports 700,000MT of fish annually which is 60,000 MT more than total domestic production (Ibru, 2005 in Essien & Effiong, 2010). However, the subsector has recorded the highest average growth rate of 10.3% (1961-2011) compared to the 6% recorded in crop production in the same period (CBN, 2012). With an average contribution of 4.3% to total agriculture GDP between 1960 and 2011 and provision of at least 50% animal protein, fisheries contributes to economic growth by enhancing food security and improving livelihood of fish farmers and their households (Gabriel et al., 2007; Essien & Effiong, 2010). Forestry is the smallest sub-sector in Nigerian agriculture contributing only 3.0% (between 1960 & 2011); however, the subsector plays a major role in providing industrial raw materials (timber), providing incomes as well as preserving biodiversity. In these subsectors, productivity is low and contributions to the economy are below expectation. Among other constraints, low productivity has been identified as a major contribution to the declining growth rate in Nigerian agriculture sector. Iyoha and Oriakhi (2002) find that slow growth in capital per worker and not slow Total Factor Productivity (TFP) is responsible for slow growth in the agriculture sector. This was further explained to be due to inadequate capital investment and rapid growth of the population and labour force. Also, Muhammad-Lawal and Atte (2006) recommends increase in per-capita productivity through the introduction of improved technology in agricultural production. They also indicated a positive and consistent relationship between GDP growth rate, population growth rate, and the Consumer Price Index as factors affecting domestic agricultural production in Nigeria. However, it is estimated based on the prospects of the sector that by 2015, it is possible to provide 3.5 million jobs within the agriculture value chain, increase farmers‟ incomes by $2 billion and also reduce food insecurity by 20 million metric tons (MT) increase in food supply (FMARD, 2012). This can only be achieved by intensified efforts in increasing productivity and developing the agriculture value chain

2.4 AGRICULTURE SECTOR AND ECONOMIC GROWTH

Several studies have focused on understanding the association between agriculture and economic growth, yet there is some disagreement. While some researchers have argued that agriculture should be the foundation of economic growth (Gollin, Parente & Rogerson, 2002; Thirtle, Lin & Piesse, 2003), others claim that the linkages agriculture has with other sectors are too weak and its innovative structures inadequate for promoting economic growth (Ranis and Fei, 1961; Jorgenson, 1961). However, the relationship between the agriculture sector and other sectors should not be a competition but rather be viewed as interdependent where supply and demand in sectors can be accommodated through strengthened linkages (Adelman, 1984; Sabry, 2009). For instance, industry is an important sector and every economy that strives for development should work toward strengthening its industries (Lewis, 1954). Nonetheless, the position of agriculture in the strive for industrialization should not be ignored as the case has been in Nigeria. As argued by advocates of agriculture-led growth (ALG), development of the agriculture sector is a prerequisite for industrialization through increase in rural incomes and provision of industrial raw materials, provision of a domestic market for industry and above all the release of resources to support the industry (Schultz, 1964; Timmer, 2004). Neglect of the agriculture sector in favour of the industrial sector will only lead to slow economic growth and inequality in income distribution. Therefore, despite the fact that agriculture may be unable to singlehandedly transform an economy, it is a necessary and sufficient condition in kick-starting industrialization in the early stages of development (Byerlee, Diao, & Jackson, 2005). The contributions of agriculture to economic growth can be examined through the roles of the sector in the economy. Johnston and Mellor (1961) summarized these roles in five inter-sectoral linkages; food, labour, market, domestic savings and foreign exchange. The most basic of these roles is, perhaps the supply of food for both domestic consumption and export. Direct contributions of food production can be through income generated from sales of farm produce and returns from economic activities related to production; or indirectly from increased capacity to partake in any form of economic activity through improved diet. Anyawu, Ibekwe and Adesope (2010) using correlation matrix find that production of major staples in Nigeria contributed significantly to GDP growth (except wheat) between 1990 and 2001. Also, as observed by Timmer (1995), the agriculture sector contributes to economic growth through provision of better caloric intake and food availability. The attainment of global food security and reduction of hunger hinges largely on this singular role. According to FAO (2005), agriculture can facilitate the attainment of all 8 MDGs through the direct or indirect linkages to food availability and poverty reduction. In 2008, UNDP reported that the 12.6% reduction recorded in the proportion of underweight children between 1990 and 2008 can be attributed largely to growth in the agriculture sector in Nigeria (UNDP, 2008). Furthermore, as population increases, failure to increase food supply in proportion to increased demand has negative effects on industrial profits, investment and economic growth (Johnston & Mellor, 1961). Hazell and Roell (1983) assert that in the early stages of development, rising incomes of rural/farming households is essential to providing market for domestically produced goods and services via strengthened purchasing power. The most direct contribution of agriculture to economic growth, according to Irz et al. (2001), is increase in incomes of farmers and therefore their purchasing power. Results of several studies, including Gallup et al. (1997), Irz et al. (2001) and Thirtle et al. (2001), show that an increase in agriculture growth results in an increase in the income level of the poorest of the population. Also results from cross-country regressions among developing countries show that $1 increase in GDP results in significantly more poverty reduction when the growth is in agriculture rather than other sectors (Lipton, 2012). This sectoral growth increases the incomes and therefore purchasing power of farmers resulting in a vibrant domestic market for other sectors, hence growth in the economy. An offshoot of income growth is increased domestic savings, both at micro and macro levels as observed in developed economies like Japan, Taiwan, South Korea, Hong Kong and recently, China (Harbaugh, 2004). Agriculture therefore contributes to economic growth by increasing the incomes of majority of the population thereby strengthening their saving capacity. Results from an IFPRI publication on Ethiopia’s growth and transformation plan shows that increased domestic savings is imperative to the achievement of higher Total Productivity (GTP) (Engida et al., 2011). Using Tobit regression model on multi-stage data from Kwara state, Nigeria, Obayelu (2012) finds that domestic saving is low among rural dwellers/farmers in Nigeria. He highlights the effect of high expenditure on food, which is a consequence of low income due to low productivity, on saving capacities of the farming households in the study. This implies that domestic savings largely influences the growth path of the economy. The sector is also in a position of making surplus labour available to industries. As productivity in the agriculture sector increases, surplus labour and capital is created and diverted to investment in industrial sector resulting in economic growth (Ike, 1982). This facilitates the industrialization process and eventually the transformation of the economy as postulated by the structural development advocates (Awokuse, 2008). Having argued that economic growth in Nigeria depends to a large extent on growth in the agriculture sector, empirically investigating the sector’s contributions to growth is important both to assess past efforts and justify future investment. Our empirical analysis in the next sections will be aimed at providing evidence on the sources of growth in the Nigerian economy. To further do justice to this, we will evaluate the agriculture sector by investigating the sources of its growth and the subsectors that require further attention based on already highlighted potentials relative to their past contributions.

2.5 INDIRECT GROWTH EFFECT—INTERACTIONS BETWEEN AGRICULTURE AND THE REST OF THE ECONOMY

In addition to its direct sectoral contribution to overall growth, agricultural development can also play an important role in fostering development in the rest of the economy (Johnston and Mellor, 1961; Schultz, 1964). Three broad types of mechanism were identified: 1) inter-sectoral linkages, forward to agro-processing activities and backward to input supply sectors (see Perry et al, 2005, for a recent assessment of these linkages); 2) final demand effects arising from a large and more affluent agricultural sector with a propensity to spend on locally produced non-traded goods and services (especially true of smallholder agriculture) generating significant demand for nonagricultural goods (reviewed in Haggblade, Hammer and Hazel, 1991) and thereby off-farm employment; and 3) wage-good effects—by reducing the price of food, agricultural productivity growth would lower the real product wage in non agriculture, thereby raising profitability and investment.9 Much of this literature argued that the stronger links were from agriculture to nonagricultural rather than the other way around (Mellor, 1976; King and Byerlee, 1978; Thirtle, et al., 2001). In part this was because inputs into non-agriculture were more import intensive, and urban consumption patterns favored imported goods (the demand for food being income inelastic). Establishing the empirical validity of these linkages has been a ‘cottage industry since the early 1970s (Timmer, 2005). While the models adopted in this literature typically embrace both production and consumption linkages,10 it is the latter that have been found to be more important. Delgado et al. (1998) concluded that for both Africa and Asia, consumption-based agricultural growth linkages are four to five times more important to growth than production-based linkages. For the linkage effects to be significant, four conditions must apply (Delgado, et al., 1998). First, agriculture must be a sufficiently large sector in employment terms for the income generating effects to be significant. Second, the income gains from agricultural growth must be reasonably widespread, so that effective demand for locally produced goods and services is raised. Third, the consumption patterns of people in agriculture must favor locally produced non-tradable goods. And finally, the non-agricultural (non-traded) sector must have to hand underutilized resources and appropriate institutional arrangements to be able to respond to the raised levels of demand coming from agricultural growth. Using micro data on consumption patterns in five African countries, Delgado et al (1998) concluded that the farm sector in Africa is better able to propagate income growth than previously thought. They estimated (p. xii) that ‘adding US$1.00 of new farm income potentially increases total income in the local economy by an additional $1.88 in Burkina Faso, $1.48 in Zambia, $1.24 to $1.48 in two locations in Senegal, and $0.96 in Niger.’ Further corrected estimates to account for potential inelastic supply response of the non-tradable non-agricultural sector by the same authors, situate the agricultural multiplier effects around 1.6 for Asian countries and 1.1 for the African cases. This difference is ascribed to the labor-abundant nature of the Asian economies, facilitating a larger supply response of the Asian non-tradable sector. Similarly, using computable general equilibrium (CGE) models applied to archetype economies for Africa, Asia and Latin America de Janvry and Sadoulet (2002) find the employment and overall linkage effects from increased land productivity in agriculture to be more important in Asia and Latin America where labor and food markets are better developed than in Africa. More recent evidence by Dorosh and Haggblade (2003) applying both fixed price semi input-output (SIO) models as well as fully price endogenous CGE models to eight SSA countries confirms the existence of sizeable growth linkages from investments in agriculture—as before the indirect effects of investment induced growth prove to be about as large as the direct effects. Moreover, fixed price (SIO) multipliers from investments in export and food crops typically exceed the manufacturing multipliers, consistent with the literature, though they also find that this is no longer the case when prices of the non-tradables are endogenized (as in the CGE). The methodologies (fixed price (semi) input-output models and price-endogenous CGE models) underpinning this micro evidence are structural in nature and data intensive. While this constitutes the strength of these approaches providing a lot of insights in the nature and extent of the linkage effects, it also constitutes their weakness as the results (partly) depend on the validity of the structural assumptions. To complement the empirical insights from the micro data we follow Bravo-Ortega and Lederman (2005), who focus on Latin America, and explore whether there exists evidence of a causal relationship between agricultural and non-agricultural output (in the Granger, 1969, sense)11 by applying dynamic panel data estimation techniques to international cross country data. In doing so, we do not for example have to assume supply flexibility or fixed prices in the non-tradables sector, in effect observing a ‘reduced form’ of the full general equilibrium outcome. The downside of this “reduced form” approach is obviously that it does not provide much insight in the mechanisms of the linkage effects. Bravo-Ortega and Lederman (2005) find evidence of a positive causal link (in the Granger, 1969, sense) between (lagged) agricultural growth and non-agricultural growth, also for poor countries, though the effect is smaller for Latin America. The reverse effect is also discernable— lagged effect of non-agricultural output on agriculture, though this is negative for low-income countries and only slightly positive (and not statistically significant) for Latin American countries. Although both the micro data and this cross-country evidence suggest that the linkage effects of agricultural growth appear to be true for Africa, the opening up of African economies might for example undermine the linkage effects from any expansion in rural demand (that demand possibly being increasingly met by imports). We therefore update the data set examined by Bravo-Ortega and Lederman and revisit their results taking an African focus and using a somewhat modified specification.

2.6 THE RELATIVE CONTRIBUTION OF AGRICULTURE AND NON-AGRICULTURE TO POVERTY REDUCTION – EVIDENCE FROM THE RECENT PAST

From equations (4) and (6) we know that poverty reduction during a certain period can be decomposed into sectoral participation and growth effects. We estimated the participation effects of the different sectors and concluded that one percent of agricultural growth yields on average 2.2 times more poverty reduction than one percent growth in non-agriculture. While agriculture could potentially grow faster, it is likely to continue to grow at a slower pace than non-agriculture due to Engel’s Law. But the indirect effects of agricultural growth on non-agriculture are substantial and likely at least as large as the reverse feedback effects. Whether investments in agriculture in a particular country would generate faster or slower overall economic growth than investments in non-agriculture is a priori not clear. This would depend on the structure of the economy and the governing institutional arrangements.28 How these potentially counterbalancing forces (potentially slower overall growth from investments in agriculture against a much larger participation effect) play out, remains an empirical question. To shed more light on this, we explore how agriculture and non-agriculture contributed to poverty reduction over the past two decades in the countries in our PovCal sample. In particular, we revisit equation (6) and estimate the relative contribution of each sector to the (predicted) change in (US1$/day) poverty incidence in these countries. To do so, we apply the estimated coefficients from the pooled data set reported in Table 6 column B to the (share weighted) sectoral GDP growth rates in our PovCal sample. The poverty spells in our sample concern the 1980-2000 period, with about two thirds of the spells occurring in the 1990s. It is especially useful to examine the relative contribution of agriculture and non-agriculture to poverty reduction during this period, as it coincides with the increasing liberalization and globalization of the world economy. These evolutions might affect the feedback effects of agriculture to non-agriculture, as well as the participation effects, if globalization induced a greater correlation between domestic and international food prices and a change in the farming structures through increased vertical integration. The effect of non-agricultural growth and the constant (a measure of the effect of inequality change) is retained in the decomposition, even though their estimated coefficients are not statistically significant.

2.7 POVERTY REDUCTION STRATEGIES IN NIGERIA

To reduce poverty various schools of thought advocates a number of measures. For instance, the Mercantilists laid emphasis on foreign trade which according to them is an important vehicle for the promotion of economic growth and poverty reduction. The Classical economists’ (Adam Smith, David Ricardo, Thomas Malthus, Karl Marx, etc.) views on poverty reduction brought to fore the social changes brought about by technological changes resulting from the industrial revolution that took place between 1750-1850. The early development economists of the 1940s and the 1950s advocate the theory of forced-drift industrialization via Big push, Balanced growth and Labour transfer (Ijaiya 2002). In the 1970s Chenery,et.al (1974) advocates redistribution of income. To them, poverty can better be reduced if radical redistribution of income or land is allowed to take place in view of the interlocking power and self-interest of the rich and the bureaucracy in the handling of the nations’ resources. The World Bank (1983; 1990; 1991) emphasizes on the need for stable macroeconomic policies and economic growth. To the World Bank, sound fiscal and monetary policies will create a hospitable climate for private investment and thus promote productivity which in the long-run would lead to poverty reduction (see also Dollar and Kraay 2000; Sandstorm 1994; Edwards 1995). This approach is what is referred to as pro-poor growth approach to poverty reduction. The 1980s to the 2000s had witness the introduction of new strategies/approaches to poverty reduction. Key among them are the basic needs and capabilities/entitlements approaches, participatory development, social capital, community self help, good governance and human right approaches to poverty reduction ( Boeniniger 1991; Picciotto 1992; Woolcock and Narayan 2000; United Nations 2002; United Nations 2004). In Nigeria, various efforts were made by the government, non-governmental organizations and individuals to reduce poverty in the country. According to Ogwumike (2001) poverty reduction measures implemented so far in Nigeria focuses more attention on economic growth, basic needs and rural development strategies. The economic growth approach focuses attention on rapid economic growth as measured by the rate of growth in real per capita GDP or per capita national income, price stability and declining unemployment among others, which are attained through proper harmonization of monetary and fiscal policies. The basic need approach focuses attention on the basic necessities of life such as food, health care, education, shelter, clothing, transport, water and sanitation, which could enable the poor live a decent life. The rural development approach focuses attention on the total emancipation and empowerment of the rural sector. In furtherance to his discussions on the measures, Ogwumike (2001) grouped the strategies for poverty reduction in Nigeria into three eras – the pre–SAP era, the SAP era and the democratic era. In the pre-SAP era, the measures that were predominant were the Operation Feed the Nation, the River Basin Development Authorities, the Agricultural Development Programmes, the Agricultural Credit Guarantee Scheme, the Rural Electrification Scheme and the Green Revolution. In the SAP era the following poverty reduction measures were introduced; the Directorate for Food, Roads and Rural Infrastructures, the National Directorate of Employment, the Better Life Programme, the Peoples’ Bank, the Community Banks, the Family Support Programme and the Family Economic Advancement Programme. The democratic era witnessed the introduction of the Poverty Alleviation Programme (PAP) designed to provide employment to 200,000 people all over the country. It was also aimed at inculcating and improving better attitudes towards a maintenance culture in highways, urban and rural roads and public buildings. By 2001 PAP was phased out and fused into the newly created National Poverty Eradication Programme (NAPEP) which was an integral part of the National Economic Empowerment and Development Strategy (NEEDS).