The Impact of Selected Macroeconomic Variables on Agricultural Sector Performance in Nigeria
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Abstract
The study investigates the impact of selected macroeconomic variables on agricultural sector performance in Nigeria using time series data spanning from 1990 to 2021. The research adopts an ex-post facto design and utilizes data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin. Advanced statistical tools, including Auto Regressive Distributed Lag (ARDL) models, Descriptive Statistics, Augmented Dickey-Fuller Unit Root Tests, Breusch-Godfrey Serial Correlation Lagrange Multiplier (LM) Tests, and the Cumulative Sum of Recursive Residuals (CUSUM) Squares Test, were employed. The findings reveal that credit to the private sector has a positive but insignificant impact on agricultural sector performance. Broad money supply, monetary policy rate, and inflation rate exhibit negative and insignificant impacts, while banks' lending rates show a positive and significant impact. Jointly, the selected macroeconomic variables have a weak but significant impact on agricultural sector performance. The results highlight that while macroeconomic variables collectively influence the sector, the lending rate plays a more critical role in agricultural growth. Based on these findings, the study recommends improving access to agricultural credit through simplified loan processes and specialized financing products, enhancing monetary policy transmission to reduce financial intermediation frictions, and fostering a stable macroeconomic environment through effective inflation control and exchange rate management. Additionally, monetary policy adjustments should consider their potential effects on different sectors, including agriculture, to ensure sustainable credit growth and investment. Stabilizing inflation through sound fiscal and monetary policies is also emphasized to create a conducive environment for agricultural producers.
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Copyright (c) 2024 Bonny, David Timidi, Ayunku, Ego Peter (Author)
This work is licensed under a Creative Commons Attribution 4.0 International License.
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