Financial Flows and Agricultural Output in Nigeria
Financial Flows and Agricultural Output in Nigeria

Summary/Abstract: The challenge of funding the agricultural sector has remained a persistent gap not only in Nigeria but across African countries in general. As one of the largest recipients of financial flows, Nigeria requires an in-depth investigation into how these specific flows impact its agricultural sector. This study examines the effects of financial flows on Nigeria’s agricultural sector using secondary data from 1991 to 2023. A unit root test guided the selection of the Johansen co-integration test, the error correction model (ECM), and the dynamic ordinary least squares (DOLS) method to determine both short- and long-run relationships between financial flows and agricultural output in Nigeria. The ECM results indicate that the adjustment mechanism is moderately significant, with approximately 29.24% of disequilibrium corrected in each period. The DOLS analysis reveals that external debt, foreign direct investment (FDI), and foreign aid have a significant positive effect on agricultural output in Nigeria. The study concludes that the government should prioritize optimizing fund allocation, improving utilization efficiency, and fostering a conducive investment environment to sustain agricultural growth. It is therefore recommended that efforts be made to encourage foreign direct investment in the sector and to ensure that agricultural aid is effectively directed toward its development.

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