CHAPTER
ONE
1.1 INTRODUCTION
Changes in the relative
importance of agriculture and industry have been recognized as the core of the
process of growth. Hence agricultural process is a prerequisite for industrial
development which metamorphosed to economic growth and development. In industry
it is the role of manufacturing sector that appears to be the strategic factors
in modern economic growth. One of the issues confronting many developing
countries is sectorial balance, determining which area of development most to
the economy as a whole.
Except for few
countries, the discernible patterns are overwhelmingly agricultural and
industrial interdependence. Agriculture involves the cultivation of land,
raising and rearing of animals for the purpose of production of food for man,
feed for animals and raw materials for industries. It involves forestry
fishing, processing and marketing of those agricultural products. The role of
agriculture in transforming both the social and economic work of an economy
cannot be put off with wave of hand.
On the other hand, an
industry refers to a number of rims producing broadly similar commodities.
Thus, industrialization is the process of building up a nation’s capacity to
convert raw materials and other inputs to finished goods and to manufactured
goods for other production or for final consumption. Agriculture provided the
needed surplus for industrialization processes in most developed countries and
lately in south Asian and Latin American countries. The industrial sectors adds
to the demand for goods produced by the agricultural sectors and this may
increase productivity in agriculture. Higher agricultural product will provide
capital and market for new industries, while industries will absorb the surplus
labour, which agriculture must release in its process of improvement.
Before and immediately
after interdependence in 1960, agriculture was the mainstay of the Nigerian
economy accounting for more than one-half of the Gross Domestics Product (GDP)
and more than three-quarter of exports earnings. The contributions of
agriculture to GDP moved from 50 percent in 1970 to 38.8 percent in 1991 and by
1995 this has declined further to only 32 percents. In fact, by mid 1980’s has
moved from a position of self-sufficing in basic foodstuffs to one of heavy
dependence on inputs, as mush emphasis was shifted to the petroleum sector.
Thus, the observed drop of relative share of agriculture in aggregate output
reflects the period of windfall from petroleum income when farm production was
depressed by the massive urban boom and movement of rural workforce to cities.
On the other hand,
emphasis on industrialization as a means of diversifying production patterns
and import-substitution and semi-processing of cash crops for export and later
on the establishment of light intermediate and heavy industrial complexes in
the 70s and 80s. consequently, the manufacturing sub-sector accounted for about
4 percent of an annual average of less than 10 percent between 1983 and 1995.
Struthers (1990)
described this simultaneous decline in the agriculture and industry as ‘Dutch
Disease’ which could be attributed to poor linkage between the sectors, despite
the huge earnings from the petroleum sectors. Moreover when the two sectors wait
for each other to perform the thrust and feedback expected of them, the pace of
economic growth tends to slow down or stagnate.
Economic historians
have shown that all economically advanced countries today were once
predominantly agricultural at their early stages of development. They
repeatedly emphasized that an expanding agricultural sectors forms the basis
for industrial expansion and development by raising the level of real income in
the agricultural sector thereby extending the potential market for manufacturing
goods, opening a new source of capital for the establishment of industry and
making possible the purchase of foreign tools and equipment necessary for
industrialization.
1.2 INDUSTRIAL AND AGRICULTURAL GROWTH
On attaining independence in 1960, the
agricultural sector maintained its dominant position as the major foreign
exchange earner. The sector accounted for more than half of the GDP and
provided enough food for the teeming population. Traditional small holder
farmers who use simple techniques of production and the bush-fallow system of
cultivation, account for about two-thirds of ’s total agricultural
production. Before 1939, there was virtually no manufacturing industry in . Cotton
was partially processed and cigarettes were manufactured at , but there was very little else. In
recent years however, and particularly since 1948, there has been a rapid and
important growth of factory industry. A major objective of the country’s
economic policy is to promote the growth of industry, both to increase the
wealth of the country and also to provide new sources of employment.
The highest industrial
growth was achieved during the period of 1966-70 when the sector recorded an
average growth rate of 25.9 percent, compared with 12.4 and 13.4 percent
achieved in the preceding periods of 1971/75 when the country was just
recovering from the devastating effect of civil war Nigeria’s economics history
can be said to have been pre-determined by the industrial expansion of Europe
at that time. For instance, crop such as palm kernels and groundnut provided
and invaluable source of raw materials for appropriates industries of Europe he
said “it takes more than industry to industrialize” this the more developed
these industries were the more the raw materials were required and the more
country like Nigerian will produce.
In 1960 about 80
percent of the country used to regard agriculture as their principle
occupation, although a large percentage of them might have produced for mere
subsistence. The country is endowed with a good climate and plenty of fertile
land and this has made it possible to produce a wider range of agricultural
resources, which are being used as raw of self-sufficiency in food production.
Sugar refining, textiles, breweries, rubber, fertilizer, footwear, paper,
cigarette and general food processing industries have continue to record
reasonable levels of capacity utilization rates.
1.3 STATEMENT OF THE PROBLEM
The development of a
sound industrial base depends on the proper harnessing of agricultural and
water resources of the country. Undoubtedly, agricultural progress is a
prerequisite for industrial development and by extension for economic growth
and development. The agricultural sector has been described by a host of economic
historians as been indispensable in achieving industrial development in an
economy. However, the problem of food supply and demand and their implications
for ’s
overall development have become major national issues. The amount of resources
that have been allocated to agriculture in general and the food sub-sector in
particular, the supply of local raw materials for industrial development would
seem justified only if the anticipated increased in agricultural production and
supply are realized. Opinion have been expressed on the linkage between
agricultural sectors and industrial sectors as been interwoven judging from the
sense that all nineteenth century industrialization were accompanied in their
early stage by an increased in agricultural output.
Therefore one can
assume that industrialization and agricultural development are not valid
alternatives, but rather effective developmental plans must embrace both goals.
Thus it remains an empirical issue for verification in whether
in the country’s development process the agricultural sector is really
complementing to the industrial sector’s development given past and present
antecedents, if the answer is in the affirmative, we need to establish the link
between these two man sectors and the extent of their linkage in .
Moreover, the importation of finished goods to the country brings about the low
growth in industrial sector. However the role of agriculture since independence
in the economy has been on the downward trend especially its contribution of
Gross Domestic Product (GDP). Its share top GDP fell from 39.9 percent in
1970/71 to 20.0 percent (based on constant prices) in 1988. This situation has
been partly due to the mergence of oil as an important commodity and partly to
the poor performance of the sector.
1.4 OBJECTIVE OF THE STUDY
The general objective
is to look into how industrial development could be attained through effective
resources mobilization from the agricultural sector, given the country’s
social, economic and political constraints.
The specific objectives
are to:
1. Analyzing
the agricultural and industrial production growth rates in order to determine
if the performance of the agricultural influences the growth and performance of
the industrial sectors, because the growth of industry brings about economic
growth and development.
2. Analyze
agriculture’s contribution to developments materials for sustaining the
production of manufactured goods up till today. This period could be said to
mark the birth of the agro-allied industries in . Sugarcane is used in sugar
producing industries, maize is used in beer production with coca serving in the
production of beverage in the beverage industries. Agriculture affects and
influence industrialize when we consider in terms of its impact on the
operations of our food industries it provides the food requirement of the
rapidly growing rural and urban
population.
Agriculture provides
employment for over 70% of Nigerian labour force. The agricultural sector has
been contributing substantially to the gross domestic products of . This
contribution has been declining over the years in some countries because of the
discovery of some mineral resources and in Nigeria case with the oil boom era,
which reduced the emphasis on agriculture also in development plans, for
example agriculture contributed 63% to the Nigerian GDP in 1960 but declined to
23.4% in 1975 (United Nation year Book of National Account 1979). Agriculture
also provides raw materials which implies a growth and adaptation of
agricultural production. With the decline of the oil boom era, the stage is now
set for agriculture to take up the prominent role it used to play then.
However, the structural
adjustment programme (SAP) embarked upon in lake 1986 by the government to
stabilize the economy had a salivary effect on the industrial sector, as the
sector recorded an annual average growth of 10.4 percent between 1986 and 1990,
with positive growth rates in each of the years. The pace continue but at a
decreasing rate, accounted for by sharp fall in manufacturing component, which
experienced very low capacity utilization as a result of lack of raw materials,
spare parts and other production bottlenecks. For instance, the annual average
growth rate of manufacturing component increased form 14.4 percent during
1971/75 to 19.4 and 17.6 percent during 1976-80 and 1981/85 periods
respectively. Thereafter the rate of growth of this sub-sector decelerated as a
result of factors enumerated above. Indeed, for the first time during the
period of analysis, this sub-sector recorded a negative growth rate of 2.4
percent compared with all industry average growth rates of 4.8 percent.
The year to year
changes have been uneven in industrial sector, therefore, government has
reacted to the declining trends in the manufacturing output by the creation of
raw materials research and development council and a raw materials data bank.
Through these institution and others, the government hope to improve the
capacity utilization through available local raw materials manufacturing using
raw materials from local sources were at a strong advantage after the 1986
reforms. By 1989, manufacturers with locally sourced inputs achieved relatively
high levels of capacity utilization, tyres (59.8%) leather products (60.3%).
Beer and stout (53.4%) textiles (60%) and industrial chemicals (46%). Agro
business grew rapidly due to the government policy.
3. Investigate
into the problem of agriculture in industrial development in .
4. Proposed
policy measure on how agricultural productivity can be improved.
1.5 RATIONALE OF STUDY
Agriculture is still
the main stay of the Nigerian economy with about 70% of the country’s labour
force there in. at independence (1960) the percentage contribution of the sector
to GDP was about 70%. And over view of the Nigerian economy shows that
agriculture is still predominant in spite of the increased industrial growth
over the years. The agricultural activity dominated the economy between
1950-1974 contributing N1,342 million to GDP in 1959 and N1,308.7 million in
1974. It highest contribution was in 1971/72 when it stood at N1982.9 million
as revealed by the federal office of statistics, national account of Nigeria
(Lagos, 1976). In 1995 the agricultural sector contributed N520,999.4 million
to the GDP, while the industrial via manufacturing sector contributed
N116,820.6 million to the GDP. The fall in the share of the agricultural sector
between 1960 and 1980 is partly due to the normal growth pattern and the
neglect of the sectors as a result of large return accruing from crude oil
production.
Fall in the share of
manufacturing sub-sector of the industrial sector in 1980s that made the
procurement of imported raw materials difficult and expensive. The continue
poor performance of the external sector especially the crude oil has forced the
government to re-order his priority such that agriculture and self-reliance is
given emphasis. Although by 1995 the increase in agriculture’s share in GDP was
quite small as it managed to move to 35.4% yet it is quite better than the
industrial sectors share of 70.9%. In essence this shows that in spite of the
fact that the decline in agricultural activity appears natural in many
development process, it is obvious that in Nigeria, agricultural activity will
remain the most single sector for some time to come, hence more attention
should be directed to the agricultural sector to enable it move to heights that
would help it play its role in the industry.
1.6 HYPOTHESIS
The relationship between
the agricultural sector and the industrial sectors has accounted for a large
proportion in the strategy for economic growth and development. In an attempt
to understand the degree of inter-dependence among the different sectors of an
economy and therefore the relative importance of each sector, a number of
devices have been employed to measure movement of resources among sectors. One
of these devices is the input-output table, which measures the degree of
inter-dependence among the different sectors of the economy.
1.7 METHODOLOGY OF RESEARCH AND SOURCES
The techniques to be
used in this study will be descriptive analysis in which table will be
employed. The data needed for this study will be collected from published and
unpublished works, the central bank of , economic and financial
review, central bank annual report and statement of account, the CBN
statistical bulletin.
The technique of
analysis is descriptive in nature, the analysis used tables being the most
frequently used method of data analysis tables used in the form of general
descriptive tables, which are in use in summarized and condensed data, the data
used have already been compiled by CBN.
1.8 SCOPE OF THE STUDY
The study will cover
the output of the agricultural sector (crops) and industrial sector
(manufacturing). The work will critically examine the role and contribution of
agricultural sector in the industrial development in , the project will focus on , but
many scathingly sight example from some other countries in analyzing some
points.
1.9 ORGANIZATION OF WORK
For ease of
presentation the project has been divided into chapters. Apart from chapter
one, which deals with the introduction, there are four other chapters.
Chapter two review
existing literature and theoretical framework on agricultural sector and
industrial sector. Chapter three consist of the overview of the role of the
agricultural sector to economic development and growth, also the contribution
to industrial sector. Chapter four is on data analysis and in which the
agricultural-industrial relation in is explored. Chapter five
comprises of the summary, recommendation and conclusion on the role and
significance of the agricultural sector contribution to industrial sectors.