Impact of Foreign Direct Investment on the Nigerian Agricultural Sector

Abstract

Adequate investment in the agricultural has been touted to be responsible for food security in the developed emerging economies. One substantial source of investment in the sectors is the Foreign Direct Investment. However, it is uncertain the level of Foreign Direct Investment in the Nigeria Agricultural as the country still records food demand and supply gap orchestrated by the rising population growth in the country. Consequently, to address the food demand and supply gap scenario this study examines the Impact of Foreign Direct Investment on the Nigerian Agricultural Sector using secondary time series data obtained from various issues of the statistical bulletin of the Central Bank of Nigeria (CBN). Data collected were analyzed using econometric regression technique of the Ordinary Least Square (OLS). Results showed that foreign direct investment, export earnings, market size, government expenditure in agricultural sector, employment generation, exchange rate has a positive relationship with Nigerian agricultural sector development. This means that as foreign direct investment, export earnings, market size, government expenditure in agricultural sector, employment generation, exchange rate are increasing, it will bring about improvement in the Nigerian agricultural sector. On the other hand, agricultural produce prices and inflation rate has a negative impact on agricultural sector performance. This means that as agricultural produce prices and inflation rate falls, agricultural sector performance will improve. The study recommends that government should provide adequate infrastructure and policy framework that will be conducive for doing business in Nigeria, so as to attract the inflow of FDI. Given the causal link among exchange rate – export growth economically at the Nigerian economy, favourable exchange rate policies should be formulated and implemented. Therefore, there is need to have a stable political and economic environment and improve on the critical infrastructure, level of security at all levels in the country. Again, the government should enforce a guiding principles or laws that will be regulating and monitoring the foreign sector activities to curb corrupted practices which are a bane for growth.