Impact of Monetary Policy on Nigeria's Agricultural Growth (1980-2010)

Abstract

This study investigated the impact of monetary policy on Nigeria’s agricultural growth (1980 - 2024). The specific objectives of the study are to identify the type of monetary policy instruments used to strengthen agricultural growth, to determine the impa ct of monetary policy instrument on Nigeria’ agricultural growth, and to ascertain if there is a longrun relationship between monetary policy instrument and agricultural output, a descriptive statistical analysis using percentage growth rate and graphical analysis were adopted. Since the data used for the analysis is a time series data, the study started by first testing for time series properties of the variables, using Augmented -Dickey -further test for Stationarity. The Engel and Granger two step procedure was adopted to test for co-integration in the study. The Error Correction Model was used to indicate the speed of adjustment from the shortrun to longrun equilibrium. The result of the descriptive statistical analysis using percentage growth rate and graphs indicates that increase in money supply brought about a fall in agricultural output with time, there is a negative relationship between monetary policy rate and agricultural output. While there is a positive relationship between exchange rate (EXR), agricultural credit guarantee scheme fund (ACGSF) and agricultural output (AGRUT). The unit root result using the Augment -Dickey -further test reveals that all the variables considered in the study were not stationary at levels but were stationary at first difference. The parsimious result of the study indicates that agricultural credit guarantee scheme fund and exchange rate were statistically significant at 5 0/0 level of significance, but money supply (M2) and monetary policy rate (MPR) were statistically insignificant at 5 0/0 and100/0 level of significance. This research work generally recommends that the government should adopt a radical and multi-faceted integration approach towards the implementation of monetary policy to enhance speedy agricultural growth. This can only be possible if the government embark on aggressive and consistent release of funds or capital to farmers and other agribusiness holder through agricultural credit guarantee scheme fund (ACGSF), using the Agricultural Dev elopment Bank of Nigeria (ADBN) as the only implementing agency. The action plan involves first a corruption free system and a flexible exchange rate system and not a fixed exchange rate, to motivate and encourage the agricultural labour force back to the agricultural sector, employing appropriate agricultural activities using the appropriate technology that will stimulate agriculture output in Nigeria.