Effect of External Borrowing on Government Expenditure on Agriculture in Nigeria

Adewinle Olajide Martins (), Fowokan Titilayo Eni-Itan () and Oyedokun Godwin Emmanuel ()
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Adewinle Olajide Martins: Department of Management and Accounting, Postal: Lead City University, Ibadan, Nigeria;,, https://www.afarng.org/mjms/
Fowokan Titilayo Eni-Itan: School of Business, Postal: Charisma University, TCI, UK, https://www.afarng.org/mjms/
Oyedokun Godwin Emmanuel: Professor of Accounting & Financial Development, Department of Management & Accounting, Postal: Lead City University, Ibadan, Nigeria, https://www.afarng.org/mjms/

Multidisciplinary Journal of Management Sciences, 2023, vol. 5, issue 1, 98-122

Abstract: Access to standard and efficient infrastructure facilities, for example road, healthcare, security, education, and power is a hallmark of a prosperous nation. However, this has become a cause of concern for the Nigeria citizens. The roads are death traps across major highways, access to basic primary heproductivitye is a challenge just as insecurity; Agricultural productivity as consistently remain poor and worsened by the activities of bandits. Finance experts have opined that with appropriate funding, such infrastructural deficit can be developed and made to improve economic activities which has positive ripple effect on living standard of the citizen. This study, therefore, examined the effect of external borrowing on government expenditure in the Nigerian agricultural sector. The model used was analysed within the ARDL framework and estimates were obtained in both the short and long run. The ex-post facto research design was used as a quantitative approach in this study to investigate the relationship between external debt, tax revenue, and infrastructure development. The data for this study is a time series trend from 1991 to 2022. The results of the long run estimate revealed that external borrowing has a negative and significant influence on government expenditure on agriculture, that is, a percentage increase in external borrowing will reduce government expenditure on agriculture by 0.43 percent. For the short run estimates, one, two and three lagged values of government expenditure on agriculture significantly and positively influences the current value of government expenditure on agriculture. A percentage increase in these values will increase the current value of government expenditure on agriculture by 0.3, 0.2 and 0.2 percent respectively. External borrowing in the one, two and three lagged periods also significantly influence government expenditure on agriculture. It was recommended that the government diversify the source of external debt service, particularly to non-oil sectors such as agriculture, mining, industry, and manufacturing, in order to reduce the burden and negative consequences of Nigerians' overdependence on foreign exchange from oil and the volatility in its price.

Keywords: Agriculture infrastructure; External debt; Government expenditure; Multilateral debt (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ris:amjoms:0085

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