EFFECT OF SELECTED MACROECONOMIC VARIABLES ON AGRICULTURE SECTOR GROWTH IN NIGERIA (1981-2018)

The common risk factor normally assessed by farmers is the weather risk, and the general problem of ignoring the risk associated with the movements in macroeconomic indicators have posed some significant threat. The study examined the effects of selected macroeconomic variables on agricultural growth in Nigeria. Macroeconomic variables examined include exchange rate, interest rate, broad money supply, deposit money bank credit and Agricultural Credit Guarantee Scheme Fund (ACGSF) on agricultural growth in Nigeria. Secondary data on macroeconomic variables was obtained from the CBN statistical bulletin. Ordinary Least Squares (OLS), and Error Correction Models (ECM) were employed for empirical analysis. The outcome of the ADF unit root test showed that the variables considered in the analyses were stationary. The co-integration result showed that there exists co-integration amongst the variables in the model. The Parsimonious Error Correction Model indicates that the R2 is 60% meaning that the dynamic model is a good fit. The Durbin Watson value of approximately 2.0 indicates a lesser level of autocorrelation. This means that the successive values of the error term are serially correlated. The following coefficients, for exchange rate, interest rate, broad money supply and deposit money bank credit are positively signed and statistically not significant at 5 percent level with agricultural growth. The study recommends that government should train and educate farmers on the role and effects of macroeconomic indicators on their farm enterprise. Government to implement discounted interest rates for the farmers and strengthen the ACGSF.