Does Monetary Policy matter for Agricultural Sector Performance? Empirical Evidence from Nigeria

Abstract

The paper examined the impact of monetary policy on agricultural sector performance in Nigeria, using annual data spanning the period 1981 to 2016. Given its significant role in providing employment to about 60 % of the economically active population and 70% of the country's poorest communities, agriculture has huge potential for achieving poverty reduction in Nigeria. In this regard, the study employed the Autoregressive-Distributed Lag (ARDL) approach and established a long-run relationship between agriculture value added and some monetary policy variables. Specifically, the findings suggested that in the long-run, money supply and maximum lending rate have significant effects on agriculture value added while exchange rate and inflation do not. Given the important role of money supply in promoting agricultural sector performance, the paper recommends an expansionary but non-inflationary monetary policy to improve value addition to the agricultural sector of the Nigerian economy.

Comparative Development of Indonesia and Nigeria in the First Two Decades of Democracy: Divergence or Convergence?

“…Indeed, the exchange rate is more important for the price competitiveness of the country's products. However, like in Indonesia, the exchange rate in Nigeria has little effect on agricultural exports (Ammani, 2012;Oyinbo et al 2014;Adekunle & Ndukwe, 2018;Oboh et al 2019). However, some studies suggest that the exchange rate generally affects agricultural sector performance (Akinniran, 2016;Ogunjimi, 2020) and, particularly, the exports of cash crops, such as cocoa (Essien et al 2011).…”