Impact of inflation on agricultural productivity in Nigeria: Analysis of policy implication (Subsidy removal 2012-2022)

Document Type : Original

Authors

Department of Economics, Baze University, Abuja, Nigeria

Abstract

The study examined the impact of inflation on agricultural productivity in Nigeria. The aim was to ascertain whether or not inflation impacts agricultural productivity as measured by agricultural GDP as well as, how government policies/ intervention schemes such as subsidy removal in 2012, 2016, and 2020 impacted the economy. Quarterly time series data were used which covered a span of 11 years (2012-2022) i.e. 44 quarters. The independent variables analyzed include inflation rate, guaranteed loans from Agricultural Credit Guarantee Scheme Fund (ACGSF), exchange rate, and deposit money bank loans to the agricultural sector. Agricultural contribution to Gross Domestic Product (AGDP)stood as the dependent variable.  The econometric models used in the research included the Auto Regressive Distributive Lag model (ARDL) and the Granger causality model. The result of the short and long-term coefficient and Error Correction Mechanism (ECM) also indicated that inflation had short-run convergence as the ECM was statistically significant and negative. Inflation, LACGSF (log of ACGSF), and DMB (Deposit Money Banks) loans exhibited a positive impact on agricultural productivity. Results of the Granger causality test revealed a unidirectional relationship between AGDP and INF (inflation). The recommendation therefore, is that the government and monetary authorities should stabilize the business environment in Nigeria as policy implications such as subsidy removal greatly impact these macroeconomic variables which in turn impact the real sector, ease of access to credit opportunities for farmers especially those in the rural areas and ensuring that government introduced agricultural schemes and programs get to the targeted population.

Keywords

Main Subjects

حوزة موضوعی: نیجریه

Scope: Nigeria

References

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Journal of Countries Studies
Volume 3, Issue 3
2025
Pages 483-507

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  • Receive Date: 14 April 2025
  • Accept Date: 18 April 2025

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