Uhm Phd 9416058 R.Pdf

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Ann Arbor, MI48106 THE IMPACT OF OIL REVENUES AND GOVERNMENT PROGRAMS ON AGRICULTURAL DEVELOPMENT IN NIGERIA A DISSERTATION SUBMITTED TO THE GRADUATE DIVISION OF THE UNIVERSITY OF HAWAI'I IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN SOCIOLOGY DECEMBER 1993 By Joe Orban Igber Dissertation Committee: David B. Chandler, Chairperson Gene G. Kassebaum George Y. Won Frank S. Scott Jr. Chennat Gopalakrishnan Dedication This dissertation is dedicated to my late mother, Ajia Igber who cherished education more than any other thing. However, for her, this moment did not come soon enough. May her soul rest in perfect peace. iii Acknowledgements FAITH - Faith is assurance of things hoped for, the conviction of things not seen, Hebrews 11 : 1. To God be the glory for not failing in His promises to all who trust in Him - Amen. I thank Dr. David B. Chandler, chairperson of my dissertation committee. He has shown extreme understanding and affection. Notonly has he been too patient with me, but has always made me not to feel guilty even when I deserved to feel so. I want to express my profound gratitude to Dr. Frank S. Scott Jr. who has stood by me from the first day we met both as a Professor and as a friend. A man of high moral principles and integrity. I thank him for his patience in every process of this dissertation, this degree and for all the hours he has generously spent in editing my many drafts. I thank Dr. Gene Kassebaum for his cooperation and intelligent comments in all his editing. His gUidance, commitment to and awareness of my interests, his concerns, his meaningful suggestions and his help in every way during this critical stage of the program. Iwould like to thank Dr. George Y. Won for his insights and useful advice in addressing sociological issues relevant to the dissertation. I thank Dr. Chennat Golpalakrishnan for his enthusiasm and helpful advice, most of all for standing by me during my critical hour. I wish to thank my family, especially my wife who has done all in her power to make sure that this dream has come to pass. My children who in many ways have been very understanding and sensitive to my degree iv program which has come to affect them in many ways. I thank my father and late mother though far away from here, have exerted more influence and concern for the accomplishment of my education, the task they initiated, education. I thank my fellow graduate students with whom I have shared very useful discussions of academic interests. Our association has helped me to grow in many ways. Finally, I want to thank all the members of faculty in the department and many other people I came to know outside the department, such as Dr. David Greenfield, Dean Graduate Division; Dr. Kathy Wilson, Urban and Regional Planning; Dr. Doris Ching - Vice President for Student Affairs and many others I can not mention individually here due to space. Thank you all. v Abstract This study critically examines the impacts of oil revenues on agriculture and other socioeconomic sectors in Nigeria during the period between 1970to 1990. Majorsocioeconomic indicators are regressed against oil revenues to determine the significance of statistical relationships as bases for in-depth analyses of social and economic impacts. The period of the initial oil boom in Nigeria channeled large sums of money into government programs which temporarily benefitted urban sectors, but neglected agriculture. These developments resulted in massive rural- urban migration where workers left the farming areas in anticipation of high paying jobs and better living conditions in the cities. The rural exodus contributed to serious declines in land in crops'. and agricultural output. Agricultural exports, which had previously contributed substantially to the balance of trade, declined to an insignificant level. Nigeria, which had previously been selfsufficientin food production, became a major food importer, further contributing to the decline in the balance of trade. The agricultural sector's contribution to gross domestic product declined from 60 percent in 1960 to less than 10 percent in 1978. The huge oil revenues impacted on the exchange rate, which was favorable during the early phase of oil industry development. But oil sales over time contributed to currency appreciation with a consequent damaging effect on international trade. vi The excessive movement of rural workers into the cities for presumed job opportunities related to oil revenue expenditures resulted in massive unemployment. This led to insufficient housing, extreme hunger, unsanitary conditions and crime. During the late 1970's and early 1980's, the Nigerian government initiated several assistance programs to address the decline of agriculture, including national food programs, the green revolution and farm credit programs. These programs, although initiated with good intent, were misguided and mismanaged and thus had minimal impact in reversing the dire economic and social conditions of the agricultural sector. The decline ofagriculture and related economic and social conditions is ironic considering the wealth of national and human resources in the country. The study offers suggestions for increasing the effectiveness of agricultural assistance programs to take advantage of the resources available. vii Table of Contents ACKNOWLEDGEMENTS iv ABSTRACT. ........................................ .. vi LIST OF TABLES x LIST OF ABBREVIATIONS AND SYMBOLS. ................ .. xii CHAPTER I INTRODUCTION............................. 1 Problem Setting ............•............... 1 Nigeria Today 3 Justification of the Study 8 Scope of the Study. .......................... 8 Problem Statement .................... 9 Objectives. ................................. 9 Hypotheses. .............................. .. 10 CHAPTER II LITERATURE REVIEW 11 Migration. .............................. .. 11 Theoretical Issues .......•.................. 11 Sociological Theories of Migration 11 Circulation 12 Economic Theories of Migration 14 State of Nigerian Agriculture 16 Contribution of Agriculture to GNP.. 18 Declining Production of Agricultural Products 18 Declining Land Area in Agricultural Production 19 Agricultural Exports-Imports 20 Problems of the Smallholder Farmer. ......... .. 22 Credit and Agricultural and Cooperative Banks 25 Politics and Agricultural Development in Nigeria 27 Oil Boom and Agricultural Development 29 The "Oil Syndrome" or "Dutch Disease" 31 The Spending Effect. ••................... 32 Resource Movement Effect 33 Dutch Disease: Social Effects of the Nigerian Case 34 Evidence of Dutch Disease in Terms of Exchange 36 Evidence of Dutch Disease on Agriculture in Nigeria .. 39 CHAPTER III METHODOLOGY .....•........•.•............ 42 Model Specifications for Regression Analysis. 42 Statistical Procedures. ..•................... .. 50 Methodology for Determining Sociological Impacts.. 51 Data Sources ..•............................ 52 Limitations of the Study 53 CHAPTER IV EMPIRICAL FINDINGS 55 Impacts of Oil Revenues on Agricultural Indicators 58 viii Impacts of Oil Revenues on Socioeconomic Indicators. ..•..•.•........................ .. 60 Summary of Empirical Findings. ............... .. 62 Agricultural and Rural Development Policy. ....... .. 64 CHAPTER V RURAL DEVELOPMENT AND MIGRATION IN NIGERIA 67 Introduction ...................•............ 67 Rural Development ......•.•................. 68 Migration ............•..•.................. 76 Social Impact of Migration. .••.............. .. 80 Housing Conditions 83 Crime .•..•.............................. 83 Extent of Urban Unemployment in Nigeria. ..... .. 85 Urban Unemployment in Nigeria 87 CHAPTER VI GOVERNMENT AGRICULTURAL ASSISTANCE PROGRAMS. .•............•............... .. 88 Summary of Government Programs and their Impacts •.............•...............

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