Funding for Development: The Role of Foreign Development Agencies in the Performance of Agricultural Sector in Nigeria

Main Article Content

Kalizibe Joseph
Christopher Ifeanyi Ezekwe


Motivated by the evidence that employment generation across various sectors of the Nigerian economy has remained largely unimpressive despite the increased inflows of foreign aids and grants, this study examined how funding from foreign development agencies comprising International Development Association (IDA), International Fund for Agriculture Development (IFAD) and United States Agency for International Development (USAID) affected the performance of the agricultural sector in Nigeria with a focus on employment generation in agriculturbetween 1990 and 2019. Time-series data on each of the variables were obtained from the World Development Indicators, International Debt Statistics and ILO statistics. Descriptive statistics, unit root and bounds cointegration tests and ARDL estimation method were applied as techniques for the data analysis. The unit root test results showed that the variables are of mixed integration, thus fulfilling the precondition for the use of the bound test approach to cointegration. It was also found from the bounds cointegration test results that employment in agriculture has a long-run relationship with the funding from the selected foreign development agencies. The estimated ARDL model revealed that funding from IFAD contributed positively to employment in agriculture. This is a pointer that IFAD, as a specialized agency of the United Nations, has remained Nigeria's trusted partner for agriculture development. The results further showed that IDA and USAID funding equally impacted positively on employment in agriculture with IDA funds creating more long-term opportunities for employment in agriculture. Based on the findings, this study recommends that IDA funding should be channelled to Agricultural Development Project (ADPs) and critical infrastructure in the agriculture sector to boost productivity, and in turn, create opportunities for employment in agriculture.

Foreign agencies, agriculture sector, employment, foreign aids, grants, development, Nigeria

Article Details

How to Cite
Joseph, K., & Ezekwe, C. I. (2021). Funding for Development: The Role of Foreign Development Agencies in the Performance of Agricultural Sector in Nigeria. Asian Journal of Economics, Finance and Management, 5(4), 80-89. Retrieved from
Original Research Article


Easterly W. Can foreign aid buy growth?.Journal of Economic Perspectives 2003;17(3):2348

Shleifer A. Peter Bauer and the failure of foreign aid.Cato Journal. 2009;29(3):379–390.

Bhargava VINAY. The role of the international financial institutions in addressing global issues.The World Bank. 2006;393-410.

Mahembe E, Odhiambo NM, Read R. Foreign aid and poverty reduction: A review of international literature. Cogent Social Sciences, 2019;5(1):1625741.

Massa I. The Impact of Multilateral Development Finance Institutions on Economic Growth’. Paper funded by DFID. London: ODI; 2011.

Harod R. An Essay in Dynamic Theory. Economic Journal. 1939;44:14-33.

Domar ED. Capital expansion, rate of growth, and employment. Econometrica, Journal of the Econometric Society. 1946; 137-147.

Chenery HB, Bruno M. Development Alternatives in an Open Economy: The Case of Israel," Economic Journal, 1962;72l:79-103.

Conchesta K. Foreign aid and economic growth: the case of Tanzania. Institute of Social Studies (Unpublished material); 2008.

Bacha, EL. A three-gap model of foreign transfers and the GDP growth rate in developing countries. Journal of Development economics. 1990;32(2):279-296.

Simpasa A, Shimeles A, Salami AO. Employment effects of multilateral development bank support: The case of the African development bank. African Development Review, 2015; 27(S1):31-43.

Adeyanju DF, Mburu J, Mignouna D. Impact of Agricultural Programs on Youth Engagement in Agribusiness in Nigeria: A Case Study. Journal of Agricultural Science. 2020;12(5):34-51

Ozigbu J. Heterogeneity of foreign capital inflows and unemployment problem in Nigeria.International Journal of Economics, Commerce and Management, 2020;8(9): 222-234.

Paago JK, Chukuigwe EC. International credit institutions and real sector performance in Nigeria (1986-2018).International Journal of Economics and Financial Management. 2019; 4(4):79-95.

Pesaran MH, Shin Y. An autoregressive distributed lag modelling approach to cointegration analysis. Chapter 11 in S. Strom (ed.), Econometrics and Economic Theory in the 20th Century: The Ragnar Frisch Centennial Symposium. Cambridge University Press, Cambridge; 1999.

Pesaran MH, Shin Y, Smith RJ. Bounds testing approaches to the analysis of level relationships. Journal of Applied Econometrics. 2001;16(3):289-326.

Ighodaro CE, Nwaogwugwu IC. Effectiveness of foreign aid on the growth of the Agricultural sector in Nigeria. Ethiopian Journal of Economics. 2013; 22(2):131-146.

Eugene, I. The impact of financial development on economic growth in nigeria; An ARDL Analysis. Developing Economies Studie. 2016;1-12.

Rakhmetullina S, Isiksal AZ, Chimezi JO. Economic Growth, Agriculture and Industrialization in Nigeria: an ARDL Bound Testing Approach. International Journal of Economic Perspectives. 2017; 11(2).

Osabohien R, Mordi A, Ogundipe A. Access to credit and agricultural sector performance in Nigeria. African Journal of Science, Technology, Innovation and Development, 2020;1-9.