Empirical Analysis of Agricultural Foreign Direct Investment on Capital Market Performance in Nigeria (1981-2018) (Published)
There is a widespread perception that Foreign Direct Investment (FDI) aids economic growth in Nigeria evident by various contributions made by researchers on this phenomenon, but these attendant benefits must be transmitted through one of the viable real sectors, and one of such sectors is the agricultural sector. Understanding the linkage between the flows of foreign direct investment to agricultural sector as if affects capital market becomes imperative since the capital market enhances financial stability in the country. Using descriptive analysis, Augmented Dickey-Fuller (ADF), parsimonious error correction model, this paper therefore examined the effect of agricultural foreign direct investment on capital market performance in Nigeria from 1981 -2018. Basically data used in this study are exchange rate, trade openness, agricultural foreign direct investment and total market capitalization sourced from Central Bank of Nigeria(CBN) statistical bulletin 2018, The result obtained shows that the inflow of FDI to agricultural sector does not follow a regular pattern as agricultural FDI has long run positive relationship with capital market performance, exchange rate has negative relationship with the explained variable, trade openness also maintained a slow but positive relationship with capital market performance. The study concluded that there exist relationship between the phenomenons of the study, based on these findings, it is recommended that there is need for the government to device several means that would motivate the foreign investors to diversify their investment from oil sector to the agricultural sector since it has a positive influence on the capital market performance. Secondly, government needs to redesign the existing exchange rate policy and ensure full implementation of policy that would revive the value of our local currency.
Citation: Eze Gbalam Peter and Okoyan Krokeme (2021) Empirical Analysis of Agricultural Foreign Direct Investment on Capital Market Performance in Nigeria (1981-2018), European Journal of Accounting, Auditing and Finance Research, Vol.9, No. 7, pp.20-37
This study examined the effect of Foreign Direct Investments flow to agriculture, manufacturing and processing, and mining and quarrying subsectors of the Nigerian economy on revenue generation in Nigeria proxied by company income tax and petroleum profit. The six hypotheses that guided the study were formulated in line with the stated objectives and relevant theoretical as well as empirical literature were reviewed and evaluated. The relevant data were extracted from the annual statistical bulletin of the central Bank of Nigeria. Unit root tests were carried out using Augmented Dickey Fuller method which revealed that the variables were integrated at different orders. The autoregressive distributive lag/bound test was used to explore the long run relationship existing among the variables in each model and the result of the bound test showed that the variables in the two models are co-integrated thus the study proceeded in evaluating the long run as well as the co-integrating form in each model. It was found that Foreign Direct Investments to agriculture does not enhance the generation of company income tax and petroleum profit tax in Nigeria in the long run as its coefficient turned out negative and insignificant whereas the coefficient of manufacturing and processing was positive but not significant in relations with company income tax, but negative and non-significant with respect to petroleum profit tax. Going further, Foreign Direct Investments to mining and quarrying had positive and significant relationship with both company income tax and petroleum profit tax generation in Nigeria. The study recommended that Government can by the use of moral suasion; appeal to foreign investors to plough back about 70% of their earnings so as to expand their output as such expansion will invariably increase the company income tax and petroleum profit tax revenues of government. Tax holidays should be granted to investors in Agriculture and Manufacturing and Processing sectors so as to encourage Foreign Direct Investments inflow to these sub-sectors which will no doubt increase output, stimulate growth and increase the government tax revenue generation capacity in Nigeria.
Food Insecurity: Causes and Policy Framework in Strengthening Food Security in Kenya’s Agricultural Sector. (Published)
According to United Nations Food Agriculture Organization and the United States of America department of agriculture in the World Food Summit in 1996, Food security exists when all people at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life. Food security is basic to the survival of any nation, be it at individual, family or national level. This therefore means that food security should have top priority since no meaningful development in economic, social or cultural sphere is possible without it. However in Kenya, with a population of more than 40 million people, about 10% is classified as food insecure according to United States of America Department of Agriculture – Food Security Analysis March 2009. This is growing at an annual rate of about 30%. Kenya is the largest import market for food and agriculture products in East Africa. Kenya imported about 725 million in agriculture products during 2009, up from 525 million in 2007 in an attempt to mitigate the crisis. This implies that the Government of Kenya should come up with policies that ensure people have access to enough food. This paper examines the role of policy framework in strengthening food security in Kenya.