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Cash crops financing, agricultural performance and sustainability: evidence from Nigeria

Author

Listed:
  • Abiola John Asaleye
  • Philip O. Alege
  • Adedoyin Isola Lawal
  • Olabisi Popoola
  • Adeyemi A. Ogundipe

Abstract

Purpose - One of the challenging factors in achieving sustainable growth is the inability of the Nigerian government to diversify the country's revenue base. This study aims to investigate the relationship between cash crop financing and agricultural performance in Nigeria. Design/methodology - Four crops were considered, namely, cotton, cocoa, groundnut and palm oil. The impact of cash crop finance shock on agricultural performance was investigated using the vector error correction model (VECM), while the long-run relationship was examined through the identification of long-run restrictions on the VECM. Findings - The variance decomposition showed that financing shock is more sensitive to cause variation in aggregate employment than aggregate agricultural output in palm oil, while for cocoa, cotton and groundnut showed otherwise. The long-run structural equations exert a positive relationship between cash crop financing and agricultural performance, except for oil palm and cocoa financing that has a negative connection with agrarian employment. Research limitations/implications - The study is limited to the unavailability of data for agriculture sector capital utilisation, which was not used. Practical implications - These results show that long-run benefit can be maximised by appropriate funding in cotton and groundnut production to promote sustainable growth. Originality/value - The study examines the impact of cash crop financing on agricultural performance with the aim to promote sustainable growth in Nigeria using identified VECM.

Suggested Citation

  • Abiola John Asaleye & Philip O. Alege & Adedoyin Isola Lawal & Olabisi Popoola & Adeyemi A. Ogundipe, 2020. "Cash crops financing, agricultural performance and sustainability: evidence from Nigeria," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 11(3), pages 481-503, May.
    • Handle: RePEc:eme:ajemsp:ajems-03-2019-0110
    DOI: 10.1108/AJEMS-03-2019-0110
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    Citations

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    Cited by:

    1. Changjun Zheng & Sinamenye Jean-Petit, 2023. "The Effects of the Interactions Between Agro-Production, Economic, and Financial Development on Bank Sustainability," SAGE Open, , vol. 13(2), pages 21582440231, June.
    2. Abiola John Asaleye & Rotdelmwa Filibus Maimako & Henry Inegbedion & Adedoyin Isola Lawal & Adeyemi A. Ogundipe, 2021. "Real Exchange Rate and Manufacturing Performance in Nigeria," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 10, March.
    3. Esther Adebimpe Ogunwole & Mosab I. Tabash & Bayan Habis Alnaimat & Yetunde Abiola Ojo & Olawamiwa Reuben Adeniyi & Adedoyin Isola Lawal, 2023. "Predatory Factors on Depression among Adolescents: Evidence from Nigeria," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 12, July.
    4. Abiola John Asaleye & Kariena Strydom, 2023. "Promoting Women’s Empowerment: Linkages Between Financial Development, Employment and Economic Growth in Selected African Economies," SAGE Open, , vol. 13(4), pages 21582440231, October.

    More about this item

    Keywords

    Financing; Agricultural performance; Sustainability; Vector error correction model; E24; Q1; Q56;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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