Analysis of the Impact of Central Bank of Nigeria's Agricultural Intervention Funds on the Economy

This paper set out to investigate the impact of Central Bank of Nigeria's interventions on the agricultural sector within an economy-wide framework of general equilibrium modelling. The paper adopted a dynamic (recursive), two-sector general equilibrium model of the Nigerian economy with some modifications on the standard model developed by the Centre for Econometric and Applied Research (CEAR) and incorporated the contributions of the CBN's agricultural based interventions as increases in the stock of agricultural capital to have a more robust size of interventions into the agricultural sector. The SAM used for the CGE model analysis was derived from the updated Input and Output Table for 2011. Results indicated that interventions contributed positively (although marginally) to GDP during the periods of intervention; contributed to a marginal decline in government subsidy expenditures and improvement in government revenues; led to an increase in exports of agricultural commodities and marginal reduction in the volume of imports of intermediate goods used in the agricultural value chain; prices of agricultural commodity exports increased marginally in the fifth period as a result of the interventions; interventions impacted positively on the incomes and utility of rich farm owners. However, poor farmers were worse off with interventions, as their income and utility increased steadily at a faster pace without intervention than it did with interventions. It is recommended that targeted extensive support must be provided to poor farmers to improve their competitiveness and ensure they are not crowded out by the rich farm holders and access to markets for fair and competitive prices needs to be encouraged.