IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 5 2016

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External Capital Funding and Staple Food Production in Nigeria

J.A.L. Effiong, I.C. Eke, B.U.Uzoho, J. O. Aligbe and G.U.Njoku

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Abstract

This study investigated the effect of foreign capital inflows (foreign private investment, foreign aids and grants and net export earnings) on index of staple food output in Nigeria. Time series data were obtained from National Bureau of Statistics and Central Bank of Nigeria Statistical Bulletin from 1980- 2013. The ordinary least squares (OLS) regression analysis and cointegration/error correction mechanism were employed as the main statistical tools. The E-views 7.1 statistical package was used in analyzing data. Results from the study show that the value of the Error Correction Model (ECM) for staple food output appeared with the right signs ( -67.04696 ) and statistically significant at the 5 per cent level. This implies that the ECM corrected the short run deviation to long run equilibrium. The Durbin Watson value of 2.36778 for staple food output suggests a lesser level of autocorrelation. The coefficient of determination (R2) showed 58.62% variation in staple food output was explained by changes in the explanatory variables. However the F-ratio of staple food model was not significant. The beta coefficient ( ?) of current and lag one forms of Foreign Private Investments (FPI), Foreign Aids and Grants (FAG), Net Export Earnings (NEE) and Exchange Rate (EXR) staple food output model was positively signed but not statistically significant. This result revealed that foreign capital inflows (FPI,FAG,NEE, and EXR) has a positive impact but does not significantly affect staple food output in Nigeria. The study recommends that government should put in place a strategy for attracting more foreign investors as well as pursuing an aggressive export promotion drive with a view to increasing the volume of value-added agricultural exports. Attempt should also be made to attract a higher volume of foreign aids and grants by interfacing with international agencies, organizations and financial institutions. Investment of External capital should be channelled to the productio

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