Causality between Agricultural Investments, Inflation and Interest Rates in Nigeria
Maduike, I. A
*
Agribusiness Department, Federal University of Technology, Owerri, Nigeria.
J. C. Nwaru
Agricultural Economics Department, Michael Okpara University of Agriculture, Umudike, Nigeria.
O. R. Iheke
Agricultural Economics Department, Michael Okpara University of Agriculture, Umudike, Nigeria.
C. C. Eze
Agribusiness Department, Federal University of Technology, Owerri, Nigeria.
O. B. Ibeagwa
Agricultural Economics Department, Federal University of Technology, Owerri, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
This study examined the linkages between agricultural investment (comprising Foreign Direct Investment in agriculture, government investment in agriculture and private sector investment in agriculture), inflation rate and interest rate in Nigeria (1981 – 2020). Data for the study were sourced from Central Bank of Nigeria (CBN) and, Food and Agriculture Organization (FAO), and analyzed using Granger causality tests. Results showed that government investment in agriculture (p < 0.05) and private sector investment in agriculture (p < 0.1) has significant uni-directional causality to the level of agricultural foreign direct investment in Nigeria. Also there was uni-directional causality from inflation rate to interest rate (significant at 10%). It was recommended that public and private sectors’ investment in agriculture should be strategic to attract foreign investments in order to boost the productivity of agriculture in Nigeria.
Keywords: Foreign direct investment, agricultural investment, public/government investment in agriculture, private sector investment in agriculture, inflation rate, interest rate