Decentralization and economic development

Material Information

Decentralization and economic development agricultural policies and implementation ; the case of Nigeria, 1976-1993
Portion of title:
Agricultural policies and implementation: the case of Nigeria, 1976-1993
Portion of title:
Case of Nigeria, 1976-1993
Uwadibie, Nwafejoku Okolie
Publication Date:
Physical Description:
x, 242 leaves : illustrations, form ; 28 cm


Subjects / Keywords:
Since 1960 ( fast )
Agriculture and state -- Nigeria ( lcsh )
Agriculture -- Economic aspects -- Nigeria ( lcsh )
Decentralization in government -- Developing countries ( lcsh )
Agriculture and state ( fast )
Agriculture -- Economic aspects ( fast )
Decentralization in government ( fast )
Politics and government ( fast )
Politics and government -- Nigeria -- 1960- ( lcsh )
Developing countries ( fast )
Nigeria ( fast )
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )


Includes bibliographical references (leaves 234-242).
General Note:
Submitted in partial fulfillment of the requirements for the degree, Doctor of Philosophy, Public Administration.
General Note:
School of Public Affairs
Statement of Responsibility:
by Nwafejoku Okolie Uwadibie.

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Source Institution:
University of Colorado Denver
Holding Location:
Auraria Library
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
36448799 ( OCLC )
LD1190.P86 1995d .U93 ( lcc )

Full Text
Nwafejoku Okolie Uwadibie
B.A.,University of Colorado at Boulder, 1980
M.A., University of Colorado at Boulder, 1983
A thesis submitted to the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Doctor of Philosophy
Public Administration

This thesis for the Doctor of Philosophy
degree by
Nwafejoku Uwadibie
has been approved for the
Graduate School of Public Affairs

Uwadibie, Nwafejoku Okolie (Ph.D., Public Administration)
Decentralization and Economic Development: Agricultural
Policies and Implementation; The Case of Nigeria,
Thesis directed by Professor Franklin James
This thesis analyzes the relationship between the
decentralization of the agricultural sector and the
economic development policy in Nigeria. This
decentralization is centered on three main strategies:
first, the creation of new states; second, the passage of
the Local Government Reform Act of 1976 which allowed the
federal government to allocate national revenue to state
and local governments; third, the implementation of a
Structural Adjustment Program which removed the federal
government from direct ownership of agricultural
This study builds on the works of Vengroff and Salem,
(1992) ; and Vengroff and Johnston, (1987) who studied
decentralization policies in Tunisia and Senegal
A case study research method as described by Robert K.
Yin (1989) is used as well as semi-structured face-to-face

interviews, mailed-in questionnaires and quantitative
secondary data.
The first proposition (PI) is that decentralization in
the agricultural sector of the economy will lead to greater
autonomy and participation in agricultural policy
implementation at the state and local levels.
The second proposition (P2) is that the devolution of
"authority" from the federal to state and local governments
will lead to more effective implementation of agricultural
policy through greater participation by state and local
The third proposition (P3) is that greater
participation by state and local officials in agricultural
policy decisions will lead to greater efficiency in the
agricultural sector thereby enhancing economic development
through higher agricultural productivity.

Dedicated To:
My former wife Mary Lee Henton-Uwadibie, who encouraged me
not to give up my life goal of obtaining a doctor of
philosophy degree. Thank you for all your support.
To my sons Ashionyedue J. Uwadibie and Osemeke J. Uwadibie.
This will serve as educational inspiration for you.

The pursuit of a doctorate degree has been difficult
financially, and very emotionally demanding- It has
nonetheless been an equally enriching and enlightening
experience. I would like to thank so many people who
contributed in myriad ways to the successful completion of
this endeavor. My deepest thanks to all members of my
dissertation committee: Dr. Franklin James, Chairman of my
dissertation committee and the Director of the Ph.D.
Program at the Graduate School of Public Affairs; Dr. Keith
Maskus, Dr. E. Sam Overman, Dr. Marjorie Lewis, and Dr.
Andrew E. Luma. Thank you all for your excellent
suggestions and direction.
I would also like to thank the following people
without whom data collection in Nigeria for this research
would not have been possible given the political situation
in the country at the time of this study: Mr. Tam Fiofori,
Sun Arts, Lagos; Mr. Yoila L. Hinjari, NALDA, Abuja; Dr.
Joseph Y. Yayock, World Bank, African Region, Lagos; Prof.
Adebayo Olukoshi, Nigerian Institute of International
Affairs, Lagos; Mr. Arcadio L. Cruz, FAO of the United
Nations, Lagos; Prof. Eghosa Osagie, and Mr. Deinbo A.
Briggs, National Institute for Policy and Strategic
Studies, Kuru; Mrs. Catherine E. Isebor, Nigerian Institute

for Oceanography and Marine Research, Victoria Island,
Lagos; Dr. D. Olu Ajakaiye, Nigerian Institute for Social
and Economic Research, Ibadan.
My thanks also go to Dr. Terry A. Olowu, Department of
Agricultural Extension, Prof. J. K. Olayemi, Department of
Agricultural Economics, Dr. Akachukwu Emeh, Department of
Forestry, Prof. Alex Gboyega, Department of Political
Science, and Dr. Femi Ogunbiyi, all of the University of
Ibadan, Ibadan; Mr. 0. F. Nwaboku, and Mr. M. T. Owolabi,
Federal Office of Statistics, Yaba; Mr. Frank Ike Azuh,
Federal Ministry of Works and Housing, Abuja; Dr. Oyesola
0. Oyebanji, Mr. A. M. Ajala, and Mr. A. A. Adeniyi, all of
the Federal Agricultural Coordinating Unit, Abuja. Thanks
also to Mr. A. C. Obi, Federal Livestock Monitoring and
Coordinating Unit, Abuja; Mr. Tunde Musiliu, Federal
Department of Forestry, Abuja; Mr. N. J. Dacher, Plateau
ADP, Jos; Mr. Emeke Maduegbuna, Bureau of Public Enterprise
(The Presidency) Lagos; Mr. Alwell 0. Ibeh and Mr. U.
Okpa-Obaj i, Technical Committee on Privatization and
Commercialization (The Presidency) Lagos; Chief Osedunme
Uwadibie, (Farmer) Omado Ventures, Issele-Uku; Dr. Kelsey
Davis-West, (Farmer) Livestock Consultant, Lagos; Chief
Nick N. Anyaegbunam, (Farmer) Trans-Atlantic Agro-Chem,
Inc. Lagos. Special thanks to Mrs. V. N. Ezeogu, Nigeria
Hotels Limited, Ikoyi for making arrangements for my hotel

accommodations while I was in Nigeria.
I would also like to thank my secretary Sandra Winston
for her excellent computer assistance; Ms. Marcia Williams,
Professor Linda Bradford and Dr. Ferdinand Fiofori for
editing the dissertation; great thanks to all my friends,
relatives and coworkers who encouraged me not to give up
and constantly reminded me that "Many of life's failures
are men who did not realize how close they were to success
when they gave up". Thank you all for your support.
December 1995
Nwafejoku Okolie Uwadibie

ABSTRACT............................................. ii
1. PURPOSE AND ORGANIZATION..............................1
1.1 Purpose of Study..............................1
1.2 Political and Economic Background
of Nigeria....................................3
1.2.1 Political Background ...................... 3
1.2.2 Economic Background ...................... 10
1.3 Economic Policy Environment................. 16
1.4 Macro Policies on Agriculture in Nigeria. . 27
1.5 Sources of Nigerian Agricultural Problems. 36
2 REVIEW OF THE LITERATURE:......................... 47
2.1 Decentralization and Agricultural Policies of Nigeria
2.1.1 Definition and Arguments on Decentralization.51
2.1.2 Objectives of Decentralization..............56
2.1.3 Forms of Decentralization.................. 57
2.1.4 Deconcentration............................ 58
2.1.5 Delegation................................. 62
2.1.6 Devolution................................. 65
2.1.7 Privatization.............................. 69
2.1.8 Analysis of Decentralization................70
2.1.9 Agricultural Policies in Developing
Countries................................... 73
viii Agricultural Pricing Policies ......... 77 Structural Policies ................... 78 Marketing Policies..................... 83
3 METHODS AMD DATA COLLECTION..................... 86
3.1 General Planing for Data Collection. ... 86
3.2 Data Collection............................. 94
3.3 Analysis and Description of Survey
Questionnaire .............................. 102
3.4 Explanation of Variables....................110
4.1 The Extent of Decentralization in Agricultural
4.2 Effect of Decentralization on
Agricultural Policies of Nigeria.............140
4.3. Effect of decentralization on
agricultural output..........................167
5.1 Summary of study............................189
5.2 Policy Recommendation.......................194
5.2.1 Policy Formulation and Implementation . 194
5.2.2 Finance and Resource Allocation .... 196
5.2.3 Input Procurement, Distribution
and Production...............................197
5.2.4 Research and Development (R&D).........201
5.2.5 Commodity Management...................202
5.2.6 Resource Endowment.....................203

5.2.7 Infrastructure
A Research Questionnaire............................209
B Policy Plow Chart of the Ministry of
C List of dates, agencies, locations of
D Old and Current Map of Nigeria...................229
E Other necessary document related to the study . 231

Chapter 1. Purpose and Organization:
l.l Purpose of study:
This study analyzes how the process of
decentralization has shaped Nigerian agricultural policies
in recent years. This study examines how the policy of
decentralization has affected the states' role in
agricultural policy by seeking to answer the following
* Has meaningful decentralization occurred in agricultural
policies in Nigeria; throughout the country, or only in
some areas, or agricultural sub-sectors? What form has
decentralization taken? If it has not occurred in Nigeria
or has not occurred in specific areas, why not?
* What types of impact has decentralization had on
agricultural policies? Have the impacts varied among states
or localities?
* How has decentralization and changes in agricultural
policy affected agricultural output?
These questions will help determine the extent to
which decentralization has been implemented by forming the
framework from which to examine whether delegation,
privatization, deconcentration, devolution or a combination
thereof, is the type of decentralization that has been
implemented. The examination will proceed in the form of

analysis of interview results and of secondary data on
agricultural policies and productivity within the years
under study (1976-1993). The structural Adjustment Program
(SAP) of 1986 will also be analyzed as a strategy to
accomplish decentralization in the agricultural sector of
the economy. Several secondary published and unpublished
materials and primary data will be used as analytical
In light of the fact that Nigeria is a nation which
has a myriad of ethnic groups as well as variety in
religion, custom, and economic environment such as climate,
soil etc, three main ethnic regions were selected for this
study in order to make a national inference about the
impact of decentralization on agricultural economic
development. An attempt is also made to generalize the
findings of this study to developing countries that have
implemented a policy of decentralization in recent times
(Tunisia and Senegal for example). The following are the
basic questions for this research:
* Has meaningful decentralization occurred in agricultural
policy in Nigeria; Has it occurred throughout the country,
or only in some areas, or agricultural sub-sectors? What
form has the decentralization taken? If it has not occurred
or has not occurred in specific ar^as, why not? This
question is addressed in section 4.1 of chapter 4.

* What types of impact has decentralization had on
agricultural policies? Have the types of impact varied
among states or localities? These questions are addressed
in section 4.2. of chapter 4.
* How have decentralization and changes in agricultural
policy affected agricultural output? This question is
addressed in section 4.3. Though more questions were asked,
the above described are the primary focus for this study.
Having established the foundation for this study, we shall
now briefly review the political and economic history of
1.2 Political and Economic Background of Nigeria.
1.2.1 Political Background
The Federal Republic of Nigeria, with a population of
120 million (1995), gained its independence from the
British Government October 1, 1960. It became a republic in
1963. One in every five Africans south of the Sahara is a
Nigerian. Nigeria pumps about 2 million barrels of oil per
day. As one of Africa's fastest growing economies, Nigeria
is the fourth largest producer of oil among members of the
Organization for Petroleum Exporting Countries (OPEC) and
the second largest supplier to the United States among
OPEC countries.
Nigeria's policy of economic and political

decentralization was dictated both by the circumstances of
its historical evolution to independence and the
preferences of its leaders. In the country's thirty five
year history, there have been over twenty coups or
attempted coups and a civil war. 1914 marked the dawn of
modern Nigeria with the amalgamation of Northern and
Southern Nigeria by the British Colonial Administration
under the leadership of Lord Lugard. Earlier through the
activities of British chartered companies, the Northern and
Southern Nigeria Protectorates had became separately
incorporated into British spheres of influence beginning
from the middle of the nineteen century.
The most famous of the British charter companies was
the Royal Niger Company. By 1900 the Nigerian charters were
withdrawn, and the three separate British administrations
in Nigeria, the Lagos Colony, the Oil River Protectorate
and the Royal Niger Protectorate, became part of the
British colonial service as Northern and Southern Nigeria
Protectorates. These two protectorates formed the basis of
Nigerian politics and administration, replacing the
traditional/cultural groups and ethnic differentiations
which the British met during their early encounters in
Nigeria. 1914 marked the beginning of a political and
administrative reconfiguration by the British of a
population of peoples who had no religious, cultural, or

economic common ground.
In 1939, the Southern Protectorate was split into two,
and the three units thus produced were referred to as
Northern, Western, and Eastern regions. (See map in
Appendix D) Table 1.1 shows an estimated ethnic
percentages from each region using data from the 1963
national census. There have been two national censuses
since the 1963 census both of which were annulled. Although
the population of the country today is an estimate, there
has been no significant change in the ethnic makeup of the
country. In other words, the majority tribes in 1963, the
Hausas, Yorubas and Igbos, are still in the majority today.

Table i.i Maior Ethnic Groups in Nigeria 1963
Ethnic Units by Estimated Ethnic
1960 Regions Percentages______
Hausa-Fulani 29.0
Tiv and Plateau Cluster 9.0
Kanuri 5.0
Idoma-Igala-Igbira 2.6
Bororo (Pastoral Fulani) 1.5
Nupe 1.2
Yoruba 20.0
Edo 3.3
Delta 1.4
Igbo 17.0
Ibibio and Semi Bantu 6.0
I jaw 2.0
Others Unclassified 2.4
Source: National Population Census ( 1963). Wunsch and Olowu, The
Failure of the Centralized State (Westview 1990), pp 201
From 1967-1970, Nigeria fought a civil war which
culminated in the division of the country into thirty
states. Many Nigerians at the time of the civil war were
found to have more interest in issues relating to their
region of origin than in issues facing the nation. These
regions which were drawn by the British later became the
first twelve states created in 1967 by the then military
government led by General Yakubu Gowon. In 1975 however,
following a military coup which brought to power General
Muritala Muhammad, seven new states were created making the
number nineteen. (See table 1.2). Muhammad's strategy was

to alleviate the domination of minority ethnic groups, such
as Ijaw, Tiv, Edo, etc. by majority ethnic and religious
groups such as the Hausa, Yoruba and Igbo.
On March 17, 1976, a decree establishing the seven new
states was promulgated by General Olusegun Obasanj o who
took over after the assassination of General Muhammad.
General Obasanjo's tenure of office witnessed the creation
of two more new states, bringing the total to 21. Also, a
centrally located area of about 3,000 square miles was
designated as a Federal Capital Territory, along with the
transfer of the federal administration from Lagos to the
new capital of Abuja.
General Babangida, the head of another military
administration, later created nine more new states in 1991,
making Nigeria a country of 30 states. Table 1.2 shows how
the states were carved out of the original three regions.
As can be seen from the table, 15 states were carved out of
the northern region and the same number were carved out of
the eastern and western regions combined. The original
regions of Nigeria and the current 30 states are found in
Appendix D.
The Nigerian constitution of 1979 established a US-
style federal system with a division of power between three
branches of government (executive, legislative, and
judicial) and between federal and state governments.

Executive authority at the national level was vested in a
president and vice president, who run on the same ticket
and serve four-year terms. A plurality of the national
popular vote is required to be declared the winner in a
presidential election. At least one-quarter of the vote in
two-thirds of the states must also be won by the candidate.
Legislative power was vested in a bicameral National
Assembly comprised of members of the Senate and House of
Representatives. Given the constant intervention by the
military in governing the affairs of the nation, this style
of governing has yet to be fully tested. In fact, in July
1993, the military government annulled the widely accepted
fair and free election held in June 1993. In June 1994, the
undeclared winner of the election, Chief Moshud Abiola, who
then declared himself the president of the country, was
arrested and held in custody. This led to various
disturbances in the country in the form of roads blocked by
angry mobs and strikes.

Table 1.2 Old Regions. Old States. New States.
Region (Pre-1967) State (1967) State (1991)
Northern Benue Plateau Adamawa
Kano Bauchi
Kwara Benue
North-Central Bornu
North-Eastern Jigawa
North-Western Kaduna Kano Katsina Kebbi Kogi Niger Plateau Sokoto Taraba Yobe
Eastern East-Central Abia
Rivers Akwa-Ibom
South-Eastern Anambra Cross-River Enugu Imo Rivers
Western Lagos Delta
Mid-Western Edo
Western Kwara Lagos Ogun Ondo Osun
Source: By Author based on Nigerian Geography.

1.2.2 Economic Background
Prior to its rise as a major oil producing country,
the Nigerian economy was dependent upon agricultural
products. Nigeria first became a major producer of oil in
1970, when the country first exceeded one million barrels
of oil per day. This also marked the beginning of the end
of an effective agricultural economic policy because,
government economic policies became focussed on the
petroleum sector of the economy. The abundance of revenue
from crude oil enhanced the military government's effort to
modernize, and led to a high degree of centralization which
resulted in corruption, nepotism and low levels of
bureaucratic performance. These developments gave rise to
an economic crisis and a severe recession from which the
economy presently suffers (Kasfir 1977; Balabkins 1982;
Uwadibie 1983; Liebenow 1985).
Table l. 3 shows the impact of agriculture in the
economy from 1958-59. According to this table, in the late
1950s agriculture accounted for 64.4 percent of the GDP. By
1979/80, the percentage of agriculture's contribution fell
to 30.8 percent giving way to increased mining of 26
percent, which includes petroleum. In the same period,
transportation and communications, and construction
contributed to the GDP 19.3% and 11.1% respectively. From
1981 to 1995, both transportation and communication have

declined. Petroleum, along with other mining products such
as coal, manganese and zinc, has now become the main source
of government revenue and foreign exchange earnings.
Petroleum now accounts for about 50 percent of the GDP and
95 percent of the foreign exchange earnings.
The percentage agriculture contributes to the
economy fell in relation to its contribution in the
sixties. Liebenow (1985) places the blame on the military,
concluding that its venture into the agricultural sector
may have precipitated the crisis. While Kasfir (1977),
Balabkins (1982) and Uwadibie (1983) agree, they argue that
the expansion of defense at the expense of development
initiatives is primarily responsible for the crisis.
Meanwhile, the debate over what ought to be done and when

Table 1.3
Sectoral Distribution of Gross Domestic Products in Nigeria,
1958-1979 (Selected years in percentages).
Sectors: 1958/59 1960/61 1966/67 1973/74 1979/80
Agriculture 64.4 64.1 51.9 34.1 30.8
Mining 1.1 1.2 6.9 17.8 25.9
Manufacturing 4.7 4.8 7.9 8.9 6.7
Electric/Water 0.2 0.3 0.7 0.8 0.5
Building/Const 4.2 4.0 5.3 8.1 11.1
Distribution 12.5 12.7 12.8 10.8 5.1
Tr anspt / Comm. 4.8 4.6 4.7 4.3 19.3
General Govt. 3.0 3.2 3.4 7.9 7.7
Education 2.5 2.6 3.6 3.0
Health 0.5 0.5 0.8 1.2 in
Other Services 2.1 2.0 2.7 3.3
Total 100.0 100.0 100.0 100.0 100.0
Source: Wunsch and Olowu, The Failure of the Centralized State, (Westview 1990), pp 213
"(The number 30.8 percent of agricultural contribution to GDP in 1979/80 was adjusted by the author to be consistent with other available
data., e.g. table 1.5. The number given by Wunsch and Olowu as agricultural contribution to GDP in 1979/80 was 18%. This number
is believed by this author to be incorrect or an oversight).
It should be noted that before the federal government
became involved in the agricultural sector, Nigeria was
able to feed itself and earned export income from
agricultural products such as soya beans, wheat, groundnuts
(peanuts), palm produce, cocoa and rice. One must therefore
wonder why the Nigerian government became involved in
agricultural production. The answer is clear. There were
private market failures in agriculture in the early 1970s.
These market failures were in the form of ineffective land
distribution, lack of effective information dissemination
as related to agriculture, inability of the private sector
to market and provide quality control on agricultural
products. Finally, the private sector was unable to produce

the needed quantity of staple food such as yam, rice, and
beans to meet the market demand. These reasons were the
justification for government role in the agriculture sector
in Nigeria.
Generally, to correct failures of the market to supply
enough goods and services the government often provides
subsidy, assumes ownership or becomes joint owner with a
private firm. The critical question about government in a
market economy is not so much what government does, but
rather, "what should government do?" Economists lean
towards reliance on market. Thus, they argue that
government action is desirable only if there is market
failure. Market failure is defined as the market failing to
achieve attainable social goals. This was the case in
The country imported an average of $2.06 billion
worth of food a year between 1971 and 1978 (Balabkins 1982;
Uwadibie 1983). The agricultural contribution to GDP
between 1975 and 1979 was 30.20 percent. This contribution
rose to over 40 percent between 1985 and 1989. From 1991 to
1992, its contribution to GDP fell only slightly to 39
percent. (See table 1.5). These increases should be
credited to the new agricultural policy of decentralization
which includes price liberalization and the dissolution of
the marketing boards in 1987. (See analysis of evidence in

chapter 4). The new policy also includes the removal of
government from direct agricultural production;
privatization and commercialization of government owned
farms and agencies supplying farm products; and states'
participation in agricultural policy formulation and
At the beginning of 1976, the Nigerian government
realized that its agricultural policy was no longer
effective and became aware that it could not continue to
depend on oil as its primary export (Balabkins 1982;
Uwadibie 1983) The government realized that the
agricultural sector was seriously neglected, and it decided
to introduce a new policy towards agriculture. The new
policy was a shift from emphasis on the oil sector to
emphasis on agriculture. This policy can also be attributed
to the gradual but continuous drop in world oil prices.
This drop in price began in 1976 but reached a crisis point
in 1983 which eventually led to what was known as the
"World Oil Glut." During this period (1976-1993),
agricultural production as a percentage of total export
from Nigeria remained below 10%. However, agricultural
imports as a percentage of total imports stayed above 10%
until after 1986, when it dropped well below 10%. (See
table 1.5).

In this study, we will examine the origins, nature and
impact of various agricultural policies in Nigeria. In
addition, a historical perspective will be provided to
establish agriculture as the driving force of growth in the
Nigerian economy before the advent of oil.
This dynamism in the agricultural sector according to
a World Bank Study of 1974, was a result of farmers'
response to income incentives generated by the integration
of the traditional agricultural economy into the world
market (Tim Wouter, 1974) The World Bank study shows an
increase in output per farmer through the employment of
surplus land and labor, and through the substitution of
higher value export crops for subsistence crops. After
independence from Britain in 1960, however, the Nigerian
Government continued to rely heavily on agricultural cash
crops for much needed foreign exchange to finance the
country's industrialization. Between 1959/1960 and
1969/1970 many cash crops such as cocoa, ground nuts,
cassava, sorghum, and maize had positive annual growth
rates of 2.5% to 4.8%. The only exception, palm kernels,
returned a negative annual growth rate of 3.4% (Balabkins
1983) Therefore, agriculture was an important part of
Nigerian economy until the early 1970s, but was neglected
during the "oil boom" of the mid 1970s to early 1980s and
is now facing new policy changes that, to some extent, have

led to a relative increase in output and contribution to
the GDP.
1.3 Economic Policy Environment
The discovery of major oil wells in the late 1950s and
the subsequent dependence on oil as an export resource in
the early 1970s, in addition to the massive migration of
farmers to the big cities in search of petro dollars, led
to the decline of the agricultural sector (Balabkins 1983;
Bates 1983; Uwadibie 1983). The continuous decline in the
agricultural sector's contribution to economic growth gave
rise to new agricultural policies, including
decentralization of authority in agricultural policy
formulation and implementation.
Comparison of crude oil exports to the export of cocoa
for example, shows that in 1976, 5.895 billion naira (an
estimated U.S. $9,357 billion) of crude oil was exported
while 218 million naira ((U.S. $346.03 million) worth of
cocoa was exported. By 1981, the export of crude oil had
reached a whopping 11.250 billion naira ($17,857 billion)
but cocoa export had declined to a very low level of 92
million naira ($146.03 million). This drastic decline in
the export of cocoa as compared to the rise in the export
of oil is further evidence of the neglect of the
agricultural sector. (See International Monetary Fund,
International Financial Statistics: vol. 36, n 4, p 312-

313, 1983). 1 Table l.4a shows exchange rates in US dollars
between 1970 and 1995. In 1970, 6.2 percent of the gross
national product (GNP) came from non-oil exports and non-
oil imports were 12.5 percent of the GNP. By 1978, non-oil
exports had declined to 1.7 percent, while non-oil imports
rose to 26.9 percent. (See Central Bank of Nigeria Annual
Report, 1980).
| Table l.4a
Exchange Rate in PSS/Nigerian Naira. 1970-1995.
Year US£ Naira Inflation%
1970-1975 $1 N. 57k na
1976 $1 N. 63 24.3
1977 $1 N. 65 13.84
1978 $1 N. 65 21.7
1979 $1 N. 56 11.71
1980 $1 N. 54 9.97
1981 $1 N. 64 20.81
1982 $1 N. 67 7.7
1983 $1 N. 75 23.21
1984 $1 N. 81 39.58
1985 $1 N1.0 7.44
1986 $1 N3.32 5.72
1987 $1 N4.14 11.29
1988 $1 N5.35 54.51
1989 $1 N7.65 50.47
1990 $1 N9.0 7.36
1991 $1 N9.86 13.01
1992 $1 N19.65 44.59
1993-1994 $1 N21.88 57.17
1995 $1 N80.0 na
Source: IMF Exchange Rate; World Development Bank Report
from 1986; and 1994 World Bank Resident Mission from 1976-
1985; na=data not available.
1The author's conversion of currency is based on 1976 and 1981
exchange rate.

Forest (1993) argued that the agricultural crisis in
Nigeria (as evidenced by the decline in agricultural
productivity and the migration of rural farmers to urban
areas) has been exaggerated. Cochrane and Struthers (1983) ;
Balabkins (1983) ; and Uwadibie (1983) have argued the
contrary, that the oil sector was the main obstacle to the
growth of the agricultural sector as is shown the federal
government's subsequent implementation of the policy of
decentralization. Forrest (1993), suggests a combination of
the pessimistic view of the political state of the nation
and a preoccupation with other policies such as defense,
education, and privatization of some aspects of the
nation's industry as a harbinger to the "perceived crisis".
Furthermore, he argues that this perception created
illusions about poor agricultural policy and its impact on
agricultural performance. It should be noted, that Nigeria
became a mono-commodity "oil economy" with oil as its only
source of foreign exchange.
First, by focussing more on oil production to meet its
economic needs, the government neglected the agricultural
sector. Then in 1976, the desire of the government to
diversify the economy, led to the formulation and the
implementation of the policy of decentralization of the
agricultural sector. Finally, the Local Government Reform
Act of (1976) was passed creating a third level of

government. This act allowed the nation's revenue, which is
mainly earned from crude oil sales, to reach the
localities. The act also was meant to create a new shared
implementation of agricultural policy between the state and
local governments. In 1991, the creation of new states as
a strategic means towards the implementation of the policy
of decentralization began. 2 The creation of states led to
further decentralization of authority over agricultural
policy implementation. This type of authority such as
extension services to farmers was given to state
government. In 1986 the policy of structural adjustment
programs (SAP) was implemented. This policy took the
federal government out of direct ownership of some farms
and factories which manufactured agriculture related
products. Commodity marketing boards were dissolved in
1987. Marketing boards are quasi-government agencies
responsible for ensuring quality control of agricultural
products; for setting prices for products purchased from
farmers? and for selling these products in the world
market. To deal with the current crisis, a shift from the
policy where prices were set by marketing boards, to a
2Please note that the creation of states in Nigeria were not
fLusively for the purpose of accomplishing the objectives of the
y of decentralization. For example, the creation of states in
1967 could be argued to have been created purely for political
reasons because those states were created during the civil war

policy where prices are driven by supply and demand was
Furthermore, privatization and commercialization of
government owned businesses was also initiated in 1989 as
part of the federal government's attempt to decentralize
(See "Reform Package for the Partial Commercialization of
the River Basin Development Authorities in Nigeria".
Lagos, April 1992). As stated earlier part of the strategy
to move toward decreased government involvement in
agricultural production was the implementation of the
structural adjustment programs (SAP) in 1986. SAP, as
prescribed by the World Bank, is an effort at
decentralization. SAP in Nigeria, focuses on the
elimination of subsidies and on governmental transfer of
certain economic authority to states and localities while
also emphasizing a greater transfer of power in agriculture
to the private sector.
Between 1988 and 1993, the economic policy under which
the nation's agriculture operated sought to attain food
self-sufficiency, improved agricultural product export, and
an increase in the output level of staple foods (e.g rice,
yam, cassava and wheat) (personal interview; Federal
Government Policy 1988). In order to accomplish these
goals, the federal government implemented a policy of
decentralization. Food self-sufficiency remained the

cardinal goal of government policy in addition to
diversifying the country's export base. This policy of food
self-sufficiency and export diversification began in 1987
when the commodity marketing boards were dissolved, by
promoting agricultural commodity exports as well as
increased conversion of primary produce into finished and
intermediate industrial products for domestic use and
export. There were other policy instruments introduced
earlier in 1986 as part of structural adjustment program
which enhanced the achievement of the goals of food self-
sufficiency and export diversification. These policy
instruments were currency devaluation of Nigerian currency
(naira) and the liberalization of the process for
determining prices of tradeable commodities.
It should be noted that the elimination of the
commodity marketing boards in 1987 was the main turning
point in the implementation of the policy of
decentralization. The dissolution of the marketing boards
led to improvement in the prices of agricultural products.
The elimination of the marketing boards allowed the farmers
to sell their products at the market prices determined by
supply and demand which increased their ability to earn
higher income. This created incentives for farmers to
produce more thereby increasing the total output of
agricultural products. Despite deregulation of commodity

prices, in 1987, a ban was placed on the import of certain
food items in 1988 namely: wheat, rice, maize, cowpea,
cassava and poultry (Phillips and Ajakaiye 1993). This was
one means of reducing the importation of food crops with
the hope of achieving Food Self-Sufficiency through
domestic production. This policy of deregulation of food
crop prices and at the same time banning the importation of
food items appears to be absurd, but it was an indirect
method of forcing farmers to grow more food to substitute
for the restricted imports.
In 1986, in the spirit of decentralization, the
government refrained from direct productive activities in
the agricultural sector. The government then focused on the
provision of public goods, particularly rural
infrastructure. This was to make rural areas more conducive
for farmers to respond favorably to policy initiatives. In
order to help the farmers increase output of food crops
such as wheat, rice, maize and cassava, in 1990, the
government increased the fertilizer subsidy substantially
in terms of naira. Then they disbursed 349.99 million naira
(38.89 million dollars) to Agricultural Development
Projects (ADPs) an arm of the state government that
implements agricultural policy. This amount was increased
to 544.99 million naira ($55.27 million) the following year
(See Table 1.4b). Rural road construction and maintenance

as well as farmer training increased as a response to the
policy of decentralization. Furthermore, as part of
decentralization policy, the federal government reorganized
the River Basin and Rural Development Authorities by
disengaging the agencies from direct agricultural
production. The government then charged the agencies with
the provision of water for irrigation of agricultural land.
In 1992, these agencies were privatized. Most government
owned agricultural enterprises were also either privatized
or commercialized.
Table 1.4b
Selected Indicators of Operations of ADPs. 1990 and 1991
1991 % Change
Disbursement (N million) 349.986
Roads Constructed (Km) 460.5
Roads Maintained (Km) 44.2
Dams, Boreholes/wells (Km)1317
Farm Service Center (#) 597
Farmers Trained 3000
Source: Central Bank of Nigeria (CNB) 1991 Annual Report
and Statement of Accounts. Note that exchange rate of Naira
(N) to the US dollar varies constantly. In 1990, US$ = N9,
US$ = N9.86 (see Table 1.4a) ADPs = Agricultural
Development Projects
According to my interview sources at the ministry of
agriculture in Abuja, the implementation of the policy of
decentralization has led to the creation of the
Agricultural Development Projects (ADPs), and the
Directorate for Food, Road, and Rural Infrastructure

(DFRRI). These agencies, according to the respondents,
continue to be ma j or conduits for supporting the
agricultural sector and rural economy in the early 1990s as
they were in the 1980s. The ADPs became fully operational
in all states in 1990 and have continued to serve as the
primary arm of the body of agricultural policy
implementation. These agencies in some cases are run by the
state governments and in others by the local governments.
The ADPs have been instrumental in broadening access to
rural farming communities.
Broadening the access of rural farming communities to
agricultural extension services and modern agricultural
inputs is seen by many as a means of improving agricultural
output. According to interviewees at the ministry of
agriculture, the activities of the agency for the
Agricultural Development Project continue to complement the
efforts of the agency for Directorate for Food, Road, and
Rural Infrastructure in improving the access of rural
communities to infrastructure services such as roads, water
and electricity. At the same time the commercialization of
the River Basin Development Authorities have made the
policy of decentralization fairly successful because the
agency is no longer involved in direct agricultural
production but instead focusses on providing water for
agricultural irrigation and household use. These

accomplishments, according to my respondents, would not
have been possible without the policy of decentralization.
It should be noted that no policy will be successful
or effective regardless of how efficiently it has been
formulated without a stable political environment. So, many
of the respondents in this study, both government
officials and non-government officials, still wonder if
they will ever know how effective this policy of
decentralization would have been if the government were
democratic and stable. This is the dilemma in the case of
Three time in Nigeria's thirty-five years of
independence elaborate democratic constitutions have been
overthrown by the military after several years of
unsuccessful and unpopular operations. There have been
seven military regimes since independence in 1960. On
several occasions military regimes overthrew each other. In
this sense, it could be argued that previously formulated
policies would be difficult to implement due to a lack of
continuity. Each new regime accused the prior regime of
wrong doing, and discarded policy formulated by the old. In
some cases such policy or policies may have been in process
of implementation. With such incoherent policy changes, it
becomes important to examine how the policy of
decentralization has affected agriculture under such an

unstable political environment because agriculture is the
only known renewable economic resource.
It should be noted that many of the interviewees were
not inclined to accept this failure in coherent policy
formulation and implementation as permanent. Although their
disgust with politicians and military leaders was evident
several years after the demise of the Second Republic
(Diamond et al, 1988) many Nigerians, especially the
educated, want the country to eventually return to a
civilian, democratic government with a stable economic
policy. This dream of a stable government with coherent
policies was shattered when a new military government took
over power from an interim civilian government in 1993.
As noted earlier, in 1991, the Federal Government in
an attempt to bring necessary services closer to the people
created nine additional states bringing the total number of
states in the country to thirty. The government had hoped
that this creation of new states would result in greater
state autonomy and subsequently enhance economic
The 1979 Constitution of Nigeria allows the state
governments to implement their own fiscal policies by
giving them the power to tax and spend, a power they did
not have before the 1979 constitution. This allowed the
states to raise revenue through consumption taxes on goods

and services as well as hospitality taxes from hotel
The creation of states was regarded by the
government as an attempt to decentralize necessary
services, particularly in agriculture, with the hope of
achieving economic development. It should be noted that in
most cases a stable political climate begets economic
growth by attracting foreign capital. Foreign capital is
known to be an essential variable for economic prosperity
in developing countries such as Nigeria. Unfortunately,
such foreign capital is still lacking in Nigeria. Now that
the political and economic history of Nigeria has been
briefly covered, the next section examines the macro
policies on agriculture in Nigeria.
1.4 Macro Policies on Agriculture in Nigeria
(a) Pricing Policy: The objectives of the government
pricing policy are:
i. that farmers get reasonable prices for their product;
ii. that there is stabilization of prices and income for
iii. that the prices of Nigerian agricultural commodities
are competitive in the world market;
iv. that agricultural imports do not enjoy an undue
price advantage compared to their locally

produced substitutes; and
v. that there is parity in agricultural prices and
incomes compared to non-agricultural prices and
incomes in Nigeria. The following strategies were used
by the government in an effort to accomplish above listed
objectives. First, following the implementation of the
structural adjustment program in 1986, the federal
government introduced a two-tier exchange rate policy in
favor of agricultural products. The two-tier exchange
allows farmers who are importing farm equipments favorable
rates compared to non-agricultural imports. One may argue
that the two-tier exchange policy approach is a pricing
policy rather than an exchange rate policy. However,
regardless of how the action is viewed, the policy was
intended to favor domestically produced agricultural
products, to reduce the prices of agricultural products,
and in turn to improve farmers' income. Furthermore, in the
same period, foreign investors who invested in farm related
industries were allowed to transfer greater percentages of
their profit to their home countries.
In order to continue the above listed favorable
actions towards the agricultural sector of the Nigerian
economy, the government undertook periodic review and study
of the prices and production costs of various agricultural
commodities. This served as a basis for monitoring the

relative movements of production costs and prices with
price parity between agricultural and non-agricultural
commodities on the one hand, and between locally produced
agricultural commodities and foreign substitutes on the
other. Furthermore, from 1988-1993 the government provided
subsidy packages to farmers in all relevant aspects, such
as fertilizer, loans, and eguipments. The government has
recently in 1993 began to reduce in some cases remove some
of the subsidies. In other words, since the subsidy to
producers is meant to reduce the cost of production, the
expected result is a reduction in the market price of the
final product. Therefore, it is appropriate to include
subsidy as part of pricing policy.
(b) Structural Policies: These policies are designed
to improve the structure of agricultural production. Thus,
these policies affect the size and layout of farms and farm
equipment, as well as the rural infrastructure (e.g.
electricity and water supplies) agricultural education and
advisory services in the rural areas.
Unfortunately, once a pattern of farms has been
established, as has been true in other developing
countries, the pattern tends to be extremely resistant to
change, even when the change is known to have worked
elsewhere. For example, many farmers of Sub-Sahara Africa
are used to a bush burning style of farming and may resist

a change leading to mechanized farming mainly because of a
lack of working capital to purchase the equipment and the
lack of skills needed to implement the potential change.
Implicit in the resistance to change is the calculus
of participation. The farmers would compare their potential
marginal benefit from participation in the new policy shift
to their marginal cost of participation. If the marginal
benefit is greater than the marginal cost of participation,
they would accept the change, otherwise, they would
probably reject it. In the case of Nigeria, the creation of
Agricultural Development Projects (ADPs) has helped to
soften the resistance of farmers to change. Evidence from
primary interviews of farmers and ADP representatives shows
that educating farmers has been instrumental in increasing
participation in the agricultural policy shift.
Still there are some farmers who believe that a
change in their farm structure will not improve their
productivity. These farmers are resisting some types of
change. For example, some farmers in the western region in
this study will not plant new imported yam seeds due to
fear that the seeds will not yield large tubers, while the
farmers in the eastern region were willing to try the new
yam seeds. This author inferred that the difference in the
willingness to try new seeds may be traced to lack of
available farmland in the eastern region and to the

relatively abundant farmland in the western region. The
eastern region is relatively small compared to the western
or northern region. So, the eastern region does not have
the luxury of land space that the other regions have.
(c) Marketing Policies: Marketing policies are
concerned with changes in the distributive chain between
the farmer and the consumer. The objective here may be to
increase the farmers' bargaining power through the
development of producer-controlled marketing organizations
(Hallett, 1981; Matthews, 1985; World Bank Report, 1986).
It is widely accepted among scholars of agricultural
economics, that developing countries tend to have
inefficient food distribution systems compared to developed
countries (Hallett, 1981).
The developed countries have distributive systems
which are incorporated into the competitive processes,
while the distributive systems of developing countries such
as Nigeria rely mainly on marketing boards. After realizing
the inefficiencies in price setting, in 1987, the
government eliminated the commodity marketing boards.
Although these marketing boards had performed duties other
than price setting and marketing of export commodities
(e.g. quality control) they were viewed by commodity
traders and some agricultural economists as ineffective
(Hallett, 1981; Matthews, 1985).

It should be noted here that some of the interview
respondents disagree about the elimination of the Nigerian
Commodity Marketing Boards. Some of the interviewees argue
for the return of the Boards in some form to support the
many farmers who are inexperienced in marketing their
commodities. Others argue that the elimination of the
boards would be the best marketing policy for farmers since
this would allow them to make as much income as possible
and learn (as they grow) how to market their own products
without government assistance. It is understandable that
vacuum were created after the elimination of the marketing
The following steps were taken by the federal
government to fill such vacuum. An agricultural extension
was adopted to quicken the dissemination of improved
husbandry practices and research findings to the farmers.
In addition, more universities of agriculture and research
institutes were established to broaden and strengthen
agricultural research and more produce inspectors were
appointed to assure that the quality of commodities meant
for export meets the international quality standard.
It should be noted that price and marketing policies
in practice are not always quite distinct. Therefore, it is
necessary to consider both the practice and the policy. The
overriding factor in Nigerian marketing and pricing

policies is to improve the total agricultural output,
particularly the country's staple food.
(d) Trade Policy: The objectives of government trade
policy are:
i. to promote agricultural exports both as a means of
diversifying the country's export trade and of
boosting the growth and development of the agricultural
ii. To internalize the growth process in agriculture by
discouraging importation and encouraging local production
of all food and raw materials which the country has
resources to produce.
The government used two strategies to satisfy these
objectives: First, in 1990, it introduced trade
liberalization. This means that the government minimized
administrative control of Nigeria's external trade and put
emphasis on the promotion of competitive international
trade through several levels of deregulation. Remember that
government earlier in 1988 had barred the importation of
some agricultural commodities. Second, in that same year,
it promoted export by using the private sector to spearhead
the actual export drive. This led to the government
providing incentives for the production and exportation of
those agricultural commodities for which the country can
produce at a comparative advantage. The government also

provided support services for agricultural exporters who
were seeking new markets, particularly markets in West
Africa. Thirdly, the government used tariff regulations to
promote agricultural exports while discouraging the import
of what it considered non-essentials. Instead of outright
ban, to accomplish this third strategy the government
imposed little or no export tax for agricultural products
while drastically raising the import tax on agricultural
(e) Agricultural Land Policy: The objectives of
agricultural land policy vary as can be seen from the
i. The Nigerian Land Pse Act f LUA) of 1978. which
restructured the property rights system in the country from
a mixed private property rights system into a collectivist
framework, circumvented the existing order by bringing all
urban land under the control of the state governments and
all rural land under the control of local governments (L.
Jide Iwarere, 1994 p 247) Thus, the agricultural land
policy was meant to have a nationally accepted land tenure
system which supposedly ensured that land was not
fragmented and was easily accessible to people who wanted
to use it for a profitable venture.
ii. The land policy was geared towards the use of available
land in such a way that the quality of the land is

conserved so as to enhance its potential for continuous
productivity. The strategies applied by the government to
achieve this second objectives are as follows: First, the
federal government controlled the process of acquisition of
land with the intention that small-scale farmers would not
be dispossessed in favor of large-scale farmers. However my
interviewees, both federal and non- federal government
respondents, believe that the small-scale farmers were
always displaced and usually found it impossible to get
land from the government. Second, though the State
governments established Agricultural Land Banks to assist
small-scale farmers in land acquisition, none of the
farmers interviewed had ever received a loan from the
Agricultural Land Bank. Those who applied were required to
bribe the loan officers before any loan could be extended
(Farmers' interview) It is claimed by some of the
respondents that the government compensated individuals and
communities for crops and for lands acquired from them and
re-allocated the acquired lands to the most suitable uses.
This is poor land policy in the sense that farmlands in a
market economy should be privately owned and allocated by
the market forces of supply and demand. One wonders why the
federal government would be implementing such poor land
policy while trying to implement a policy of
decentralization. It does not make economic sense that

while the government is implementing a policy of
decentralization it at the same time is acquiring and
distributing land for farm use.
Having discussed the larger aspects of agricultural
policies of Nigeria, it is now necessary to examine the
other sources of Nigerian agricultural problems.
1.5 Sources of Nigerian Agricultural Problems
There are several sources of problems in agriculture
and agricultural policy in Nigeria. For the purpose of this
study, we will focus our examination of the other sources
of agricultural problems between 1970 and 1982. This is an
arbitrarily selected focus period, just six years before
1976 and six years after 1976. It is important note that
the year 1976 is significant in this study because this was
the year the local government reform act was implemented.
The implementation of the local government reform act then
led to the creation of several new local government areas
(LGAs). The creation of the LGAs was the harbinger to
decentralization. Again, the period 1970 to 1982 is not a
scientific selection but it provides some knowledge of the
other sources of Nigerian agricultural problems since many
of these problems still exist in spite of the new policy of
decentrali z ation.
By the mid-1970s, Nigeria's agriculture had started to

experience some problems. Agricultural exports began to
decline and food shortages started to emerge. These
immediately followed the civil war (1966-1970). Other
factors which drastically affected agriculture, such as the
increasing rate of population growth and urbanization,
drought, and inadeguate funding for agricultural
development also came into play. In response to these
problems, the federal government of Nigeria initiated
various innovative agricultural policies, programs and
institutions. Emboldened by increased revenue from
petroleum exports, the Federal Government assumed greater
responsibilities for agricultural development. These
responsibilities included widespread government
intervention in direct agricultural production such as
financing collective farming, input supply and marketing,
in addition to adopting credit control and other policies
favorable to agriculture. New agricultural institutions
such as the University of Agriculture in Makurdi were
created to conduct research related in agriculture and food
The results of these new moves were more government
bureaucracy, control of input supply, marketing, and the
wasteful use of resources which resulted in massive
corruption (Interview Sources) Agricultural based
institutions that had been put in place towards the end of

the 1980s to enhance agricultural and rural development
efforts remained in the fanning communities in 1994. The
difference these institutions have made to the success or
failure of the decentralization of agricultural policies
will be discussed in chapter 4.
Although resources were pumped into agriculture on a
massive scale in this period (1970-1982), the impact on
agricultural production was not commensurate with the
effort (Central Bank of Nigeria: Economic and Financial
Review, Vol.31 June 1993). Central Bank Reports show that
between 1970 and 1982, agricultural production had around
a one percent annual growth rate. During this same period,
the population growth rate was 2.5 3.0 percent per annum.
In addition, there was a serious decline in export crop
production, while food production increased only
marginally. Thus, domestic food supply had to be augmented
with large amounts of imports. The expense of importing
food rose in real terms from a mere 113.88 million naira
($199.79 million) annually in 1970-74 (exchange rate of
$1=.57 Naira) to 1,964.8 million naira ($3,070 million) in
1981 (exchange rate of $1=.64 Naira). Considering that
there was a 20.81 percent inflation rate in 1981, this
represents a real increase in food imports of about 11.2
percent. (See table 1.4a)
In spite of the heavy importation of food per capita,

calorific food consumption declined from the surpluses of
the 1960s to a negative per capita calorific food
consumption of 38.0 percent in 1982. Similarly,
agriculture's contribution to GDP declined from 60 per cent
annually in the 1960s to an annual average of 32.94 percent
from 1970-82. The advent of the oil boom in the same period
(1970-82) reduced the share of agriculture as a percentage
of total export to a mere annual average of 1.68 percent
(Table 1.5). By 1976, Nigeria, which previously was the
world's leading producer and exporter of palm oil, became
a net importer of vegetable oils and other food products.
The story is the same for cash crops such as cocoa and
rubber. Nigeria's cocoa output, which peaked between 1970
and 1971 at 309,000 tons, declined sharply to a mere
110,000 tons in 1982. Agricultural terms of trade which is
defined in table 1.5 as the ratio between agricultural
export and agricultural import in thousands of tons took a
disturbingly sharp downturn.
The ratio of agricultural exports to imports which
from 1960-69 had been about 670 percent annually dropped
sharply to 176 percent between 1970 and 1971, and
ultimately fell to 0.22 and 0.09 percent in 1980 and 1981
respectively (Table 1.5). Thus, Nigeria, once a net
exporter of food during the years between 1960 to 1975, now
became a net importer in the late 1970s.

| 1970-74 1975-79 1980 1981 1982
Total (N Billion) 58.20 73.70 73.20 70.40 70.20
Agriculture (N Billion) 19 JO 22.30 2230 24.40 25.10
Agriculture as % of Total 33.20 30.20 30.80 34.70 35.80
Growth in Total (%) 8.80 230 4.10 -3.80 -030
Growth in Agriculture (%) 8.80 230 4.10 12.70 2.90
Crops 122.02 98.66 92.00 93.60 95.70
Livestock 74.60 7930 75.10 88.40 96.10
Fisheries 117.64 137.28 153.40 132.70 136.80
Forestry 85.98 99.60 10630 10630 105.70
Aggregate 111.02 96.90 9230 95.20 9830
Per Caput Calorie Intake 1896.00 1761.00 1762.00 1500.00 1600.00
Deficit/Surplus (%) -21.6 -27.20 -27.20 -38.00 -33.90
Total Population (Million) 60.10 66.80 71.20 72.70 74.20
Active Population as 96 of Total 51.00 50.00 50.00 50.00 50.00
Agriculture as % ofTotal 70.50 69.00 68.00 62.00 62.00
Total (NMillion) 2237.20 724230 19,186.70 11,023.50 8206.40
Agricultural 200.80 357.00 3393 178.40 177.60
Agricultural as % ofTotal 9.00 4.90 2.40 1.60 2.20

1970-74 1975-79 1980 1981 1982
Total (NMUlion) 1157.40 6334.20 9095.60 12,719.80 10,770.50
Agricultural 113.88 742.28 1564.60 1964.80 1810.10
Agricultural as % of Total 9.80 11.70 17.20 15.40 16.80
Total (N Million) 1.93 1.14 1.56 0.87 0.76
Agricultural 1.76 0.48 0.22 0.09 0.10
1983 1984 1985 1986 1987 1988
Total (N' Billion) 66.40 63.00 68.90 71.10 70.70 77.80
Agriculture (N' Billion) 25.00 23.80 27.80 30.40 29.30 32.30
Agriculture as X of Total 37.70 37.80 40.30 42.70 41.50 41.50
Growth in Total (%) -5.40 -5.10 9.40 3.20 -0.60 10.00
Growth in Agriculture (%) -0.40 -4.90 16.60 9.30 -3.40 10.00
Crops 90.50 100.00 106.80 111.20 123.40 151.70
Livestock 91.90 100.00 104.20 108.10 103.90 110.40
Fisheries 146.90 100.00 77.40 69.50 66.80 85.70
Forestry 99.00 100.00 103.00 106.10 106.30 109.10
Aggregate 93.90 100.00 104.60 108.30 116.10 138.50
Per Caput Calorie Intake 1750.00 1790.00 1863.00 1924.00 2146.00 2039.00
Deficit/Surplus (%) -27.70 -26.00 -23.00 -20.50 -11.30 -15.70
Total Population 75.80 77.40 79.00 80.70 82.30 84.00

1983 1984 1985 1986 1987 1988
Active Population as X of Total 49.00 49.00 49.00 49.00 49.00 49.00
Agriculture as X of Total 60.00 58.00 55.00 53.00 55.00 56.00
Total (N' Million) 7502.50 9088.00 11,720.80 8920.50 30,360.60 31,192.80
Agricultural 259.00 208.00 193.60 407.40 2032.10 2532.60
Agricultural as X of Total 3.50 2.30 1.70 4.60 6.70 8.10
Total (N' Million) 8903.70 7178.30 7062.60 5983.60 17,861.70 21,445.70
Agricultural 1415.4 955.40 1003.70 941.30 1731.20 1844.30
Agricultural as X 15.90 13.30 14.20 15.70 9.70 8.60
of Total
Total CN' Million) 0.84 1.27 1.66 1.49 1.70 1.45
Agricultural 0.18 0.22 0.19 0.43 1.17 1.37
1989 1990 1991 1992
GROSS DOMESTIC PR00UCT (1984 Fact. Cost)
Total (N' Billion) 83.50 90.40 94.50 98.40
Agriculture CN' Billion) 33.90 35.30 36.90 37.90
Agriculture as X of Total 40.60 39.00 39.00 38.50
Growth in Total (X) 7.30 8.30 4.50 4.10
Growth in Agriculture (X) 5.00 4.00 4.50 2.80
Crops 169.00 178.80 192.00 203.40
Livestock 117.80 121.30 119.40 120.20
Fisheries 89.20 77.40 81.10 64.40
Forestry 112.60 117.10 119.50 122.20
Aggregate 152.50 159.80 169.20 176.80

1970-1992 (Contd)
1989 1990 1991 1992
Per Caput Calorie Intake 2146.00 2200.00 2200.00 2200.00
Deficit/Surplus (X) -11.30 -9.10 -9.10 -9.10
Total Population (Million) 85.80 86.70 88.50 91.30
Active Population as X of Total 49.00 51.00 49.00 50.00
Agriculture as X of Total 57.00 57.00 57.00 57.00
Total Agricultural 2255.90 2,248.13 2,941.76 2,895.9
Agricultural as X of Total 3.90 2.00 2.40 1.40
Total (N' Million) 30,860.20 45,717.90 89,488.20 143,151.20
Agricultural 2252.80 4,080.90 8,680.40 13,742.70
Agricultural as X of Total 7.30 8.90 9.70 9.60
Total CN' Million) 1.88 2.40 1.36 1.44
Agricultural 1.00 0.55 0.34 0.21
Source: Derived from data compiled from FOS and CBN3
In reading table 1.5, the reader should understand for example, that GDP is measured in 1984 factor cost. This means
that 1984 is the base year. All other years thereafter are in real term and not nominal term. The GDP is measured in
Nigerian currency and in billions of naira. In 1984 the U.S. dollar was equivalent to .81. Agricultural production
(crops, livestock, fisheries, and forestry) are indexed. Again using 1984 as the base year, every production for the year
1984 is equivalent to 100. This means that any production indexed over and above 100 is an improvement over the
1984 production. Indices below 100 are poor compared to 1984 production. Measurement of food consumption in
table 1.5, (deficit/surplus %) shows that majority of Nigerians consume less than the recommended amount of calorie
intake. Although, the table shows deficit in calorie consumption throughout 1970-1992 the negative number has
continued to decline. Most of the measurements in table 1.5 are self explanatory.

The performance of the agricultural sector in
Nigeria during this period (1970 to 1982) was undermined by-
disincentives that could be traced to macroeconomic policy-
problems. Among these were:
(i) The over-valuation of the naira and the sharp increases
in the foreign exchange earnings which resulted from rising
oil revenues (Central Bank of Nigeria: Economic and
Financial Review, Vol. 31 June 1993). These increases in
the foreign exchange earnings were not effectively directed
towards the improvement of agriculture.
(ii) Government implementation of an import policy that
resulted in the ban against subsidized imports of poultry
and rice. Imports of sugar and fish, for example, which had
grown phenomenally during the oil boom of the early 1970s,
were cut by fifty percent (50%) between 1981 and 1984.
(iii) Inappropriate pricing policy resulting from the use
of marketing boards.
(iv) Competing job opportunities in other urban sectors
leading to massive migration of rural farm population to
large cities.
(v) World commodity prices were depressed in real terms,
while prices of domestic commodities were highly unstable
due to marketing boards inefficiency.
Furthermore, higher rates of increase were
witnessed in aggregate food prices compared with those of

other consumer goods, reflecting to some extent in the
short run, the variations in output caused by bad weather.
The increases in aggregate food prices should stimulate
output. The increases did but they also decreased demand
for agricultural products. Although, the laws of supply and
demand created an equilibrium between price and quantity,
only those who were willing and able to buy at the given
price would do so. There were several potential consumers
who were willing but could not afford to buy at the going
price. Conflicting and inconsistent government policies
were the other problems. These conflicting and inconsistent
government policies will be discussed further in chapter
four. Typical examples were the inconsistent banning and
un-banning of rice imports between 1970 and 1982. There
were the effect of a conflicting policy of the banning of
the import of frozen chicken and maize and the policy of
decentralization, all of which resulted in low output.
(vi) The final source of Nigerian agricultural problems is
the unstable government. This perhaps is the primary source
of the problem. In fact, one of the interview respondents
in this study stated that Nigeria had five ministers of
agriculture in a period of three years (1991-1993) with
each having his own policy.
We have so far discussed the purpose for this study,
the political and economic background of Nigeria, economic

policy environment, the micro policies affecting
agriculture, and the sources of agricultural problems in
Nigeria. It is necessary therefore, to
that addresses the significance of
decentralization on economic development,
agricultural development.
review literature
the effect of
more specifically

Chapter 2 Literature Review
2.1 Decentralization and Agricultural Policies of Nigeria
One of the critical debates in development
administration today is the issue of decentralization. Much
of this debate has focused on decentralization as a
mechanism to freeing up economic and political resources
for effective and efficient use. Such a free flow of
economic resources for effective use is usually expected to
lead to potential economic growth (Pourgerami 1991,
Vengroff and Johnston 1987, Vengroff and Salem 1992).
Pourgerami (1991) believes that economic development can be
achieved through decentralization. According to Pourgerami,
centralization may achieve economic development quickly but
it will not fairly and equitably distribute the burden of
growth, as decentralization could. Conyers (1984), Todaro
(1989),and Sorensen (1990) argue that "decentralization is
another form of re-centralization". That is, since there
are usually no skilled personnel at the sub-national level
to implement the policies which have typically been
developed by the national government, it is ultimately
skilled personnel from the national government who end up
implementing the policy.
The debate on decentralization and economic

development for third world countries revolves around two
principal arguments. Todaro (1982), Gosh (1984), Sorensen
(1990) for example argue that centralization leads to a
faster rate of economic development. Examination of
decentralization and development literature revealed the
following as the basis for the debate.
Many developing countries before and immediately
after political independence from their colonial masters,
generally regarded unified, centralized, and regulatory
government as highly desirable. There are several reasons
for that. Most evident is the fact that most countries
inherited a centralized system directly from the colonial
rulers and saw no legitimate reason for change; others saw
it as the perfect means of keeping the ethnic groups
Centralized economic planning, intervention, and
control have been viewed by national governments of many
developing countries as the correct path to accomplish
economic sufficiency, despite frequent and increasingly
detailed accounts by experts of the negative effects of
such policy on economic growth. According to Rondinelli et
al (1984), there is a widely held suspicion in the third
world that the principal mechanism of economic
decentralizationthe marketis "immoral and unresponsive"
and that its impersonal operation rewards the few at the

expense of the many.
Neoclassical economists would agree that markets in
developing countries do not function in an orderly manner
because of the government monopoly of almost all economic
resources (Pourgerami 1991; Matthews, 1985; Heilbrun, 1981;
Meier, 1980; Powelson and Loehr, 1981). Meier 1980 and
Rondinelli 1981 conclude that the proper solution to the
problem of economic inefficiency is the removal of
obstacles usually created by centralization and
intervention. Those factors considered by government to be
important for maintaining political stability are usually
kept under centralized governmental control. These factors
include but are not limited to food subsidies, wage and
price control, import and export regulations, and tariffs.
Clearly, policies promoting centralization usually
pay off, at least in the short run, in material and
political returns for the dominant elite. Rondinelli et al
(1984, p 2) states that: as long as economic
centralization reinforces centralized political control, it
will have strong supporters who usually appeal to the
need for national unitydespite the most persuasive
rationalistic economic criticisms." Increasing
centralization pressures in developing countries
notwithstanding, dependency on foreign aid has caused many
countries to begin to shift their political and economic

planning towards decentralization. Sudan, Nigeria, Zaire
and Malaysia are prime examples. These countries
decentralized because of foreign aid givers dissatisfaction
with the results of national planning and administration.
For example, the International Monetary Fund (IMF) and the
World Bank require most aid recipients to make changes in
their economic policy such as decentralization of the
economy. For this reason, many Third World countries
implemented a decentralization policy to obtain foreign
aid. Others did so because the underlying rationale of
international development strategies began to change during
the 1970s and early 1980s (Rondinelli et al, 1984;
Rondinelli, 1981; Vengroff and Salem, 1992; World
Development Report, 1988).
The underlying rationale for international
development strategies as explained by Rondinelli et al
(1984, p 2) "was to distribute the benefits of economic
growth more equitably to increase the productivity and
income of all segments of society, and to raise the living
standards of the poor. But because policy makers found it
difficult to formulate and implement these strategies
entirely from the center, they sought new ways of eliciting
greater participation in development planning and
administration." We call this strategic policy shift, a
policy of decentralization.

Now that we have briefly examined the arguments on
decentralization as a policy tool for economic development
in the Third World, it becomes necessary to define
2.1.1 Definitions and Arguments on Decentralization
Decentralization is defined herewith as the
transfer of responsibility for planning, management and
allocation of resources from the central government and its
agencies to:
(a) field units of central government ministries or
(b) subordinate units or levels of government;
(c) semi-autonomous public authorities or corporations;
(d) area wide, regional or functional authorities; or
(e) nongovernmental private or voluntary organizations;
(Vengroff and Salem 1992). Rondinelli (1981) defines
decentralization as the transfer or delegation of legal and
political authority to plan, make decisions and manage
public functions from central government and its agencies
to field organizations of these agencies.
Chikolo (1981) defines decentralization simply as
the placing of an authority or responsibility for a program
operation and decisions at the level closest to the clients
consistent with effective and responsible performance. He

stressed the importance of "transferring power from the
nation's capital (center) to the periphery" emphasizing the
common denominator of decentralization, which is "away from
the center" (Chikolo, 1981). Nellis (1985) defines it as
"the transferring and increasing of responsibilities and
resources of sub-national political and administrative
units". From these definitions come some arguments in favor
of decentralization as effective economic development
First, it is argued that decentralization can
overcome the severe limitations of multi-sectoral national
planning (such as the bureaucratic bottleneck caused by the
inefficient flow of information from top to bottom and from
bottom to top) by delegating responsibility for planning
and implementation to officials who are working closer to
the problems. Research indicates that the impact of multi-
sectoral, macro-economic planning in most developing
countries has been weak (Rondinelli 1981). Central
planning, according to Rondinelli has neither directly
improved investment decision-making nor has it
significantly improved policy implementation.
Moreover, the recent concern of many governments with
achieving economic growth with social equity suggests the
need for more decentralized procedures of planning,
stronger ties between planning and implementation, and

diffusion of administrative capacity among a wide range of
public and private institutions in order to reach those
people who had previously been excluded from the benefits
of economic growth (Rondinelli, 1981; Rondinelli et al,
1984; Pourgerami 1991). This type of policy shift allows
effective distribution of responsibilities and benefits to
all segments of society. Decentralization of authority to
plan and manage development projects to the regional or
local levels, some experts argue, would allow governments
to reach the needs of various groups and localities. This
becomes very vital in developing nations with ethnic and
class diversity, such as Nigeria.
A second related argument is that decentralization
is a means of cutting through the enormous amounts of "red
tape" and the highly bureaucratic procedures characteristic
of planning and administration in developing nations that
result, in part, from the over-concentration of power,
authority, and resources by the central government. By
decentralizing development functions such as agricultural
policy formulation and implementation, fiscal management,
and health issues (excluding cases of national crisis such
as AIDS) to the field offices of the ministries, or to
subordinate levels of administration, more public servants
such as field bureaucrats (see for example Kingdom, 1984)
will become knowledgeable and sensitive to local problems

and needs. Such decentralization of development functions
will allow the field bureaucrats to work at the level where
these problems and needs are most visible and pressing.
"Field Bureaucrats" (Kingdom 1984; Waldo 1988) usually have
effective knowledge of the needs of the local population.
Those at the center are far away from the population and
their needs.
Closer contact between local populations and
government officials would allow the latter to obtain
better information with which to formulate more effective
plans and programs. Montgomery (1972) argues in his study
of decentralization of land-reform administration, that
where the land reform was successful it may have worked
because of a combination of certain factors that come with
public participation in program implementation. These
factors include easier access to knowledge, more powerful
motivation, better communications and increased community
solidarity. Making it "work" requires balanced judgment and
consideration of the needs of many participants. Some
experts (Sklar and Whitaker, 1991; Sorensen, 1990; Todaro,
1989; Gboyega, 1991) say that developing countries lack the
sufficient skilled personnel required to implement a policy
of decentralization. Therefore, they argue that these
countries are better served by centralization policy.
An extensive review of the literature on

decentralization shows mixed results of decentralization in
developing countries. Much of the inconsistency can be
attributed to poor record-keeping and accountability in
developing countries. Poor record keeping or the failure to
keep a record can be traced to absence of computerized
government offices or to simple deliberate acts of
avoidance of record keeping to cover up corruption, both of
which are daily occurrence in Nigeria. In some cases, the
inconsistency can be attributed to the correlation between
"attempted" decentralization and "successfully implemented"
decentralization which is unfortunately low.
While some countries such as Nigeria, Malaysia,
Tunisia, Zaire, Colombia, and Sudan, have undertaken
decentralization programs, primarily involving
deconcentration and delegation as opposed to devolution,
few have demonstrated the political will necessary for
successful implementation (Conyers, 1983; Rondinelli et al,
1984; Rondinelli, 1983; Chikolo, 1981; Vengroff and
Johnston, 1987; Vengroff and Salem, 1992). We should note
that the relationship between "successful" decentralization
and "good" governance is very likely under a stable
government. However, this stability has been lacking in
Nigeria in recent years.

2.1.2 Objectives of Decentralization
The extraordinary scope of the concept of
decentralization is revealed by the many objectives that it
supposedly serves (Rondinelli et al, 1984). Hope is often
expressed that decentralization will reduce overload and
congestion in the channels of administration and
communication. Decentralization would help eliminate such
congestion by improving information flow from top to lower
level bureaucrats and vice versa. Hence, in the instance of
decentralization, information would be disseminated to the
local population in such a way that it would appear that
the central government is acting in their best interest.
Programs are decentralized with the expectation that
decentralization will improve government's responsiveness
to the public and increase the quantity and quality of
services it provides.
Thus, decentralization often provide a way of
managing national economic development more effectively
and/or efficiently. It is obvious that many governments in
developing countries that have embarked on decentralization
during the 1970s and 1980s have not always had
effectiveness and/or efficiency of economic development as
their primary goals. These nations have rarely undertaken
a policy of decentralization primarily for economic
reasons. In some countries, decentralization is pursued in

reaction to the technical failures of comprehensive
national development planning or the impact of multi-
sectoral macro-economic development programming
(Rondinelli 1984) This is true of Nigeria. Also true of
Nigeria, are the ethnic issues which have non-economic
Decentralization therefore, is often seen as a way
of increasing the ability of central government officials
to obtain better and less suspect information about local
or regional conditions; to plan local programs more
responsively and possibly more efficiently; and to react
more quickly to unanticipated problems that inevitably
arise during implementation (Rondinelli et al, 1984) We
should also note that in some countries, decentralization
is used as a means of mobilizing support for national
development policies by making those policies better known
at the local level; in other countries, it is a means and
should be a means of efficient and effective resource
2.1.3 Forms of Decentralization
Rondinelli (1981), Conyers (1984), Vengroff and
Salem (1992) and many others see decentralization as an
ideological principle. This principle is associated with
objectives of self-reliance, democratic decision making,

popular participation in government, and accountability of
public officials to citizens. Hyden and Bratton (1992)
referred to this as "effective governance". As such,
decentralization has been pursued as a desirable political
objective. Decentralization of central government policies
vary from simply adjusting workloads within central
government organizations, to divesting central government
of all responsibility for performing a set of what were
previously considered to be government functions. However,
as Vengroff (1992) noted, most governments of developing
countries do not have the political will to implement
devolution. Nonetheless, we can distinguish between the
types of decentralization that have been successfully or
unsuccessfully tried in developing countries. According to
Conyers (1984) Vengroff and Johnston (1987) Rondinelli et
al (1984), decentralization should be divided into four
categories: deconcentration, delegation, devolution, and
2.1.4 Deconcentration
Deconcentration is the weakest form of
decentralization in that it involves simply the shifting of
"workload" from the central authorities or from the central
headquarters to the local officials of national agencies.
These local officials do not have the power and authority

to implement a policy or program as they see fit. The
actual policy estimation, selection, and/or implementation
criteria and instructions come from the central authority.
This type of decentralization has been criticized as not
involving any real power transfer since there is no
opportunity for the people at the local or regional levels
to make decisions based on local or regional conditions.
For example, local officials would not have the power to
make decisions on whether or not to purchase more
fertilizer for local farmers nor could they decide how much
to purchase.
Studies show that deconcentration has been the
most frequently used form of decentralization in developing
countries since the early 1970s (Rondinelli et al, 1984).
The reason most frequently cited is the lack of willingness
by central authorities to relinquish power to regional or
local authorities. In Nigeria, Indonesia, Morocco,
Pakistan, the Philippines, Sri Lanka, Thailand, Tunisia,
Zaire and elsewhere, deconcentration has been encouraged
through financial grants from the central governments to
provincial, district, or local administrative units.
Such transfer of funds to local units carries with
it no authority for the local units to spend as they choose
without permission from the central government. Sometimes
world agencies are involved in the transfer of funds for

the purpose of deconcentration. This is the case of farming
deconcentration in Nigeria through the assistance of the
World Bank. In 1975 and subsequent years, the Nigerian
government received assistance from the World Bank for
agricultural development and health improvement for the
local areas of the country. In both areas the central
government continued to retain some authority in policy
formulation and implementation. The local representatives
made decisions based on criteria set at the federal level.
Other governments have deconcentrated operations by
creating coordinating units at the sub-national level or
through incentives or contract arrangements. According to
Rondinelli, the central government in Pakistan has created
and supervises "market" councils to integrate and
coordinate the agricultural credit, public works,
marketing, and infrastructure development activities of
central government ministries with the activities of local
agricultural cooperatives and private sector firms. The
Philippines, with the help of the United States Agency for
International Development Assistance Program (USAID) have
also implemented deconcentration programs. During the
1970's and 1980's many governments in North Africa, e.g.
Libya, Algeria, Morocco and Tunisia, embarked on the
process of putting power and responsibility into the hands
of "the people." Libya once claimed that its government

was "the people's revolutionary government in which public
policy decisions were made by "the people's council."
These claims are associated with the notion that
democratically elected, representative local institutions
have been or are being given jurisdiction over policy
issues formerly controlled solely by the central decision-
makers. According to Rondinelli et al (1984), in Morocco,
the government has gone even further in deconcentrating
development management. The government of Morocco requires
that the communal councils be consulted by the central
authorities when any action of local concern is under
consideration. In Tunisia, each of the country's governors
receive an annual grant from the central government to
formulate and implement local employment generation and
development projects. However, the central government
ministry is required to approve the plan before any money
is spent. In Nigeria, local governments get their annual
allocations from the federal government through the state
governments. When it was discovered that the majority of
the state governments were not disbursing local government
allocations in full but instead were increasing the
salaries of local government and state officials, the
central government implemented the policy of direct payment
to the local governments (1989 Constitution section 162).
Nyerere's Ujamma policy of 1972 provides perhaps the

best example of the short comings of decentralization. In
1972, the government of Tanzania abolished traditional
local governments, absorbed local officers into the
national civil service, decentralized national ministries,
and attempted to consolidate the rural population into
Ujamma villages all with the objective of providing
efficient services and facilities. Although Ujamma is not
the same as decentralization, it embodies many of the
characteristics of deconcentration. It should be noted that
Ujamma was a failure in the sense that the policy was
ineffective and lacked adequate provision of resources.
Mazrui (1988) contends that Ujamma has not worked as an
effective policy shift. He once described Ujamma policy in
one of his documentaries using the proverbial statement:
"man shall not live by bread alone" but in Tanzania there
is no bread at all. Mazrui was claiming that ujamma did
nothing but create hunger among the people it was supposed
to help. Although this statement may be correct, Ujamma
still carries some elements of deconcentration.
2.1.5 Delegation
The second form of decentralization is "delegation".
Delegation is the transfer of specific managerial
responsibility for specifically defined functions to units
that are outside the central bureaucratic structure and

controlled by the central authority. According to
Rondinelli, this means that a sovereign authority creates
or transfers to an Agent specified functions and duties,
which the Agent has broad discretion to carry out
(Rondinelli et al, 1984) However, the main responsibility
remains with the central sovereign authority.
In some countries, delegation is a policy instrument
used to remove important functions from inefficient
government bureaucracies. For example, in Nigeria,
fertilizer is supplied to farmers by private company but
financed by the government. In other countries, delegation
is a method of getting necessary and important services to
the local areas where they are needed most. Conyers (1983)
notes that delegation has been found to be the most
frequently used form of decentralization by developing
countries. In the East African countries of Kenya and
Zambia for example, public corporations and special
authorities in the form of delegation have been used to
finance, construct, and manage physical infrastructure
projects such as highways, dams, hydroelectric facilities,
railroads, and transportation systems, and to organize and
manage large-scale agricultural activities such as cotton
growing in the Sudan and tea raising in Kenya (King, 1967;
Khali, 1970).
In Nigeria, the government used delegation to provide

rural electrification to the country side. Following the
creation of states, each state was empowered by the central
government to provide electricity to its residents through
the state Rural Electrification Authority. In Latin
America, governments have delegated a wide range of
services and functionsfrom the production of essential
inputs for industrialization through the management of
industrial enterprises, to the provision of social
servicesto public authorities.
Some oil producing developing countries have tended
to delegate control over the exploitation, processing, and
exportation of valuable natural resources, such as minerals
and petroleum, to publicly owned corporations and special
authorities, rather than allow either private enterprise or
the regular civil service to take responsibility for them.
Nigerian National Petroleum Corporation (NNPC) is a prime
example of this type of delegation. The federal government
has continued to play a major part in determining who
drills or exploits oil and gas in Nigeria. Thus, one can
argue that the preference of delegation over devolution is
associated with the high reliance of government on the oil
sector of the economy which contributes 68 percent of the
Gross Domestic Product (GDP) and counts for 98 percent of
the foreign reserve of the country.
It could be argued also that privatization of the oil

sector could, in fact, lead to an increase in the country's
GDP and foreign reserves. This is because the market forces
of supply and demand will function more efficiently and
effectively due to the fact that petroleum and its by-
products are private goods and not public goods and the
forces of supply and demand can effectively and efficiently
allocate private goods.
It is clear that the government of Nigeria has
continued to treat petroleum and its by-products as public
good when in fact they are not. SONATRACH in Algeria,
Petroleos Mexicanos (PEMEX) in Mexico, COMIBOL in Bolivia,
PETROBRAS in Brazil, and PERTAMINA in Indonesia have all
played an important role in the petroleum and mining
industries of these countries. Governments of these
countries may have chosen to delegate management of these
functions to special authorities because of the
ineffectiveness usually exhibited by regular bureaucracy
which leads to inefficiency and incapability in regulating
and controlling such activities.
2.1.6 Devolution
The third form of decentralization is "devolution".
Devolution is political in nature and involves the creation
of independent units at the sub-national levels and carries
with it the transfer of authority (Chikolo, 1981;

Rondinelli, 1981; Rondinelli et al, 1984; Conyers, 1983;
Vengroff and Salem, 1992) The fact that the autonomous
units function on their own signifies "separation" of the
sub-national units from the central authority. According to
Conyers (1983), devolution is the legal establishment of
locally democratically elected political authorities.
However, many question devolution as a viable policy
process for development. Sherwood (1969, p 79) for example,
notes that "the transfer of power to geographic units of
local government that lie outside the formal command
structure of the central government, is not
decentralization." According to Sherwood, "it represents
separateness, diversity of structure within the political
system as a whole."
However, Uphoff and Esman (1974) contend that
devolution and decentralization are two different
phenomena. They noted that the concept of decentralization
should describe an intra-organizational pattern of power
relationships and devolution should describe an inter-
organizational pattern of power relationships. Furthermore,
they argued that the institutional separation from other
levels of the government only succeeds in rendering the
local levels impotent. Local autonomy, they claim, does not
create incentives for development; it only creates a
network of organizations to promote development plans

already conceived elsewhere, usually by the central
authority. They emphasized that even in developing
countries where devolution has been tried, the national
government still retains some power.
While the central government provides necessary
resources, it controls the formulation, and implementation
of policies at the local levels. Uphoff and Esman concluded
that ideal-typical devolution, therefore, is being
practiced nowhere. They may be correct in the aspects that
ideal-typical devolution is not being practiced anywhere,
but it must be noted that the problem of effective
implementation of devolution lies in the "will" of the
central government to let go of its authority; to allow the
local levels to formulate, estimate, select, and implement
the policies as they see fit; and to allow localities to
terminate policies that have been evaluated and found to be
non-effective or non-beneficial to potential recipients.
Contrary to Uphoff and Esman's claim, it should be
understood that some developing countries have successfully
implemented devolution. In Sudan the provincial councils
and provincial commissioners have been given the
responsibility for nearly all public functions except
national security, posts and communications, foreign
affairs, banking, and the judiciary. In another case, in
Papua New Guinea, between 1976 and 1978 devolved to

provincial governments full legislative and management
responsibilities for a wide range of local functions
(Rondinelli et al, 1984) .
Similarly, in 1976 Nigeria devolved a wide range of
statutory local functionsconstruction and maintenance of
public roads and bridges; formulation and implementation of
rural development schemes; agricultural development; and
the provision of health care services, water, electricity,
and housingto local governments. In spite of several
changes in central government (military and civilian) most
of these functions continue to be devolved. Local
governments became at that time the only legally recognized
level of government below the state level. Both the state
and federal governments are required to make annual
statutory grants from their budgets to local governments.
However, some state governments are known to have failed in
their responsibilities to the local governments. Due to
devolution of authority, localities now have the power to
raise their own revenues from property taxes, motor park
fees and market stall rates. For the fact that these
revenue sources are limited, localities still depend to
some extent on their share of state and federal budget
allocation (Idode, 1980; Olowu and Smoke, 1992; Gboyega,
1991) .

2.1.7 Privatization
While many developing countries hold fast to all
facets of political and economic power, some have divested
themselves of responsibility for some or all functions
usually performed by the central government by transferring
these functions to private enterprises. In Bangladesh,
cooperatives are primary sources of credit for poor farmers
which supplement the capital borrowed by farmers through
the private market. Cooperatives in Egypt provide farmers
with seeds, fertilizer, and credit. Many other developing
countries' private sectors provide working capital for
local, small-scale agricultural and hand craft projects and
market outlets for the goods produced in villages (James,
1982) Similarly, the Nigerian government in the late
1970's embarked on privatization of some Nigerian companies
and relinquished some of its interest in
telecommunications, air transportation and control of the
agricultural product market.
State regulated commercial banks in Nigeria and some
community banks are established in such a way that the
services of the banks will be closer to the local
merchants. Local co-operatives and state agriculture
departments now have programs to loan mechanized farming
tools to local farmers for a few days or sometimes couple
of weeks, at a reduced fee. Usually farmers do not have the

capital to purchase the heavy equipment required for
mechanized farming. Thus, they rent from government
The Philippines, Malaysia, and Sri Lanka all
implemented privatization policy to some extent, and in
some cases, these governments continue to exercise some
amount of supervision and support. For this reason, the
distinction between privatization and delegation is
blurred. Nevertheless, the use of private firms can give
governments greater flexibility in attracting the much
needed foreign capital, technological know-how, marketing
skills, distribution process, and production techniques
from industrialized countries for different types of
projects. It is therefore necessary to note that for the
purpose of this study, privatization as a concept of
decentralization will only be studied in relation to
government involvement in farm improvement. Such
participation has already been discussed above.
2.1.8 Analysis of Decentralization
There is a tremendous support for decentralization by
experts and politicians. Government planners, observers of
the development process and donor institutions such as the
World Bank, continue to promote it. Extensive review of
past and present literature indicates that some of the

reasons for support are that decentralization is often
perceived as an instrument for achieving political
objectives particularly in countries with diverse ethnic
groups such as Nigeria.
Sometimes, international lending institutions require
certain policies be implemented as a condition for the loan
or grant. This was the case in Nigeria's implementation of
Structural Adjustment Program (SAP) in 1986. This policy
required that certain subsidies be removed, currency be
devalued and fiscal policy be adjusted. Therefore, even
though programs are usually justified on the basis of their
potential for increasing administrative efficiency and
effectiveness, they are frequently not assessed by their
economic or administrative cost-benefit results but rather
by their political effects (Rondinelli et al, 1984;
Vengroff and Salem, 1992) .
Implementation usually revolves around increased
political stability. Some experts continue to support
decentralization, believing that it promotes more efficient
and/or effective administration, since highly centralized
governments in developing countries are manifestly
ineffective in implementing local development programs.
Rondinelli et al (1984) point out that centralization and
decentralization are not mutually exclusive or dichotomous
arrangements for governance. They suggest that few

countries are either totally centralized or totally
decentralized. This is analogous to economists' knowledge
of the fact that pure capitalism does not exist anywhere,
and mixed economies are typical. Thus, the challenge for
most governments of developing countries is to find the
proper balance between centralized and decentralized
arrangements function by function and then to link them in
ways that promote development most efficiently and
effectively. They noted that the optimal mix is not easily
determined; the end result shifts as social, economic, and
political conditions change.
Due to this complexity, a variety of criteria are
suggested by experts for assessment of the implementation
of decentralization policy;
1. The degree to which decentralization contributes to
achieving broad political objectives, such as' promoting
political stability;
2. The degree to which decentralization increases
administrative effectiveness. by promoting greater
coordination among units of the sub-national government and
between the sub-national government and local governments
in order to attain mutually acceptable development goals;
3. The degree to which decentralization contributes to
promoting economic and managerial efficiency, by allowing
governments at both central and local levels to achieve

development goals in more cost-effective ways;
4. The degree to which decentralization increases
government responsiveness and contributes to greater self-
determination and self-reliance among subordinate units of
administration in promoting development or meeting highly
valued needs within the society.
The following section will center on decentralization
as related to agricultural policies in developing countries
including Nigeria.
2.1.9 Agricultural Policies in Developing Countries
Agricultural policy, like any other aspect of economic
policy, depends on certain political, social and economic
objectives. These objectives range from economic
stabilization through control of inflation and
unemployment, to reduction of rural to urban migration, to
political stability, to increasing agricultural exports
through improved productivity. In industrialized countries,
one objective in the past has been to maintain the maximum
number of persons engaged in agriculture. This was done
either because the farm population was regarded as a source
of courageous and unquestioning infantrymen in a time of
war, or because the countryside was considered to provide
better living conditions than the town (Hallett, 1981).
Other objectives have been to maintain a certain degree of

self-sufficiency in food production, to maintain the
incomes of the farming community and improve the efficiency
of agricultural production and marketing. While some of
these objectives found in industrialized countries may be
applicable to developing countries, increased production of
food and cash crops and higher rural incomes have been the
most important objectives for governments of developing
countries (World Bank, 1986).
Extensive review of literature indicates that in
pursuing these policies, governments in developing
countries with the assistance of foreign governments and or
agencies, have made substantial public investments to
improve the physical infrastructure in rural areas, expand
irrigation and flood control, and to organize research in
the area of agriculture. In some cases, resources have been
directed to programs which are aimed at raising
productivity. It is a fact that the spread of the policy of
green revolution in Africa, Asia and Latin America as
exemplified in the increased cultivation of rice, beans,
cassava, soya bean, and wheat is evidence of central
government's recognition of the importance of agriculture
to economic growth. This reflects government attempts to
improve the contribution of agriculture to economic
It is evident that in some developing countries, the

policies which have been implemented have limited the
growth of agricultural production and hampered to a great
extent the efforts to reduce rural poverty and increase
farm income. For example, in Nigeria, before the
abolishment of agricultural marketing boards in 1987 which
allowed the market forces to determine farm products
prices, the policy of marketing boards setting the price of
agricultural products used to take away from farmers the
ability to earn more for their product. We should note that
marketing boards were agencies set up by the federal
government of Nigeria to act as agriculture quality control
experts. They also marketed and set the agricultural
product price of products meant for export. Farmers were
therefore required to sell their export products directly
to the marketing boards at the price predetermined by the
According to World Bank Report 1986. in cases where
the marketing boards were involved with sector-specific
non-agricultural pricing, the result was substantial
discrimination against another sector of the economy,
usually agriculture. In addition, government intervention
at all stages of production, consumption, and marketing of
agricultural products though undertaken to improve market
efficiency, have often resulted in greater inefficiencies
and lower output and income. The reason is simple.

Government intervention in the allocation of production
resources (land, labor, and capital) and in setting product
prices where market forces (supply/demand) can easily do
the allocation, causes unnecessary interference. Thus,
creating market inefficiency.
Although many developing countries profess self-
sufficiency in food production as an important objective,
when it comes to implementation, they follow policies that
tax farmers and subsidize consumers rather than producers,
thereby increasing dependence upon imported food. The
reason for this is that farmers are usually in the rural
areas of the country and do not have appropriate
representation at the federal government level. Thus, they
are taxed because it is easier to tax people with little or
no political power or influence than it is to tax those
that have power e.g. the manufacturers in the cities.
According to Hallett (1981) and Matthews (1985) there
are three main types of government agricultural policies.
These are: price policies, structural policies, and
marketing policies. Other policies which are implicit in
the above policies include import controls, market
intervention, export subsidies, and direct aids. Trade,
exchange rate, fiscal, and monetary policies are other
policy instruments that have significant impact on
agriculture in developing countries, and their effects

often overshadow the effects of sector-specific policies.
More often than not, these policies become leading
determinants of the movement of factors of production, e.g.
capital and labor, between agriculture and the rest of the
economy. This author will discuss only the main
agricultural policies, which are price, structure and
marketing policies. Agricultural Pricing Policies
Agricultural pricing policies concern the prices
which farmers receive for their products "at the farm-gate
price" as well as the prices at other stages in the
distributive chain. The pricing policies are a major
concern to developing countries because it is the developed
countries (the consumers) who often influence the price of
agricultural products. Developing countries have often
complained about their lack of power to influence the price
of their products, e.g. coffee, cocoa, tea, and rubber.
Thus, although Agricultural price policies can be pursued
either nationally or internationally by both the developed
and developing countries, the industrialized nations are
most likely to implement international price policy while
developing nations are most likely to implement national
price policy.
National price policies may include but are not

limited to tariffs or levies on import, subsidies, import
quotas, support buying and statutory marketing boards.
International price policies consist mainly of the
international commodity agreements such as sugar, coffee,
banana and tin agreements between nations. The developing
countries usually are not quite organized enough to pursue
or implement such policies. When they do, it is usually on
a small scale as can be seen in the Economic Community of
West African States (ECOWAS). Structural Policies
Structural Policies are policies designed to improve
the structure of agricultural production; that is, the
size, layout, and equipment of farms, as well as the rural
infrastructure e.g. electricity and water supplies, and
agricultural education and advisory services in the rural
areas. With decentralization, many developing countries
believe that they can be more effective in meeting the
needs of the farmers. Unfortunately, once a pattern of
farms has been established, farmers tends to be extremely
resistant to change, even when the change is known to have
worked elsewhere. Many farmers of the Sub-Sahara Africa
e.g. Nigeria, Ghana and Kenya, usually sought to increase
the area of land under cultivation by cultivating on virgin
lands. To improve the structure of agricultural production

in Nigeria, the federal government in 1973 introduced the
National Accelerated Food Production Program (N.A.F.P.P.) ,
a package deal which introduced farmers to the new
technology and inputs required to realize the policy
objectives of the new production systems. In 1986, the
River Basin Development Projects were re-structured to
provide irrigation water and electricity to farmers and to
disengage the government from direct agricultural
By 1986, these and other integrated rural development
projects became the government's principal agricultural
policies. Though the policy formulation is relatively
centralized (the National Agricultural Council which
formulates the policy has only federal and state officials
as member) the policy implementation is not. It is
important to note that stages of the policy process,
particularly the implementation stage, and most especially
in economic (agricultural) policy is difficult to
accomplish, either because policy analysts sometimes assume
that implementation stage of policy process is simple or
because mistakes are made during the formulation,
estimation, or selection stages (Brewer and deleon, 1983;
Pressman and Wildavsky, 1984). This makes it necessary to
study how Nigeria has performed. A continued examination of
Nigerian agricultural policies and the country's strategies

to rid itself of continuous importation of agricultural
products reveals that self-sufficiency in food production
continues to elude the government (Sanusi, 1992).
The Nigerian 1981-1985 Development Plan, indicated
the urgency attached to increasing local production of
basic food crops. This urgency arose from the continuous
food shortages in the country. According to the development
plan (1981-1985), because of various problems encountered
in the agricultural sector in the past, it became necessary
for the federal government to devise what it considered to
be a "new and more effective strategies and policies" to
enhance the attainment of: (i) increased rural farm
production of food crops? (ii) promotion of increased
production of raw materials for agricultural-based
industries; (iii) progressive and systematic transformation
of the traditional agricultural sector into a system that
will allow for increased productivity per farmer; and (iv)
effective improvement of living standards of farmers and
rural populace in general" (Fourth National Development
Plan, 1981-1985, p. 24-48).
The most recent plan, the 1986-1990 Development
Plan" is also similar to the 1981-1985 Development Plan,
except that the policy involvement of the local government
is well spelled out. Among other things, this plan includes
short training seminars for the local government officials

who will participate in the formulation and implementation
of the plan. This is quite different from the previous
plans. In this plan, "while state governments are expected
to formulate appropriate machinery for coordinating the
various elements of the program, it is the responsibility
of the local governments to galvanize local communities to
participate in the program, in addition to implementing
their own (local governments) aspects of the scheme" (Fifth
National Plan, 1986-1990, p. 105-118).
The following is a summary of agricultural policy
objectives of the federal government from the fifth
national plan:
1. Structural adjustments (SAP) to the economy will be made
in favor of agricultural and industrial sectors through the
provision of adequate funding and farm education as opposed
to defense build up.
2. Implementation of effective policy to solve the problem
of rural-urban migration.
3. Self-reliance in food production will be achieved.
4. The import content of locally manufactured goods related
to agriculture will be reduced.
5. The general price level will be maintained in order to
keep inflation under control.
6. Supply and reliability of economic infrastructure will
be improved especially as pertains to agriculture.

Based on the above, it is unclear who sets the
following local government agricultural policies:
1. Establishment and maintenance of markets, motor parks
(bus stations), and public conveniences
2. Development of agricultural production
3. Organizing co-operatives (Fifth Development Plan, 1986-
1990, p 105-118).
Although the projects connected with the above
policies appear to be less spectacular than the giant
urban-based projects, they are nonetheless vital to the
success of the overall federal government plan for
agriculture. That the functions of the local government are
less spectacular are true to the extent that the local
governments provide valuable support for the implementation
of other broad federal projects. It should be noted that
"resource mobilization" have been decentralized to the
states and local governments. These include internal
generation of revenues, project selection, implementation
and monitoring.
The creation of state agricultural development
agencies (ADPs) between 1976 and 1988 was responsible for
state level agricultural policy implementation and the
education of local farmers. The services of the ADPs as a
farm extension provider intensified with the implementation
of the structural adjustment program in 1986. The necessary

research question is how successful were these policies in
their implementations? The question of whether the
involvement of states and local governments (such as
choosing which farmer to whom to loan a tractor, educating
the farmers on new products, extension of low interest farm
loan, etc) made any difference in the policy outcome is
critical to this study. The policies enumerated above were
implemented. Marketing Policies
As stated earlier, marketing policies are concerned
with changes in the distributive chain between the farmer
and the consumer. There is a fine line between marketing
and pricing policies. While pricing policies are directed
towards increasing farmers income, the objective of
marketing policies is to increase or stabilize the farmers'
bargaining power through development of producer-controlled
marketing organizations (Hallett, 1981; Matthews, 1985;
World Bank Report, 1986) It is widely accepted among
scholars of agricultural economics, that developing
countries tend to have inefficient food distribution
systems compared to the systems that exist among the
developed countries.
The developed countries have distributive systems
which are incorporated into the competitive processes,

while distributive systems of developing countries, such as
Nigeria, rely mainly on marketing boards. After realizing
the inefficiencies in price setting, the government of
Nigeria eliminated the commodity marketing boards in 1987.
Although these marketing boards had performed duties other
than price setting and marketing of export commodities
(e.g. quality control) they were viewed by commodity
traders and some agricultural economists as ineffective and
as setting poor marketing policy (Central Bank of Nigeria,
Economic and Financial Review, Vol 31, June 1993) It
should be noted here that my respondents disagree on the
elimination of the Nigerian Commodity Marketing Boards.
Some argue for the return of the Boards at least in some
form to support the many farmers who are inexperienced in
marketing their commodities. Others argue that the
elimination of the boards was the best marketing policy for
farmers since this allowed them to make as much income as
possible and learn (as they grow) how to market their own
products without government assistance.
In conclusion to this section and chapter, we should
note that pricing, structure and marketing policies are
necessary for effective agricultural policy, which in turn
might lead towards an efficient and productive agricultural
sector of a developing country's economy.
Having generally examined decentralization and

agricultural policies of developing countries and
specifically the agricultural policies of Nigeria, it is
necessary at this point to explain the methodology for this

Chapter 3 Methods and Data Collection
3.1 General Planning for Data Collection:
There are three propositions in this study:
PI: The working proposition is that the implementation of
decentralization(devolution, deconcentration, delegation
or privatization) will lead to greater autonomy and
participation in agricultural policy formulation and
implementation at the state and local government levels.
P2: The second proposition is that the devolution of
"authority" from the federal government to state and local
governments will lead to more effective implementation of
agricultural policy through greater participation by state
and local officials.
P3: That greater participation of state and local
officials in agricultural policy decisions will lead to
greater efficiency and effectiveness in the agricultural
sector thereby enhancing economic development through
higher agricultural productivity.
These propositions will be tested by analyzing the
data collected from respondents in several interviews
conducted in Nigeria over a period of three months.
Secondary data on agricultural policies and agricultural

production outputs as well as other related indicators in
the agricultural sector of the economy will also be
examined. Such indicators will include but are not limited
to the following: agriculture as a percentage of GDP;
production output of crops, livestock, fisheries, and
forestry? percentage of the labor force in agriculture
during the period of this study (1976-1993) ; the amount of
capital expenditure on agriculture as a percentage of total
federal budget; loans and advances by the Nigerian
Agricultural and Cooperative Bank to benefit the
agricultural economy? and export and import analyses of
agriculture related goods. A relative increase in output or
percentages in all or the majority of these indicators will
indicate effective agricultural policy. In the absence of
a positive correlation, further explanation will be sought
to determine whether decentralization occurred but was not
Three methods of data collection were used for this
study: (1) primary data collection through face-to-face
semi-structured interviews. These interviews were conducted
one-on-one in the offices of the respondents. All
interviews were conducted in English. (2) Primary data
collection through mail-back questionnaires, and (3)
secondary published and unpublished data. All of these
methods were used where appropriate to obtain reliable data

from officials and staff of the Federal Ministry of
Agriculture as well as regional, state and local
agricultural personnel, farmers and others with expert
knowledge of the Nigerian agricultural policies. At the
federal government level eleven respondents were
interviewed. Nine regionally selected experts in
agricultural policy were also interviewed in an attempt to
substantiate the information provided by federal government
officials. These interviews were conducted to seek data
related to the following: the level of federal government
involvement in agricultural policy implementation relating
to decentralization; federal government expenditure on
agriculture; the level of authority transferred to the
states and localities (e.g., scope and intensity) ;
effectiveness in the implementation of decentralization
policy; and the potential for the nation's agricultural
sector of the economy to become a major contributor to the
gross national product given the new policy of
For the purpose of analysis, the country was divided
into three regions. This division was along the line of the
old 1967 regional make up consisting of (1) the western
region which is west and south west of the River Niger (2)
the northern region which is north of both Rivers Niger and
Benue and (3) the eastern region which is east of River

Niger and south east of the River Benue. One state from
each region was selected for the purpose of data
collection. Data from each state was considered
representative of that region. (Please see maps in Appendix
The data collected from Oyo State was used to
represent agricultural performance of the western region.
Oyo state is viable in all cash crop production and
specializes in tropical crops such as cocoa, rubber, cashew
nuts, and yams. Oyo state has been the primary producer of
cash crops such as rubber, cocoa and cashew nuts in Nigeria
both before and after independence in 1960. Within the
western region, Oyo state plays a major role in the
region's agricultural production. It is partly for this
reason that the International Institute for Tropical
Agriculture (IITA) is located near the boundaries of Oyo
and Ogun states. This Institute regularly conducts
agricultural research on new methods of improving the
production of tropical crops and seed multiplication. It is
therefore very logical to select Oyo state as a
representative state for the western region.
Imo state which was selected to represent the eastern
region. Imo state is vital in the production of yams,
cassava, palm produce and cocoa-yam. Yam (which is
different from cocoa-yam) cassava and rice are the main