Nigerian Economy: Agriculture and Trade Relations

Abstract

The dissertation is based on a mixed methodology research approach to analyze and discuss the Role of Agriculture and FDI in the economic development of Nigeria. It also discusses the ways through which the Nigerian agriculture, FDI and Trade sector can play effective role in the economic development of the country. Moreover, this paper also discusses the trade relations of Nigeria with the developing nations in general and US, China and India in particular. Various trends and issues related to Agriculture and trade are identified and policy recommendations for the government are put forward. It has been noticed that Nigerian government needs to take some drastic steps in order to bring a revolutionary change in the economy of the country.

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The proposed research is aimed at understanding the role of these three economic drivers for Nigeria. The research study is mainly focused on studying the impact of the developments and problems associated with these sectors in Nigeria to have an understanding that how these sectors are contributing to the economic development of the country. The research is also aimed at identifying the main problems surrounding these factors so that the identification of these problems and their solutions can work for improving the economic conditions of Nigeria. In order to achieve these research objectives there are two research methods employed and the data and information for the research is collected through the interviews and the secondary analysis of data.

In the end the research report puts forward various recommendations for the government to follow. These recommendations can help the government in becoming a little lenient towards the trade policies which on the other hand can create a positive image of Nigeria. Moreover these recommendations will also help the government to focus more on the non-oil sectors which do have potential and can contribute towards the development of the country.

Background Research

Agriculture, Trade, and foreign direct investment (FDI) are regarded as important components of economies all over the world. These three important economic variables including Trade, foreign direct investment, and agriculture sector are major drivers of economic development and the pace of the economic development highly depends upon the performance of these economic variables. Experts believe that these sectors have the potential to affect the economic growth of any country up to a great extent because different economic variables and their performances are dependent upon the growth and development of these sectors.

While looking at the case of Nigeria, it is found that these three variables are playing very influential role for the economic development in Nigeria as the impact of FDI, trade, and agriculture is very strong on the economy of the country. It is found that Nigeria is also affected and influenced by the recent waves of globalization, trade liberalization, and agriculture revolution occurring at international levels.

Due to this, there are some major changes also made in the policies of the countries dealing with trade, investment, and agriculture related activities. Unfortunately, the agriculture sector, despite passing through flourishing growth phase after the independence of Nigeria, has not been able to successfully meet the feeding demands of Nigerian people due to which the country has to pay a lot on the export bills of many of the food items like rice, maize, wheat, etc.

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Furthermore, the strict trade policies and restricted tariff system adopted by the government of Nigeria make the investment regime of the country less attractive for the foreign investors and despite possessing great reserves of natural and energy resources like crude oil, natural gas, tin, iron, etc, these sectors have not yet been significantly developed in Nigeria due to the lack of attention by the government and the foreign investors.

It is widely believed that Nigeria must adopt some revolutionary reforms related to the trade policies so that FDI inflows can be increased and different sectors can also develop in the country. Despite the lack of attention of the foreign investors in Nigeria, it is a good sign that the trade relations of Nigeria are getting better with the passage of time with many of the developing countries.

At present, Nigeria is engaged in trade operations with the US, China, and India; and the volume of trade between these countries is also increasing because the officials of all these countries are emphasizing on the need of improving the bilateral trade relations by discussing the matters of common interest and resolving the issues that were creating problems in the past. It is also a fact that at present Nigeria is still struggling with its low progressing economy and the important components of the economy including trade, agriculture, and FDI are not supporting the development of the country as effectively as they should because of the policies and strategies of the government. As a result of the inefficient performances of these sectors the country is facing some very basic problems related to the economic development.

Nigeria is blessed by nature with many natural resources like natural gas, petroleum, tin, iron ore, coal, limestone, niobium, lead, and zinc. Along with that, the country also possesses the tenth largest oil reserves of the world. However, despite possessing these natural reserves and energy resources the country is facing major problems related to the economic development, and it is observed that there are some major problems that are hindering the economic growth of Nigeria. Among these problems the restricted trade regime of the country is an important barrier because due to the unfriendly investment polices and high tariff rates; the local as well as the foreign investors are not encouraged to operate in the trade regime of Nigeria.

The lack of interest of the foreign as well as local investors is the basic reason due to which the inflow of FDI is also very low in Nigeria and the industries are not developing significantly due to lack of financial support. Moreover, the policies of the government related to the agriculture sector have also proved to be less beneficial and less significant. As such the sector is contributing low in the total GDP and the food needs are also not met adequately.

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All of these issues are serious threats to the environmental stability in the country and the natural resources despite being a great blessing of nature have become great source of pollution and environmental threats in Nigeria. It is due to the mismanagement of the industrialization and urbanization process in the country (Akinbobola and Ayo, 2001).

Along with the mismanagement of the natural resources, the country is also facing major problems in terms of trade relations at international and regional levels due to which the economic growth rate is unable to flourish in the country.

Though in the recent years there is improvement in the trade relations of Nigeria with India, China, and USA there is still need for improving these relations and there must be some reforms implemented in the trade regime of the country to encourage the foreign and local investor to raise the amount of FDI and to improve the bilateral trade relations with the developing countries. The government has taken many steps to liberalize the trade regime of the country, but many of the products, including many agriculture products, are still facing strict trade and import policies due to which the agriculture sector is receiving negative impacts and the rate of the growth of the sector is also badly affected (Brown et. al, 2000).

It is a fact accepted worldwide that the agriculture sector has the potential not only to feed the growing population of the country but also to generate employment opportunities and earn foreign exchange for any country. Thus the sector can support the economic growth of a country effectively if managed properly. However in case of Nigeria the ban on the import of certain agricultural products and despite having huge land area and natural resources, the agriculture sector of the country is performing inefficiently; the output of the sector also remains below the projected budgetary output that has led to several crisis in the country.

Corruption and mismanagement of the resources at governmental level have played a major role in undermining the progress of the agriculture sector due to which the sector is not adequately fulfilling the feeding needs of the country. The issue of the food insecurity has also risen in the country. There are more than half of the population in the country that is living below the poverty line and facing the basic problems of meeting their daily food requirements (Ogundipe, 1998).

This problem has become a serious issue for Nigeria because despite having 98.3 millions hackers of land, the agriculture activities are being done on little portion of the land because most of the farming area is still unexplored in the country. The major portion of the population of Nigeria is involved in farming activities due to which the agriculture sector is able to contribute around 40 percent to the GDP of the country but the threat of hunger and poverty still exists in the environment and it is backed by unemployment, inefficient productive systems, and mismanagement of natural resources like land and other natural reserves (CIA Fact book 2007).

Due to all these problems, the economic growth is very slow in Nigeria and the problems of underutilization and mismanagement of the natural resources, inadequacy in the usage of the energy resources, and the food insecurity all have taken the people of Nigeria below the sustainable level of economic growth. These problems are fueled by the fact that agriculture and trade sectors are not managed effectively in the country and are not supporting the economic development.

In this situation, it is very necessary that these sectors must be managed properly so that they can support the economy of the country and the population of Nigeria can get the benefits from the performances of these sectors in terms of better trade conditions, stable environment, and food security. However, all this requires great awareness and willingness at the governmental level to remove the barriers that hinder the growth of these sectors. Along with that the social scientists also have to play role in the situation by conducting research to identify the main problems and formulating recommendations and suggestions for the improvement of the entire situation.

This dissertation is based on a research is aimed at understanding the role of these three economic drivers for Nigeria. The research study is mainly focused on studying the impact of the developments and problems associated with these sectors in Nigeria to have an understanding that how these sectors are contributing to the economic development of the country. The research is also aimed at identifying the main problems surrounding these factors so that the identification of these problems and their solutions can work for improving the economic conditions of Nigeria. For this purpose the research study employs a qualitative research approach; all the issues related with the topic of the research are explored with the help of secondary analysis of data and in-depth interviews of the experts associated with these three fields in Nigeria.

Thus the research study is based on the objective of studying the impact of agriculture, trade, and foreign direct investment on the economy of Nigeria. For this purpose these three economic variables will be studied in detail with reference to the Nigerian economy with the objective of highlighting the main problems and identifying their solutions so that the economy of Nigeria can get significant support from these sectors.

There have already many attempts made by the experts and social scientists to identify the main barriers that have led to the mismanagement and inadequate growth of these sectors. However there is still great need of research work required to be done in this field so that the identification of the main problems encountered by these factors can led to the solution of these problems and the country can proceed toward sustainable economic growth.

The policies, strategies, and limitations of Nigeria in the perspective of agriculture revolution, trade liberalization trends, and FDI growth are discussed in details with the objective of tracing the impacts of these limitations and opportunities on the economic condition of the country. Secondly the research is focused on studying the development occurred in the sectors at global and country level and their impacts on the economy of Nigeria.

For this purpose, the history of agriculture, trade sector, and FDI in Nigeria is studied to understand the contribution of these economic variables to the entire economy of the country. This analysis and examination can help in determining as to what and how the development occurred in these sectors at international level and have affected the economic conditions of the country. There are certain issues, limitations, and problems that are surrounding these sectors in Nigeria.

The present study will strive to explore these issues and problems to find out the impact of the performance of this sector on the economy of Nigeria. This study and analysis will be an attempt to identify the main barriers in these sectors that are hindering the economic growth of the country so that these barriers can be handled effectively in a way that these three sectors can contribute positively in the economic development of Nigeria.

Research Focus

The main focus of the research is to find out the ways through which the Nigerian agriculture, FDI and Trade sector can play effective role in the economic development of the country. For attaining this objective, the research strived to identify the main problems and limitation faced by these sectors and then the possible solutions that can help out these sectors in coping up with these challenges. All these activities are directed towards the intention to support the Nigerian economy by providing active role and support of the agriculture, FDI and Trade sector.

Aims and Objectives of the Study

The research study is basically aimed at studying and analyzing the impacts of the performance and growth of the agriculture, FDI, and trade relations of Nigeria with US, China, and India on the economic development of the country. The research study tends to study the main failures, limitations, and developments occurred in these sectors over the last few decades and to trace the impacts of these developments on the economic growth of the country. Furthermore, the dissertation also strives to study the importance of these three sectors and their significance and contribution to the economic development of different countries of the world to have a general understanding of the issues. Thus, the main objectives or key goals of the research study are as follows:

To study the importance of agriculture, trade relations with developing countries, and FDI for the economic development of countries

To study the effects of the performances and limitations of these sectors on the economic growth rate and patterns of the countries

To analyze and examine the performances of agriculture, trade and FDI over the last three decades

To identify the main limitations, problems, and development that occurred in these sectors of Nigeria during last three decades

To examine the role and contribution of these sectors in the economic development of Nigeria

To identify the main barriers influencing the growth, development, and contribution of these sectors to the economic growth of Nigeria

To study the history of bilateral trade relations between Nigeria, India, US, and China

To study the trade, investment, and tariff policies of Nigeria affecting the flow of FDI and trade relations with other countries

To formulate suggestions and recommendations that can improve the performances and contributions of these three sectors in the economic growth of Nigeria

Research Question

The research is based on the objective of studying the impact of agriculture, FDI, and trade relations of Nigeria with China, US and India. For this purpose the dissertation strives to provide a general understanding about the importance of these drivers of economic growth and their contribution to the economic development and then analyzes these factors specifically with reference to Nigeria including the historical developments, problems, issues, and limitations surrounding these sectors. In this regard, the research study is aimed at finding out the answers of the following research questions:

  • What are the main factors influencing the performance and contribution of Nigerian agriculture sector in the overall economic development of the country?
  • How the performance of Nigerian agriculture sector can be made better so that it can face the challenge of food insecurity and poverty prevailing in the country?
  • What are the main developments, problems, and issues associated with the agriculture sector in Nigeria?
  • What is the overall situation of the investment regime in Nigeria in the perspective of attracting foreign direct investment?
  • What steps and strategies can help Nigeria in making its trade regime liberal and attractive for the foreign investors?
  • Which sectors of Nigerian economy have potential to become attractive destination for the foreign investors and how these sectors can be made attractive?
  • What are the trade policies of Nigeria and effects of these policies on the trade relations of Nigeria with developing countries like India, China, and USA?
  • How can Nigeria improve its image at international level to become preferable trade partner for the developing countries?
  • What is the reason that despite growth in the trade volume between Nigeria and developing countries, Nigeria is still struggling with the issues of foreign currency reserves and balance of payment etc?

Research Approach

In order to achieve the objectives of the research study, there is a qualitative research approach employed in the dissertation. Secondary analysis of data is conducted to gather and review the related existing research studies around the topic with the objective of attaining better and deeper understanding of the entire issue and its different perspectives. The secondary analysis of data is chosen as a research method also to find the existing gaps in the literature so that this research study can strive to fill these gaps and also to collect the views of the experts related to the performance and failure of these sectors and their contribution to the economic development of Nigeria.

In addition to the secondary analysis of data, primary sources are also utilized in the research study which is backed up by in-depth interview of 30 experts belonging to the main sectors under study. For this purpose, there are ten experts selected from each of the sectors (Industrial, Trade, and FDI) and with the help of structured questionnaire, the views and opinions of these experts are collected and used for analyzing the situation.

The experts are selected for the interview on the basis of their experiences, willingness, as well as availability for the interviews. Thus, the research approach is to review the existing works of the social scientists related to the topic and then to go deep insight the issue with the help of the in-depth interviews of the professionals associated with the three sectors that are studied for examining and analyzing the role of these sectors in the economic development of Nigeria particularly for the environment, trade, and food security.

A research study could be exploratory, explanatory, descriptive, or predictive type. However, looking at this research study, it is found that this research study is going to be an exploratory and descriptive research study because with the help of the secondary analysis of data, the research study will first strive to describe the performance, failures, and limitations of the selected economic drivers and their contribution to the economic development of the countries in general and particularly in Nigeria. In the second phase, the dissertation will go on exploring the issue deeply with the help of the in-depth interviews conducted of the experts belonging to these three sectors. In this way, the research study is going to be a descriptive as well as exploratory research study.

The dissertation is based on a qualitative research approach. It is found that the main objectives of the research study can be best attained with the help of qualitative research methods and the quantitative research methods, despite all their significance, are not of much relevance and significance for this research as per the main objectives of the study. On the other hand, the qualitative research methods can serve best for the research study in attaining all its objectives.

The significance of the qualitative research methods is also recognized by many social scientists; the availability of a wide range of qualitative research methods further facilitates the researchers to conduct qualitative research studies by employing the most relevant and suitable research methods as per objectives of a research topic. Thus, it is decided to employ only qualitative research approach in the study.

In order to cover the issue from each and every perspective, it is decided to employ more then one research methods so that there could be deep understanding of the topic and all of its aspects can be explored in details as well. Qualitative research study could be a “case study, literature review, natural experiment, participant observation, interview-based, and secondary analysis of data or combination of these” (Berg, n.p, 1989).

For this research study the review of the related literature is conducted by employing “secondary analysis of data” as the first research methods to have deep understanding of the issue and then “in-depth interviews” of 30 experts belonging to the agriculture and trade sectors are also conducted to explore different aspects of the issue in the light of the opinions and views of the experts belonging to these fields.

The interviews of the experts will be conducted with the help of structured questionnaire. This will be attempted to access and interview the experts working in the relative fields for many years so that they can share their broad experiences on the issue in a better way.

Moreover, the expected outcome of the research study will be applied in nature because with the help of the analysis and examination of the performances of these three sectors, there will be some recommendations and suggestions to be put forward in the study that can work for bringing some improvement in the situation. These recommendations will be in form of the workable suggestions that can help in improving the performances of these three sectors and to make their positive contribution to the economic development of Nigeria particularly in the field of trade, food security, and environment.

Main Findings of the Study

The study unfolded many important issues related with the Nigerian economy and the contribution of Nigerian agriculture, FDI and trade sectors in the economic development of the country. The study highlighted the importance of these three important drivers not only for Nigerian economy but in general also. It became clear from the study that FDI, Trade and agriculture sectors are truly regarded as drivers of economic development because these three sectors possess great potential for pacing up the rate of economic development towards its peak.

The review of different research reports focusing on the economies of developing nation also provide evidences in favor of the significant role of these sectors for the economies because it is revealed from the review of these researches that in the developed nations, the trade, FDI and agriculture sector contribute significantly to the total GDP and with the support of these sectors the economies of developed countries succeeded to progress well.

The study also clarified that the governments have to play supporting role in the development and growth of trade, FDI and agriculture sector by formulating and implementing different policies and strategies in favor of these sectors. The diversification of economy towards non oil sectors also appeared as important factor that can work for the improvement of the performance of the non oil sectors in most of the oil based economies.

It became clear that the development and growth of trade, FDI and agriculture sector is very important for the countries struggling with the issues of low economic development, poverty and food insecurity because the high level performance of these sectors can only solve these issues faced by these countries. thus the study helped in building the understand that what role and importance these three selected sectors posses for economy and this understanding also justified the selection of these three sectors to study impacts upon the economic development.

The study specifically focused on the development, problems, limitations and issues related with Nigerian trade, FDI and agriculture sector and it is found from the research that there are number of problems, limitations and issues associated with these three sectors of Nigerian economy due to which these are not playing much active role in the economic growth of the country as they are unable to support well the Nigerian economy due to their weaknesses.

It is found that there are some common problems faced by these three sectors in Nigeria and the key root of all of these problems is the oil based economy of the country. It is revealed from the research that because of oil dependency there is less focus of the government towards the development and growth of trade, agriculture and FDI sectors. As a result of this neglecting attitude these sectors are unable to progress well.

The Nigerian agriculture is currently not able to meet the food requirement of the country due to which the country is facing the serious issue of food insecurity and it has to import several agriculture items from other countries. Moreover the less devleoped non oil sectors are not much attractive for the foreign investors doe to which the FDI inflows are also very low to the country. In the same way the trade volume between Nigeria and some developing countries is mostly contributed by Nigerian imports from other countries and export of oil based products.

The non oil sectors are not productive enough to export commodities in other countries and hence many items are imported by Nigeria from other countries against payment of high import bills. Thus it is found that there are many problems and issues responsible for low rate of growth and development of agriculture, FDI and trade sector in Nigeria like oil dependent economy, weak infrastructure, shortage of skilled labor, corruption, lack of adequate financial resources, lack of proper management and planning etc. It is essential to work for resolving all these issues to enable these sectors playing important and active role in Nigerian economic development because these sectors possess great potential to support the economy.

The study also bring out the opinions of the experts working in these three sectors of Nigerian economy and it is found that there is great dissatisfaction among the experts working in the Nigerian agriculture sectors regarding its performance. The experts commonly agreed that the Nigerian agriculture sector drastically lacks financial resources, research and development work and government support due to which the performance and productivity of this sector is not sufficient for meeting the feeding requirement of the population. Moreover the low productivity of this sector is also causing heavy burden on the economy in terms of high import bills of agriculture products.

At the same time it is also observed that there is an overall satisfaction observed among the experts associated with the fields of FDI and trade sectors regarding the role of he government in making the Nigerian investment regime attractive for the foreign investors and traders. It became clear from the interviews of the experts that the steps and policies of the government taken in the direction of liberalizing the Nigerian economy are much praised by the related people and these people also see many positive results generated from such steps. But still there is need for taking some more steps for supporting the Nigerian trade and FDI sector because the present performance of these sectors still needs improvement.

Thus it is revealed from the research that there is great need of improving the present level of performance of Nigerian agriculture, trade and FDI sectors so that these sectors can support the Nigerian economy. For achieving better level of performance of these sectors it is very essential that Nigerian government must take some positive and effective steps for the diversification of the economy. There are many sectors in Nigerian economy that can be attractive destination for the foreign investors like telecommunication, tourism and agriculture sector but there is need for strengthening the infrastructure of these sectors so that the investors and traders from other countries find it profitable to get involve in business in these sectors.

The identification of the major problems and limitations faced by the Nigerian agriculture, trade and FDI sector enable to formulated some workable suggestions for the improvement of performance of these sectors and finally the research study presented a detailed analysis of the performance and problems of Nigerian trade, agriculture and FDI sector and examine their part and present role in the economic development of the country. Furthermore the study also help in finding out the ways through which the performance of these sectors can b made better enabling them to better support the development of Nigerian economy.

Significance of the Study

The agriculture sectors, FDI, and trade relations with the developing countries possess great importance for the economic development of any country and the efficient performances of these sectors have proved to be beneficial for the economic growth of different countries all over the world. However, looking at the case of Nigeria, it is found that these three economic drivers are not managed and performing effectively enough to support the economic growth of the country and there is great need of analyzing the performances of these sectors so that the identified barriers can be removed and the performances of these sector can be made batter and positive for the country.

There are several research studies conducted by the social scientists that are meant to analyze the performances of these sectors in Nigeria and their impact on economy. These research studies also came up with the identification of the main barriers and limitations surrounding these sectors; however, it is found that the social scientists have separately reviewed the performances and contribution of these economic drivers in different studies but all of these economic drivers are not covered by any of the social scientists in any single research study.

These three economic drivers are related to each other in some way or another and the performances and problems of one sector are linked to the problems and limitations of other as well. Thus the analysis and examination of these sectors in a single research study will be more helpful in determining the reasons behind the low performance of the economy of Nigeria.

Thus, there is a great need of such research study that can fill this gap found in the literature. In order to fill this gap and fulfill this need, this research is based on the objective of analyzing and examining the performance of these three economic drivers in Nigeria and the implications of their performances on the economic development of the country. There is great significance of conducting research study on this topic because the expected outcome of the research will be not only a valuable contribution to the existing literature but the outcome in the form of suggestions, recommendation, and analysis of the three sectors’ performances and their impact on the Nigerian economy will be of practical value and can be usefully employed to make improvement in the overall performance of these variables and the Nigerian economy.

In this way, the research study will be an attempt to bring some level of change in the economic development of Nigeria through the analysis and identification of the barriers and limitations encountered by the agriculture, trade relations, and FDI in Nigeria.

Moreover, the research study is conducted with the expectation of exploring and identifying the main causes that are affecting the performance and growth level of the agriculture, FDI, and trade relations of Nigeria with India, China, and USA; and the issues that are preventing these sectors to perform an effective role in the economic development of the country. The expected outcomes of the research study will be qualitative in nature as the entire research study is conducted by employing two different qualitative research methods.

The dissertation will present in-depth analysis and examination of the performance, growth level, and problems of the three selected economic drivers of the Nigerian economy with the help of the secondary analysis of data.

Furthermore, the interviews of the experts of these sectors will also provide deep insight to all the issues and aspects related to the topic of the dissertation. It is also expected that the opinions of the experts working in these fields and the analysis of the research works done by different social scientists will be helpful in formulating such suggestions and recommendations as will be workable for the country and can be practically implemented in these sectors with the hope of bringing some level of improvement. Finally, all of these efforts are done with the expectations that in the end the benefit will reach to the Nigerian economy. There will be some degree of assistance found from the outcome of this study in attaining a better level of economic development and sustainable growth.

Organization of the Study

The study strives to cover wide range of topic that requires well planned and detailed research work in the relative fields. It was also possible that in the process of conducting this research work there will be certain limitations faced that can result in more time required to complete the dissertation. Thus the main possible limitations of the research were listed out to that the study can be organized in a manner that it can minimize the possible negative affects of these limitations on the research work.

The first limitation of the research was the unavailability of authentic facts, figures and data related with the Nigerian economy. Little historical data and statistics were found from the secondary analysis of data related with Nigerian agriculture sector and its trade relations with US, China and India. Thus it became difficult to present statistical data related with these three fields in detailed manner. However all the possible sources were accessed and finally the dissertation presented overview of all of these three sectors of Nigerian economy in detailed manner.

The important limitation of the research study was the arrangement of the in depth interviews with the experts of the three fields selected for the research. As the primary research intended to interview such professionals that are working on important places for many years in the respective fields so these people are not easy to access. There was long list of the professional constructed for interviews and almost 20 experts of each field were contacted however due to their busy schedules there were just 10 interviews conducted from each of the field that finally allowed having 30 interviews of the professionals.

Moreover the experts granted less time for the interviews due to which in some cases some questions were skipped by the experts and for many questions they do not provide detailed answers and expresses their feeling in yes or no type answers. Thus the non availability of sufficient data and the difficulties encountered in conducting the interview of the professionals of the field are the main limitations faced in conducting the research study due to which there is more time utilized to complete the dissertation.

To overcome these limitations, the proper organization of the study was very essential to successfully complete the dissertation in the given time thus the study is organized in a manner that minimum time is wasted in waiting for the responses etc. First of all there was a general understanding developed about all the issues related with the topic of the research with the help of the study of some authentic researches. On the basis of this study first of all three questionnaires were constructed and sent to the experts of the fields and then while waiting for their responses, the theoretical work of the research was done i.e. the secondary analysis of data and writing of the research methodology and introduction parts. In this way lot of time was saved and the dissertation is completed in minimum possible time.

Definition of Key Terms and Concepts

Agriculture

The term basically refers to the “production of goods through the growing of plants, animals, and other life forms”. It is also called the “art and science of crop and livestock production”; however, in broader sense it can be said that agriculture is the term that comprises the entire range of technologies associated with the production of useful products from plants and animals, including soil cultivation, crop, and livestock management, and the activities of processing and marketing (Bolens, 1997).

Trade

Trade is the term that refers to the “business of buying and selling commodities; commerce”. It also refers to the “act or an instance of buying or selling; transaction or the exchange of one thing for another”. (European Union Trade Issue)

Literature Review – Agriculture and the Nigerian Economic Development

Introduction

The review of literature is one of the research methodologies employed for conducting the study because with the help of the review of the related researches the dissertation will strive to present complete understanding of the background issues related with the topic of the research. Thus, the three main drivers of the economic growth including agriculture, foreign direct investment, and trade are studied in general and in reference to the Nigerian economy to understand the importance and contribution of these three variables on the economic development of Nigeria.

The literature review is thus divided into three chapters to organize the data and information so that all of these three variables or economic drivers could be discussed in detail. In this first chapter of the literature review the agriculture sector is studied to have a deep understanding of the importance of the agriculture sector for the economic development of the countries and the contribution this sector can make to accelerate the economic development and to meet the feeding demands of the nation. In addition to this, the chapter also discusses the agriculture sector of Nigeria in detail; for this purpose the historical perspective of the Nigerian agriculture sector is studied to analyze trade development occurred in this sector over the period of time.

Furthermore, the issues of negligence of the agriculture sector due to oil boom and the main problems and limitations of the Nigerian agriculture sector are also presented in this chapter to present a complete picture of the Nigerian agriculture sector and to explain the important of this sector for the economic growth of the country.

Agriculture – Importance and Contribution to Economic Development

The importance and contribution of agriculture sector in the economic development of a country have been recognized worldwide; throughout the history of human civilizations, there are many accounts that prove the overwhelming importance of the agriculture sector growth as a must for the economic development (Deaton, 1995). It is also believed that agriculture revolution paved the way for the industrial revolution and even today the poor nations of the world are struggling with the severe problems of food insecurity and rural development due to inefficient performances of their agriculture sectors (Evenson and R.E. 2001).

The role of agriculture sector evolves along the stages of the development of the nations and both the rich and the poor nations of the world have recognized the importance of agriculture at every stage of their development. In the developed countries agriculture plays a vital role because in many of the developed nations, the population depends upon agriculture for fulfilling their food needs as well as for employment. In this way agriculture sector became the backbone of the economy of these countries as the process of industrialization is also supported when the population get an easy and affordable access to food (Gardner and Bruce, 2000).

World Development Report (2008) highlighted the importance of agriculture sector for the economic growth and revealed that in the agriculture based countries it is very necessary that there must be special emphasis given upon increasing the productivity and efficiency of the agriculture sector because in such countries the economic growth can strongly affected by the performance of the agriculture sector. In the sub Sahara African countries especially the agriculture sector can not only reduce the poverty level but can also help the people in coping up with the challenge of food insecurity.

It is also revealed in the report that in the modern area the agriculture sector has also changes a lot and now the farmers can get hold of better opportunities and techniques to maximize the productivity of their land however for this it is very necessary that the countries must focus on research and development work and invest adequate amount of money to bring advancement in the agriculture sector to make it align with the advancements of the twenty first century.

The governments of the African countries are required to formulate comprehensive policies that can work for acquiring fast growth of the agriculture sector and in this regard there must be presence of “better producer incentives, increasing public and private investment, and strengthening the supporting institutions, underpinned by macroeconomic and political stability” within the agriculture sector.

World community has realized the importance of the agriculture sector for development after the industrial revolution and in the mod 18th and 19th century the significance of the agriculture sector was further spread across the world from England to Japan and later to Indi, China and Vietnam. If the agriculture sector progress well and generates high productivity then there could be agriculture surplus attained by the country that can allow it to lower down the prices of food items and improve the livelihood of the population. The high productivity also causes significant share of the sector in the total GDP of the country that is a great support for the economic development.

The report pointed out that there are four important reasons that are the base for making judgment that the performance and high productivity of the agriculture sector can accelerate the economic growth of any country especially in its early days of economic development struggle. First of all in many of the low income countries the agriculture sector is among the largest sectors of the economy and in many of the sub Sahara African countries agriculture sector contributes almost one third to the total GDP of the country so when there will be rise in the productivity of the agriculture sector the contribution of the sector in the total GDP will also rise and ultimately there will be significant support of agriculture sector received by the economic growth rate.

The second important reason behind sighting the role of agriculture sector important for the economic development is the capability of the sector to lower down the food items prices in the country. Most of the African countries are facing the serious challenge of food shortage and despite having huge land area for agriculture these countries have to import food from other countries to fulfill their food necessities. Due to high market and transportation cost of many of the food items the people find it difficult to have an easy access to the food items and as a result the food insecurity issues became very serious for the African countries.

However the production of agriculture products within the country in abundance can assure the people availability of food on reasonable prices and the country can also earn foreign currency by exporting the agriculture products.

In this way not only the prices of food will be reduce for the people but the government cal also earn money from the export of the agriculture products. The agriculture sector also possesses the potential to provide comparative advantages to the countries.

Most of the African countries mainly rely upon diverse portfolio of processed and unprocessed exports but the rise in the efficiency and productivity of the agriculture sector results in the competitiveness of manufactured goods as the countries can come over the problems of labor shortage, lack of finance and research and development work. The agriculture sector can also support the economic development because the sector is closely linked with other sectors of economy and the improvement in the productivity of the agriculture sector strongly influence the performance and productivity of other sectors of economy as well.

Thus it was made clear in the report that the performance and productivity of the agriculture sector possesses great potential to support the economic development of the countries and in most of the African countries where agriculture sector is the largest sector in terms of employment and resources allocation, the performance of the sector became even more important for the economic development and it is very essential that the governments of the African countries must design such strategies that can improve the productivity of their agriculture sectors and they can attain a sustainable level of economic growth.

Alston et al (2000) explain that the agriculture sector traditionally plays significant and vital role in the economic development of countries as it performs variety of functions. Agriculture sector usually provides employment to considerable ration of population especially in the rural areas where people are less qualified; agriculture sector is among the best sources of getting employment. In this way the overall poverty level and livelihood of the people of the rural areas is improved because of agriculture sector.

For many countries the agriculture sector is among the major sources of securing foreign exchange because through exports and innovations the countries can gain profits as well as maintain balance of payment. At the same time there are savings accumulated at domestic level that serve for investment and capital formation. There can be more saving accumulated because when the agriculture sector performs well, people can save more money and with this amount the banking sector and industrial development could be supported very well. In this way the agriculture sector can support the economic development of countries by providing a variety of benefits to them.

Timmer (2002) throws light on the importance of agriculture sector for the economy and presents a conceptual framework to explain how agriculture can work for the economic transformation of nations. He explains that agriculture can support the sustainable economic development of countries in four stages of development. In the first stage the developed agriculture sector can become a source of income for the countries because there should be many direct and indirect taxes enacted by the government related with the agriculture activities like import and export, etc.

This revenue can be used by the government to feed different public assets and infrastructure and in this way agriculture sector can improve the condition of other sectors as well. In the second stage the role of the agriculture sector can be made more direct and significant. In this stage the agriculture sector can contribute to the economic development process through creation of links with different segments of industries that can result in the improved efficiency of products and mobilization of the rural resources.

According to Timmer, agriculture sector could be completely integrated into the economic development in the third stage because at this stage the productivity and efficiency of the sector can result in the decline of the food prices and its share to the urban budget. In the fourth stage agriculture sector becomes a part of the industrial economy through its productivity, efficiency, and environment-related issues. Thus these four stages are very important for countries because by passing through these stages agriculture sector can become an important contributor to the economic development of countries.

Hazzell et. al (2001) also identify the importance of agriculture sector of the development of the economies of the nations. The researchers reveal that in many of the under-developing countries the majority of people are involved in the agricultural production. However, the governments of these countries continuously neglect the importance of making investments in these sectors. As a result, the condition of the rural population of these countries is to live below the poverty line and the process of economic development is badly affected.

On the other hand, in many of the developed nations there is very small majority of population attached with the agriculture sector, but they have enough power that they can catch the attention of government and can force them to make decisions in their favor. In such countries the investment in the agriculture sector is also adequate and the livelihood of the people living in the rural areas is also much better than that of the under-developing countries. Thus the attention given to the agriculture sector development can play a significant role in the economic development of the nations.

Antle and John (1985) pointed out that the agriculture sector can play vital role in determining the pace of economic development of the countries and this importance has been realized at international level. Different international organizations like WTO, UNEP, UNESCO, UNDP and FAO have kept the development of the agriculture sector on their top agenda and these organizations are also arranging meetings and conferences to attract more investment and attention of the public and private sector into the agriculture sector from all over the world.

The experts of the field believe that there are some very critical environmental, economic and demographical challenges that the agriculture sectors are facing all over the world and it is very necessary to resolve these issues on priority basis. The focus on resolving the challenges and problems faced by the agriculture sector will not only enable the agriculture sector to perform well but the productivity of the agriculture sector can also assist the countries in reducing the hunger of the population and improving the livelihood of the people living in the rural areas.

The researchers further revealed that the agriculture sector possesses great importance for the people of the world because this sector is directly linked with fulfilling the very basis human need that is the feeding need without which the human life can not survive and the efficient performance of this sector can assist the countries in facing the issues like food insecurity and rural development etc.

Tsay and Yau-Yuh (2002) realize that the efficiency and productivity of the agriculture sector are very important for the development of the countries. For the adequate development and growth of the agriculture sector it is very necessary that at the government and private level there must be awareness about the importance of the agriculture sector. The researchers also present some ways through which the performance and contribution of the agriculture sector can be made better in favor of economic development. At first, it is very important that there must be investments made in the agriculture sector so that new technologies and machinery of farming and production could be introduced in the sector and the research and development can also progress effectively.

Along with this, the skill development and technical qualification level of the people are also very important so investments must be made for giving the related people professional education and training of the field. The economic policies must also support the environment; public and private investment must be mobilized in the agriculture sector to provide financial support for different agriculture related activities. If the authorities emphasize these issues then the agriculture sector can progress well and can support the economic development of the country efficiently.

Antle and John (1985) point out that the agriculture sector can play a vital role in determining the pace of economic development of the countries and this importance has been realized at international level. Different international organizations like WTO, UNEP, UNESCO, UNDP, and FAO have kept the development of the agriculture sector on their top agenda and these organizations are also arranging meetings and conferences to attract more investment and attention of the public and private sector into the agriculture sector from all over the world. The experts of the field believe that there are some very critical environmental, economic, and demographical challenges that the agriculture sector is facing all over the world. It is very necessary to resolve these issues on priority basis.

The focus on resolving the challenges and problems faced by the agriculture sector will not only enable the agriculture sector to perform well but the productivity of the agriculture sector can also assist the countries in reducing hunger of the population and improving the livelihood of the people living in the rural areas. The researchers further reveal that agriculture sector possesses great importance for the people of the world because this sector is directly linked with fulfilling the very basis human need, that is, the feeding need without which the human life cannot survive. The efficient performance of this sector can assist countries in facing the issues like food insecurity and rural development, etc.

Mundlak and Yair (1999) notice that within the next four to five decades the demand for food is expected to almost double because there is great increase expected in the population of the world in coming years. At the same time the changing patterns of the food consumption and demand due to the increase in per capita income in the urban developed areas are also raising the demand for food at high speed.

Due to this increase in demand, the world community is facing a great challenge to assure the availability of safe, healthy, and nutritious food to the people of the world. In most of the developing countries, especially in the African region, most of the people use to rely on the agriculture sector for their livelihood and the performance of the agriculture sectors of these countries have direct effect on the living patterns of the majority of the population of these countries.

Thus it is very crucial that the governments of these countries must work to solve different social and environmental issues surrounding the agriculture sector. In most of the under-developed countries’ agriculture sector there is a shortage of water supply for crops and people are not aware of the modern techniques of farming. Moreover, they are not familiar with advanced methods of fighting with different diseases of the crops and to increase the productivity of their land.

The policies of governments like tariffs and import duties on several agriculture sector production-related items further adds to the difficulties of the agriculture sector in these countries. As a result, the people of these countries are compelled to live below the poverty line and the economic growth rate is also affected badly in most of the African countries due to lack of support of the agriculture sector.

Frisvold and Ingram (1995) notice that in most of the sub Sahara African countries agriculture sector is the main source of employment and livelihood for majority of the population. Due to the fact that majority of the people are engaged in the agriculture sector related activities, there must be adequate importance given to this sector. However, in reality the agriculture sector is among the most neglected sectors of the African countries.

To date the governments of the African countries, despite announcing their willingness in favor of agriculture development, have failed to take solid and positive steps for the improvement of this sector. It is very important that while formulating reforms for the agriculture sector the government must assure to involve experts of the field in the decision and policy making process so that they can identify the factors that can improve the performance of the agriculture sector.

Moreover, there must be an evidence-based, policy-relevant and technically accurate system developed for transforming the agriculture sector that can allow the governments to access the local, regional, as well as global prospects of agricultural development and can present different views to identify the key scientific uncertainties and areas where there is great need of conducting research and development work. It is also very important that the authorities must analyze the existing as well as up coming technologies and machineries that can affect the prevailing trends and patterns of the agriculture sector.

The researchers reveal that all of these measures can be taken only when there is cooperation and coordination among all the authorities, government officials and departments, and the people associated with the sector. This means that government, people, and NGOs must join hands to bring improvement in the productivity and efficiency of the agriculture sector that in turn can work for accelerating the pace of economic development of these countries.

Craig et. al (1997) reveal that the authorized organizations and the government of the agriculture based countries must realize the importance of that fact that they must take some positive decisions to assure positive agriculture sector in their countries and at international level; only then can they expect high pace of economic development. The researchers reveal that in many of the under-developed countries the agriculture sector is not equipped with modern technology, machinery, and techniques of production and in these countries major portion of the population is attached with the agriculture sector. The negligence of the government and the authorities toward adopting updated technologies in the agriculture sector draws very negative impact of the livelihood of the people that are attached with it.

Due to this fact in most of the African and Asian countries rural areas, people relying on the agriculture sector are living in very poor conditions and there are no hopes regarding any improvement in their conditions in the coming day because there are no positive signs about the adaptation of new technology and improvement in the efficiency and productivity of the agricultural sector of these countries.

Thus, it is found that the agricultural sector that possesses the potential to accelerate the economic growth of the countries is rather declining the economic development pace in many of the countries mainly because of the negligence of implementing reforms and introducing updated technology in the agriculture sectors of these countries.

Nigerian Agriculture Sector

In this section the research studies focusing on the Nigerian agriculture sector are reviewed. The developments occurred within the sector over the period of time, different policies of government and their effects on the growth of the sector are discussed with the help of presenting the historical perspective of Nigerian agriculture sector. Moreover the reason behind the decline in the performance and productivity of the Nigerian agriculture sector are described in this section to explain that how increasing dependency on oil sector has affected the performance and productivity of agriculture sector in Nigeria. Along with that the main problems and limitations faced by the sector are identified along with some possible solutions that can help Nigeria in coping up with these challenges.

The Historical developments

The agriculture sector possesses great importance in the economic scenario of Nigeria. Since its independence, the country has relied on the agricultural activities. In fact during the first decade of independence, Nigeria was regarded as an agriculture-based economy (Ogen, 2003). It is also said that the first decade after independence was the era of flourishing development for the agriculture sector in Nigeria. The agriculture sector not only provided employment to major proportion of the population but the contribution of the agriculture sector is also major in the total GDP of Nigeria.

The agriculture sector possesses great importance for Nigerian economy in terms of employment as well because almost 70 percent of labor force of the country is engaged in this sector. Almost 33 percent, that is around 30.7 million hectares (76 million acres), of land in Nigeria is under cultivation. However most of the agriculture sites or holding of Nigeria are small and scattered where the farmers used to employ simple and traditional tools and techniques in shifting cultivations.

These small agricultural farms produce almost 80 percent of the agriculture products produced in Nigeria (Akinbobola and Ayo, 2001). The climate of Nigeria is diverse. In the tropical area coast and north arid zones there is possibility of growth of different agricultural products that can grow in the tropical and semitropical areas. There is abundant supply of water available in Nigeria and the wide area of arable land and favorable weather can further support the growth of different agricultural products.

But despite all these favorable conditions, there is low productivity of agricultural products in most of the areas of Nigeria mainly because of inefficient and outdated methods of cultivation and low soil fertility in some of the area (Olomola and Akande, 1990). The agriculture production of the country are mainly divided in to two groups: the home consuming food crops, and the export products (Olagunju, 2000).

During the first decade after independence Nigeria became the largest producer as well as exporter of the palm oil in the world (Brown, 2000). At the same time it was also an important producer and importer of cocoa, palm kernel, cotton, rubber, and ground nuts (Alkali, 1997). As a result of this significant progress of the sector the contribution of the agriculture sector reached to the level of 60 percent on the 1960s. During this time period the Nigerian farmers mainly stuck to the traditional methods, techniques, and tools of farming but even with those old and traditional tools their productivity was very high and they were successfully fulfilling the feeding needs of the population.

In the 1960s, the agriculture sector not only produced 70 percent of the Nigeria exports but almost 95 percent of the food needs of the country were also met by the sector successfully. After going through this successful and flourishing phase, the agriculture sector was badly neglected especially during the period of oil boom in the 1970s (Fasipe, 1990). The government started focusing mainly on the oil sector and the lack of economic diversification resulted in the inefficient performance of the agriculture sector and the people of Nigeria started facing problems in getting basic food items. In the next decade the contribution of the agriculture sector also declined in the total GDP of the country.

Olomola and Ade (2001) notice that the Nigerian agriculture sector was highly productive and efficient till the beginning of the civil war in the country and all the food needs of the country were successfully met by the agricultural products grown in the country.

However, after the civil war there was a massive rise in the import of the food items from other countries. After 1973 Nigeria used to import wheat from US for the preparation of bread due to which in most of the urban areas the domestic food crops are replaced by the cheapest staple food. As a result of decline in the productivity of Nigerian agriculture sector, the leading producer and exporter of palm oil became the net importer of vegetable oil in 1976. (Olagunju, 2000) At the same time there was also a decline in the agriculture exports of Nigeria including both the manufactured food products and the agricultural items.

It was mainly due to the discouraging low prices of the agricultural items in the global market. In addition to this there was a ban enacted on the import of certain food items like fresh milk, vegetables, roots, and tubers, fruits, and poultry in 1979. At the same time the export of food items like milk, sugar, flour, and hides and skins was also banned (Alkali, 1997). By the 1980s, it became very clear that the Nigerian agriculture sector is not able to meet the food requirement of the population of the country any more and the productivity declined so much so that the supply of the raw material to the food industry and the export of food items to earn foreign exchange also became difficult.

In the first national plan of Nigeria developed in 1962-1968 there were some objectives set for the improvement of the agriculture sector as well. The national plan was indented to introduce some modern methods of production in the Nigerian agriculture sector. In this regard, the plan was mainly focused on the “farm settlements, co-operative (nucleus) plantations, supply of improved farm implements (e.g. hydraulic hand presses for oil palm processing) and an expanded agricultural extension services to the sector” (Ogen, 2003, p43); during this time period there were some specialized schemes also initiated including the “Farm Settlement Schemes”; and “National Accelerated Food Production Program” (NAFPP)” (Olanjunju, 2000, p221) that was launched in 1972.

After the 1970s, the government of Nigeria again paid attention toward the agriculture sector and started the commercial production of many crops, grains, livestock, dairies, and feeds. However their efforts were not successful enough and many of the agriculture projects did not achieved all of their objectives. Another important effort to support the agriculture sector was made by Nigerian government in 1973 with the establishment of the Nigerian Agricultural and Co-operative Bank (NACB) through which the government attempted to support the agriculture sector from the revenues and wealth attained through the oil sector. This bank was established with the objective of providing credit facilities and incentives to the agriculture sector related businesses and activities (Olanjunju, 2000).

The ineffectiveness of all of these efforts and measures is reflected from the fact that Nigeria used to import huge amount of agriculture products from other countries. For example in the year 1982 only the import bills of Nigeria was too high because the country paid 92 millions of USD for 153,000m tons of palm oil and 92 millions for 55,000m tons of cotton (Alkali, 1997). In the same way Nigeria also used to import millions of tons of wheat, rice, and maize from other countries for which Nigeria paid millions of dollars. The annual performance and productivity of the agriculture sector also used to remain below the estimated budget targets for many years that compelled the government to implement some reforms for the agriculture sector.

The Nigerian agriculture sector faces the major problems due to lack of formulation and implementation of systematic planning and strategies for the development of the sector. Though since the year 1988 a well-articulated agricultural policy document has been developed for the sector, in practice the rules and regulation of these policies are not implemented. However, there are some important steps taken by the government that were basically meant for increasing the production of different commodities in the country. Among these programs, some important ones include Farm settlement schemes (FSS), River basin development authorities (RBDAs), Agricultural development programs (ADPs) and Green revolution scheme (GRS) (Manyong, et. al, 2003, p22).

The farm settlement scheme FSS was introduced in the early 1950s and this scheme was basically intended to generate maximum employment opportunities for the young school leavers in the agriculture sector and to increase the agriculture commodity output. The second important program River basin development authority was intended to harness the water resources to make them easily available for the farmers of the country. The Green revolution scheme worked for the encouragement of the population living in the rural and urban areas so that they should get involved in the agriculture sector related activities at some level so that there could be improvement in the food availability for the household consumption.

The Agricultural development programs (ADPs) was introduced in all the States of the federation so that the farmers of the country could be organized and facilitated with the modern inputs and techniques of cultivation and production and ultimately the productivity of the agriculture sector could be increased. The implementation of all of these programs was successful up to the extent that the production of certain agriculture activities was improved in the country. However these programs also did not result in a long term improvement of the condition of the Nigerian agriculture sector.

It is also an important issue that in most of the plans and strategies designed for the improvement of the Nigerian agriculture sector the root causes are neglected and the focus is given to the side issues and problems that cannot work for the improvement in the conditions of the sector at all. This is the main reason behind the failure or little success of the government implemented programs and policies related to the Nigerian agriculture sector.

Main problems and limitations are not truly identified and there are no practical steps taken for solving those problems also. For example, in the 2001 Rural Development Sector Strategy it is identified that the Nigerian agriculture sector requires “Institutional restructuring and role reassignment, Agricultural technology development, Public intervention, Human capacity building and natural resources management” (Manyong et. al, 2003, p32); whereas the 2002 Agricultural Policy document also identifies some specific areas that require attention for the improvement in the condition of the agriculture sector.

In both of these programs the agriculture sector is not covered with all of its aspects and only some areas are identified and given importance. Due to this reason these programs also failed to improve the situation of the Nigerian agriculture sector because no direct efforts have been exerted for the improvement of the sector. (Manyong et. al, 2003) The researchers also compiled data related with the performance and contribution of the Nigerian agriculture sector with the help of the data provided by the central bank of Nigerian (CBN). Table 1 reviews the performance of Nigerian agriculture sector with respect to six different indicators from 1981 to 2000.

Performance of Nigerian Agricluture Sector 1981-2000.
Table 1: Performance of Nigerian Agricluture Sector 1981-2000 (Source: Manyong et al, 2003).

The marketing boards were set up by the Nigerian government with the intention to better handle the marketing activities related with the export of certain agriculture products like cocoa, rubber, palm produce, cotton, and groundnut. Though these marketing boards were established earlier, in 1973 and then in 1976 there were certain reforms implemented in these marketing boards because the operations and performances of these boards were highly criticized and charged with inefficiency and abuses (Olagunju, 2000).

After the reforms introduced in the marketing board there were “individual commodity boards” (Olagunju, 2000, p222).set up for the export products and food crops in the year 1977. These boards were assigned the responsibility to manage the export of the agriculture commodities and to fix the price of the agriculture products. Along with that these boards were also directed to take necessary measures for the support and development of the agriculture sector related activities in the country. However after the anticipation of SAP in 1986 these boards were abolished. In the year 1986 there was the establishment of a free market for all the agricultural products after the abolition of the government marketing boards for agriculture products (Olagunju, 2000).

In the second half of the year 1986 the Structural Adjustment Program (SAP) was also revised by the Federal government in the 1986 budget to make it more comprehensive. SAP was implemented basically to restructure and diversify the productive base of economy so that the Nigerian economy could be diversified to the non oil sectors. In order to reduce the dependency of oil sector SAP proposed some measures for the reforms in the agriculture sector and the price policy was improved to encourage the export of the agriculture goods. Despite the trade liberalization measures offered by SAP the export of the agriculture products was not raised up to any high level and there was mixed results of implementation of SAP measures (Olagunju, 2000).

Ogen (2003) notices that most of the policies implemented in the Nigerian agricultural sector were anti-competitive because these policies were formulated after the realization that there is lack of resources allocation in the Nigerian agriculture sector due to which there is great need of equitable development. The pre SAP era policies implemented in the Nigerian agriculture sector include “price control (administered output prices for export commodities), guaranteed minimum price for grains, input subsidy, centralized marketing and export monopoly” (Ogen, 2003, p42).

Later the government introduced Guaranteed Minimum Prices (GMP) to assure the fixation of the floor prices for the agriculture products that the government will give in case of fall of the market prices below the minimum price level. This step was taken with the intention to assure the remunerative income to producers of the agriculture commodities. However, the official prices guaranteed by the government through this program were mostly below the farm gate prices due to which these prices did not offer any competition in the domestic market and finally GMP was proved to be an ineffective program introduced in the agriculture sector (Olomola and Akande, 1990).

The following table shows lack of competiveness in the prices offered by the government (GMP) as compared with the farm gate prices of the major agriculture crops:

Crops Average Farm gate Price 1981-1985 (1) Average (GMP) 1981-85 (2) % Difference Between (1) & (2)
Beans 1,046 408 -61.0
Maize 616 257 -58.3
Millet 489 274 -44.0
Rice (Paddy) N/A 433
Rice (Milled) 833 594 -28.7
Guinea Corn 428 267 -37.6

Table 2: Average Farm gate and Guaranteed Minimum Prices of Selected Food crops in Nigeria (N/tone).

There were several policies implemented in the agriculture sector especially during the 1970s many policies were formulated to reduce the cost of production of the agriculture sector and to facilitate and improve the productivity of Nigerian agriculture sector. Some of the major polices implemented during the 1970s include “Agricultural Commodity Marketing and Pricing Policy, Input Supply and Distribution Policy, Agricultural Input Subsidy Policy, Agricultural Mechanization Policy, Agricultural Cooperatives Policy, Water Resources and Irrigation Policy” (Manyong et al, 2003, p22). In addition to these policies some institutions were also created so that the macro economic and microeconomic policies of the government related with the Nigerian agriculture sector could be supported.

These institutions were mainly established to fulfill some specific functions and objectives including the transfer of technology into the sector, improvement in the supply of the seeds, and agriculture output, to promote and encourage research and development work in the sector, improvement and updating of the agricultural mechanization, and better management and handling of the agricultural commodity marketing and pricing matters. These institutions include Agricultural Credit Institution, which was established in 1973 by the Nigerian Agricultural and Cooperative Bank (NACB). The objective of creating this institution was to provide credit facilities to the agriculture and rural development areas. This institute supplies small scale as well as large scale credits to the farmers on easy terms and conditions.

In 1972 there was another agriculture institute established as National Seed Service (NSS). This was a seed supply institution that works for providing improved seeds of different agriculture products to the farmers including rice, maize cowpea, millet, sorghum, wheat, and cassava. National Science and Technology Development Agency was established in the year 1977 with the objective to support and encourage the research and development work in the agriculture sector.

In the same way “National Science and Technology Development Agency, Agricultural Extension and Technology Transfer Policy, National Accelerated Food Production Project (NAFPP), Agricultural Development Projects (ADPs) and The Center for Agricultural Mechanization” (Manyong et al, 2003, p24) were also created in the 1970s for the improvement of the conditions of the Nigerian agriculture sector and to promote research work, technology adoptability, and improved seeds availability to the Nigerian farmers (Manyong et al, 2003).

The government also used to extend subsidies over certain agriculture and farm inputs like the fertilizers, improved seeds, herbicides, pesticides and agricultural implements, farm services, and machinery. These subsidies were basically meant to offset the biasness against the people engaged in the agriculture sector mostly living in the rural areas. With the help of subsidies the Nigerian government also attempted to grow competitiveness and productivity of the agriculture sector so that the farmers can be compelled to use advanced machinery, technology, fertilizers, and methods of production at their farms.

Fertilizers were mostly subsidized by the government to encourage the farmers to increase the productivity and efficiency of their farms but unfortunately this step was also not proved to be much beneficial for the sector because the corruption and mismanagement of the fertilizer supplies resulted in the black-marketing of the fertilizers and the farmers failed to get the full benefits of this policy as well (Olomola and Ade, 2001).

Along with that there were some more programs and interventions introduced by the Nigerian government like the “Operation Feed the Nation (1976), River Basin and Rural Development Authorities (1976), Green Revolution Program (1980), and The World Bank-funded Agricultural Development Projects” (Alkaki, 1997, p76). Moreover, the Agricultural Credit Guarantee Scheme (ACGS) was introduced by the government in 1995 with the objective of providing easy credit to the agriculture sector business. Moreover, the establishment of Calabar, Enugu, Kaduna, Jos, and Lagos Export Processing Zone (EPZ) were also taken by the government to facilitate the food and export crops.

An important attempt to support the development of the agriculture sector was the establishment of different agricultural research institutes in the country along with their extension research liaison services. These agriculture institutes included “Agricultural Extension and Research stock production and fisheries production in Nigeria Liaison Service (AERLS), The International Institute of Tropical Agriculture (IITA) and International Livestock Centre for Africa (ILCA)” (Akinbobola and Ayo, 2001, p65).

These steps were followed by the National Rolling Plan for 1996-1998 that was designed to enable the agriculture sector to meet the food demands of the country by 2000 but unfortunately despite all these steps and reforms the corruption and mismanagement prevailing in the country contributed towards the inefficient performance of the sector. Experts believe that Nigeria is blessed with lots of natural as well as human resources and the effective employment of these resources can contribute to the development of an efficient agriculture sector of the country. Therefore, there must be proper reforms and sincere efforts for the implementation of these reforms to enable the country to meet its food needs without importing food items from abroad (Alkaki, 1997; Eicher and Witt, 1964).

Nigeria – An Oil based Economy and the Role of Agriculture Sector

Olagbaju and Falola (1996) noticed that the agriculture sector was progressing significantly in Nigeria during the early years of independence and bog portion of the food needs of the country were also met by the agricultural items produced locally. However, the agriculture sector was highly neglected in Nigeria when there was oil boom in the 1970s. During this time period all the policies and strategies of the Nigerian government focused on the oil sector and to provide maximum facilities and attention to the oil companies.

It is widely believed that in the 1970s Nigerian government made the major mistake to increase the dependency of the oil sector and to neglect the agriculture sector. This was the root cause that soon resulted in the rise of poverty as well as food shortage in the country. Due to this negligence the productivity of the agriculture sector was badly affected and the contribution of the sector in the total GDP of the country reached to the level of less then 5 percent (Olagbaju and Falola, 1996).

Godoy and Julio (2005) pointed out that the agriculture sector was performing significantly in Nigeria; however, when the government started concentrating on the oil sector, the agriculture sector started facing some serious problems and among them lack of funding is an important one. There are little credit facilities available to the farmers due to which they are not motivated to use advanced machinery and techniques of production in their farms.

The people attached with the Nigerian agriculture sector are already living in the miserable and poverty based situation where there are little chances for them to look towards the advancements ongoing in the modern world and even if they get knowledge about the modern machinery and techniques of production, they cannot implement these techniques in their farms due to lack of funds and credit facilities.

The dark side of the picture tells the story that Nigeria currently pays high amount of money for the import bills for rice and other food products and if some portion of this amount is made available to the Nigerian farmers, they can become capable of producing more and then the import volume can also be declined. But lack of management, planning, and concentration on the agriculture sector has resulted in the creation of this serious problem.

As a result, the Nigerian agriculture sector received less financial support and the productivity went on declining. The researchers also suggest the government that the officials should think about granting more financial and credit opportunities to the farmers because the motivated and financially equipped farmers can produce more and the import bills of Nigeria can also be declines as a result of their increased productivity and efficiency.

Buxton (2001) reveals that the agriculture sector possesses great importance in the context of economic development of Nigeria because the sector generates employment opportunities to a major proportion of population and at the same time the contribution of the agriculture sector in the total GDP of the country and the export volume is also very important in determining the economic growth rate of Nigeria.

The positive side of the picture is that Nigeria is rich in abundant of natural and human resources; there is huge land area in the country available for cultivation and agricultural activities. Yet the dark side of the picture shows that due to mismanagement, corruption, and negligence of government, the agriculture sector was unable to flourish after the 1960s and the focus on the oil sector has further narrowed down the developmental pace of Nigerian agriculture sector.

The researcher reveals that despite having huge land area, unfortunately only 50 percent of the cultivable land is under cultivation in Nigeria and even in that 50 percent of the under cultivated, the farmers use to employ old and traditional methods and techniques of cultivation and farming due to which the productivity of that land is also very low.

Manyong et. al (2003) notices that the dependency on the oil sector has drawn many negative impacts on the Nigerian agriculture sector because along with the negligence of the government the investments are made mostly in the oil sector and the productivity of the agriculture sector went on declining due to low rates of investments. When there was boom in the global oil prices, then both the public and private sector started focusing on the oil sector because at that times the oil sector used to offer the investor high rate of returns, high interest rates and high exchange rates on their investments.

On the other hand, the agriculture sector was surrounded by multiple taxations and strict and non-liberal trade policies due to which the investors were not interested in making their investments in the Nigerian agriculture sector. This lack of attention of the foreign and the domestic investors toward the sector resulted in decline of technology adaptation, lack of research and development work, unavailability of credit facilities, and non access to the advanced and improved farm in puts. Furthermore, the ban on the trade of certain agriculture products by the government to cover up the consequences of oil sector disaster made the situation even worst.

Moreover, there was little focus of the government on the development and growth of the Nigerian agriculture sector due to which the sector used to lack proper planning and policies regarding the availability of the agriculture credits, technology adoptability, input policies and storage, and processing policies. It is also observed by the experts that there are some major differences in the governmental policies related with the Nigerian agriculture sector before and after the era of oil prices boom in the global market. Before the 1970s the government used to have somewhat relaxed attitude towards the agriculture sector because there was little direct interventions made by the government in the sector.

The government allowed the private sector to work freely in the agriculture sector and the small Nigerian farmers were managing the matters of the sector according to their own convenience. At that time the productivity of the Nigerian agriculture sector was also high and most of the feeding requirements were successfully met by the productions of the agriculture sector. The government used to support the farmers by facilitating them with research and development work, extension and export crop marketing, and pricing activities.

However, after 1970 the situation changed a lot for the Nigerian agriculture sector and a major change occurred in the policies of the government regarding the sector. The government then started maximum interventions in the sector and implemented many policies and plans related to the agriculture sector. This mostly resulted in the lack of efficiency of the sector.

There were many direct and indirect taxed enacted on the agriculture products and the import of some agriculture products was banned as well. In this way the oil prices boom created negative effects on the performance and productivity of the Nigerian agriculture sector.

Sharma (2003) analyzes the situation of the Nigerian agriculture sector and reached to the point that the basic problem with the sector is that all the officials and authorities used to have a cosmetic view of the entire situation and then they tried to resolve the issues and problems by overlooking the root causes that were generating all the problems. The researcher points out that the basic problem is that the Nigerian government does not use to look at the agriculture sector in the justified manner and the authorities do not give the agriculture sector as much importance as is desired by the sector according to its importance for the economy and the population.

At first it is necessary that the government give proper attention and concentration to the agriculture sector and take some positive steps to improve the situation for the farmers so that they can meet their food requirements by themselves without relying on the imports from other countries.

Minot (1986) reveals that Nigeria was among the major producers as well as exporters of crude oil in the world but the government of Nigeria paid attention towards the agriculture sector during the early days of independence due to which the agriculture sector flourished in the country and the food requirements of the populations were also satisfactorily met since the early 1970s. However, after this time period the Nigerian economy witnessed the effects of oil prices boom in the global oil market and as a result the focus on the agriculture sector was shifted. Since the 1970s the government attempted to make Nigerian economy totally oil-based giving little attention towards the development of the non oil sectors.

As a result the contribution of the agriculture sector that was around 60 percent in the 1960s, declined to the level of 25 percent during 1975 and 1979 and then further declined in the next decade. This decline was led by the fact that due to the development and growth of mining and manufacturing sectors in the country, there were little incentives available to the agriculture sector in the emerging macroeconomic environment. Due to lack of incentives and attention the productivity as well as exports, the agriculture sector was badly affected and the food import bills of Nigeria kept on rising in order to meet the demands of the population.

According to the figures there was an increase of 14112.88 million annually during 1970-74 to N 1, 964.8 million in 1991 in the food imports bills paid by Nigeria. The researcher points to the sad effects of negligence of the agriculture sector in Nigeria that the country was the leading producer and exporter of palm oil in the world but due to negligence and less productivity of the agriculture sector, Nigeria became the net importer of vegetable oil by the year 1976.

Idachaba (1998) notices that the negligence of the agriculture sector due to oil prices boom in the 1970s drew very strong, direct, and negative impact on the agriculture sector and as a result of these negative impacts and negligence, the majority of the population fell below the line of poverty because majority of the Nigerian people were associated with the agriculture sector and decline in the performance of the agriculture sector resulted in the decline of the living standard of the related people as well. The low productivity of the agriculture sector resulted in the decline of the income of the households due to which these people had no other way in front of them but to live in severe poverty conditions.

Although the government has designed and implemented many policies and programs for the improvement of the performance of the Nigerian agriculture sector during the last three decades, these programs and policies have not brought any significant results in favor of the Nigerian agriculture sector because some factors like lack of financial opportunities, research and development work, and concentration on the agriculture sector hindered the development of the Nigerian agriculture sector.

he researcher further notices that there is great need to focus upon formulating and implementing some solid and practical policies and strategies so that the agriculture sector can increase its productivity and can play an efficient role in the economic development of the country as well as to meet the feeding demands of the growing population.

Problems and Limitations

Manyong et al (2003) reviews the problems and opportunities in the Nigerian agriculture sector and notices that the largest African country with the total geographical area of 923,768 square kilometers and population of about 126 million (2003 estimate), possesses highly diversified agro-ecological conditions that allow producing wide range of agricultural products on the land due to which the agriculture sector possesses great importance for the economic development of Nigeria not only to meet the food requirements of the population but also in terms of generating employment opportunities for the majority of the inhabitants of Nigeria.

Keeping in view the importance of agriculture for the country, one can assume that there should be very much importance given to this sector in Nigeria. In reality there is little focus of the government and authorities on the growth and development of this sector and since the oil prices boom era, the productivity and performance of this sector has been continuously declining and the share of agriculture sector in the export products and GDP has been also very low during the past three decades.

Along with the negligence of the government towards the development and growth of the sector, there are some important factors identified by the researchers that are responsible for low level performance and productivity of the Nigerian agriculture sector; these factors include: “household income poverty food poverty/insecurity, poor access to public services and infrastructure, unsanitary environment, illiteracy and ignorance, insecurity of life and property, poor governance” (Manyong 2003, p41). Due to the above mentioned problems the Nigerian agriculture sector is facing serious crisis and it is very necessary that these issues must be resolved in order to enable the Nigerian agriculture sector to become highly productive and efficient.

Oluwasanmi (1996) reveals that Nigeria is blessed with a huge wealth of natural and human resources. However, the mismanagement of these resources has resulted in low productivity of the agriculture sector in the country. The researcher notices that Nigeria used to earn massive amount of foreign exchange from the export of cocoa but after the abolition of the Nigerian cocoa board the growth of this product also went down and the foreign exchange earned through the export of this non oil product also began to decline.

It is estimated that Nigeria can produce 300,000 tons of cocoa beans per year but due to the dominance of small holders and lack of farm labor, the production of cocoa is very low. In 1999 there were just 145,000 tons of cocoa produced in the country. In the same way the production of rubber which is the second largest non oil earner of foreign exchange of Nigeria also declined in the country during the 1990s due to low yields, aging trees, and lack of proper equipment. Thus the mismanagement of resources and lack of updated technology usage is among the main problems that are hindering high productivity of the agriculture sector in Nigeria.

Nworisara (2008) reveals that the question about the efficient performance of the Nigerian agriculture sector is very important because the fulfillment of the food requirement of the entire population depends upon the productivity of the agriculture sector. The global shortage of grain supplies has further made this question a very serious issue for Nigeria. The researcher reveals that in order to face this challenging situation it is very necessary that all the problems and limitations should be identified so that the actual reasons behind the fall of the productivity of the sector could be understood and steps can be taken for the removal for those limitations and problems to enable the agriculture sector to perform well and meet the food demands of the population.

The basic problem with the agriculture sector is the negligence shown by the government and the authorities towards the sector during the days of oil boom that resulted in massive decline in the productivity of the Nigerian manufacturing sector. Along with this issue there are several other important factors that are equally responsible for the lack of efficiency of the agriculture sector in Nigeria. For example, there is a gap found in the actual working patterns of the farmers in their fields and the research work done in different institutes and agriculture development centers. The farmers and the researchers have no direct contact and the findings of the researchers to make the agriculture sector more productive usually remain inaccessible for the Nigerian farmers.

Due to this reasons the Nigerian farmers are mostly unaware of different advanced methods and techniques that can increase the productivity. They also have no idea about the immediate changes required to be made in the mechanism and techniques employed in their farms to keep them updated with the ongoing changes in the modern world. Thus, it is found that the Nigerian agriculture sector is facing a major problem in terms of lack of communication link between the farmers working in the agriculture field and the experts working in the research institutes due to which the farmers do not know about the advanced methods of agriculture production. In this regard the role of government as well as the private sector is very important as both of them have to work for building a bridge between these two important players of the scene.

Lawal (1997) points out that the Nigerian government has to take some positive steps towards the improvement of the condition of the agriculture sector and for this purpose it is very necessary that the youth of the country attached with the agriculture sector must be motivated and utilized to increase the pro0ductivity of the sector.

At present many of the young people living in the rural areas are unemployed and the government can make some programs and policies through which this work force can be utilized effectively in the agriculture production to make better use of the human resource. However, all this requires adequate planning and strategies that unfortunately the Nigerian agriculture sector lacks because the government mostly used to focus on the oil sector and neglects the non oil and this is the root cause behind the less productivity of the agriculture sector in Nigeria despite having vast natural and human resources.

Graham et al (2004) claims that the main problems behind the inefficient performance of the agriculture sector is the inadequacy of agriculture policy because the government has implemented such reforms and strategies in the agriculture sector as changed the situation for the farmers and made it less attractive for them because the agriculture has became a non profitable profession in Nigeria.

Moreover, the corruption in the sector also rose over the time and the officials responsible for the distribution of the resources took some very biased decisions and gave the government-granted fertilizers and tractors to the people whom they knew only personally; no matter if they had any concern with the agricultural activities and production or not. In the same way, the agriculture banks provided loans to the people having affiliations with the officials influencing the bank’s operations. The farmers did not get the loans on easy terms and conditions. Due to this reason the deserving people failed to get the benefits of the governmental assistance, and there are no positive effects transferred to the agriculture sector despite the government initiatives.

In addition to this, the mismanagement of agricultural activities is also an important problem that hinders the growth and development of the sector. It became common in Nigeria that the producers used to reduce the prices of the agriculture goods on a daily basis and the middlemen acted as the marketing boards by formulating their own policies and rules. Due to this mismanagement there is a haphazard situation created in the agriculture sector and the farmers have lost the motivation to produce more and perform well.

Buxton (2001) reveals that the agriculture sector possesses great importance in the context of economic development of Nigeria because the sector generates employment opportunities for a major proportion of population. At the same time the contribution of the agriculture sector in the total GDP of the country and the export volume is also very important in determining the economic growth rate of Nigeria. The positive side of the picture is that Nigeria is blessed by nature with abundant natural and human resources as there is huge land area in the country available for cultivation and agriculture related activities.

The dark side of the picture, however, shows that due to mismanagement, corruption, and negligence of government, the agriculture sector has been unable to flourish after the 1960s and the focus on the oil sector has further narrowed down the development rate of Nigerian agriculture sector. The researcher reveals that despite having huge land area unfortunately only 50 percent of the cultivable land is under cultivation in Nigeria. Even in that 50 percent of the under cultivated area, the farmers employed old and traditional methods and techniques of cultivation and farming due to which the productivity of that land is also very low.

Ogundipe (1998) also notices that mismanagement and corruption in funds and loans grants is among the major problems faced by the Nigerian agriculture sector because there have been many cases observed where the politicians get the money allocated for the agriculture loans on the basis of their influence and political pressure and then invest this money in the sector for making personal profit and gains. This situation became worst after the civil war in the 1970s.

Many of the enthusiastic and devoted farmers were demotivated and discouraged to operate in the sector. Due to this demoralization and lack of motivation many of the young farmers as well as experienced people started leaving the field and the Nigerian agriculture sector then lost a valuable part of the human workforce just owing to corruption and mismanagement.

The researcher clarifies that the solution to the problem of the Nigerian agriculture sector does not lie only in the provision of loans and availability of fertilizers and machinery but there is much more need of managing all the matters of the sector in fair manner. The actual problem hindering the growth of the sector is corruption, biasness, political pressure, and mismanagement rather then lack of availability of loans, machinery, and human workforce. If the government commits to remove the root causes of the problem, all the related issues will be resolved automatically and the agriculture sector will then get the real benefits of all the initiates and steps taken by the government and private sector for the improvement of the sector.

Oyekale (2007) noticed that the Nigerian agriculture sector possesses the capability of accelerating the economic growth of the country and also of meeting the food requirement of the population. But unfortunately there is lack of adequate planning for the sector due to which the country pays high import bills for the food items and the people belonging to the agricultural activities live below the poverty line as they have no means for personal saving and attaining high life standards.

The main problems hindering the growth of the Nigerian agriculture sector are identified by the researcher as “peasant nature of the production system, low productivity, poor response to technology adoption strategies, and poor returns on investment” (Oyekale, 2007, p310). It is also noticed that there is need to induce modernization and investment in the Nigerian agriculture sector in order to enable the sector to play significant role in the economic development of Nigeria. There could be more investments in the agricultural sector when the investors are assured of the certainty of the agriculture sector environment, and they can see the willingness of the farmers towards the adoptability of new techniques of cultivation and production.

Thus it is very necessary that the overall image of the people related to the agriculture sector should be made better and the investors, both domestic and foreign, can see that the availability of financial opportunities can change the working patterns of the Nigerian farmers very well and the sector can be more productive and efficient with the help of adequate local and foreign investment.

Manyong (2003) analyzes the performance and situation of the Nigerian agriculture sector and identifies some of the major problems and limitations that are playing leading role in undermining the performance of the Nigerian agriculture sector. The researchers concluded that the main constraints to the development of the Nigerian agriculture sector can be summed up as the “technical constraints, resource constraints, socio-economic constraints, and organizational constraints” (Manyong, 2003, p23).

The researcher further explains that these constraints prove their responsibility for the low productivity and inefficient performance of the Nigerian agriculture sector. The technical constraints are encountered by the Nigerian agriculture sector in a sense that the Nigerian farmers do not have adequate knowledge and access to the insecticides and remedies that can prevent their crops from pests and diseases. Hence, there is usually high rate of incidents of pests and diseases on the crops of these farmers.

Moreover the infrastructure facilities are very weak and the farmers face many difficulties in accessing the agriculture markets and they also have to rely upon the old, outdated, and rudimentary technology for the production in their farms. The inefficient supply of the inputs and the unjustified distribution are also among the major barriers that are hindering the performance of the Nigerian agriculture sector in technical ways. Moreover, the sector also faces some major constraints related to the availability of the resources.

According to recent trends the youth prefer to migrate from the rural to urban areas in large numbers in search of better careers and lifestyle opportunities. Due to this there is great shortage of labor supply to the Nigerian agriculture sector. Especially during the periods of high labor demands like during the time of land preparation, weeding, and harvesting, there are several problems that arise due to the unavailability of the seasoned labor. On the other hand, the population is growing fast creating burden on the land to meet the food requirements of more people; whereas, the productivity of land is continuously on the decline due to the fact that there is low rate of investment in the sector and the farmers use their traditional methods of cultivation that has resulted in a very low rate of land improvement.

As a result of the labor shortage and the low quality of land also the productivity of the Nigerian agriculture sector remains at a low level. Furthermore, the sector also faces some serious socioeconomic problems because the cost of the improved machinery and farms input is very high and the marketing arrangements for the agriculture products are also inefficient in the country. The agriculture markets are mostly characterized by high marketing margins and absence of grades and standards. At the same time there is also lack of legally enforceable ownership and control rights over the land due to which the investors are widely discouraged to make their investments in the sector.

Some other important socioeconomic constraints identified by the researchers include “inadequate extension services, difficulties in accessing credit facilities, low growth in international demand for primary export commodities and increasing food deficit, and high dependence on food import arising from the disequilibria in national agricultural resource base, a largely traditional agricultural production system and some domestic population dynamics” (Manyong et al, 2003, p40). The major organizational constraint influencing the growth and development of the Nigerian agriculture sector is that the agriculture farms are scattered all over the country and these farms are mostly organized on small scale level. These scattered and traditionally working farmers do not seem to play any significant and active role in the development of the sector mainly due to the dispersed nature of farm settlements and problems in getting farm credits and advanced farms input.

Thus the above mentioned constraints are identified as the major problems and limitations that are affecting the growth and development of the Nigerian agriculture sector. It is very crucial to solve these issues in order to bring some level of improvement in the performance and productivity of Nigerian agriculture sector (Manyong et al, 2003).

Summary

The review of the studies from social science focusing on the importance and contribution of the agriculture sector makes it clear that the agriculture sector has the capability of fostering the economic growth of the countries and in most of the countries people used to rely on this sector for meeting their basic food requirements. The importance of the agriculture sector is mostly identified by the developing countries where the policies and strategies of the government are found in favor of this sector and the people involved in the agriculture sector are living their lives with better standard and facilities.

On the other hand the underdeveloped nations where there are more people involved in the agriculture sector, there is an overall negligence about the significance and importance of agriculture reforms. In these countries the people living in the rural areas, involved in the agriculture activities are living below the poverty line. This is because there are no proper reforms and policies by the government. The few available are also not in favor of the agriculture sector. It is also found that there is lack of adaptation of new technology and research and development work in the under developed countries’ agriculture sector due to which the performance and productivity of these sectors is also very low.

Thus, the review of these research studies makes clear the importance and significance of the agriculture sector for the economic development. The main reasons behind the inefficient performances of the agriculture sectors of underdeveloped countries especially sub Sahara African countries are also identified in these research studies. It is also found from the review of the research presented above that in Nigerian economic scenario also the agriculture sector possesses great importance.

The Nigerian agriculture sector performed well in the 1960s; however, the oil boom in the global oil prices in the 1970s drew negative impacts on the growth and development of the agriculture sector because during those days the Nigerian government focused mainly on the oil sector and neglected the agriculture sector.

The main problems and limitations faced by the Nigerian agriculture sector are also identified in the above review of the research studies and it is found that the root cause of the low performance and productivity of the Nigerian agriculture sector are the strategies and policies of the government implemented in the agriculture sector. It is also found that after the 1970s, the Nigerian government used to focus on the development and growth of the Nigerian agriculture sector through introducing different polices and plans in the sector.

However, most of these plans proved to be useless for the agriculture sector due to mismanagement, corruption, and lack of real interest of the government officials. Lack of technology adaptation, less focus on the research and development work, and inaccessibility of the Nigerian farmers to the financial resources are also among the major problems surrounding the agriculture sector.

It is also found that the oil prices boom in the global market drew negative impacts on the performance of the Nigerian agriculture sector because after that era the government tightened the policies related with the sector and also increased the interventions in the sector. This led to reduction of the productivity of the sector which was badly affected. However, from time to time the government used to formulate different policies and plans for the improvement of the agriculture sector but most of them lacked direct focus on the root causes of low productivity of the sector due to which the Nigerian agriculture sector is still struggling with low growth rate and low contribution to the total GDP of the country.

The review of the literature presents a very clear picture of the Nigerian agriculture sector and different aspects are explored and explained by the social scientists in detail. However there are some gaps also found in the research studies that are intended to fill in the current research work. For example, it is found that the Nigerian agriculture sector has been discussed by many of the researchers in details; however, the views and opinions of the people attracted with the field are not collected and included in any of the research study.

The experts working in the Nigerian agriculture sector are among the most important players that can influence the performance and growth patterns of the Nigerian agriculture sector. It is, hence, very necessary that the views and opinions of these people must be gathered to understand the main problems and limitations of the sector in the view of the people working in the same field, and to understand the solution of the identified problems in the light of the opinions of the experts that are operating in the Nigerian agriculture sector.

Thus, to fill up this gap found in the literature, the research study will present in-depth interviews of 10 experts that belong to the Nigerian agriculture sector and work at government and private sectors. The in-depth interviews will allow having a thorough understanding of all the issues according to the viewpoint of the experts of the field. In this way, the literature gaps identified above will also be filled. Moreover, some of the research questions will also be answered in the light of the in-depth interviews conducted of the experts working in the Nigerian agriculture sector that are as follows:

  • What are the main factors influencing the performance and contribution of Nigerian agriculture sector in the overall economic development of the country?
  • How the performance of Nigerian agriculture sector can be made better so that it can face the challenge of food insecurity and poverty prevailing in the country?
  • What are the main developments, problems, and issues associated with the agriculture sector in Nigeria?

Foreign Direct Investment (FDI) and Nigerian Economic Development

Introduction

The second chapter of the literature review is related with the topic of foreign direct investment. The research study is aimed at studying the Nigerian economy with respect to three economic variables including agriculture sector development, foreign direct investment and trade relations of Nigeria with US, China and India. The first part of the literature review studied in details the developments, history, problems, issues and trends associated with the Nigerian agriculture sector and now this second part of the literature review is aimed at studying and understanding in details foreign direct investment and its effects on Nigerian economic development.

First of all the significance and importance of foreign direct investment is studied for the economic development in general to understand that what is the importance of foreign direct investment for the development of the nations and what role the foreign direct investment can play for the economic development of the countries. Furthermore the Nigerian economy is also studied in details in the perspective of foreign direct investment. The chapter presents an overview of the Nigerian investment regime to portray the picture about the potential of foreign direct investment inflows to Nigeria. The major opportunities, challenges and problems associated with the Nigerian investment regime are also discussed in the chapter to explain the reasons behind the low level of FDI inflows to Nigeria.

The steps taken by the government to make the Nigerian investment regime attractive for the foreign investors and their effects on the FDI inflows are also discussed in the chapter. Along with describing some historical facts and figures about FDI inflows to Nigeria, the chapter also presents the present situation of foreign direct investment to Nigeria and the main sectors attracting and having potential to attract foreign direct investment are also identified in the chapter.

Foreign Direct Investment – Contribution and Significance for Economic Development

International Monitory Funds (2005) defines Foreign Direct investment in its Balance of Payments Manual as a category of international investment that reflects the objective of a resident in one economy (the direct investor) obtaining a lasting interest in an enterprise resident in another economy (the direct investment enterprise).

Heledd (1999) further explained that foreign direct investment is basically the investment that is done in order to achieve the profit from an enterprise that is operating in the economy of the country from where the investor does not belongs but he invests his capital in the industry of that economy to gain profitability. Economic experts all over the world believe that foreign direct investment is as important for the sustainable economic growth of the country as international trade. In the emerging situation FDI has become a key driver of economic growth of the host countries because the foreign direct investments play an important role in the economic development of the countries.

United Nations Conference Trade and Development (2007) describes that the foreign direct investment possesses great potential for boosting a country’s economy. FDI generate employment in the country and create new jobs in different sectors. Moreover the exports of the country are also increased and there is significant transfer of skills and technologies between the countries.

Foreign direct investment is a modern phenomenon that is gaining importance in today’s advanced world. IMF’s Balance of Payments Manual fifth edition (BPM5) defines the foreign direct investment as a category of international investment that reflects the objective of a resident in one economy (the direct investor) obtaining a lasting interest in an enterprise resident in another economy (the direct investment enterprise).

For the establishment of foreign direct investment relation ship it is very necessary that the investor must acquire about 10 % ordinary shares or voting power of an enterprise. The growing volume of international trade and capital flows across the borders has characterized the economy of the modern world in the recent era of globalization. Foreign Direct Investment has become a vital tool for the countries to attain sustainable economic growth especially the developing countries have recognized the importance of FDI as a channel through which they can get access to the resources essential for the economic growth however a major share in the global FDI is contributed by the developed countries and the developing countries are still not getting big share in the global FDI inflows.

There are several factors behind this low share of developing countries like inadequate infrastructure of the developing countries, lack of investment incentives, high import duties and tax rates and overall illiberal investment regimes of most of the developing countries. Over the last couple of decade a spectacular change has been observed in the attitude of the developing countries towards FDI and these countries have made their trade policies relatively open and liberal so that they can attract more foreign direct investment.

The developing countries are facilitating the multinational companies by lowering down the tax barriers and raising the investment incentives so that the MNCs could be encouraged to invest in the country and along with the rise in the FDI flow, several other advantages could also be enjoyed by the host country like improvement in employment conditions, tax revenues and technology transfer etc.

UNCTAD (2007) declared that the foreign direct investment has a great potential for boosting economic growth of a country because due to increased foreign investment in the country, more jobs are created and the situation of employment becomes better. At the same time foreign direct investment also raises productivity because the manufactures have greater scope of trading. Through foreign direct investment management skills and technologies are also exchanged between the host and investor country.

In this way foreign direct investment accounts for economic development and most of the developing countries are well supported by foreign direct investment in their development process. UNCTAD also observe that almost all the countries are paying attention to the foreign trade investment and taking such steps that can attract the investors from all around the world to invest in their country and initiate different developmental projects. (UNCTAD, 2007)

Zhang (2005) pointed out that foreign direct investment usually proved to be significant for the host countries in so many ways because there are varieties of advantages enjoyed by the host country as a result of the operations of the foreign companies in their country. The researcher revealed that foreign direct investment is an important vehicle that can drive the economies through the transfer of technology as well. When the foreign companies invest in different sectors of another country, the host country not only receives financial gains but the skills and technical knowledge of the investing country is also transferred to the host country and as a result there is rise in the technical progress, management practice and technology level of the workers of the host country.

This is a great advantage of foreign direct investment and the governments of the developing countries realizing this benefit use to provide different incentives to the foreign investors so that they can become a source of introducing new technology and skills in their country. The advantage of technology transfer could be seen not only in the progress of that particular company, sector or industry but the overall business environment also receive some positive effects of the technology transferred from the foreign country and usually the related sectors also become technically improved and skilled as a result of technology transfer driven by foreign direct investment.

Thus FDI allows the host countries to be most technologically updated and their labor also became more skilled, trained and aligned with the international standards and technical knowledge. This is a great advantage that can affect the economic growth of the countries up to higher extent and it is essential to encourage foreign investors to take the advantage of transfer of technology, skills, and management practice and business management patterns.

Linda and Vijaya (2001) explained that the foreign direst investment draws significant impacts on the economy of a country and there are five main variables of the economy that are mostly affected by the FDI. These variables were identified as “domestic investment, technology, employment generation and labor skills, the environment and export competitiveness” (Linda and Vijaya, 2001, p82).

There is a considerable increase in the flow of global foreign direct investment during last decade. According to the statistics of International Monitory Fund Report, “FDI increased by an average of 13 percent a year during 1990-97, surged by an average of nearly 50 percent a year during 1998-2000, driven by large cross-border mergers and acquisitions” (Linda and Vijaya, 2001, p82). Till the end of Second World War United States dominated the global FDI through the highest FDI profits b from 1945 to 1960 but then FDI became a global phenomenon and countries all around the world identified the importance of FDI and formulate their policies to facilitate foreign investment in their lands and as a result the foreign investment stocks began to increase. According to an estimate the foreign direct investment stocks constituted 20% of global GDP by the end of 2006. (IMF Statistic, 2006).

UNCTAD (2006) described in the World investment report that there are some important factors that have great impact on acceleration of global foreign direct investment. These factors are “the relatively low levels of interest rates in major capital exporting economies and the increase in domestic investment and industrial output”. (UNCTAD, 2006)

Borensztein et al (2002) revealed that foreign direct investment can significantly affect the economic growth of the countries however it is not necessary that all the countries receive similar type of effects of foreign direct investment. This is because there are some other important factors that play role in determining the economic growth patterns of the countries and sometimes foreign direct investment has no capability to influence those factors. For example the human resource management is an important factor that determines the economic growth. If a country does not possess efficient workforce or there are problems in availability of skilled labor in the country then the foreign investors are also helpless to improve the productivity of that sector.

In this regard it is very important that there must be solid measures taken at government level to train the work force so that the foreign companies can hire the skilled people and can groom them further to make them productive part of their working mechanism. As a result not only the productivity of that foreign company will be improved but the overall skills level of the workers will also become better in the country. In the absence of skilled and qualified labor, the foreign companies can also not play effective role.

The countries all over the world are interested and willing to increase the production and trade of good and services at international level through the multinational enterprises because these firms have identified the importance of foreign direct investment for the economic growth of the country that’s why “the annual growth rate of FDI during the last decade exceeded the growth of both the international trade in goods and services and output”. (Borensztein et al, 2002, p115)

Dr. Romulo (2005) pointed out that all the developed and developing countries are well aware of the importance of foreign direct investment for economic development and the financial and economic managers and planners of the country always place foreign direct investment among the priority development strategies of government. Foreign direct investment is regarded very beneficial for the economic growth of the countries. In the host countries, foreign direct investment brings capital, productive facilities and technology transfer.

In addition to these benefits FDI also create several new jobs in different sector of the host country and build up managing expertise in the people related to these industries. The scope of foreign direct investment FDI is different in different regions. China and India were the top FDI recipients’ countries in 2004-2005 and most of the time; foreign investment was done in the services sectors like tourism, telecommunications and Information Technology. “Asia and Central and Eastern Europe are viewed as the most attractive regions for FDI, while relatively weaker FDI recovery is expected in Western Europe and Africa in 2004-2005, and in Latin America in 2006-2007.” (World Investment Report, 2007)

Technological advancement has accounted for rise in international trade activities and as a result there is also rise in the FDI flow both for developed and developing countries. The rise in the FDI flow is measured and provided by the UNCTAD in the World Investment Report 2006. It is disclosed that the FDI inflow rose by 29 percent and reached to the amount of $916 billion in the year 2006. The rise if FDI inflow was 27 percent in the year 2004 that further rise with 29 percent.

The FDI flow to the developing countries amounted to 542 billion that was an increase of 37 percent. In the same time there was also a record increase in the FDI flow to the developed countries that amounted $334 billion. In this way the share of the developed countries become 59 percent of the global inward FDI whereas the developing countries are contributing 36percent in the global inward FDI and around 4 percent goes to the South-East Europe and the Commonwealth of Independent States (CIS).

Markussen and Vernable (2003) pointed out that foreign direct investment is a significant tool for the economic development and FDI possesses the capability to affect the economies of the host countries in direct as well as indirect manner. Foreign direct investment creates difference in the trade volume of the countries because in order to conduct their business operations, the foreign firms are required to import and export certain raw materials, machinery and then the finished goods and products. This is a direct effect of foreign direct investment that can be seen in the increased in the export volume of the host countries.

The revenues earned through the tariffs and import duties also play important role in bringing foreign currency in the host country. In addition to this foreign direct investment indirectly affects the economic development of the countries because the level of the domestic production is also influenced by the foreign companies’ operations and the total productivity of the domestic firms is also changed after FDI.

The investments made by the foreign companies in the domestic industry are also important source of bringing changes in the domestic productivity of the host countries. Thus it is revealed by the researchers that foreign direct investment can affect the economies of the countries both in direct as well as in indirect manner. Magnus (1996) presented two theories in his empirical study of identifying the impact of FDI on the host countries. Magnus stated that there are two approaches towards measuring the impact.

The first one is the standard theory of international trade that assumes that FDI increases “marginal product of labor and reduce the marginal product of capital in the host country”. Another approach is the Theory of Industrial organization” (Magnus, 1996, p435) that was presented by Hymer in 1960 that the firms invest in the other markets due to some specific reasons like technology or market competition etc. the theory also presents the view that a firm must have technology know how, management and marketing skills in order to do the business aboard. Magnus used these theories in the context of developing and developed nations and studies the impact of FDI in the economies of developing nations.

Rosalina (2007) conducted a study on foreign direct investment (FDI) inflows to ASEAN member countries and the Problems and prospects related to the issue. The research work was focused on the trends and patterns of FDI flows particularly to the ASEAN countries as a whole and then discusses the FDI flow to each country separately. The paper also compares FDI coming to different countries with respect to the main sectors of investment. Foreign Direct Investment (FDI) has become an important vehicle of economic development for emerging markets over the course of the last twenty-five years in a neo-liberal global economic environment the issue of whether these emerging markets are able to fulfill their true FDI potential becomes crucial.

Multinational companies following a horizontal FDI model take advantage of firm level economies of scale. MNC’s decision to invest in production across various countries depends on the trade-off between the added fixed costs of a second plant versus the trade costs of serving the foreign market by exporting such as tariffs and transport cost. MNC’s can also overcome the lack of commitment of host country by inducing tax competition if they have production facilities in more than two countries and hold excess capacities.

Bende et al (2004) studied the importance and significance of foreign direct investment for the economic development and notices that in many of the developing countries foreign direct investment inflows have played very significant and supportive role in the development of the economies. The researchers cited the example of China and pointed out that foreign investment in different sectors of Chinese economy has brought high level of improvement in the performance of these sectors and the overall economic growth of the country is also supported from the foreign direct investment.

Moreover many of the Latin American countries also observed significant improvement in the performance and productivity of their economies as a result of business operations and activities of foreign companies. In most of the countries the manufacturing sectors became more productive and efficient as a result of foreign direct investment because the foreign companies generally introduce new manufacturing technology, machinery and tools that not only save the time and cost of production but also improves the quality and standard of the products manufactured in the host countries.

In this way the overall standard and productivity of the host countries’ manufacturing sector is improved and foreign direct investment proves to be beneficial for the economies of the host countries. Andreas (2002) also conducted an empirical study on Foreign Direct Investment in a Developing Country. The study was based on the data on foreign direct investment of the countries that are relatively skilled labor and capital scare countries. The research look at the patterns of multinational companies’ activities in the developing countries and suggests that the “existence of both economies of scale and imperfectly competitive markets are important for inducing firms to expand abroad” (Bende et al, 2004, p25).

Robert (2003) studied the importance of foreign direct investment for the economic growth of the countries and revealed that there is rising emphasis of the researchers on the issues related to the foreign direct investment because FDI is gaining importance as a form of capital flow. At the same time FDI is also proved to be a very reliable form of investment specially the developing countries can support their economies by getting involve in short term investments. The researcher also observed that in the current situation the multinational companies are taking control of the world economy.

His study also present the statistical evidences to show the increasing trend of FDI that’s has resulted in increase of world’s capital outflow. Robert (1998) studied the factors associated with foreign direct investment and came to the point that Foreign Direct Investment is a complex phenomenon that requires acquisition of 10% or more of the assets of a foreign enterprise. There is lot of decisions to be taken by the company before getting in to the process of foreign direct investment. The researcher observed that market and labor conditions of the host countries matter a lot in deciding several things about the FDI.

Foreign direct investments play very crucial role in generating the employments, raising productivity, transferring skills and technology, enhancing exports and at the same time FDI also contribute towards long term economic development of the countries. The importance and significance of foreign direct investment is further proved from different theories presented by the economic experts regarding the role of foreign direct investment in the economic development of the countries.

There are different micro economic and macroeconomic theories presented by the experts for example the classical microeconomics theory of FDI assumes that domestic competitions might cause a decline in the profit rate of the industrial countries because when domestic competition is created in a country the local firms of the developing countries also got engage in FDI (Yamin, 2000).

The Microeconomic theory of FDI was presented by Hymer in 1960. There are three exploratory approaches towards FDI. The microeconomic theory is concerned with the reasons that the firms face low rate of profit while investing in other countries due to the domestic competition but still these companies remain interested in investing in other countries. The microeconomics theory of FDI also insists that investing in other countries requires more cost and when any firm initiate any project in another country for the first time, the firm faces even more problems and it has to pay extra cost for material and skills.

This problem arises because the firm is not familiar with the working culture and market condition of the new country. The three approaches that explains the reason being the investor’s thinking are the “Ownership advantage, Locational Advantages and Internalization advantage” (Dunning and Rugman, 1985, p228). The Ownership Advantages are those advantages that arise from economies of scale. The ownership advantages include the benefits of having intangible assets like the availability of skilled management and organizational know how.

These factors possess great advantage for the firms and such firms gain more profit within the country rather investing abroad. The Locational Advantages are associates with the stages of production of a product and the role of technology in the process. According to the theory a product go through many stages and complete a production cycle before coming in the market. At first the product in being used in the home country and then it is exported to other countries as well after standardization. In this way the firms get advantage of utilizing several products available within the country.

The Internalization advantages are the benefits enjoyed by a firm in case of getting involved in the foreign production process itself. In this case the local firm doesn’t go for sub contracting or licensing but they conduct the production process by their own. These are the three approaches presented in the micro economics theory however the experts believe that these theoretical approaches are not comprehensive and exclusive. (Yamin, 2000)

The old literature emphasized on a macro level approach towards foreign direct investment. The macro level theory is concerned with the explanations that why foreign direct investment is done. In this context there is a Rate of Profit theory that explains that FDI is done for free and broad flow of capital at international level. Another approach is vent for surplus that explains that due to low wages conditions in other country the capital is shifted there to get he benefits of the conditions. Political conditions also come in consideration under this theory (Heledd, 2006).

Bradley (2006) discussed the macroeconomic theory of foreign direct investment and explained that the macro economic theory of FDI emphasizes that the countries that have capital intensive industrial sector invest in other countries where the industrial sector is capital poor and the labor cost is comparatively low. According to the theory the developed countries made this investment in order to maximize their profits. The macro economic theory of foreign direct investment is supported by the thought that in a perfect competitive market when there is rise in the demand and profit gains of any industry then the rate of profit is dropped because many new companies rushed towards the market and there is eventually decline in the profit of that industry.

The macro economic theory of Foreign Direct investment was much criticized by Hymer and some other economists and experts. It was argued that this theory is too much general and does not speak specifically on any aspect or sector. Dunning also criticized the theory and stated that the theory is not compatible in the modern world and there are many aspects that are uncovered in the approach.

However despite all the criticism and controversies regarding the theories of foreign direct investment, it is widely believed that foreign direct investment possesses the potential to accelerate the economic growth of the countries at high speed thus it is very important that the government and the private sector should work jointly to make the investment regime of their country more attractive for the foreign investors so that they can enjoy the benefits of foreign direct investment and the economy of their country can also get sound support from FDI in different ways identified by the experts.

Miria (2001) discusses the issue of foreign direct investment in relation with the Sub Sahara African region and pointed out that the business environment prevailing in most of the African countries is very inadequate and discouraging for attracting high quality foreign direct investment.

This is because the incentive framework of most of the African countries is not encouraging for the foreign investors. Through there is improvement observed in the foreign direct investment general framework adopted by the African countries in the recent years but there are still many barriers that are hindering greater inflows of foreign direct investment in the region. For example in most of the African countries there are certain sectors where still only domestic firms are allowed to enter and the foreign firms have given either very limited or low right to entry.

The complexities in the required registration for the foreign investors are also among important barriers for FDI in Africa. The researcher observed that in recent years the governments of the African countries have taken several steps to make their investment regimes attractive for the foreign investors like streamlining incentives for the investors and harmonizing the investors by signing different agreements and treaties on regional and international level but despite these measures the present situation is discouraging for the foreign investors because there is still implication of many generous investment incentives like costly tax holidays etc.

Foreign Direct Investment and Nigerian Economy

This section describes the current situation of foreign direct investment in Nigeria. In this regard an overview of the Nigerian investment regime is presented to have a cleat picture of current situation of investment opportunities and problems in Nigeria. The main factors influencing the foreign direct investment inflows to Nigeria are identified and the main sector possessing potential to attract FDI is also highlighted in this section. Moreover the major problems and barriers faced by the foreign investors in Nigeria are also pointed out in this section in order to have an understanding about the reasons behind low rate of FDI in the country.

Nigerian Investment Regime – An Overview

Nigeria possesses highest potential for the foreign investments in African continent because the country is blesses by the nature with abundant natural as well as human resources. There is no rival of Nigerian markets in the African continent because as compared with other African countries the work force of Nigeria is highly trained, there is huge arable land and the weather conditions are supportive for different agricultural and productive activities.

The natural resources are also present in abundance like crude oil, coal, bitumen, gypsum etc that can support different industrial activities like construction, pharmaceuticals, food processing and manufacturing but despite all these advantages the Nigerian investment regime is not regarded as an attractive option for the foreign investors because due to lack of proper management and planning the country fails to take the benefits of all the blessings of nature in term of capturing the attention of the foreign investors.

The economic experts concerned with the Nigerian investment regime conditions worked out for the identification of different factors that are responsible behind the low inflows of foreign direct investment in the country and it is revealed by many of the experts and researchers that dependency on the oil sector and uncertain business environment are the major issues that discourage the foreign investors and multinational companies to invest their capital in different industries and sectors of Nigerian economy and as a result the rate of FDI remains very low in Nigeria (Julius, 2003).

Foreign direct investment inflows in Nigeria are highly influenced by the trade policies and tariff systems implemented in the trade regime of country from time to time. The trade policy of Nigeria has gone through phases of certain reforms, strictness and liberalization measures. In the beginning the government of Nigeria formulated such policies that were mainly focused on protectionism rather then trade liberalization (Oyejide and Ademola, 2002).

Since 1960s the government of Nigeria adopted the strategy to enact different tariffs so that with the help of the earning of these tariffs there could be an increase in the fiscal revenues. At the same time the policies were intended to protect the domestic industries due to which the local industries are saved from the competition at domestic and international level (Adenikinju, 2005). At the same time the trade policy is also marked with different non-tariff barriers including the quotas, prohibitions and licensing schemes that were enacted on the import of different items.

The government tend to promote the link between different domestic economies and to promote the manufacturing exports. Trade policies are also intended to diversity the economy of the country towards the non oil sectors (Olaniyi, 2005). As per the intentions of the government the main emphasis of the trade policy till the beginning remained on the discouragement of the dumping and on providing the support to the import substitution.

Moreover the trade policy also strives to adverse movements in the balance of payments and to conserving foreign exchange (Bankole and Bankole: 2004). During the 1970s also the trade policy of Nigeria was mainly intended to protect the local manufacturers through the implementation of the restrictions as well as high import duties. (Ogunkola and Olawale E., 2005)

During 1970 to 1976 the government of Nigeria took some positive steps to attract the foreign direct investment and for this purpose the trade and investment policies were made less restrictive. Later in 1980s the trade policies of Nigeria were mostly focused on export promotion so that there could be intensive use of the raw material but in 1982 the major lapse in the oil prices in the global market destroy the improving graph of the trade liberalization and the government raised tariffs on the import of certain items that was followed by certain import licensing and foreign regulation policies due to which the investment regime of Nigeria became less attractive for the foreign investors however after 1986 there were some major efforts made to liberalize the trade regime and SAP was implemented for this purpose.

At present the trade polices of the country are mainly emphasized upon providing the facilitation to the local manufacturers and exporters (Ukaoha et al, 2005). The trade policies of Nigeria are not regarded liberal and positive enough to attract the foreign direct investment and it is suggested by most of the economic experts that the government of Nigeria must look towards some ways through which they can attract more foreign investors towards different sectors in Nigeria and the country can get financial support from the FDI inflows to proceed in the upward direction.

In a report related with the Nigerian economy WTO has also stressed upon the need of improving the trade regime of the country (WTO, 2005) because trade liberalization is basic requirement to attract the foreign investors in the country however the government of Nigeria keeps the view that in order to provide protection to the local industries, companies and manufacturers they have designed some strict tariff rates so that the local industries can also be developed (Olaniyi and Oyinlola 2005).

On the other hand the experts believe that due to the strict tariff rates, the flow of the foreign direct investment are not coming in the country at high rates and as a result there is little exchange of knowledge, introduction of new techniques of production and financial opportunities in the country and the rate economic development also remains at low level that’s why the trade liberalization measures including the reforms in the tariff system are very necessary for bringing FDI in Nigeria and to support the economy of the country (Winters and Allan 2002).

The government of Nigeria has been formulating many strategies and plans to promote the trade related activities in the country. Among these measures NEED program is an important one that is a medium term economic strategy for the time period of 2003-2007. The four main objectives of this program are “reorienting values, reducing poverty, creating wealth and generating employment” (Ukaoha et al, 2005, n.p).

The program work for attaining these objectives in the trade areas as well and strives to promote the integration of Nigeria with the international community. NEEDS is intended to reduce the uncertainty and unpredictability of the trade policy regime prevailing in Nigeria and to harmonize the trade practices with the country with different countries of Africa specially with the West African States (ECOWAS) countries. (Ukaoha et al, 2005).

The US department of States (2007) reviews the Nigerian investment regime and pointed out that lack of security, poor infra structure and little focus on the democratic principles are the major problems that are responsible for low levels of FDI inflows in Nigeria. The foreign direct investment inflows remain just 6 percent of the total GDP of the country in the year 2007 that is not a very significant ratio and the Nigerian government is essentially required to remove the obstacles that are hindering the entry and successful operations of foreign investors in the country.

Otepola and Ayorinde (2002) that there are some very positive attributes due to which Nigeria can be cited as an important destination for the foreign investors however in order to become an important player of the regional as well as international market, it is very essential that Nigeria must concentrate towards resolving the critical issues that are discouraging the foreign investors to invest in Nigeria.

The infrastructure of the country is weak enough that it can be called as a decaying infrastructure and the regulatory environment is also very poor that the foreign investors can see only complexities and complications from outside. It is also very important that the non oil sectors should also be groomed and bring in front of the world as a targeted market for foreign investment for example the telecommunication sector possesses great potential for attracting FDI in Nigeria.

Thus the government should formulate and implement some solid and positive reforms in the telecommunication sector so that foreign companies can initiate their projects in this sector and the FDI inflows can help the country in attaining sustainable level of economic growth. For attracting foreign companies towards the Nigerian telecommunication sector, the Nigerian government should also assure the foreign investors security of life and safe business operations, adequate infrastructure, smooth supply of the energy resources to their business sites and fairness of regulatory process.

Adeolu (2007) conducted a research study to investigate the empirical relationship between foreign direct investment and economic growth on Nigeria. The research study also examined the determinants of foreign investment in Nigeria and it is found from the research study that factors including “market size, infrastructure development and stable macroeconomic policy” (Adeolu, 2007, p265) are among the major determinants of foreign investment in Nigeria. It is also found that foreign investment can contribute positively towards the economic development of Nigeria because on many of the economic components the effects of FDI are found to be positive.

It is also found that the Nigerian communication sector possesses the highest potential and capability to attract foreign direct investment and then to significantly affect the economic development of the country. The potential of communication sector for foreign direct investment is observed even more then the oil sector. On the other hand it is found that the foreign investment in the manufacturing sector can negatively affect the economy because of poor infrastructure and unavailability of skilled and trained labor. The Nigerian workforce is also found with low skills and low education level and it is observed that for attracting more foreign investment in different sectors of Nigerian economy it is very necessary that the people must be given adequate education and update technical knowledge and training.

Anyanwu (2005) notices that being an important country of the African region, Nigeria has great potential to attract the foreign investor but unfortunately there are some very critical issues that are making the Nigerian investment regime unattractive and non profitable for the foreign investor. In order to attract the foreign direct investment it is very essential that all the main factors affecting the inflow of FDI should be identified and then measures should be taken to resolve those issues so that the economic growth of the country can get the support from the FDI inflow.

The weak infrastructure of the country and the insecurity prevailing in the social, business and political environment of Nigeria are among the most important barriers that are hindering high inflows of FDI in the country. If the Nigerian government took some solid and positive steps towards the improvement of infrastructure condition and law and order situation of the country then the foreign investors can be attracted towards different sectors of Nigerian business world because despite realizing the geographical importance of Nigeria, many of the foreign investors and multinational companies avoid to invest in Nigeria because they see high level of risks in Nigerian business environment due to lack of security and stability.

The researcher further explains the importance of controlling the law and order situation for the assurance of the foreign investors that theft is a very common problem encountered by the people in Nigeria and there are many cases where the imported and expensive machinery and tools are stolen from the business sites and the foreign companies also have to bear heavy losses due to the theft of their property. Along with the financial loss their work is also badly affected due to the sudden absence of their essential tools and machinery and they are much disappointed due to this situation to conduct their operations in the country.

Thus it is very important that the government should work for the security of the domestic as well as foreign companies’ property so that they can work without interruption. Moreover the basic infrastructure of the country is also in great need of major transformation to support the business activities and to attract foreign direct investment. Adeolu (2007) pointed out that the effects of foreign direct investment are found significant from most of the studies related with the FDI and Nigeria however in some of the research studied it is also found that FDI effects negatively on the economic development of Nigeria due to the reasons of distortions. Adeolu referred to some research studies and found that GDP and FDI are found positively related with each other in Nigeria

Opportunities and Restrictions for Foreign Investors

Adeolu (2007) analyzed the current situation of Nigerian investment regime in attracting foreign direct investment and pointed out that historically the oil sector is the main recipient of foreign investment in Nigeria and some other important sectors like Agriculture, transport and communications, and building and construction have not been given importance by the foreign investor due to low level of growth and development in these sectors. However along with the passage of time some development in non oil sector and the policies of the Nigerian government to diversify the economy resulted in the improvement of the condition of the non oil sectors and transport and communications sector also become attractive destination for the foreign investors.

The Nigerian telecommunication sector especially showed good level of growth and development and appeared to be highly attractive sector for the foreign investors because at present Nigeria is regarded as the fastest growing mobile phone market in the world. The mobile phone operators were granted the licenses in 2001 and since then there have been increase record in the number of subscribers of the mobile phone in the country. At present there is very tough and healthy competition between the four major mobile phone operators in Nigeria including MTN, V-mobile, Glo and M-Tel. As a result of their competition the rates are down and consumers are getting good quality of services. In this situation the foreign investment in the sector will be profitable as well as successful.

Otepola and Ayorinde (2004) analyze the situation of foreign direct investment in Nigeria and revealed that the main determinants of FDI inflows to Nigeria include “market size, stable macroeconomic policies and a level of human capital tolerable by investors” (Otepola, Ayorinde), 2004, p657). Moreover the relationship between economic growth of the country and the FDI inflows is also found positive according to the results of the research study and it is also noticed by the researchers that the Nigerian communication has the highest capability and potential to support the economic development of the country by attracting high FDI inflows.

On the other hand the Nigerian manufacturing sector is not found to be significantly progressing to support the economy by attracting foreign investment mainly because the present business environment of the country is not supportive for the manufacturing sector activities. The study also indicated that despite having huge population Nigeria lacks skilled, qualified and well trained workforce and it is an important barrier that hinders the high FDI inflows to Nigeria.

Thus it is very important that the government must make arrangement for the skill development and training of the work force and along with that the infrastructure, regulation process, trade policies, law and order situation and energy resources supply must be made adequate to support different business activities and to encourage the foreign investors so that Nigeria can enjoy the benefits of foreign direct investment.

Julius (2003) reviews the Nigerian investment regime and notices that the oil and gas sector are the most attractive sectors for the foreign investors as these sectors have the potential to generate high profits in the international markets. There is certain sub sectors also established within the oil and gas sector where the foreign investors found great potential for investment like “Crude oil refining, transportation and storage, Production of liquefied natural gas, Manufacture of gas cylinders, valves and burners, Processing plant for refined mineral oil, petroleum jelly and grease, Chemical industries, Fertilizer plants and Petrochemical plants, rubber and plastics plants” (Julius, 2003, n.p).

Along with these sub sectors of oil and gas the food processing industry is also now regarded as an attractive destination for the foreign investors in Nigeria. The international research institutes like Marubeni Corporation’s Economic Research Institute have identified that the production of vegetable oil tantalite, and fruits processing could also be a profitable investment for the foreign investors in Nigeria. The main attractions for the foreign investors in the Nigerian food industry could be the production of the “Food preservation, Animal feeds production, Fruits processing, Livestock and abattoir development, Fabrication of small agricultural tools, Production of agricultural chemicals Trawling fish and shrimps, and large scale integration farming” (Julius, 2003, n.p).

The foreign companies like Japanese and American companies have made their investments in these sub sectors of Nigerian food industry during last few years that is regarded a positive sign for the Nigerian economy. Moreover the solid mineral sector is also important for attracting the foreign investment because Nigerian possesses reserves of solid minerals including “Limestone, Coal, Tantalite, Gypsum, Gold, Barite, Marble, Manganese, Lead/zinc, Bitumen, Tin and columbine, Iron ore, Kaolin, etc” (Julius, 2003, n.p) and the foreign companies have shown their interest to invest in exploring and extracting these minerals from Nigerian land.

UNCTAD (2007) observed in World Investment report 2007 that Nigerian government is attempting to attract foreign investors and companies to the country and for this purpose the government offers some incentives to the foreign investors.

For example the Nigerian government implemented the law to allow 100 percent ownership of the business to the foreign investors that was not allowed in the past, moreover the Nigerian government has also signed different trade agreements with different European countries and US like Cotonou Agreement for the promotion of foreign direct investment however the weak infrastructure of the country is still major barrier in attracting FDI and the government along with formulating different laws and flexible regulations is required to focus upon the development and improvement of the basic infrastructure so that the foreign companies can be sure of their successful business operations in Nigeria.

Along with building the infrastructure of solid basis, the Nigerian government is also required to take control over the law and order situation in the country because at present the increasing rate of crimes, violence, conflict and corruption are also decaying the image of Nigeria in front of world community and the government is required to improve this image by encountering the issue of law and order. There is also need of relaxing the tariffs and tax laws for the investors in order to establish an investor friendly business environment that can encourage the foreign investors to come and invest in Nigeria.

Adelegan (2000) noticed that the Nigerian government is emphasizing upon the development and improvement of certain sectors of Nigerian economy to make them attractive for foreign investments. After the boom in the oil prices in the global market, the non oil sectors were badly affected in Nigeria and the basic infrastructure of the country also became weak However later the Nigerian government focused upon the development of the non oil sectors as well and there are some positive steps taken by the government for the improvement of the conditions of the non oil sector.

For example there were some reforms and plans introduced for the betterment of the rail and roadways system. The Transport Master Plan was formulated by the government for the rehabilitation of the railway system wit the standard gauge so that the railway system can meet the increasing demands and requirements of the commercial and industrial sector activities. The government is also emphasizing upon improving the human infrastructure in the country. The Nigerian workforce has regarded as highly skilled and highly educated man power of the African region and according to the African Competitive Report 2000/2001, the Nigerian human resources has high potential to meet the requirements of the foreign investors.

The Universal Basic Education Program was introduced by the Nigerian government so that all the people of the country can get access to the education. The private sector was also encouraged to invest in the education sector so that the Nigerian labor can get advanced and modern education and training and could become innovative, competitive and technology driven and can serve the demands of the foreign and domestic investors in best possible way. In this way the government attempted to attract the foreign investors through the availability of improved infrastructure and trained work force in the country.

Funki and Nasuli (2003) revealed that the Nigerian oil and gas sectors are regarded most important and attractive sectors for the foreign investors however the other sector of Nigerian economy also possess potential for generating high profits if the government and the international companies pay attention towards these sectors. For example the service sector and the telecom industry can also become an important source of attracting foreign direct investment where the foreign investors can invest their money for the provision of the network links, sales and installation of terminal equipments, manufacture of telecommunication equipments and accessories, etc.

The researchers noticed that the government of Nigeria has also somewhat realized the important and potential of the telecommunication sector to become a destination for the foreign investment and during last few years there are some developments also took place in the telecommunication sector as a result of the government measures to improve the telecommunication infrastructure of the country. The Nigeria Communications Commission (NCC) issues licenses to 12 fixed wireless operators in 2002. These operators have 363,284-installed capacity and 120,771 subscribers.

Along with this licenses were also granted to two GSM mobile operators that have the combined installed capacity of 1,223,942 lines and 1,004,592 subscribers. In this way there have been some improvement brought in the telecommunication sector and the foreign investors are encourages to invest their capital however there is still need of nurturing the infrastructure that is regarded weak for the successful conduction of various telecommunication sector related business activities.

Akinlo (2004) revealed that Nigerian government has taken some steps for the improvement of the conditions of the Nigerian investment regime that is a positive sign, indicating that the Nigerian government has realized the importance of attracting foreign direct investment in the country for supporting the economic development. There are some reforms implemented to face the challenge of corruption. Corruption is an important issue that prevents the foreign investor to operate in Nigeria and the government too realized this fact.

In 2000 the realizing Anti-Corruption and other Offences Act of 2000 was signed and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) was established under this law. This anti corruption court was given lot of powers and authorities that it can investigate as well as prosecute the corruption suspects. There were many cases of corruption addressed by the court and the situation of corruption became somewhat better in Nigeria however truly speaking there is still lot of corruption at government as well as private level and the foreign investors still face many problems due to this corruption and are discouraged to invest in Nigeria. There is still need of taking some reforms to handle the critical issue of corruption so that the FDI inflows could be increased for the country.

De Mello (2002) revealed that Nigeria possesses some very positive features and attractions for the foreign investors. The country is blessed with abundant human as well as natural resources and the market size is also very large. Due to these positive sins, Nigeria is among the top three African countries with respect of foreign direct investment inflows. However if looking in the perspective of availability of human and natural resources in Nigeria, it is found that the foreign direct investment inflows are very low in the country due to which there is still very unclear link between the foreign direct investment and economic development of Nigeria.

Almost 60 percent of the foreign investments are made in the Nigerian oil sector due to which the influence of the oil sector remains very high on the economic development and the other sectors failed to play an effective role for the economic development of the country. Morisset (2000) conducted research study to identify the main determinants of FDI inflows to the African countries. The study of FDI inflows to Nigeria shows that the political instability in the country and the human capital are negatively related with the foreign direct investment inflows. On the other hand the GDP of the country, openness and infrastructure are positively related with FDI inflows

Ariyo (2004) notices that the importance and significance of foreign direct investment has been realized by most of the countries and there have been different measures taken by the developing and developed nations to attract the FDI inflows to their countries so that they can take benefits of varied advantages of foreign investment inflows. The African countries are also attempting to attract more foreign direct investment in their different sectors of economy and Nigeria, the most important economic centre of the African regions is also taking different steps to attract foreign investors and multinational companies to the country.

Nigeria also joined New Partnership for Africa’s Development (NEPAD) to organize its efforts to attract foreign direct investment in different sectors. The problems of corruption, inadequate infrastructure and restricted trade regime are the main barriers hindering the rise in foreign direct investment inflows in Nigeria however it is also a fact that different sector of Nigerian economy especially the communication and service sector possess great potential for the foreign investors and if managed properly these sectors can accelerate the economic growth of the country by attracting multinational companies and investors.

For this purpose there is need of not only improving the infrastructure and business environment conditions of Nigeria but the Nigerian workforce also requires skill development and training to become useful for the foreign investors. Julius (2003) notices that the investment regime in Nigeria is facing some very serious challenges and due to these challenges the flow of foreign direct investment is very low in the country. The major problem is the high dependency of Nigeria on the oil sector that brings 95 percent of the total foreign currency in the country and almost 80 percent of Nigerian national budget also depends upon this sector. As a result the other sectors lack development and the flow of foreign investment also remains very low in different sectors of Nigerian economy.

Along with dependency on the oil sector the economic policies of the country were also not supporting for the foreign investors especially during the military regime and the high budget deficit also discourages the investors to bring their money in different sectors of Nigerian economy.

It is also a major issue for the foreign investors that the infrastructure of the country is weak enough that different business related activities could not be conducted in desired manner and as a result the productivity of different sector remains at very low level. The corruption problem works along with the unstable regulatory and institutional environment and further discourages the foreign investors and the uncertain business environment surrounded by criminal activities is also an important reason behind the low rate of foreign direct investment in Nigeria.

Thus it is revealed that there are some very serious and challenging issues that are hindering the high inflows of foreign direct investment in Nigeria. It is also a fact that there are some complexities in the Nigerian business process like the multiplicity of approving agencies and high interest rate due to which the Nigerian investment regime is not attractive for the foreign investors

History and Facts about Foreign Direct Investment in Nigeria

Adeolu (2007) revealed that Nigeria in an important recipient of foreign direct investment in the African continent and after Angola Nigeria was the second largest FDI recipient country in Africa in 2001 and 2002. The Nigerian government has also noticed the importance of foreign direct investment for accelerating the economic development and in order to take the benefits of FDI both at political and economic grounds, the Nigerian government formulated and implemented several policies and strategies from time to time.

The experts however believe that all of the policies implemented by the Nigerian government were not aimed at promoting foreign direct investment but some of the indigenization policies of government like Nigeria Enterprise Promotion Decree (NEPD) was aimed at regulating the foreign direct investment inflows to the country rather then promoting and encouraging foreign investment.

In 1972 Nigerian government introduced NEPD that limited the foreign equity participation in different important sectors of Nigerian economy like the manufacturing and commercial sectors. The foreign companies very allowed maximum of 60 percent ownership in these sectors and in 1977 this ownership was further reduced to maximum of 40 percent through the implementation of second decree. In this way the foreign investor faced lot of restrictions on Nigeria during 1972 to 1995 and as a result of this restricted investment environment the foreign participation in total GDP of the country also remained at very low level.

In 1985 the Structural Adjustment Program SAP was initiated with the intention of reforming the investment regime and some of the hostile polices were terminated. In 1988 The Industrial Development Coordinating Committee (IDCC) was established with the intention of facilitating and encouraging the foreign investors through the establishment of this one step agency that was replaced with the Nigerian Investment Promotion Commission Decree 16 of 1995. In 1995 there was a major change occurred in the investment environment of the country when NIPC allowed 100 percent ownership to the foreign investors in several sectors and industries.

NIPC also assured the foreign investors that the documentation process will be made easy and fast for them and after getting all the necessary documents from the investors, NIPC committed to approve their applications within 14 days. Earlier there was time of four weeks taken by IDCC for the approval of the investment applications. The establishment of export processing zone (EPZ) scheme in 1999 was also a positive step to encourage the foreign investors that allowed the investors to invest and establish their businesses in different zones and sectors especially in the manufacturing sector.

Thus it is found that the adaptation of SAP brought some major changes in the investment regime of the country and there were five major policies introduced by the Nigerian government after SAP implementation including “establishment of the Industrial Development Coordinating Committee (IDCC), investment incentive strategy, non-oil export stimulation and expansion, the privatization and commercialization program, and the shift in macroeconomic management in favor of industrialization, deregulation and market-based arrangements”. (NIPC Homepage, 2007)

Ekpo (2003) notices that adoption of SAP by the Nigerian government in 1980s draw some positive impacts upon the foreign direct investment inflows and there was a gradual increase recorded after 1980s in FDI to Nigeria because most of the measures taken under SAP reforms were meant at liberalizing the trade policies and to make the investment regime attractive and open for the investors.

During 1990 to 1993, there was massive drop in the FDI inflows to Nigeria, mainly because during that time period the country was going through the phase of political instability and the business environment was highly uncertain and unstable due to which the investors were not attracted towards the country. However the establishment of Nigerian Investment Promotion Commission (NIPC) was regarded as an important step towards encouraging the investors through the liberalization measures. Due to some of the positive measures taken by NIPC the FDI inflows were increased to Nigeria especially there were more investments made by the foreign investors in the non oil sector.

Some of the important measures taken by NIPC to liberalize the Nigerian investment regime include “guided deregulation, Foreign Exchange (Monitoring and Miscellaneous Provisions) Decree 1999, and the establishment of export processing zones (EPZ) (Ekpo, 2003, p59).

The privatization and commercialization practice done by the Nigerian government also attracted foreign investors and the FDI inflows to Nigeria were increased. The deregulation of the telecommunication sector and granting of licenses to the mobile phone operators also contributed towards the growth of the telecommunication sector in Nigeria and the foreign investor started considering the sector as a profitable mean of investment. As a result the FDI inflows to Nigerian telecommunication sector reached to the level of US$50 million in 1999 and US$2.1 billion in 2002.

The credit of this increase was mainly given to the granting of GSM licenses to the private operators. However despite all of these measures the oil sector is still the main recipient of foreign direct investment in Nigeria. The Nigerian manufacturing sector started attracting foreign investment mainly after the adaptation of SAP measures in 1980s however the infrastructure problem and inadequate supply of energy resources to the manufacturing units kept the level of foreign investment at low level for the manufacturing sector.

Thus the entire situation demands that Nigerian government must work further to improve the conditions of the investment regime and business environment of the country to encourage the foreign investors and companies. In this regard the government is required to focus on some important issues like creation of a favorable business environment through the provision of infrastructure facilities, restriction of imports, and the privatization and commercialization program.

UNCTAD (2007) discloses in a report related with the African countries’ investment regime that during 2000 to 2007, Nigeria received almost 30 percent of the total foreign direct investment inflows that came to the African continent however if on the debt and equity portfolio there is just 6 percent of the portfolio inflows received by Nigeria during 2000 to 2007 and other African countries like South Africa (88 percent) and Kenya (6.5 percent) took the major shares.

In this way Nigeria received just 6 percent of $59 billions equity portfolio during this time period because according to the FDI trends bulk of FDI goes to the natural resources sector other then South Africa and the banking and telecommunication sectors in Nigeria are less focused by the foreign investors due to lack of development and growth of these sectors and uncertainty of the business environment. In the same way the Nigerian manufacturing and the agriculture sectors receive little inflows of FDI though these sectors have great potential to attract FDI as well as to support the economic growth.

UNCTAD (2007) discloses in the World Investment Report that in 2008 during the last few years there is some improvement observed in the FDI inflows coming to Nigeria and it is expected that Nigeria will continue with the same trends of foreign direct investment that were seen during last three to four years. The report further explains that till 2002 and 2003 the FDI growth statistics was not encouraging for Nigeria as in 2003 there were $2.4bn received by the country that was less then the FDI inflows of 2002 however after 2004 there was significant improvement recorded in the FDI growth and Nigeria received US$ 3.4bn in 2005 and US$5.4 in the year 2006.

There is significant rise observed in the FDI inflows coming to the country and in the light of the FDI data of these years, UNSTAD projected that in Nigeria FDI will reached to the level of $7.5bn in 2007 and US$8.6bn in 2008. In the same way the ratio of FDI also increases in the total GDP of the country that became 43 percent of GDP in 2003. The following fact sheet issued by UNCTAD further presents the FDI statistics and trends related with Nigeria as compared with African countries and the world.

UNCTAD (2007) reviews the Nigerian investment regime in the perspective of attracting foreign direct investment in details in the world investment report and also identified some of the major factors that highly affect the FDI to Nigeria. UNCTAD observed that Nigeria possesses the capability to become attractive center of foreign direct investment because the population of Nigeria is very huge that assures the availability of abundant human resource, the Nigerian market size is also bigger then most of the African countries and the location of the country is also very important in the African region because it is situated in the nerve center of Africa continent.

Moreover the natural resources are also present in the country in abundance that makes the country more important from the perspective of foreign investment. It is revealed in the World Investment report 2007 that at present the situation of FDI is not as much disappointing for Nigeria as it was some years ago because now FDI inflows to Nigeria are increasing.

Nigeria was the second largest FDI recipient African country after Egypt in 2005 and 2006. The oil sector is the main recipient of foreign direct investment and China has become the major investor in the Nigerian oil sector however there are serious challenges encountered by the Nigerian investment regime including “lure of globalization; the issues of poverty; high prices and buoyant global demand for oil and other minerals; increased cross-border mergers and acquisitions (that tripled in 2006 and 400 percent annual increased in 2007); and misguided policies of the government” (World Investment Report, 2007).

Due to these challenges Nigeria is still struggling to become an attractive destination for the foreign investors. The political conditions also play important role in determining the FDI inflows and the establishment of democratic government in Nigeria is also considered as a hopeful development that can encourage the foreign investors to invest in Nigeria because according to UNCTAD analysis the democratic government can assure stable market conditions in the country better then the military regime.

At present the FDI is not responsible for economic development in Nigeria but unfortunately some negative attributes of Nigerian economy are responsible for lack of significant support of FDI towards the economic development in the country. These negative attributes of Nigerian economy were identified in UNCTAD report as “corruption, political fallout, socioeconomic, environmental, legal, and cultural and labor variables, mutual distrust, street crimes, bribery, non observance of the rule of law, long-standing deep seated tribalism and the level of gross underdevelopment in the oil rich regions of Nigeria”. (UNCTAD World Investment Report, 2007)

Foreign direct investment oxerview

Summary

The chapter was intended to study in details foreign direct investment FDI and its significance for the economic development in general as well as in the perspective of Nigerian economy. It is revealed from the review of different researches presented in the chapter above that foreign direct investment possesses the potential to act as the vehicle for economic development and through out the world history there are certain examples of countries like China and Latin American countries, where foreign direct investment has contributed significantly towards the improvement of the economic conditions.

There are certain benefits that the host country can enjoy after receiving foreign direct investment like the increment in the trade volume, technology transfer, improvement in the level of work force’ skills and technical knowledge, revenues through tariffs and import duties and increase in the productivity and standard of the domestic products.

Thus it is found that the governments of the countries generally tent to provide different benefits and incentives to the foreign companies so that they can encourage them to invest in different sectors of their economy however foreign direct investment can work significantly towards the improvement of the economic condition of the host country when certain other important variables like infrastructure, business environment, regulatory conditions, government policies and work force capabilities also work favorably with the foreign companies.

The chapter also presented the review of the research studied related with FDI inflow to Nigeria to have complete understanding of the issues related with foreign direct investment inflows to the country. In this regard it is found that the Nigerian investment regime is much attractive for the foreign investors because there are some very critical issues and problems that are surrounding the Nigerian investment regime and these problems discourage the foreign companies to invest their money in Nigeria.

First of all the dependency of the country on the oil sector resulted in the neglect and lack of growth and development of the non oil sectors due to which the foreign companies found little attractions in the non oil sector and their investment remain very low in the telecommunication, service, manufacturing and other important sectors that possess great potential for foreign investment but are not developed enough to attract major share of foreign investment. Moreover the infrastructure of the country is also not developed to support the business related activities due to which the foreign companies avoid to invest in Nigeria.

The other major problems preventing the foreign investors to invest in Nigeria include the corruption, complexities of regulation and registration process, unfair regulatory system, high tariffs and import duties. The review of the literature also describes some of the major steps that have been taken by the Nigerian government from time to time in order to improve the situation of Nigerian investment regime through the implementation of several reforms in different sectors. Some of these reforms and strategies have brought positive results and foreign direct investment to Nigeria has increased during the last few years and it is expected by international experts that Nigeria will continue with the rising trend of the attracting FDI to the country.

Though the above review of the researches provided deep understanding of different aspects of the entire issues and all the problems, limitations and opportunities surrounding the Nigerian investment regime were identified and the role and trend of FDI to Nigeria also became clear however most of the research works were based on the facts and figures compiled by different institutions and organizations and on the basis of these facts and figures the conclusions are drawn by the social scientists.

The opinions of the experts operating in the field and experiencing different difficulties are not collected in the above reviewed researches and thus in order to fill up this gap found in the literature, this research study will further explore this issue with the help of the in depth interviews of different experts that are associated with the Nigerian investment regime for many years so that in the light of the opinions and experiences of these experts, the entire situation could be understood in a batter way and a clear and true picture of the entire situation could also be attained. Thus the following research questions have been formulated in order to fill the research gap with the help of primary research.

  • What is the overall situation of the investment regime in Nigeria in the perspective of attracting foreign direct investment?
  • What steps and strategies can help Nigeria in making its trade regime liberal and attractive for the foreign investors?
  • Which sectors of Nigerian economy have potential to become attractive destination for the foreign investors and how these sectors can be made attractive?

Trade Relations at International Level

Introduction

The research study is aimed at studying Nigerian economy in the perspective of three important drivers of economic development including agriculture, foreign direct investment and trade links with developing countries including China, India and USA. In this regard the agriculture sector and foreign direct investment to Nigeria are studied in details with the help of the review of research studies in the last sections in this section the trade policies of Nigeria are discussed to identify the main problems and opportunities related with the Nigerian trade regime. This chapter is mainly focused on the trade relations of Nigeria with developing nations of the world including US, china and India.

For this purpose first of all there is a general understanding provided of international trade and its importance for the economic development so that it can be explained that why international trade is selected as the driver of economic growth. The significance of international trade for the economic development provides the reason behind studying Nigerian economy in the perspective of trade relations with the developing countries of the world. The trade policies adopted by Nigeria from time to time are discussed and the main barriers and limitations surrounding the Nigerian trade regime are identified in the chapter to have a complete picture of the Nigerian trade regime.

Moreover the chapter also contains the Nigerian trade policies to have an overview of the trade operations of Nigeria at international level. The trade relations of Nigeria are also studied separately for the three selected countries USA, China and India so that the Nigerian bilateral trade relations with these countries could be studied along with the impacts of the trade relations with these countries.

Importance of Trade Relations with countries

Economic growth is one of the major issues for the world community and experts for many years strives to identify the factors that have the potential to effect the economic growth of countries. In this regard there are many economic variables identified by the economic experts like the capital asset stock, labor, land, trade liberalization, FDI, domestic entrepreneur development and so on. International Trade also identified is the major factor that has strong relationship with the economic growth and it is supposed that strong export growth can accelerate the economy of a country. This relationship has been proved by many of the researchers (through different empirical studies and most of the research work came up with the evidences that prove strong links between the international trade and the economic growth.

The economist of the neoclassical school especially believe that international trade especially exports can have major contribution in the economic growth of any country because exports result in the rise in the rate of investment and at the same time the exporting country also get the benefits of large economies of scale when they reach large markets however it is also a fact that the relationship between exports and the economic growth is supported by many of the empirical studies but there is no overall consensus over this issue and some researchers found that the export growth does not supports the economic growth so well that the relationship between these two economic variables could be established.

International trade is simply “the process and physical actions required to convey ownership of goods between sellers and buyers who reside in different countries” (John, 2005, 566). OECD (2008) further explains that International trade is an “engine for development”, providing it’s most important source of finance. It is the practice of exchange of good and services between different countries. When different countries are engaged in cross border trade then these transactions come under the umbrella of international trade. At international level trade has proven it significance and it is observed that in many countries, a large share of GDP is contributed by the international trading transaction.

International trade had enjoyed the recognition as an important growth tools from very beginning however advancement in information and communication technology has further enhanced the importance of international trade and in the era of globalization, international trade has become an integral part of the world businesses. International trade is the economic interaction among different nations involving the exchange of goods and services, that is, exports and imports.

Paul et al (2007) revealed that international trade is such a crucial element for the development of countries that it can called as key driver of country’s economic growth. The researchers also observed that over the last three decades, international trade is significantly assisting countries to secure high rate of growth and development, so the countries must recognize the importance of international trade and they must design such policies and strategies that can help in promoting trade and trade competitiveness to perform well at international level. International trade is not a simple process but a complex one that involves selling, manufacturing and recycling of products and services and along with passage of time it is turning to a challenge rather then a simple transaction.

In a highly competitive market of today there are lots of opportunities available for any organization and at the same time there are lot of factor to focus upon like legal environment and competitors’ positions. Trade and law are closely connected with each other and up to a large extent trade depends upon the law because internationally trade is mainly regulated through treaties and trade agreements between the countries.

Some countries have also enacted duties and tariffs on conducting trading activities within their borders and the trader company has to pay that tariff moreover the trader should also follow the rules and regulations implemented by that country according to international trade law. However this system was discouraging for promotion of international trade and in 19th and 20th century some international organizations came in to existence and started working for regulation of laws in the trading activities among different counties.

These organizations include GATT and WTO. For the implementation and proper regulations of international law, organizations like WTO – World Trade Organization play very important role. The main objective of the formation of WTO is the liberalizations of international exchanges. In order to gain this objective, rules have been formulated that are based on the non discrimination principles. There are two manifestos of WTO’s principle; these are Most Favored Nation Treatment and National Treatment. The Most Favored Nation – MFN treatment is criticized when it is applied to different degree of development of relationships between the countries.

Trade is regarded as the engine of the economic development because if the trade policies of any country are well designed then the country can get many benefits in form of creation of many jobs, increased competition and exchange of knowledge and skills. (WTO, 2005) Due to this importance of trade, most of the countries focus lot on the trade related policies and strategies and attempt to remain competitive in the domestic as well as international trade markets so that they can enjoy the economic benefits of regional and international trade.

International trade is regarded an important factor that can influence the growth and development of the countries and experts believe that if the trade policies and strategies are properly manages by the government and other authorities of the countries then the international trade can accelerate the economic development of countries very well (European Union Commission, 2007). Economic experts all over the world believe that there are strong links between international trade and economic development and the dynamic international trade sectors of most of the developed nations have assures their pace of development over the years. Thus it is very necessary that the countries must focus on the promotion of trade relation activities at regional, domestic and international level in order to support their economic development.

Haishun and Parikh (2000) found that the links between international trade and the economic growth are very strong. Especially in the developing countries there are clear evidences that show that the rise in international trade operations especially exports has led the economic growth of the developing countries as well in term of rise in the annual growth rate. Exports externally affect the non export sector and the marginal productivity of the countries is also an important factor that led to the rise in the exports of a country.

Wang, Z. (1998) notices that the relationship between the international trade and the economic growth is not as much strong that one can make the point that the rise in international trade led to the improvement in the economic development rate of the country. This is because the economic data of many of the countries like Hong Kong and Taiwan denies this relationship and it is found that there are certain other factors that work in this situation and some of the social scientists get the impression that the international trade operations growth is the driving force behind the entire situation.

The researcher further pointed out that that the level of the development and the economic structure of the country are two important issues that have direct effects on the relationship between international trade and the economic growth. When there is low level of development in a country and the economic structure is also based on weak foundations then there are little possibilities that the international trade sector expansion will lead to the improvement in the economic development.

In the same way of there is adequate economic structure supported by the economic development in different other sectors that evidences could be found that international trade and the economic growth proceed in same direction in a country.

However it is also an important point to be notice that when the economic growth of a country is accelerated and a high level is achieved by the annual growth of a country then it becomes less significant to see the role of the international trade in this context especially in the middle income countries. Thus it is very necessary that if a country wants to attain significant level of economic growth then there must be adequate measures for attaining minimum level of development, for which the governments are required to formulate outward oriented developmental policies.

International Trade can also effect the economic growth of countries in different manners because there are certain other factors that are associated with these two variables and it is not possible that both of these proceed in same direction with out taking the effects of the other related factors. It is a fact that the economic growth and international trade operations of a country generally go through long and complex process and there are several structural changes also occurred with the economies of the countries that contributed to the change in the level of the international trade operations as well as economic growth.

Thus in different countries the impact of international trade is different on economic growth because in different countries, the structural changes occur in different manner and thus there are not clear indications that the exports and the economic development are related with each other because the role of certain other factor is much more important in maintaining this relationship and these factors are not present in the economies of different countries in same patterns due to which this relationship is also different in different economies.

Lardy and Nicholas (1995) pointed out that the relationship between international trade and the economic development of a country may exists but at the same time it is also a fact that in different regions and in different sectors this relationship works in quite different manner. Due to which it is not possible to pass an overall judgment over the relationship related with the link of international trade and economic growth. The growth may accelerate the pace of the economic development in one country but it is not necessary that the same patterns and level of export sector growth contributed in the same way to the economic development of another country.

This is because along with international trade there are certain other things that matter most in determining the pace of the economic growth and there are many important variables that work to define the relationship between international trade and the economic growth thus it is a fact that when the overall economic structure of a country is supportive for the development and the export sector also work well then there is possibility that the country will witness positive links between the export growth and the economic development. It is also a fact that the degree of openness means the trade liberalization and the economic structure that supports the domestic entrepreneur is usually different in different countries due to which the patterns of exports and economic growth are also different in these countries.

The exports of a country hugely depend upon the productive capacity of a country as well as on the foreign investments because when the country is efficient in production certain goods and the foreign investment also back this production, then the country can easily fulfill the domestic needs and then export the remaining good to the different countries. Due to the foreign investment the domestic entrepreneurs use to develop fast because they get the opportunity to produce more for meeting the demands of the foreign investors. Thus it is a fact that these conditions work in different manner in different regions. When the government is supportive to the foreign investment, the international trade and export sector grows and ultimately the country is benefited inform of economic growth.

International trade can support the economic development of the countries by increasing the country’s growth rate. Trade also assures long term economic development of the countries because it accumulated human capital and also accelerates research and development work as a result of collaboration of people belonging to different business levels in different countries. Trade also assures transmission of technology from one country to another due to which there could be increased in the skills and technology level of the labor. Skilled and technologically advanced labor generates high level of productivity and as a result the economic development is accelerated.

During the last decade the important of international trade is further realized after the advancement in the communication and transportation technology and it is believed that international trade provides significant impulses for global growth and has led to measurable improvements in the current accounts of this group of countries. The developing nations give more important to managing their trade relation at international level in effective manner as these countries have realized the importance of international trade for economic development. As a result there is increase in the share of value added in the exports of developing countries. There is almost 25 percent increase recorded in the exports of the manufactured goods of the developing countries in global market share as compared with 1980s.

Moreover there is also rise in the export of hi tech products from the developing countries. For effective management of trade at international level it is very important that the countries must assure openness in trade by stabilizing prices and promoting the efficiency gains through increased competition. Trade openness not only benefited the countries in short term by increasing their trade volume and giving them advantage of specialization and economies of scale but in long term also international trade openness helps the countries by enhancing and facilitating productivity that is an important driver for the economic growth.

International trade also requires the countries to adopt trade liberalization policies because liberalization is among the key elements of the international trade strategies however it is very important that the countries must carefully review the costs and benefits of trade liberalization policies before implementing and adopting them.

The countries tend to accelerate their pace of development through international trade operations generally adopt more trade liberalization policies so they can attract other countries through their trade regime by showing them more incentives and benefits. In many of the developing countries there are usually less employment opportunities due to which the governments of these countries invite the other countries investors and companies to initiate projects in their country so that the labor of the home country can get more employment opportunity and can also take the benefit of technology and skills transfer.

However to attract and encourage other countries to initiate different projects in their country, the governments are required to formulate such policies and strategies that can be encouraging for the foreign investors and they can be assured of enjoying the potential benefits of trade liberalization.

With regard to international trade the main and most important organization is WTO – World Trade Organization. It is an international trading body that deals with the laws and rules of the trading operations between the countries. WTO is an important component of international trade and trade law because the trading activities are conducted between countries through different agreements and the WTO agreements secure a prominent position in the international law.

The WTO agreements are often called as WTO trade Rules, in this contrast the organizations is also called a rules-based organizations means that the system of WTO is based on rules. WTO came in to existence on the 1st of January 1995at Geneva Switzerland as a legal and institutional foundation of the international trading system. There are total 151 members of WTO and the organization has the head office in Geneva working with 450 employees.

WTO was established to replace GATT – General Agreement on Tariffs and Trade. The structure and constitutional framework of GATT was adopted by WTO and most of the countries that were the member of GATT became the member of WTO. The constitution of organization is based on Marrakesh Agreement that is final Act after the Uruguay Round of Multilateral Trade Negotiations was signed on 15 April 1994.

This 550 pages document contains all the details regarding the results of the negotiations including the agreement that call for the establishment of the World Trade Organization (WTO), as a single institution that will encompass the framework of GATT. WTO was established to perform an important function of supporting the developing countries to survive in the international trading scene. The developing countries including the African countries like Nigeria face many problems and supply-side constraints due to inadequate infrastructure and poverty and as a result these countries fail to get benefits from the multilateral trading system. WTO arranges different conferences for the support of these countries. A recent example is the arrangement of “Aid-for-Trade (AFT)” program that is created in the sixth Ministerial Conference of WTO in 2007

Nigerian Trade links with developing countries

The importance of trade links with other countries especially with the developing nations has been explained in the last section. In this section the trade links of Nigeria are discussed with some of the developing countries including United States, India and China in order to review the impact of these trade relations on the economic development of the country. In this regard first of all the Nigerian trade regime is analyzed to identify the main trade barriers and opportunities that other countries face while trading with Nigeria and later the historical development and current situation of bilateral trade between Nigeria, US, India and China are discussed separately to have a picture of Nigerian bilateral trade relations.

Nigerian Trade Policies – Historical Developments, Problems and Opportunities

Nigeria is regarded as the most powerful regional player in West Africa. However the economy of Nigeria is inclined towards oil industry and there is unimpressive performance of non oil sector of the country that is less then three percent of the annual revenue of the country. The international trade history of Nigeria is marked with some important incidents. In the year 1982 Nigeria invoked GATT Article XVIII: B on restrictions for balance-of-payments reasons in 1982. After confirming the WTO agreement in 1994, Nigeria became the original member of WTO in 1995.

Later in 1996 these restrictions were reviewed by the Balance of Payment Committee and it was decided by the committee that the restrictions are not justified under the BOP rules of GATT 1994 (USAID, 2002). Nigeria then proposed that all such measures should be eliminated. In 1998 Nigeria presented a 5 years phase out plan in front of WTO for the remaining restrictions but the member countries opposed the restrictions as those were inconsistent with the measures with WTO rules.

In the same year Nigeria filed a notification with WTO Committee on Safeguards through which Nigeria expressed that the prohibition on the import of several materials like wheat flour, sorghum, millet, gypsum and kaolin was means for the safe guard reason and according to the Article 12.7 of the Agreement on Safeguards of GATT 1994 Nigeria requested a waiver and undertake that the restrictions will be eliminated soon. However the importers complaint about the multiplicity of import documents and many trade activities were diverted to other countries. (World Bank Document, 2006)

In order to improve the performance of the private sector, the government of Nigeria went for reducing the pre shipment inspections of imports with several countries that reduced paperwork and import cost. Nigeria became member of WTO by accepting the Marrakech Agreement however the Marrakech Agreement has not been incorporated in the Nigerian law. In the domestic legal and trade system of Nigeria there is no clarification about several obligations of WTO for example the investors and traders fail to invoke the WTO provisions in the domestic counts because the WTO agreements don’t have the force of law in Nigeria.

The country has not signed any pluliteral agreement under WTO neither it is involved in any trade-related dispute under the WTO Agreements. Though Nigeria is among the founder members of the organization however there are some controversies surrounding the issue. Some government officials of Nigeria believe that the membership of WTO is not benefiting the country as it should. For example despite being a member of WTO Nigeria has not yet achieved trade liberalizations and economic development due to which over 100 millions of the Nigerian people are living below the poverty line.

Despite this opposition the country is an active member of WTO and it has also become a member of the coalesced G20 trade block of articulate developing countries that is led by India, Brazil, China and South Africa. The objective behind the establishment of this trade block in 2003 was to build trade cooperation between the countries in form of low subsidies of domestic agriculture production and export.

Moreover the government of Nigeria also follows the laws and regulations enacted by WTO on Nigeria being a member country like as prohibited by WTO the Nigerian Government has banned the import and export of several items in the country. There is ban on the import of used cars moreover verity of items like frozen poultry, vegetable oil (in bulk), kaolin, gypsum, canned beer, used clothing, coils, wax-printed fabrics, bagged cement and many other items are also banned as per the policies of WTO. (World Bank Document, 2006)

Nigeria has also filed a notification to the WTO on 8th of Feb, 2005. Through this notification Nigeria inform WTO the country is applying a mandatory SONCAP – Standards Organization of Nigeria Conformity Assessment Program with the objective of importing different products including electrical products, auto products and toys. SONCAP is basically a set of conformity assessment and certification procedures that are applied to the control of import products in Nigeria.

The country adopted this mandatory from the year 2005. Nigeria is also among the founder members of the ECOWAS under which the TLS – Trade Liberalization Scheme is operated. Nigeria has significantly contributed for the organization. In 1997 Nigeria provides $7 million to the ECOWAS in order to assist in the relocation of it’s headquartering from Lagos to Abuja.

Moreover Nigeria is also involved in bilateral trade agreements with many countries like Turkey, Zimbabwe, Benin, Bulgaria, Equatorial Guinea and Uganda. Moreover Nigeria had also signed the Cotonou Agreement that was done between the European Communities (EC) and 78 African Caribbean and Pacific (ACP) countries in 2000. The agreement came in to force in 2003 (USAID, 2002).

This agreement was based on three interlinked pillars that were “political dimension; development and finance cooperation; and economic and trade cooperation” (UNCTAD, 2006). Under this agreement the member countries commit to provide duty free treatments on industrial, processed agricultural, and fishery products, subject to a safeguard clause. It was decided that at the end of 2007 when the interim period of the agreement will come to end, WTO compatible reciprocal economic partnership agreements (EPAs) will replace these unilateral references.

Nigeria also prepares reports on trade policy review mechanisms which are submitted to World Trade Organization (WTO) Headquarters in Geneva every 6 years. Reports are also prepared for UNCTAD, World Customs Organization and Commonwealth on trade measures such as taxes and tariffs. (UNCTAD, 2006)

There are several important factors that are regarded as major barriers for the promotion of the trade operation in Nigeria. Among these barriers the tariff peaks are very important because in Nigeria there are very high tariffs rates and tariff peaks implemented on different commodities. For some of the agriculture products the tariff rate is as high as 150 percent whereas on fruits and vegetables the tariff rate is 98.2percent, for beverage 75.3 percent and for textiles and garments there is 42.7 percent tariff rate set in Nigeria.

All of these rates are regarded very high as compare with the tariff rates of other countries. Moreover there are certain import restrictions that further narrow down the scope of trade in Nigeria. These import restrictions include import ban and import licensing. In 2004 the Nigerian government decided to impose ban on the import of 41 items and the list of these items was revised in 2005. The 42 items include many products that were China’s main export products to Nigeria including textile items; footwear and bags however in 2006 the Nigerian government decides to remove the import ban on certain textile and raw material so that the domestic manufacturing industry can improve its production quality and reduce the cost of production.

These import bans are of great concern for the Nigerian trade partners as well and the international bodies like WTO, Nigerian trade partners like China and USA expressed their concerned over this issue and suggested that Nigerian government should work for creating balance and stability in its trade policies. Moreover Nigerian government has also enacted some special licensing requirements on the trade of certain products especially on the petroleum products and generation units and these licenses have to be secured three month before the arrival of the products on the entry point. This policy is also been criticized by many of the Nigerian trade partner countries like China and US.

The Customs and Excise Management Act of 1990 is the main legislation that was formulated for providing guidelines related with the Nigerian tariff systems and procedures. The other important laws and regulations related with Nigerian trade operations include Excise Tariff Decree No.4 (1995), Foreign Exchange Monitoring and Miscellaneous Provisions Decree No.17 (1995) and Investments and Securities Decree No. 45 (1999).

The Nigerian ministry of Commerce has the authority and responsibility for the management and administration of the trade operations including foreign trade, domestic trade, regional trade, formulation and implementation of trade related policies and regulations, management of trademarks, patents and other important matters related with Nigerian trade. However the trade laws are formulated by NIPC and the Ministry of Commerce mainly formulated trade policies. Nigerian Investment Promotion Commission (NIPC) has the responsibility to design such strategies, policies as well as laws that can work for attracting and encouraging the foreign investors towards the Nigerian investment regime.

NIPC was established in 1995 when the Nigerian government felt the need of a body that can look after the interest of the country in trade and investment with full concentration. The government of Nigeria was also committed towards providing facilities and coordination to tee foreign investors in the country and to attain this objective the Nigerian Investment Promotion Commission NIPC was established. Nigerian Investment Promotion Commission – NIPC came in to existence as the agency of the Federal Government.

The basic purpose of establishing NIPC was to encourage, co ordinate and promote the investments in different sectors of Nigeria economy. Now the trade and investment matters in Nigeria are mainly managed through Nigerian Investment Promotion Commission (NIPC) that was established in 1996 under the Decree No.16 and later amended in 1998. It is the agency of the Federal Government of Nigeria that was basically established with the objective of encouraging, promoting and co coordinating with the investment plans in the Nigerian economy. The agency has given right under the law to regulate the matters of several industries like Export oriented industry, Implant training, Research and development and many others.

The commission has taken some very positive and progressive steps towards the promotion of foreign investment in the country like the permit to foreign investors to get 100 percent ownership in domestic investment projects and removal of trade barriers like high taxes and license fee were also lower down by the commission. The commission allows the foreign investors to own up to 100 percent shares of any enterprise in Nigeria moreover the foreign investors can also go for purchasing the shares of any of the Nigerian domestic firm.

The commission has granted enough powers by the government to work for the promotion and coordination with all the investment activities that took place in the Nigerian Economy. To improve the investment culture in the country, NIPC has build up an effective system of zonal offices that are located in six geo political zones of the country. The commission is working for the promotion of regional integration as well so that there could be more investment by the foreign investors in Nigeria. NIPC is also responsible for assisting the foreign investors and multination companies in completing the formal registration and legislation system and to communicate with the Nigerian government at desired level to negotiate different trade related matters. (NIPC Homepage, 2007)

The establishment of NIPC is an important step of government of Nigeria that is part of the series of actions taken by the government to liberalize the economy and to promote competition as well as investment in different sectors of the economy of the country. NIPC came in to existence as a successor to the industrial Development Coordination Committee – IDCC. The establishment of NIPC under the NIPC act 1995 cancelled the pervious laws that were formulated for the creation of IDCC. The laws cancelled by NIPC law 1995 are the IDDC Decree N0 36 of 1989 and Nigerian Enterprise Promotion Decree of 1989. NIPC replaced IDCC that was subjected to act as the coordination center and had the sole authority to consider and grand approvals related to different sectors of the investment industry.

In this way the investors got the opportunity to get their proposals approved or granted from the same place and they don’t have to consult many organizations. However there were some problems associated with IDCC. The committee often faced the problem of lack of quorum in its meetings. IDCC also did not get adequate funding and as a result the functioning of the organizations was badly effected and the investors often faced inconvenience and disheartening situation when they come to IDCC for the approvals of their projects.

These problems led the foundation of NIPC that took over the functions and responsibilities that were performed by IDCC like approvals and grant of investment projects and other investment promotion related activities. Moreover NIPC was also established with the intention of overcoming the hurdles that were faced by the foreign investors in Nigeria resulting from Nigerian Indigenization Decree of 1977.

The NIPC Act law gave the commission authority to grant approvals on the fiscal concessions on incentives related to different industries “Pioneer industries, Local raw material utilization, Export oriented industry, Implant training, Investment on infrastructural facilities, Research and development” (NIPC Homepage, 2007). Moreover the commission was also assign some other important responsibilities for example the commission was directed to focus on the areas where the investment activities are not successful.

The commission also has to use different promotional tools thought which investment from inside and outside the country could be encouraged and promoted. The commission registered total 63 new foreign investments in the year 2004 (NIPC Homepage, 2007). In the manufacturing and services sectors there were 18 investments each registered by the commission whereas 5 were from the oil and gas sector. The rest of the investments were done in the sectors of Engineering/Constructions, Communications, Agro/Agro – Allied, Pharmaceuticals and Transport sector. From these 63 new investments total sum of $96.34 million came into the country through foreign capital injections.

The rise in the FDI flow to Nigeria is also measures during the lat few years. The net FDI amount was almost doubled in the year 2003 as compared with 2002 when it touches the limits of US$3 billion. Later in 2005 the FDI flow increased to US$6 billion. (UNCTAD, 2006) In order to support trade related activities in Nigeria, the role of NIPC is regarded very important. The commission provides several services like assistance to the foreign investors in completing the registration and documentation, guiding the investors about the procedures and details of the investment opportunities in the country. These services are provided by NIPC to the investors free of cost.

The commission is run through the funding of government that often seems insufficient to meet the expenditures of the commission because it provide wide range of services to the investors that requires adequate funding. The funds are required to conduct several highly leveled activities like targeted investment promotion, capacity building, data bank development, arrangement of seminar and production of such material that can promote the investment facilities. For the promotion of investment opportunities the commission works for arranging a National Council that was the first National Council on Investment.

The council was attended by the stakeholders that were interested in activities that can raise the FDI flow to the country. The council has designed a national investment strategy so that the local people of the country will also be encouraged to invest in different sectors. This council also works to coordinate, streamline and promote investments in the country. In order to promote the investment activities at national level the commission coordinate with the other agencies of government and designed strategies that work for fostering collaboration between the related ministries and agencies of government.

The commission has also developed effective communication links with the representatives of foreign embassies and missions working in Nigeria. NIPC communicate with them about the investment opportunities, incentives and the potential benefits and advantages of investing in the country. As a result of this communication the share of non oil sectors in the total FDI of the country is increased and in the year 2004 the services sector accounted for 54.96% of total FDI into the country. This is followed by Telecommunication-23.06% and the third largest inflow was in the manufacturing sector, which accounted for 13% of total FDI into the country.

The communication links with the companies are establish through different meetings and seminars that are arranged by NIPC however very often these discussion and communication remain fruitless and the steps of the commission are limited due to lack of financial assets. The commission fails to perform the function of creating awareness among the investors about the investment opportunities and incentives that are offered in Nigeria NIPC face a major constraint in form of lack of funding.

The government provides funds to the commission but very often these funds are found insufficient to meet the expenditure requirement of the commission and as a result NIPC was not able to meet all the targets that are define in the Annual work plan of the commission for example training of staff at high standards, development of data bank, organizing more regional seminars and workshops and production of investment promotion material.

NIPC also formulated several laws to ease the foreign investments like it allows the foreign investors to own 100 percent of the equity of any enterprise in Nigeria. Moreover the law also permitted the foreign investors to buy the shares of any domestic firm and they were assured that there will not face any barrier or inconvenience on the transferability of their capital, profits as well as dividends.

In this way NIPC acted as a one stop agency that serves as the only center for the coordination and approvals of the investment related activities. Though there are some other agencies, ministries and departments of the government that look after these matters however NIPC is the full fledge and effective investor service agency of Nigeria that has assigned the job to look after all the matters of investments in the country.

United States Agency for International Development (USAID) prepared a report regarding the investment regime of Nigeria in 2001 and disclosed that there is much room for improvement in the functioning of NIPC. In the report UNCTAD point out that working process of NIPC is not satisfactory. In the report some flaws in the working procedure of the commission are mentioned. It is stated that “As currently designed, the NIPC registration process is discriminatory and redundant; its operations inefficient, and its procedural guidelines incomplete. Unwittingly, the NIPC essentially adds layers to services being delivered by the MoIA, the MoI (IDD), FIRS, the NCS, and the NEPC. ” (UNCTAD, 2006)

The working of commission is criticized and many of the steps in the commission procedure of registration are considered unnecessary because the commission lacks adequate funding and due to which the commission is unable to hire highly skilled and professional staff as it can not afford the high salaries of highly skilled employees. As a result the procedure of registration at the commission is not professionally managed. In this situation it becomes very necessary that NIPC must get adequate funding so that the commission can hire highly qualified people who can make some major changes in the working procedure of the commission to make in simple and invertors friendly.

The report further expressed that foreign investors have to the formal registration and permitting procedure with NIPC and in this regard it is very crucial that there should be refocus on the authorities and functioning of the commission. The role of NIPC should be more of investment promoting body rather then a regulatory authority so that it can give the impression of a facilitating and investor’s supporting agency and not a regulatory authority. Moreover the requirement of registration of all the foreign investors with NIPC should also removed because it cause delay of time for the investors and as a result they are not discouraged but they feel uncomfortable with the complex system. Hence there is need to review the constitution and organizational structure of NIPC.

Trade relations between Nigeria and USA

The trade relations between US and Nigeria are getting stronger with each passing day and in the year 2007 the US- Nigeria trade volume hit N3trn in just nine months. There is continuous rise in the two way trade between these countries and not only the US exports to Nigeria are increasing but also the amount of FDI from US to Nigeria has increased and reached to the level of $874 million (N109.2) billion. At the same time the imports from Nigeria to US increased by 1.5 percent in 2007 and reached to the level of $22.0 billion (N2.75 trillion).

This increase is regarded as the result of measures that are taken at official level to promote the trade relations between these countries. The US and the Nigeria trade industry related officials used to hold different meetings for creating mutual understanding and in these meetings and conferences these officials discuss the common objectives and focus on the issues like building cooperation at international trade level through WTO, commercial issues, trade capacity building and technical assistance, intellectual property protection and enforcement, export diversification, and infrastructure issues.

The governments of United Stated and Nigeria have also taken some positive steps for the development of bilateral trade relations between the two countries. USA and Nigeria also meet at the platform of WTO and share various opinions on certain trade related issues. At WTO both of the countries have expressed their willingness to make the international trade regime as liberal as possible and supportive for the economic development of the countries.USA and Nigeria have shown their willingness and desire to expand the trade operations among them for different products and services and for this purpose there have been many agreements done between these countries as well.

USA also committed to Nigeria that it will assist the country in the process of economic development by taking the appropriate measures to encourage and facilitate the trade operations between the two countries. USA also assured Nigeria about diversifying trade between respective national companies of the countries so that Nigeria can secure long term development supported by favorable trade conditions. Nigeria and USA also decided to establish US-Nigeria council on trade and investment.

The name given to this council is The Council in which there is representation of the business officials belonging to both the countries. the Office of United States Trade Representative (USTR) has given the authority to chair this council from American side whereas from Nigeria Ministry of Commerce will chair this council and the respective officials of both the countries’ departments and ministries will assist the chairman in managing and conducting the matters of the council. The council decides that the removal of the trade barriers between the two countries will be among the important objectives of the council and the members of the council will also work to enhance and encourage the investment opportunities in different sectors of each other’s economy.

Nigeria and USA have officially agreed that both of the countries will work for further development of the bilateral trade relations by increasing the exchange of certain goods and services. Moreover whenever the officials will feel the needs, they will also sign agreements at appropriate level related with the matters of trade intellectual property, labor, and transfer of technology, technical cooperation, and investment issues. Moreover USA and Nigeria agreed to raise consultancy on investment and trade matters to promote the bilateral trade relations and if the experts notice that there are some trade and investment issues that can badly affect the trade relations then they will go for the resolution of such issues through agreements and treaties at relative level.

Both countries also agreed to remove the trade barriers among them so that there could be easy flow of goods and services and both the countries can get the advantages of this free flow of goods in fair manner. USA and Nigeria also agreed to increase investment in different sectors of each other’s economy by elimination non tariff barriers and facilitation great access to each other’s markets so that there could be increase in foreign direct investment inflows between them and the countries can take the benefits of FDI and trade in terms of acceleration of economic growth, generation of more employment opportunities, improvement in the technology and advancement in the manufacturing and production processes.

The important issue of intellectual property is also discussed among the officials of Nigeria and USA and the governments of both the countries have decided that they will provide adequate protection and cooperation to each other for the enforcement of the intellectual property rights. In this regard both the countries will take in account their obligations that they have agreed by signing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and in intellectual property rights conventions.

As a part of promoting the bilateral trade relation, Nigeria and USA have also committed to make their trade policies supportive for each other through the safeguard of the trading right and interest of each other and to establish a bilateral mechanism that can encourage the trade liberalization and promote investment opportunities among them. Thus both of the countries have made several commitments for the promotion and encouragement of trade relations and investment in different sectors of each other and as a result of these efforts the bilateral trade relations between these two countries are improving along with the passage of time.

Due to the rise in the trade volume between US and Nigeria, Nigeria has become the largest trade partner of United States in the Sub Sahara Africa. This partnership is becoming strong mainly due to the oil imported from Nigeria to USA in huge quantity. Nigeria imports almost 46 percent of its daily oil production to United States that accounts for 11 percent of oil import for US. As a result Nigeria is fifth largest oil importer for US. In 2007 there was an increase of 17 percent in the trade volume between the two countries after which the two way trade volume between US and Nigeria reached to the level of $35 billion in 2007.

Along with oil the bilateral trade relations between the two countries are built on the import of machinery, wheat, motor vehicles and other US good from US to Nigeria. At present Nigeria has become the 50th-largest export market for U.S. goods and the 14th largest exporter of goods to the United States.

Due to increase in the trade volume the amount of foreign direct investment inflows in also increasing and United States is among the major foreign investor for Nigeria. The amount of US investments to Nigeria reached to the level of $874 million in 2005 and this investment was mainly made in the mining and wholesale trade sectors.

The Trade and Investment Framework Agreement (TIFA) meeting between US and Nigeria in 2008 further worked out for improving the bilateral trade between US and Nigeria where the experts of both the countries meet to make some advancements in the ongoing trade related work programs between US and Nigeria and to discuss improvements in Nigerian trade policies and market access.

The following table shows the trade volume from US to Nigeria during the year 2008 that shows gradual increase between import and export between the two countries.

Month Exports Imports Balance
January 2008 235.3 3,648.2 -3,413.0
February 2008 333.4 3,217.1 -2,883.7
March 2008 245.9 3,528.9 -3,283.0
April 2008 257.8 3,639.8 -3,382.0
May 2008 337.4 3,492.3 -3,155.0
June 2008 375.1 3,714.9 -3,339.8
July 2008 459.9 4,210.6 -3,750.7
TOTAL 2,244.7 25,451.8 -23,207.1

Trade relations between Nigeria and India

The trade relations between India and Nigeria are also going through a phase of increased cooperation and coordination due to which there is an increase recorded in the trade volume between India and Nigeria as well. According to the facts and figures the Nigeria exported different items to India amounting $875million2005 and 2006 and it is expected that in the coming years there will be further increase in the trade relations and cooperation between these countries because at different forums the officials are attempting to promote the FDI, import and export related activities among two of these countries.

As a result of improvement in the trade relations, Nigeria has become the largest trade partner of India in African region. At the same time the Nigerian government is encouraging the Indian investors to invest their money in different sectors of Nigerian economy and as a result of these efforts the Indian multinational companies have shown their interest to invest in different Nigerian industries like fertilizer, petrochemicals, power, oil and gas. These facts and figured show that there is considerable improvement in the trade relations of Nigeria with developing countries of the world like India, China and USA.

The government of Nigeria is moving in positive direction to promote import and export with these countries and at the same time also encouraging the companies and investors in these countries so that they can invest in different projects and industries in Nigeria and the FDI inflow of Nigeria could ne increased. The main items of export from India to Nigeria are Pharmaceutical products, machinery and mechanical appliances, electrical machinery and equipment, rice, automobiles, iron and steel, cereals, plastic and articles thereof, rubber and articles thereof, paper and paper products and cotton textiles whereas the main exports from Nigeria to India include Crude oil, metal scrap, wood, cashew nuts, iron and steel.

India and Nigeria also signed the strategic partnership pact in 2007. Both the countries that are also the member of G-15 countries group decided to promote bilateral trade relations through this pact. Nigeria is also the second largest supplier of oil to India and India has also signed agreement with Nigeria regarding the drilling of oil fields. In return exchange for energy India has assured Nigeria about the economic support and have committed to assist Nigeria in finding out the low cost solutions for poverty elimination in the country. In this regard the Indian pharmaceutical companies use to supply different medicines and drugs to Nigeria on cheap prices.

Ranbaxy is one of the important India pharmaceutical companies that provided different medicines including Anti- retroviral (ARV) drugs to Nigeria on reasonable prices. Another Indian pharmaceutical company Cipla committed to provide medicines for the cure of HIV AIDS patients. Along with pharmaceutical companies, the Indian telecommunication companies are also busy in different business activities in Nigeria and these Indian companies have shown great interest in investing in Nigerian telecommunication sector.

As a result of these activities of Indian companies in Nigeria, there is rise in the trade volume between the two countries that reached to the level of US$ 901.1 m in 2006-07 rising 3.1% from US$ 874.0 m in 2005-06. This export volume is mainly contributed by the export of the plastic & linoleum, transport equipment, paper & wood products, rubber manufactured products, non-basmati rice, machinery & instruments and drugs & pharmaceutical and in this way India is involved in the trade operations within Nigerian non oil sectors as well however the oil products still have major share in the trade volume between these two countries.

In 2007 India imported from Nigeria petroleum crude & products amounted to US$ 6942.8 m that was 79.4% of total imports from Nigeria to India. In this way Nigeria became the second largest importer of crude oil to India after Saudi Arabia. (Indian High Commission in Nigeria, 2008)

India and Nigeria have no contentious issues among them due to which both the countries used to enjoy friendly and cordial relationship with each other. These are some common factors that tie the two countries together for example both India and Nigeria believe in colonial struggle, ethnic diversity and anti apartheid struggle. India and Nigeria are also the members of some international organizations like UNO, NAM, G-15, and G-77 and Common wealth. The collaboration of these two countries on these different international platforms shows that India and Nigeria share common perspectives and views on certain international political and social issues due to which the trade relations between these two countries are also going in favorable manner.

The high level officials from India and Nigeria use to visit each other very frequently. In 2000 the third session of India-Nigeria Joint Commission was chaired by the Nigerian President. Later in 2003 Indian Minister of State for Commerce and Industry visited Nigeria in order to chair the Conference of Commercial Representatives of Western Sub-Saharan Africa. In the same year Nigerian foreign Minister visited India and co chaired the Fourth Session of the Joint Commission. In 2006 Nigerian foreign minister visited India again and met the high officials there and then in the same year Indian Prime Minister visited Nigeria to attend the Commonwealth Heads of Government Meeting.

The visits of these officials are further followed by the visits of different business delegations that worked out for the strengthening of bilateral trade relations between these two countries. Many Nigerian trade missions visited India during last few years and negotiate with the India high commerce officials on certain economic and trade related issues. From India also different business delegations visited Nigeria including the delegates from RITES, CII, IEEMA and jute industry in order to negotiate with respective officials and organizations to identify the area of cooperation and look towards the possibility of increasing cooperation in their areas. The Nigerian firms also participated in the INDIASOFT events in 2004 and 2005.

Moreover the Nigerian firms also attended the BSMs organized by CAPEXIL, CHEMEXCIL, EEPC, and PLEXCONCIL. On the other hand Indian delegation associated with Electronics and Computer Software Export Promotion Council (ESC) visited Nigeria in 2004 and 2006. The delegations from Pharmaceuticals Exports Promotion Council of India (PHARMEXCIL) and Indian National Thermal Power Corporation also visited Nigeria in 2005. (Indian High Commission in Nigeria, 2008)

The growing trade relations between India and Nigeria can also be seen from the existence and operations of different Indian companies in Nigeria. Indian companies are engaged in investment in Nigeria businesses for many years and these Indian companies are investing in different sectors of Nigerian economy including textiles, chemicals, electrical equipment, pharmaceuticals, plastics, fishing. The first ever Indian company was established in Nigeria in the year 1923 and the name of the company was viz. K. Chellaram Company.

At present there are many Indian companies that are operating successfully in Nigeria MECON, RITES, TCIL and NSIC are working in the sector of steel, railways, telecom, and small-scale industry for many years. In the same way Petroleum India International (PII) provides technical support and training to the Nigerian labor and is also involved in the maintenance of Port Harcourt and Warri oil refineries. In this way India not only conduct its business activities in Nigeria but also supports the economic development of the country by providing training opportunities to the Nigerian labor.

India has transferred technology, machinery and expertise to Nigeria in form of the joint ventures and consultant companies established by the Indian businessman in Nigeria. As a result the trade turn over is growing fast between the two countries and Nigeria has became the largest African destination for Indian manufactured products. India now exports hi tech products to Nigeria as well including power generation and electricity transmission, telecommunications, defense and machine tools, computer components and software services.

Trade relations between Nigeria and China

Taylor and Ian (2007) review the trade relations between China and Nigeria and revealed that the formal diplomatic relationship between these two countries was established on the 10th of February 1970 and gradually the relations grew closer along with international isolation and Western condemnation of Nigeria’s military regimes. Nigeria is an important trade partner for China because rapidly growing Chinese economy is fuelled by oil and petroleum whose major portion is imported from Nigeria. In this way Nigeria became energy resource for China and in return Nigeria expects economic, military as well as political support from China.

Chinese government has also showed its willingness to support Nigeria on different grounds and the visits of the officials of both the countries to each other further strengthen their relationships. During the visits of Chinese president to Nigeria in 2004 and 2006 there were memorandum of understanding also signed between the two countries. As a result of these efforts the bilateral trade relations between the two countries are growing very strongly. In the year 1998 the trade volume between the two countries was USD 384 million that reached to the level of USD 3 billion in 2006.

The companies and investors of both the countries have invested their money in different sectors of each others including agriculture sector, telecommunications, and energy sector and infrastructure development. An important development took place in the trade relation of both the countries in 2006 when the Chinese president on his visit to Nigeria, secured the license for foil oil drilling. At the same time there was an agreement signed between the two countries regarding Chinese investment of USD 4 billion in oil and infrastructure development projects in Nigeria.

As per this agreement China was allowed to control the stake in the Kaduna oil refinery for the production of 110,000 barrels. Nigeria also committed with Chinese official that during the oil explorations in Niger Delta and Chad Basin, Nigeria will prefer to contract with the Chinese firms. On the other hand there was a grand financial loan of USD 1 billion was granted to Nigeria from China in order to assist the country in upgrading and modernizing its railways system. Nigeria also signed an agreement with the Chinese company Petro China regarding the daily supply of 30,000 barrels of oil for USD 800 million. Moreover China has also showed its interest in investing USD 267 million to assist Nigeria in building the Lekki free trade zone near Lagos.

Though all of these developments are very positive for strengthening the bilateral trade relations between these two countries but it is also a fact that the growing trade volume between these two countries is also drawing come negative impacts on the Nigerian economy. For example there are abundant of Chinese products available in the Nigerian markets at cheap prices due to which the Nigerian domestic industries are badly suffering and many of the Nigerian firms have to close their business due to devaluation of their products. The Nigerian textile industry especially badly suffered due to the availability of Chinese textile products at cheap rates in the Nigerian markets and during the last few years, 65 Nigerian textile mills were closed that resulted in the unemployment of 150,000 textile workers in the country.

Chinese firms also have certain concerns regarding their business operations in Nigeria. The law and order situation is the biggest threat for the Chinese workers as well and many of the Chinese workers and projects have been threatened by Nigerian militants especially at Niger Delta. (Taylor and Ian, 2007)The government body responsible for the promotion and support of trade related activities in Nigeria NIPC also formed a Nigeria – China business and investment forum in Shanghai. Through this forum also several MOUs were signed by the investors. The representatives of different countries also attend different meetings and do several site visits to find more about the investment opportunities. This forum was arranged by NIPC with the collaboration with the Chinese World Annual Conference and Trade Fair (NIPC Homepage, 2004)

Games (2006) pointed out that there are some strong ties developing between Nigeria and China on demographic, cultural, historical, economic and political grounds due to which the trade relations between these two countries are also strengthening. There are some common factors that act positively to bring two countries closer with each other like both of these countries are rich in population. China is the fastest growing economy of the world whereas Nigeria has become the fastest growing economy of African region and both of these countries also share communist background.

When Nigeria adopted trade liberalization policies and open its gates for the foreign investors and importers then soon China became an important trade partner of Nigeria and at present there are many industries and sectors In Nigeria where Chinese people are working in considerable proportion. On the other hand many of the Nigerian people are also living in china conducting different business activities in different industries and sectors of Chinese economy.

The bilateral trade relation agreement signed between the two countries in 2001further worked for creating close trade ties between the China and Nigeria and the officials of both the countries also use to visit each other from time to time to maintain close trade relations for example Chinese President in 2006 visited Nigeria and there were many trade agreements signed between Nigeria and China including new memorandum of understanding on cooperation, a new bilateral trade agreement and an agreement for the reciprocal promotion and protection of investment.

These agreements are regarded as positive moves towards strengthening the trade relations between the two countries and through these agreements China and Nigeria committed to cooperate on economic and technical cooperation, avoidance of double taxation, medical and health services, and consular matters. On the other hand the Nigerian officials also use to visit China and during their visits also there are many trade related agreements signed between the two countries for greater bilateral cooperation for agricultural development and China also assured Nigerian officials to share its expertise in land reclamation and dry season farming with Nigeria.

In 2006 China also granted donation of 30 million RMB (about 3.5 million US dollars) to Nigeria to assist the country on various economic and technical projects. At present there are many giant international Chinese companies that are operating in Nigeria and benefiting the economy with the usage of advanced techniques and machinery in their production process. As a result the Nigerian labor gets familiar with the advanced and updated technology and these Chinese companies also support Nigerian economic development in this way.

Rory (2006) listed some of the important agreements signed between Nigeria and China from time to time that worked out for promoting the trade relations between these two countries. The researcher revealed that after the beginning of formal diplomatic relationship both of the countries focused towards the promotion of the trade relations as well and for this purpose there are different agreements and memorandum of understandings also signed by the officials of both countries. In 2001there were two major agreements signed between the Government of the People’s Republic of China and the Government of the Federal Republic of Nigeria. The first agreement was on Trade whereas the second agreement signed between the two countries was on Investment Promotion and Protection.

Later in 2002 the government of both the countries signed another agreement that was for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income. This agreement played an important role in determining the export and import volume between these countries. In the same year there were some more agreements signed between the governments of China and Nigeria. These agreements were on Cooperation on Strengthening Management of Narcotic Drugs, Psychotropic Substances and Diversion of Precursor Chemical, and the Agreement on Tourism Cooperation.

In 2006 China decided to assist Nigeria in improving its railways system and for this purpose China promised to invest $1bn (£530m) in Nigeria’s creaking railways. China offered Nigeria to provide this amount of money as soft loan so that Nigeria can use this money for the repairing of oil railway lines and the installation of new rolling stock and equipment. In this way China attempted to assist Nigerian economic development by improving the infrastructure of Nigeria.

Emeka (2004)notices that the trade relations between Nigeria and China are going through phase of cooperation and development due to which there is an increase recorded in the total trade volume between these two countries also in the year 2006. This amount is greater then the trade volume between these two countries in 2001 and 2002 that was $1.4 billion and N1.7billion respectively.

Economic experts believe that there is an improvement between the bilateral trade relation between china and Nigeria that is clearly seen in the increased volume of trade between these countries. This improvement in the trade relations of these two countries is mainly contributed by the fact that both of the governments are having cordial relations for some years and they are taking some positive steps to increase import and export of certain items among them. It is also a good sign that the officials related with the trade activities in both the countries hare the view that there must be further increase in the trade volume between these countries and they should work for the promotion of export, import and well as FDI from china to Nigeria so that the relations between these two countries could be strengthen.

Taylor and Ian (2007) notices that the Chinese and Nigerian cooperation on trade and business platforms is reflected from the fact that there are thousands of Chinese people living in Nigeria as they are engaged in different businesses and industries of Nigerian economy. There is also rise in the number of Chinese people living in Nigeria every year and according to an estimate in 2007 the number of Chinese people living in Nigeria reached at level of 20,000 that is the official registered figures and the experts believe that there are lot more Chinese people living in Nigeria unofficially.

The trade volume between the two countries is also increasing with each passing year. In 1960 the trade volume between china and Nigeria was just 1 million dollars that reached to the level of 3 billion dollars in 2006. In 2005 the trade volume between the two countries was US$2.83 billion. Moreover the cooperation between the two countries is also going well on different business grounds for example in 2006 China decided to assist Nigeria in launching its first telecommunications satellite that was also the first telecommunication satellite of the Sub Sahara African regions. China assisted Nigeria in the process of satellite launch by arranging training for the Nigerian engineer.

There were almost hundred Nigerian engineers that were sent to China for receiving advanced technology training for the design, launching and operation of the communications satellite. China is also investing in different sectors of Nigerian economy including oil and gas, iron and steel, machine-manufacturing, cement, electronics, motorcycle-assembly, fishing, pharmaceuticals and telecommunications. China also exports variety of commodities to Nigeria including motorcycles, machinery equipment, auto parts, rubber tires, chemical products, textiles and garments, footwear, cement etc.

Howard (2004) pointed out that China is a good option for Nigeria trading because the Nigerian economy is struggling with the issues of inflation and currency devaluation and in this situation Nigeria cant afford to import different products from bigger economies whereas Chinese products are cheaper and affordable for Nigeria so China is a favorable trade partner for Nigeria in dollar terms. This is an important factor that is contributing towards the increase of trade volume between these two countries and Nigeria now uses to prefer to have more trade operations with China as compared with Western countries.

The researcher also noticed that the trade relations between Nigeria and China are well supported by different trade agreements signed between the countries related with trade, economic and technical cooperation, scientific and technological cooperation and investment protection. As a result both of the countries use to export variety of products to each other. China mainly exports light industrial, mechanical and electrical products to Nigeria whereas Nigeria mainly exports petroleum, timber and cotton to China. The growing trade relations of both the countries can also be seen from the fact that till 2004 there were more then 30 solely funded companies and joint ventures were established by China and Nigeria and lot of Nigerian people have found employment opportunities in these joint ventures and companies.

Some of the important projects running with Chinese cooperation in Nigeria include rehabilitation of Nigerian railway and the Games Village of Abuja Sports Complex. China Geological Engineering Company, China Harbor Engineering Company (Group) and China Civil Engineering Construction Corporation are among the giant Chinese companies that are operating in China and are involved in different major projects. Nigeria is also investing in different projects in China. In 2006 there were total 15 projects initiated by the Nigerian companies in China.

The contractual volume of these projects was US110 million dollars whereas the actual utilization was US20 million dollars. Thus it became clear from the above facts that both Nigeria and China see each other as good trade partners and at government level there is lot of willingness to promote bilateral trade. The visits of the officials, signing agreements, contracts and granting of licenses to each other’s business professionals are the practical evidences that indicate that in coming days there will be more improvement in the trade relation between Nigeria and China.

Summary

This chapter was basically aimed at studying the topic of International trade, its significance for economic development of the countries and the trade relations of Nigeria with some of the developing countries. All of these aspects of the issues are studied with the help of the review of the research works conducted around the topic and it is revealed from the above review of the literature that international trade is regarded an important vehicle for the economic development because the countries can accelerate their pace of development with the help of trade operations at international level.

It is very necessary that the countries must manage their trade relations and policies in effective manner to use international trade as tool of development. In most of the developed countries trade sector possesses dynamic importance and the governments of these countries give lot of importance to liberalize their trade regime as well as to manage it in effective manner so that the economy of their country can take the advantages of trade operations with other countries.

There are lot of benefits that a country can enjoy by managing international trade relations like increase in the trade volume, transfer of skills, foreign exchange earning etc however some of the negative aspects of the issue are also highlighted in the review of the research studies and it is found that in some of the cases the countries fail to get the advantage of international trade due to mismanagement of their trade policies or retracted trade regimes etc.

In case of Nigeria it is found that Nigeria has been involved in trade at international level for many years and the country has also signed different agreements and pacts. Nigeria is also the member of different regional and international trading bodies however the trade regime of Nigeria is regarded very strict according to the international standards and the barriers like high tariff rates tariff peaks, import bans and import licensing etc are the factors that hinders the flourishing growth of Nigerian trade sector. In the recent years Nigerian government has taken some steps to make the trade regime liberal and attractive for the foreign countries and as a result there is improvement in the international trade relations of Nigeria.

The study of trade relation of Nigeria with USA, India and China show that Nigeria is preceding fast in growing trade relations with developing countries. In the recent years there have been increase recorded in the trade volume between Nigeria and UN, India and China. Nigeria is among the major importer of crude oil to these countries and in returns these countries also tend to support the economic development of Nigeria by assisting the country in maintaining better level of economic growth.

Indian, Chinese and American companies have invested in many sectors in projects in Nigeria and these countries are also providing technical training, machinery and advanced knowledge to the Nigeria labor in order to assist the country is maintaining sustainable level of economic growth however the dark side of the picture tells that as a result of increasing import especially from China, the domestic industries of Nigeria are suffering badly because Chinese products have become available in the Nigerian markets at cheap rates and the domestic manufacturers are finding it difficult to survive.

The security issues, law and order situation and the uncertainty in the Nigerian business environment further act as barrier for the development of trade sector in Nigeria. The above review of the researches threw the light on different aspects of the issues in effective manner however there are some gaps also found in the literature.

The research work studied above describe the trade regime of Nigeria, its limitations problems, opportunities and also highlight the trade relations of Nigeria with India, china and USA but in these research studied the problems of the Nigerian trade sectors are not identified from the perspective of the Nigerian businessmen and in order to fill this research gap, this research study will present the detailed views and experiences of the Nigerian businessmen about this topic with the help of the in depth interviews. The dissertation will also strive to find the answer of the following research questions in order to fill this gap found in the literature reviewed above.

  • What are the trade policies of Nigeria and effects of these policies on the trade relations of Nigeria with developing countries like India, China, and USA?
  • How can Nigeria improve its image at international level to become preferable trade partner for the developing countries?
  • What is the reason that despite growth in the trade volume between Nigeria and developing countries, Nigeria is still struggling with the issues of foreign currency reserves and balance of payment etc?

Research Design

Introduction

The research design chapter explained the methodological approach on which the entire research is based upon. It actually gave an outline of the structure of the research report and holds the various chapters of the research together. Different research reports have different research designs and research approaches. These depend on the subject and the type of research which is being carried out. Social scientists use various research methodologies according to the needs and requirements of their research. It is always important to choose the research design which suits the research being carried out most in order to achieve the required results.

Therefore, this chapter discussed various kinds of research approaches which can be used in a study, their main purposes and then their outcomes are also discussed accordingly. On the basis of this, the research design which suited the study best was analyzed. How this will help in the attainment of the purpose of this research and what would be the outcome of this study is also studied. In short, this chapter discussed the data collection methods, sampling, questionnaire construction depending on the text of the study, sources of information gathering etc.

Research Questions

The main objective of this research is to study and analyze the performance and growth of agriculture, FDI and trade relations with US, China and India. Moreover, the study was also aimed at finding the impact of these variables on the economic development of the country. This study analyzed the failures and limitations faced by these sectors over a period of time. Whether the changes in these sectors bring a change in the economic growth of the country was also discussed.

In order to have a general understanding of the topic and in order to compare the impacts of these sectors on the economic development of Nigeria with other countries, the study also strived to make a comparison of these variables in different countries. United States, China and India are the three countries under focus. This is a wide topic and in order to study this topic in a systematic manner various research questions have been designed. These research questions will help in the attainment of the research objectives in an organized fashion as the findings of these research questions would help in the attainment of the desired results. Below are the research questions on which the whole study depends.

  • How agriculture sector can influence and support the economic development of the countries?
  • What role the agriculture sector can play in the economic development of countries?
  • How the performance of Nigerian agriculture sector can be made better so that it can face the challenge of food insecurity and poverty prevailing in the country?
  • What are the main developments, problems, and issues associated with the agriculture sector in Nigeria?
  • What is the importance and role of foreign direct investment in accelerating the economic growth?
  • What is the overall situation of the investment regime in Nigeria in the perspective of attracting foreign direct investment?
  • What steps and strategies can help Nigeria in making its trade regime liberal and attractive for the foreign investors?
  • Which sectors of Nigerian economy have potential to become attractive destination for the foreign investors and how these sectors can be made attractive?
  • What is the importance of bilateral trade relations between countries and how these relations can affect the pace of economic growth and development?
  • What are the trade policies of Nigeria and effects of these policies on the trade relations of Nigeria with developing countries like India, China, and USA?
  • How can Nigeria improve its image at international level to become preferable trade partner for the developing countries?
  • What is the reason that despite growth in the trade volume between Nigeria and developing countries, Nigeria is still struggling with the issues of foreign currency reserves and balance of payment etc?
  • What is the present situation and contribution of the Nigerian agricultural sector, trade, and FDI in the economic development and growth of the country?

Research Approach

This research used a mix methodological approach to achieve its objectives. For this reason a secondary analysis of the subject which is the literature review and primary analysis with the help of interviews was done. Both of these research methods are used for this study in order to get an in-depth knowledge of the subject and keeping in mind the relevance of these research methods for the study. In order to have a deep understanding of the topic and discuss the background issues related to the study, the literature review has been conducted. The main research questions have been drawn with the help of reviewing the literature review.

The answers to these research questions will be discussed in chapter seven. The answers to these research questions will be obtained with the help of the literature review. The literature review helps in answering these questions as it contains analysis of the studies based on FDI and growth of agriculture and its impact on the economic development.

As most of the questions are based on these issues and the relation of Nigeria with China, United States and India, therefore a review of the second, third and forth chapters of this research gives a clear understanding of the subject and helps in answering the research questions. The last chapter has given detailed information about the trade relations of Nigeria with India, China and United States. Thus the qualitative study of the secondary data will help in finding the answers to the research questions and will help in addressing the common issues in this research.

The comparative analysis approach in any research is used to study the topic in detail. Many researchers have pointed out the fact that in order to find out innovative ways to improve the economic performance of a country, it is best to compare its economic conditions with the conditions of other countries. Comparing every factor will help the researcher analyze the areas where the country needs to improve and due to comparison with the developing nations, the research report can also point some ways to make this improvement. The growth pattern of any developing nation can help in improving the growth pattern of the country under study. Therefore, this approach will help in comparing the economic performance of Nigeria with United States, India and China.

As mentioned earlier, this research makes the use of mainly qualitative information to deduce results. The secondary analysis of the data or the study of the already researched areas and the existing researches provides a deep understanding of the topic. Various issues have been raised which will be brought forward in the key findings section of the report.

The secondary analysis of the data also helps in identifying the areas where a gap in the research is present. In order to fill these gaps, face to face interviews of 30 experts belonging to the main sectors under study was also discussed. This will yet again help in identifying the areas where these sectors have failed to contribute to the economic development of Nigeria significantly. Out of the thirty interviews being conducted, 10 experts are selected from the industrial sector, ten are selected from the trade sector and the rest ten are selected from the FDI sector. These interviews are conducted with the help of structured questionnaires.

These interviews are taken to be more qualitative in nature, even though are conducted with the help of very structured and planned interview questions. Even though in any qualitative interviewing the interviewer can slightly depart from the actual given questions in order to get more information out of the expert, however, in this research the interviewer will strictly adhere to the given questions as these questions already contain all necessary questions which should be asked in order to achieve the objective of this research report. Questions of an interview should be knowledgeable, structured, clear, gentle, sensitive, open, could be steered and critical.

The experts in these interviews will be selected on the basis of their expertise and knowledge. However, the willingness of the expert his availability also plays an important role in this selection.

In short, the main research approach is to review the existing work of the researchers which is related to the topic under discussion and then in order to have a deeper understanding of the subject, conduct interviews of experts which are related to the sectors under discussion, and therefore find out the role of these sectors in the economic development of Nigeria.

Research Methodology

Before formulizing the research design and methodology the main purpose, process and the outcome of the research should be clearly understood. Moreover, the types of research methods are also an important part of the research methodology, as the one which suits the research report most is usually chosen. Therefore, the sections below will first define the purpose, process and the outcome of the research.

Purpose of the research

There are almost four types of researches. Out of these one or more than one can suit our research type and shall be implemented accordingly. According to Aaker and Days (1990), “exploratory, descriptive, analytical and predictive”, are four types of research purposes. Each of these research purposes will be discussed below in order to find out the research purpose which suits this research best.

The first research method, which is ‘exploratory research’, is probably one of the most important research methods. As the name suggests, this type of research method, in order to find answers to certain questions or phenomenon, looks deep in to a topic. Social scientists use this type of research method to find answers to their research questions. According to many social scientists, exploratory research method is one of the most significant research methods as in this method the researcher just looks around the topic trying to find out more about the main subject under study and tries to develop suggestive ideas.

This type of research can be called as the best kind as its main objective is merely to collect maximum information about a certain topic. This in turn leads the researcher to study the problems associated with the topic and hence generate more ideas and more solutions to the problems.

However, social scientists mostly use this kind of research when the available data is not reliable and the problem is uncommon. Moreover, this type of research is also used in areas where quantity and quality of literature available is insufficient. As mentioned earlier, these are uncommon problems which are studied rarely and the reason for this can be a lower probability of interference or affect of these topics in other areas. For this reason, social scientists usually conduct interviews in this type of research (Aaker and Days, 1990). With the help of interviews and the literature available, the social scientists try and find out patterns to gain deeper insight of the topic.

If we analyze our topic in terms of explorative research method, it can be noticed that our research is explorative in nature. This research tries to point out various gaps in the literature review and various issues which have not been studied yet and hence are studied in the upcoming chapters of this report. This research will study the missing issues which have not been studied in the previous researches. Therefore, it can be said that this research is explorative in nature as it explores the topic and tries to find out various gaps in the previous research reports and studies various patterns of this subject.

Another type of research method is ‘descriptive Research’. Descriptive research method is used by social scientists to study variety of different topics. Like exploratory research method, descriptive research method is also very popular among social scientists as it is usually used in areas where a description of any phenomenon, event, individual etc is needed. This kind of research method usually makes use of secondary analysis of data, and with the help of this secondary information generalizations are made.

These empirical generalizations about any event, topic or phenomenon help the researcher find solutions to various problems. As noticed, the descriptive method of research mainly makes use of qualitative information which can be obtained through the review of various studies and literature available around the topic under focus. The descriptive research method also makes use of data collection techniques which use statistical methods to study the data. This study is not only explorative in nature but is also descriptive. However, it has also been noticed that it is not entirely aimed at describing things and therefore is not entirely descriptive. The study mainly explores, examines and analyses issues related to the topic.

Another type of research is ‘explanatory research’. This is one of the most important research methods which social scientists use. The reason why it is so important is due to the fact that this type of research method builds up theory with the help of empirical generalizations. The social scientists use this method to find answers to their research statements and prove their hypothesis. This, as mentioned earlier, is done with the help of empirical studies.

The explanatory research is sometimes also known as analytical research. The fact that explanatory research analyses any situation or phenomenon in detail and then gives reason for the cause and effect of those happenings or phenomena, is the reason why it is also known as analytical method of research. It is also important to note here that the explanatory research strives to give causes and affect of the topic under study. Moreover, it also strives to explain the kind of relationship various factors have.

In our case we have tried to figure out the relationship between FDI, Agriculture with the economy of Nigeria. Whether this relationship is direct or indirect or whether there exists no relationship at all, these questions will be answered in the upcoming chapters with the help of the answers to the research questions.

At this point it is clear that our research is going to be exploratory or analytical in nature. It will discuss and define various factors which can affect the economy of Nigeria and will also try to examine the relationship these factors have with the economic situation of the country. For this reason, the research has studied the topic in detail in the literature review section and will further explain the findings of the secondary research in the upcoming sections. As the study will also define the trade relations between China, India and United States with Nigeria, therefore this confirms the fact that this study is analytical in nature.

The fourth type of research method is ‘predictive research’. As the name suggests, this type of research goes a step ahead and the researcher tries to put forward some predictions and comments on the likelihood of his predictions being true. The researcher also tries to point out areas where there is a chance of the situation or the happening to occur again. Moreover, the researcher also tries to give out possible reactions to the recurrence of the situation and what should be done.

As it has been understood by now that this type of research tries to give out the obvious answers which need to be answered in any research, such as how did the situation occur? Why did it occur? Where did it occur? What were the possible reasons? What will it affect? Etc. Even though this research will give some predictions and suggestions for future of the Nigerian economy, however it is not predictive in nature. The main aim of this research is not to give predictions for the future but to define the current trends; therefore this research is not predictive in nature. However, like other research studies, it will also conclude by giving some suggestions for the future of the Nigerian economy.

In the light of the above explanation of different types of research methods, it has been found that this research study is ‘descriptive and exploratory’ in nature. With the help of the secondary research, the study will explain the performance of the economic drivers and their contribution to the Nigerian economy. Moreover, the study will also discuss the failures and limitations of these economic drivers. The contribution of these economic drivers will be studied for development of nations in general and Nigeria in particular.

This part of the report is descriptive in nature as it will define and discuss the contribution and affect of the selected economic indicators. The second part of the report is explorative in nature as this part will explore the issue more deeply and with the help of interviews will try and find out various issues, problems and limitations related to the topic. The interviews will be conducted by choosing experts from the three sectors under study. Therefore, it can be said here that the study is going to be explorative and descriptive in nature.

Process of the research

As the purpose of the research is now clear, the process of the research should be defined also. The research process which suits this study most will be chosen. As discussed above, the descriptive and exploratory research methods mostly use the qualitative method of analysis. Thus for conducting this study a qualitative approach is employed in order to achieve the objectives of the study.

According to Becker and Howard (1996), qualitative research “is a field of inquiry that crosscuts disciplines and subject matters”. The main aim of any qualitative researcher is to get a deep understanding of the topic under discussion. Moreover, such researchers also aim to define human behaviour which result in such activities or phenomenon and also determine various reasons for such behaviour. Qualitative researchers find out why and how of any activity, unlike other researchers who try and determine when, where and what of activities.

This why and how helps this type of method gain its name of qualitative research method. Another important difference between a qualitative researcher and other researchers is the fact that qualitative researchers focus their energies on a smaller sample rather than large vague samples such as in a quantitative research method.

Qualitative research method is one of the oldest research method types. This type of research lost popularity after the advent of quantitative research methods during 1950s and 1960s (Adler and Adler, 1987). However, during 1970s social scientists recognized how important this type of research method was and how beneficial it was for the research studies. Earlier qualitative research was limited to subjects like anthropology and sociology where more of qualitative work was needed then quantitative. However after the 1970s, qualitative research method was being used in all sorts of educational studies, social work, women studies, information studies and management studies.

The progress qualitative research method made in just these few years was unbelievable. This research method was now being used in all areas even in areas where the quantitative method dominated. In the 1980s, the qualitative research method started developing more as there was a need to address issues associated with this research type. Even though qualitative research strives to answer questions which quantitative research method does not, it has been noticed that the qualitative research is mainly explanatory. Looking at a quantitative research paper, it can be concluded that quantitative research papers are mainly conclusive (Denzin and Lincoln, 2000). However, as mentioned earlier as qualitative research methods are basically explanatory therefore qualitative researchers make use of various theories, models and hypothesis.

According to Denzin and Lincoln (2000), quantitative research method can be used as an instrument to help gain an in depth understanding of any happening or phenomenon. This in-depth understanding can later help the researchers define the base for a qualitative research in the same area.

Due to the significance and importance of the qualitative research method, it will be used in this research report. Moreover, the next step is to identify the type of qualitative research method which will be best suitable for this study. According to Berg (1989), there quite different and unique methods of qualitative research such as;

“Case studies, literature reviews, natural experiment, participant observation, interviews based, and secondary analysis of data or combination of these.”

In this research study a combination of two methods was be used. Literature review and interview based research are a true example of a qualitative research method. The success of any of these methods depends on a few conditions which are inevitable. One of these is the research questions. The type of research questions also determine the type of methodology to be used. In this as most of the research questions are explanatory in nature therefore a quantitative analysis is not necessary.

Moreover, the control over the situations or the circumstances and the control over the factors affecting the topic under study, also determines the type of qualitative method which should be used. Last but not the least, the degree of focus on the contemporary issues also helps the researcher determine the type of method he or she should use.

The researcher can select from the above qualitative method one or more than one methods depending upon the type of their research and the research questions. As this study is focused around finding the contribution and impact of selected sectors on the economic condition of Nigeria, therefore it is essential to conduct a literature review of the previous researches. This will help in outlining contemporary issues related to the topic and will help in making the future recommendations, which is an essential part of such researches.

This secondary analysis of the data is an essential part of any qualitative research method. The secondary analysis helps in understanding critical points of any study and reviewing existing literature around the topic. As all of the analysis done in literature review is usually secondary or is derived from others researchers therefore the name’ secondary analysis of data’ is given.

This research will rarely use a quantitative research method as this method is mostly about “systematic and scientific investigation of quantitative properties and phenomena and their relationships. It is all about quantifying relationships between variables” (Berg, 1989). Even though this report will discuss the relationship of a few selected factors with the economic conditions of the country, however this relationship cannot be quantified up to a very accurate extent. Therefore there is no logical reason to use quantitative method of research in this study.

For a deep understanding of the subject ‘in-depth interviews’ of almost 30 experts belonging to the agriculture and trade sectors is also conducted. This will help understand the topic and various issues related to the topic in the light of the opinions and views of the experts belonging to these fields. These interviews are based on structured questionnaires and experts being interviewed would be the ones who have a good experience of the related field. The upcoming sections of this report will discuss more about the interviews, expert selection method and interpretation of the information.

The outcome of this study will be applied as with the help of this study certain recommendations will be forwarded which can help bringing some improvement in the situation. These recommendations will be in form of the workable suggestions that can help in improving the performances of these three sectors and to make their positive contribution in the economic development of Nigeria particularly in the field of trade, food security and environment.

Outcome of the study

The third important decision which has to be made before hand, before conducting the research, is determining the nature of the outcome of the study. According to Shaughnessy et al (2006), there are almost three kinds of outcome of any study, “applied, basic or pure and action”.

In the applied outcome, the researcher tries to find a solution to any problem. In this case the solution can actually be applied in real case and can really be helpful in solving that problem. The recommendations made in such studies not only help in resolving the issue, but the recommendations are actually helpful in the future too. For example; if any manufacturing company wants to improve its efficiency but has certain problems, a research would simply study the problem and device solution for that problem.

Moreover, it would also put forward some recommendations to improve the efficiency of the workers and enhance the performance of the production line. However this would be a case of quantitative research, as the researcher would have to do extensive study of the inputs outputs and the efficiencies of the production line. Another example would be of a study which aims in improving the conditions of a workplace. This would be completely qualitative in nature depending on the research questions of the study. In this the researcher will study the conditions and the workplace environment and will put forward recommendations to make it better. Likewise, if we look at the objective of this study it can be seen that this research will be applied in nature.

The next type of research outcome is basic or fundamental research outcome. In this type of research the main aim of the research is not to put forward any recommendations for future use, or to solve any problem, but the main aim of such researches is to study a topic in depth. The general issues regarding any topic are studies and the study does not put forward any immediate recommendations. As this type of research mainly adds knowledge to the existing literature, therefore it might have some useful insights and inventions in the topic area and can outline some discovery. However the main outcome of such studies is mainly academic in nature.

If we analyse our research, we can see that this research is not fundamental or basic in nature. It not only gives useful insights and information about the topic but also goes a step ahead and gives future recommendations for the subject. These recommendations help in making these sectors under study better and helping them contribute more to the economy of Nigeria.

The third type of research outcome is action. As the name suggest in this type of outcome the social scientists are able to interfere with the environment and make certain changes. However at this point it should be noted that the research scientists are usually not allowed to make such interferences without government approval. The main aim of a research is mainly to study a topic and put forward recommendations, suggestions with the help of analysis of primary and secondary information. Therefore this is not a very common type of research outcome and is rarely used. If we look at this study we can notice that this is not an action oriented study as in this the researcher is not asked to make any changes in the conditions or the environment of the study.

After studying and analysing all the three types of outcomes of a research, it can be concluded that this research outcome will be applied in nature and can be applied in actual. It will study the topic in detail and with the help of in-depth interviews and will make certain recommendations and put forward a few suggestions to make the economy of Nigeria better. As the nature of the outcome of this research is applied in nature, it is certain that the recommendations if used in the future can help the economy of the country.

Secondary Analysis of Data – Significance and Relevance to the Research Objective

Secondary analysis of data is the most proven research method used by the social scientists during any qualitative research method. Even though secondary analyses of data are not only used in qualitative methodology but also in quantitative methodology and mix methodology, however according to most social scientists the combination of qualitative methodology with secondary analysis gives the best results. According to Miles and Huberman (1994);

“Secondary analysis of data basically helps to reanalyze the data that is already compiled by other researchers and organizations to meet the requirements of their own study or data base”

So what is secondary analysis of data? Secondary analysis of data can be defined as ‘second hand analyses’. As the name suggests this kind of analysis is actually study of information gathered by somebody else. This can be gathered by the government or NGOs etc for different purposes (Cnossen 1997).

The purpose of original data collection is usually different from its secondary analysis. If the secondary data analysis is taken seriously and worked upon with care and diligence, it can provide a better and a cheaper way of a deep understanding of the data with its qualitative and quantitative analysis. Secondary data is also helpful in conducting primary research. By comparing the results of both primary and secondary data, the researcher can validate their data and prove the authentication of the data they collected.

Therefore, analysis of secondary data can be beneficial in many ways. Secondary data analysis can become very vague as there is a vast amount of data available today on most of the topics. In order to stay focused, the social scientists usually develop a clear and concise statement of purpose. This has been already done in the first chapter of this report. The research design and purpose clearly states what the report will be about and what kind of information should be expected. Secondary sources of data are various such as;

Official statistics are an important source of secondary information. This is the data collected by the government. Various agencies are involved in the collection of such data. Such data is easily available and comprehensive and hence prove to be reliable and accessible information.

Technical reports or research projects are another form of secondary information. A research might carry on a work of any on-going research project or can be a completely new work, it can be for an academic institution or for the sake of interest, but it usually provides a good source of secondary information.

Scholarly journals contain portions or small reports of original researches. In order to check the accuracy and reliability of such reports they are usually peer reviewed. Online journals are a good source of secondary information today.

Literature review articles are usually quite a few researches gathered under one topic. These researches represent the same topic and are usually original. The literature review is a section usually present in every research which is a good source of secondary information.

Trade journals usually contain practical information about any topic. These can provide original case studies and reliable source of secondary information.

Reference books such as encyclopaedias, manuals and dictionaries are a good source of secondary information (University of Cincinnati Library 1996; Pritchard and Scott 1996).

There are various sources where all this data can be collected. However the most authentic and reliable source of information should be chosen in order to make the research authentic and useful. In our case most of the information we need is about the economy and the contributing sectors.

This information is mostly available in government official documents. A lot of this is available on the internet. Quite some part of general information regarding how one factor might affect the economy of any country is available by various researchers and can be collected from journals and literature reviews. Sometime there is disaggregate data available too in which case the author has to do some research to find out which is right. Secondary research helps strengthen primary research and hence care should be taken while formulating the secondary analysis.

One major disadvantage of the secondary data analysis is the fact that secondary data might help us understand the topic better but usually such data just gives the answer of when and where and rarely describes ‘why’ of any incident. Therefore, proper research, citation and well documented use of secondary data can help answer all the qualitative and quantitative information of the research topic.

This report makes the use of secondary data in three steps;

  • Locate the data (which is an easy task today due to the advancements in the information technology. Authentic data is easily available online)
  • Evaluate the data (attention was paid while collecting the information and only authentic information was used in this report)
  • Verify the data (to ensure good quality of research the verification and validation of data was also done).

In depth Interviews – Significance and Relevance to the Research Objective

In depth interviews can wither be for a qualitative or a quantitative research. Qualitative interviews are quite different from quantitative interviews. In a qualitative research the approach of the research questions is much less structured than in a quantitative interview. In a quantitative research as there is a need of collecting specific information, therefore there is a need for the questions to be more specific and order to authenticate the data being collected. The key concepts have to be validated accordingly too. In a qualitative research on the other hand, there is a need of generalization and the interviewees’’ point of view instead of the facts and figures.

Another point which differentiates the quantitative interview from a qualitative interview is the fact that in a qualitative interview going off in tangents during the questions answers session is encouraged more as this gives more space to the interviewee to give his points of views and suggestions. In order to encourage this behaviour sometimes the interviewer himself asks questions which are slightly of a different topic than the topic under study.

The order of questions and the wording of the questions are not fixed in such an interview. However, due to time limitations and due to the fact that interviews are usually conducted with an expert and in such case time is very important, therefore the qualitative interviewer might want to stick on the topic. However as mentioned earlier the best way is to let the interviewee drift a little from the original question.

In a quantitative research, the interviewer wants point to point answers as he wants to collect specific information, whereas as in a qualitative interview the interviewer usually wants point of view of the interviewee therefore such interviews are more flexible.

There are two major types of qualitative interviews and depending on the type of study either one is chosen.

  • Unstructured interview: This is a totally unstructured interview and in this the interviewer learns a few areas of the topic and asks questions made up at the very moment. There even might be a single question which the interviewer might ask and the interviewee is then allowed to respond freely. It is just like a conversation.
  • Semi structured interview: in this interview the interviewer has an interview guideline which all the questions are listed. A qualitative interview cannot be all structured and conducted in a yes or no session. Therefore, in this type of interview the interviewer picks on things from the answers of the interviewer and then applies it on the next questions.

In our case a well structured questionnaire for the interview will be develop to conduct an in depth interview. This semi structured interview questionnaire will help the interviewer ask the questions to the expert in a semi structured fashion. Due to limitations of time and as precise information is needed; this interview cannot be totally unstructured.

The kind of interview to be chosen depends on various factors.

The nature of the interviewer: if the interviewer believes that even slightly making his interview structured will deprive him of the points of views of other people and that a structured interview can hinder the actual thought of people.

If more than one people are to conduct the interview, then a plan should be devised in which they do not contradict each other and help the flow of each others question. In such case a semi structured interview is preferred more than an unstructured one. The questions distribution

In case of a multiple case study research, the interviewer will have to have a proper structured interview in order to define the relation between the two.

If the interview is the beginning of research then the interview has to be semi structured because in such case the interviewer wants to discuss more specific issues.

From the above it can be clearly noticed that the structure of this interview has to be semi structured as it not only discusses certain issues related to the topic but also provides some flexibility to the interviewee to express his comments. The figure below gives a general idea about how a semi structured interview is conducted.

How a semi structured interview is conducted.

As the report is aimed at studying and analyzing the impacts of the performance and growth of the agriculture, FDI and trade relations with US, China and India on the economic development of the country, therefore a semi structured interview is most suitable for this research. The in depth interviews will help understand the topic in more detail and help the researcher put forward some recommendations for improvement in these sectors.

Almost 30 interviewees were selected. Face to face interviews were done with these experts belonging to various fields. A pilot test was also done in order to validate the questions.

Criteria for selecting Interviewees

In this case, in order to get most information about the contemporary issues regarding this topics, experts from three fields; agriculture, trade and FDI are selected. These interviewees are selected on the basis of their experience in the related field, as the more experience they have, the more knowledge they will have and more knowledge they will be able to impart. Sometimes the top man in an organization lacks the technical knowledge that is required.

Hence it is always not feasible to choose the top person. Therefore in order to choose interviewees it is essential to find out the amount of time they have spent in that particular field. Moreover, the top men in an organization usually have less time to spare and are usually less committed. Experts in lower level usually have more knowledge and more time to commit, therefore these people should be chosen to interview.

So how to find such people who not only have time but also have expert knowledge. One of the easiest ways to find such people is through literature review. Specialized conferences also help identify such expert personnel. If none of these is possible, then the easiest way is to call companies and ask for information. However this is rarely successful as the companies usually do not give out information about their expert knowledge. Going through umbrella organizations also help find out such personnel.

Once an expert is identified, the next step is to convince the expert to give interview. An important thing is always to approach the interviewee after appropriate amount of study has been done in the required field. The very first thing is to explain the goals the aim of the study to the interviewee. This will help in convincing the expert that the study is well formulated and worth giving interview. Another important thing is to sound professional and not say things like ‘hi, can we meet’ or ‘hi, I am a second year student and want to interview you’. All these sentences make the person sound unprofessional and interviewees tend to ignore such messages.

The first talk should be about the background related to the topic. This should come after explaining the affiliation. If there is no response from the interviewee, always wait for sufficient time and then call again. The time span of the interview should always be fixed in advance; such personnel usually want to know how much time they will have to spend giving the interview.

Choosing the right candidate or the interview is not an easy task and usually the whole study depends on the responses from the interviewee. Care should be taken in choosing the right person. If possible, a little research should be done and information about the interviewee should be collected.

The Questionnaire for Interviews

The questionnaire for the interviews can be of different types depending on the type of the interview being conducted. Usually the interviews are conducted face to face. In case of some limitations it can also be conducted on a telephone, however the best way to interview is face to face.

As mentioned earlier, a qualitative interview can have a semi structured or an unstructured interview. Moreover the questions of an interview can be either open-ended, closed ended or partially closed-ended. Open ended but direct questions help obtain a particular information which is required. It can be about certain content, topic or some aspect of the theory being studied. Questionnaire can also be open-ended questions also help obtain the opinion or view of a person. Usually this is the main reason interviews are conducted i.e. to get opinions of different people on some topic.

The questionnaire on the next page helps getting inside information and answers to contemporary issues in the selected three sectors of the country. The questionnaire for each sector is well developed and organized. Almost 30 experts, 10 from each sector will be requested to give the interview.

The questionnaires are given in the Appendix. There are three questionnaires. One of each questionnaire is for the selected sector expert. The questionnaire was constructed keeping in mind the aims and objectives of the research paper. It was made sure that the questionnaire asks all relevant questions so that discussion of the contemporary issues related to the topic is guaranteed.

Summary

This chapter has explained the methodological approach on which the entire research is based upon. It actually gives an outline of the structure of the research report and holds the various chapters of the research together. Different research reports have different research designs and research approaches.

This research uses a mix methodological approach to achieve its objectives. The main research questions have been drawn with the help of reviewing the literature review. The answers to these research questions will be discussed in chapter seven. The answers to these research questions will be obtained with the help of the literature review. The comparative analysis approach in any research is used to study the topic in detail.

Before formulizing the research design and methodology, this chapter explains the purpose, process and the outcome of this research in detail. The first research method, which is ‘exploratory research’, is probably one of the most important research methods. As the name suggests, this type of research method, in order to find answers to certain questions or phenomenon, looks deep in to a topic. Social scientists use this type of research method to find answers to their research questions.

According to many social scientists, exploratory research method is one of the most significant research methods as in this method the researcher just looks around the topic trying to find out more about the main subject under study and tries to develop suggestive ideas. If we analyze our topic in terms of explorative research method, it can be noticed that our research is explorative in nature. This research tries to point out various gaps in the literature review and various issues which have not been studied yet and hence are studied in the upcoming chapters of this report. This research will study the missing issues which have not been studied in the previous researches.

Descriptive research method is used by social scientists to study variety of different topics. This kind of research method usually makes use of secondary analysis of data, and with the help of this secondary information generalizations are made. As noticed, the descriptive method of research mainly makes use of qualitative information which can be obtained through the review of various studies and literature available around the topic under focus. The descriptive research method also makes use of data collection techniques which use statistical methods to study the data. The study mainly explores, examines and analyses issues related to the topic.

Another type of research is ‘explanatory research’. This is one of the most important research methods which social scientists use. The explanatory research is sometimes also known as analytical research. The fourth type of research method is ‘predictive research’. In the light of the above explanation of different types of research methods, it has been found that this research study is ‘descriptive and exploratory’ in nature. With the help of the secondary research, the study will explain the performance of the economic drivers and their contribution to the Nigerian economy. The interviews will be conducted by choosing experts from the three sectors under study.

As discussed in this chapter, the descriptive and exploratory research methods mostly use the qualitative method of analysis. Thus for conducting this study a qualitative approach is employed in order to achieve the objectives of the study. After studying and analyzing all the three types of outcomes of a research in this chapter, it can be concluded that this research outcome will be applied in nature and can be applied in actual.

Due to the significance and importance of the qualitative research method, it will be used in this research report. Moreover, the next step is to identify the type of qualitative research method which will be best suitable for this study.

In this research study a combination of two methods will be used. Literature review and interview based research are a true example of a qualitative research method. The type of research questions also determine the type of methodology to be used. The researcher can select from the above qualitative method one or more than one methods depending upon the type of their research and the research questions. This secondary analysis of the data is an essential part of any qualitative research method. The questionnaire for the interviews can be of different types depending on the type of the interview being conducted. Usually the interviews are conducted face to face. As mentioned earlier, a qualitative interview can have a semi structured or an unstructured interview.

Research findings

Introduction

This chapter contains the detailed description of the research findings. There are two types of researches employed for the study including the secondary analysis of data and the interview. Both of these approaches are aimed at exploring and explaining different issues and aspects associated with the topic of the dissertation. Following are the key findings derived from both the types of research methods.

The primary research i.e. the interview was conducted with the help of structured questionnaire that was divided into various sections to attain comprehensive information about each and every aspect of the issue in details. This chapter will present the results of the interview separately for each question and then collectively for every section.

The secondary research was the secondary analysis of data that was conducted by accessing and reviewing the secondary literature conducted around the topic. The secondary research was divided in to three parts. In the first part of the literature review the information about the agricultural sector, its history and importance for the economic growth is studied. Moreover, this chapter also discussed various issues related to this sector and why this sector was not able to contribute much to the economic growth of Nigeria.

Food scarcity and predictions about food problems in the future was also discussed. In the second section of the literature review foreign direct investment in Nigeria was discussed. This chapter also discussed the contribution and significance of FDI for the economic growth of a country. Its history and current investment trends were also presented. The third and the last part of the secondary research presented the trade relation of Nigeria at an international level. Trade relations of Nigeria with US, China and India were discussed in particular.

Key Findings of the Primary Research – Responses of Interviewees

Three totally different questionnaires have been developed each of which was used to interview experts from three different fields. Almost 30 interviews were carried out, out of which 10 were conducted for each sector. The first ten interviewees were chosen from the agricultural sector, the next ten from the FDI and the last were chosen to discuss the trade relations between Nigeria and India, China and USA.

Experts were selected from agriculture, trade and FDI fields and were selected on the basis of their expertise in the relevant area. The selection was based on the time they had spent in the particular field, as more knowledge they have about their particular field, more insights they will be able to give us.

The interview was semi structured and qualitative in nature. In the first section of the questionnaire the respondents were asked about their personal details. The respondents were assured their confidentiality and secrecy. Therefore, any kind of information about the respondents will not be disclosed in this report as per the agreement.

Agriculture sector

A separate questionnaire was developed for each sector under consideration. There are 25 questions for each sector. The interviewees were selected on the basis of their experience in the agriculture field. None of the interviewees had working experience less than 20 years. The respondents were placed in reputable positions in the top management and hence had detailed information about the agricultural sector.

First question the interviewee were asked whether they were satisfied with the present situation, performance and contribution of the agricultural sector in the economic development of Nigeria. None of the interviewees were satisfied with the current performance of the agricultural sector. According to one of the interviewees in the early 1960s and 1970s Nigeria used to be a large good exporter but today it is an importer which reflects the unsatisfactory performance of this sector. One interviewee also mentioned that Nigeria’s foreign exchange earnings from the oil sector was almost 95%, therefore oil added almost 85% of the total budgetary earnings.

On the other hand he also mentioned that even though agricultural sector employs almost 70% of the entire labor force, yet it contributes only 17% to the GDP. This is a very low percentage of contribution to the economy and as it has been established worldwide that the contribution of the agricultural sector plays a major role in the economic development of any economy, therefore it was a common concept among all the interviewees that the agricultural sector of Nigeria had very unsatisfactory performance and that it could do better in order to help the economy grow.

It was after the 1960s that a decline in the performance of the agricultural sector of Nigeria was noticed. Therefore, in the next question the respondents were asked the reasons for the decline in the performance and productivity of the agricultural sector of Nigeria after the 1960s. It was a common belief among all the interviewees that the main reason for this deterioration was the lack of concern and proper planning from the government’s side to make the agricultural sector better.

Proper budgetary allocation and inconsistent successive policies affected the agricultural sector in an adverse way and hence a declination of this sectors performance was inevitable. Apart from this an interviewee also pointed out the fact that the economy of Nigeria became too dependent on the oil sector. This made all the developmental revenues go towards this sector and hence a lack of attention to this sector and more dependency on the oil sector was another reason for this downfall. Since independent the Nigerian government was not able to set out proper policies for this sector resulting in this deterioration.

In the next question the interviewees were asked whether they thought that the agricultural sector of Nigeria was updated with the modern technologies and advancements or not. Not everybody was dissatisfied with the current technological advancements made in the field. Even though changes are being made in this areas, a lot more can be done. A lot of the respondents believe that with the help of partnership between the private and public sector drastic changes can be brought in the agricultural sector which can help change the declining situation of this sector. A few respondents also believe that this sector lacks research and if proper research is done in this area it can grow and contribute more to the GDP of the country.

In the next question the interviewees were questioned whether they thought that the revolutionary changes and developments which have occurring all over the world and especially in the developed countries have influenced the agricultural sector of Nigeria in any way. According to an expert “the world has turned into a global village and it is not possible to avoid the changes which might affect the agricultural sector of Nigeria”.

However, what the government of Nigeria can do is take actions to get better prepared for these changes and accept them as opportunities and act on them. For example; global food crisis is slowly creeping towards every country and even in the developed nations the affect of global food crisis has been noticed. Nigeria also did not remain unaffected by this change and hence a lot of efforts are been taken to introduce modern methods of agriculture in the country. Different revolutionary measures have also been taken such as the green revolution, operation feed the nation etc. However, one of the respondents also mentioned that these revolutionary measures did not stand the test of time in many developed countries.

In the next question the interviewees were asked about the limitations which hinder better performance of Nigeria’s agricultural sector. A few pointed out the fact which has already been mentioned that overdependence on the oil sector has taken attention of the agricultural sector and hence major developments were made in the oil sector while the agricultural sector completely remain neglected.

This lack of research and development in the agricultural sector was the main reason why the performance of this sector has gone down. There is a lack of modern research which is due to the fact that research in any areas require adequate amount of funds and capital. Without adequate amount of capital a proper research facility cannot be established and hence results in lack of modern research. Another expert pointed out that “the inadequate extensions services and the dispersed nature of farm settlements” is another reason for this negligence. A few experts pointed out the corrupt leaders who siphon government finance for self gratification are also responsible for the declining performance of this sector.

However, apart from all the above given reasons it has been noticed that the most common reason was that there is a lack of modern technology and research funds for the agricultural sector. This shortage and negligence has resulted in the poor performance of this sector.

After a little discussion about the limitations which hinder better performance of the agricultural sector, the experts were then asked whether they thought that the Nigerian agricultural sector has the potential to support the economic development of the country. Almost all the experts agree that it was the agricultural sector which was a major source of economic boost till the 1960s. After the oil sector boom in the 1960s the performance of this sector began to decline.

This means that this sector always had the potential to do better and has done better in the past. It is only that this sector has not been given proper attention. With the help of research and modern technology Nigerian agricultural sector can definitely support the economic development of the country. Reactivation of the railway system can help link to the pre-independence agricultural system and hence boost the production of both the cash crops and the food crops. A little effort in this sector can enhance the performance and help it contribute more to the economy of the country.

In the next question the experts were asked whether the abolition of the Nigerian agricultural board and the set up of the free market was a positive thing to do and whether it will help the growth of this sector. The answer to this question was very controversial. Almost 50% of the people believed that abolition of the agricultural board was appositive thing to do. This board fed on the funds coming from the public and did not do much for the betterment of the sector therefore it was just wastage of money.

On the other hand the rest of 50% believes that abolition has only resulted in the breeding of unwholesome middlemen, some of whom are not genuine farmers; but only exploiting the sector. Only one interviewee pointed out that there can be no right or wrong way and that the abolition of agricultural board was a good idea or not depends on the government.

The inconsistent policies of the government have also been a reason for the decline of this sectors performance hence if the government could set up new policies then with or without the board, the agricultural sector of Nigeria can do a lot better. However, now as the board has been abolished and free market economy is present, it should be noted that this type of market poses many challenges and without proper government policies the middlemen or the agents will corrupt the entire system.

The experts were then asked about the role of African Agricultural bank in providing financial assistance and opportunities to the farmers of Nigeria. Every interviewee agreed to the point that even though this bank provided good assistance to people who wanted to invest in this sector, but with the passage of time the deserving candidates were not acknowledged and people started to abuse this facility. Grass root farmers are still left high and dry due to the fact they do not meet up the rigid requirements from the certificate of ownership to the cash flow statements and feasibility studies.

Next the experts were questioned about what they thought were the main reasons for decline of agricultural productivity and exports after the 1960s. Few respondents pointed out the reasons they had mentioned earlier, such as the boom in the oil sector which took leaders minds off the agricultural sector and hence resulted in a decline in the productivity of the agricultural products. This decline in productivity also came from the decline in the guaranteed credit from the government.

This was about N44m in the 1980s and N5.6m during 1996 to 2000. Even the Federal government expenditure came down from 15% to 4%. This change was so abrupt and drastic that it directly affected the agricultural sectors production. This was lack of government’s commitment to promote agricultural production. This lack of commitment not only came in form of lack of funds but also in form of inappropriate government policies which further brought down the exports of the country.

Moreover a few of the experts also pointed out the high cost of production which without the help of government intervention brought a steep decline in the dedication of people and investors towards this sector. Lack of funds and over dependency on the oil resources were the main factors which affected the growth of agricultural sector.

Old cultivation methods are still being used in Nigeria. So, in the next question the experts were asked about the reasons for using the old cultivation methods in Nigerian farms. They were further questioned whether they thought that the lack of use of new and modern technology in farming was due to lack of funds or merely due to unawareness in this aspect. Most of the experts agreed to the point that Nigerian grass root farmers were unable to use new and modern machinery not due to the reason that they were unaware of this but due to the fact that they were unable to get funds to buy new machinery.

These grass root farmers were not able to meet the requirements of the African development bank and hence were unable to acquire necessary machinery. Using old machines not only made the processes slow but inefficient and less productive too and this resulted in the continuous decline of the agricultural sector up to a point where the country had to import agricultural products instead of exporting them. The poor performance of the agricultural sector is reflected by the living standards of the people who are engaged in this sector. Most of them are poor and can barely make both ends meet. This lack of funds and credit facilities is the major reason why farmers especially the grass root farmers still use old cultivation methods.

In the next question these experts were asked about possible ways in which new technology can be introduced in the farming system in order to make it more productive and efficient. As the main problem was of funding unavailability which resulted in lack of new machinery being used in agricultural system, therefore the main suggestion every expert made was government’s cooperation in this context.

The government can make new policies built agricultural universities which can teach the farmers everything about agriculture and the use of new and modern technology in farming and provide training to youths and new people entering this sector. With the help of this government can make people understand that investing in this sector can eventually result in the betterment of this sector and hence availability of new opportunities.

An expert also pointed that “new machinery and modern technology should be imported in Nigeria and farmers should be trained and educated in order to help them use the new technology”. However, proper research and development should be done for this sector and comparisons with prospering agricultural systems of other countries such as China and India should be made in order to find out what Nigeria lacks. Coordination between dedicated government officials and grass root farmers is also essential.

After the identification of the main problem and suggestions about how to solve these problems the interviewees were then asked whether there was any way to convince the farmers to use new technology and buy these machineries. The first important thing is to give these farmers training and enlightenment. This will help them accept that new and modern technology is for their own betterment and this does not mean that their jobs will be taken up by machineries but this means their workload will reduce.

These farmers should be given proper education about agriculture and this should be down to the grass root level so that the farmers who are actually responsible for the production are able to do better. This enlightenment and awareness program should be developed by the stake holders with the help of the government. Apart from this the government should provide these farmers easily available loans without very rigid documentation requirements as in case of the African development banks. These reduced interest loans will help the farmers acquire new technology and meet up with the current technological trend. On the other hand the government can purchase the machineries and import them.

These can be later sold to the farmers on reduced prices and installments. Experts agreed that these steps can easily attract the farmers and help them to adapt new technology and update their cultivation methods. One of the experts pointed out that “the lack of infrastructure such as roads which also help in the accessibility of farm lands to the entire country”. Moreover, this will also make farming tools accessible to the grass root farmers.

In the next question the experts were asked how it was possible to mobilize the private sector so that they would support the growth and development of the agricultural sector of the country. It was a common concept among the experts that without the help of the government the private sector would not be able to do much. The government should enforce 100% sourcing of raw materials from within the country; this can be done through legislation.

This will help the private sector to invest in this sector and hence better opportunities for the farmers. Total awareness campaign should be started through radio, television and even seminars. The best thing would be for the government and the public sector to go together and hand in hand in order to help the agricultural sector’s modernization. Acceptance of new technology would be difficult as it is not easy to bring in such a drastic change, however if the government sets up new policies and start new campaign and programs it would be easier to teach the farmers about the new technology and will be easier for the private sector to take more interest in the Public private partnership and eventually in the agricultural sector.

As the role of government is an important one in facilitating and encouraging interest in any sector, therefore in the next question the experts were asked about the role the government can play in order to facilitate and encourage the agricultural sector to be more productive and efficient. It was noticed that most of the interviewers agreed to this point that the government should finance more researches and skill acquisition programs for grass root farmers so that they can concentrate more on production of the food and cash crops.

The government should also make sure that the funds go in the right direction and the corrupt leaders who have continuously leeching on the agricultural sector’s funds should be caught and punished accordingly. If these corrupt leaders are not caught they will further exploit the farmers and no development in this sector will be possible. An expert pointed out that “as the elimination of agricultural boards fostered the growth of middle men and agents who exploited the farmers, therefore the agricultural board should be formed again”.

These boards should be formed in all the state capitals so that the farmers have accessibility options available. It should also be noted that agricultural subsidies, loads, fertilizers are easily accessible to the grass root farmers on need basis. Government should make sure that the people who are not only exploiting these farmers but using up the funds set up for the development of this sector should be warned. However the most important thing the government can do is to promote the agricultural sector by planning programs, seminars and even television and radio programs in order to teach and enlighten the farmers about how they can increase their production and become more efficient. Moreover, these farmers should also know their about their rights and options available to them.

As a lot of food items are now being imported in Nigeria, therefore in the next question the experts were asked whether the imports should be cut down or not. All the experts agreed that the imports should definitely be cut down; however each presented a different view on how to do so. A few experts agreed to the fact that it is impossible to cut down the imports without first increasing the production in the country.

Therefore, with the help of joined efforts from the public and private sectors the farmers should use new and modern technology and increase their production and efficiency levels. As the production of the agricultural sector of Nigeria increases, the country can then decrease the imports. Careful planning is very essential as without this the shortage of food in the country can create other problems.

Nigeria used to be major exporter of Cocoa and other agricultural products in the past. However, with the passage of time and especially after the 1960s Nigeria lost its edge in the agricultural sector and instead of exporting agricultural products started to import these products. In the next question the interviewees were asked how Nigeria could retain its position as a major exporter of cocoa and other products. Extensive marketing of its products in the international market and with the help of financed researches in the agricultural sector; Nigeria can definitely regain this position again in agricultural exports.

In the next question the experts were asked about their opinion in case of the contribution the agricultural sector makes in the trade volume of the country. It was a common opinion that the trade volume was influenced mostly by the oil sector. The contribution or the influence of the agricultural sector’s productivity on the trade volume is very meager as compared to what it ought to be. However with the support from the government a little attention can be given to this sector and full commitment from the stake holders this sector can once again influence the trade volume as it did before the 1960s.

In order for the agricultural sector to once again take hold and establish its base the government has to rethink its trade or import /export policies. Therefore, in the next question the respondents were asked whether the trade policies of Nigeria were favorable for the growth of the agricultural sector. May experts agreed to the point that the trade policies were in favor of the agricultural sector, however the expenditure allocated for this sector was still low.

On the other hand a lot of constraints and bottlenecks hinder the smooth flow of the trade; therefore government intervention can help remove these bottlenecks so that the agriculture of Nigeria could increase its productivity and contribute more towards the economy of the country. Therefore, overall the policies of Nigeria are in favor of the agricultural sector however a few reforms and changes can help increase the growth and productivity of this sector.

In the next question the respondents were asked whether they thought that there was a need of reforms in the management of policies related with the agricultural sector of Nigeria. A lot of the respondents believed that even though the most of the reforms were in favor of the agricultural sector however there is a need to bring in a few changes in order to increase the productivity of this sector.

A few respondents said that “there was a serious need for reforms in true sense”. For this reason the government has to pay more attention to this sector as negligence in this case has been an important reason why the agricultural sector of Nigeria has had lower productivity and efficiencies since the 1960s. A few changes have to be brought in the agricultural sector which can then foster the growth of this sector. These reforms will not only help the sector work towards being better but will also attract foreign investments.

In the next question the experts were asked whether they thought that the Nigerian agricultural sector had the capability and resources to meet the food requirements of the inhabitants and to face the challenge of food insecurity. It is understood by now that the agricultural sector of Nigeria posses the ability to meet the food requirements of its country and even possess the ability to produce more than what they need in their country and export the rest.

However, it does not have the resources to do so. This lack of resources comes mainly from complete negligence which this sector faced due to the oil sector boom after the 1960s. This boom of the oil sector took people and the government’s mind off this sector and hence this sector’s policies were not reformed. It has been noticed that even though the agricultural sector of Nigeria is not doing god these days, however there are myriads of resources which if tapped carefully can go a long way.

Nigeria’s agricultural sector definitely has the potential to meet the food challenges which might come up in the near future. The main problem is just the mismanagement of the resources and unjust utilization of the agricultural funds. On the other hand it is very difficult for the farmers to obtain any kind of funds from the development bank due to strict documentation and other procedures. Therefore, in order to fully utilize the capability of this sector the government will have to put forward some reforms and manage the funds properly.

As a few issues were raised in context to government’s attitude towards this sector, therefore in the next question he respondents were asked about the issues which should be solved at the government level in order to enable the agricultural sector to fulfill the food requirement of the country. The main issue is lack of funds.

The government should device a plan which should enable the deserving grass root farmers to obtain loans so that they can implement new and modern system of cultivation which will increase agricultural production. Another problem is of land ownership. The land ownership laws and policies should also be reviewed and reformed. The main issue of this sector has been that the government has been applying different policies which make no difference whatsoever in the production of this sector. There is a need for complete research in order to find out the areas in which this sector lacks and changes have to be made accordingly.

Another main issue which should be solved at the government level is the removal of the corrupted leaders who are continuously leeching over the agricultural funds and therefore this sector is not able to make any progress. The government can also start discouraging the import of agricultural goods in their country which in turn will make people concentrate more in the development of the agricultural sector. This will help the country concentrate more on producing its own food products and hence become self sufficient in this sector. The government can encourage the local farmers by giving incentives to them.

In the next question the experts were asked about the role of government and its policies in promoting and supporting the activities and operations of the agricultural sector. The government can also help the grass root farmers in getting the loans not only from the African development bank but also from other good Nigerian banks which can be dedicated to help these farmers but also interested in developing the agricultural sector of Nigeria. Even though the policies of the government are quite in favor of the agricultural sector however there is still a need of some kind of reforms with the help of which this sector can grow.

In the next question the respondents were asked whether they thought that the decision to establish the Export process Zones in Calabar, Enugu, Kaduna, Jos, and Lagos was a positive move towards the development of the agricultural sector in Nigeria. Almost all the experts had a positive view on this. They believed that this effort allows exporters from even outside their own zones to apply and get the export processing status which acts as an encouragement for the agricultural exporters.

A few experts also said that this was a good idea and more of such zones should be created in Minna and Markurdi etc. even though almost all the experts believed that this was a positive step and can really make a difference in the agricultural exports, one of the respondents also said that as Nigeria has more imports than exports and hence these export processing ones will not have much effect on the current situation of this sector.

In the next question the respondents were asked whether the private sector and the social scientists played any role in the improvement of the position and performance of Nigeria’s agricultural sector. The experts believed that the private sector should invest heavily to increase capital formation in the sector. It should be made mandatory for all beneficiaries of the sector to set aside certain percentage of their turnover for R&D. The social scientists should play the role of advocacy in the sector. Moreover, if proper backing is present this sector can build a capitalization base and be listed in the stock exchange market with significant amount of trade nearing banks.

It is true that this is the duty of the private sector to also make the life not only meaningful but also worthwhile in the society they operate. Therefore, as the respondents said the scientists and the public sector should also contribute to the development of this sector. The social scientists can engage themselves in the research work which can help in increasing the efficiency and productivity of this sector and bring in modern techniques of cultivation.

In the last question the respondents were asked for any kind of suggestion and recommendations which can help in improving the current situation. Below are a few recommendations put forward by these experts

  • Financing, R&D, grouping of small scale farmers in to larger cooperatives for easy sensitization
  • There should be a committee comprising political office holders, stakeholders from the sector as well as technocrats formed to take a holistic look at the aforementioned problems and suggest possible solutions to the identified problems
  • Government should formulate a viable Agric. Policy.
  • Food imports to be placed out gradually infrastructure development to be augmented more irrigation facilities to be developed.
  • Incentives to be given to farmers.
  • Corruption to be stopped from all levels.

Role of FDI

The second questionnaire was developed for the role FDI plays in the development of Nigeria’s economy. This questionnaire also had 25 questions and the interviewees were selected on the basis of their experience in the relative field.

In the first question the experts were asked their opinion about the current situation of Nigeria’s investment regime. All the respondents agreed to the point that today Nigeria’s investment is more encouraging than ever before. Even though some people still show a bit resistance due to the volatile economy of the country, however due to abundance of natural and human resources many investors are coming forward.

A look at the various steps evolving and being propagated by the present political administration reveals some levels of seriousness on part of the government to provide a level playing field for investment. The economic experts of the country have tried to point out regions where Nigeria’s investment regime still needs to manage properly in order to attract foreign investment. Even though most of the respondents had positive opinion about the current situation of Nigeria’s investment regime however one of these respondents pointed out that Nigeria’s investment regime has to face a lot of challenges which are ahead ranging from the decaying infrastructure to the corrupt public officials who drain down the funds of this sector.

In the next question the respondents were asked whether they thought that the current Business environment of the country was attractive for foreign investors. Almost all the respondents believed that Nigeria’s business environment was pretty lucrative for foreign investment. The environment can be said to be attractive considering the 1995 Decree that came out of the establishment of NIPC. It allowed 100% foreign ownership as against the 40% previously allowed.

The BPE also relaxed many obstacles attributed to the govt. ownership of certain businesses. However, the volatility of the economy and a few regions made these investments less favorable. Even though in the past few years the foreign investment activities had been really encouraging however the government had to stop some activities in the Niger-Delta region. This was done to make the country safe and hence the problems in such areas have affected the investments coming in. The developments which are now being made in the non oil sectors of the country are certain to attract more foreign investment.

As not all sectors of Nigeria have potential for attracting foreign investment, therefore in the next question the experts were asked which of the sectors of the Nigerian economy they thought had the greatest potential for foreign investment. A few respondents gave names of quite many sectors which they thought had a lot of potential to attract investments. These sectors included Oil and gas, telecommunications, agriculture, tourism, power sector and solid minerals.

Oil and gas and telecommunications sector has the most potential for attracting investments. The investments in the banking and the insurance sectors have been increasing too. The main reason for this is the developments being made in this sector. However, the agricultural sector still lacks these foreign investments due to underdevelopment of this sector. However on the whole the above mentioned sectors have great potential for new investments.

As trade and tariff policies play a vital role in determining the foreign investments coming in the country, therefore in the next question the experts were asked to give their opinion about the trade and tariff policies of Nigeria. The role of government was found to be quite satisfactory however a few experts pointed out that enacting the policies was not the main issue. The main problem was the continuous improvement of such policies. This continuous improvement along with adequate supervision of policy implementation can help retain foreign investment.

In the next question the respondents were asked whether they saw any improvement in the situation of foreign direct investment inflow as compared with past as a result of government policies. Almost all the respondents answered that they have noticed a lot of improvement in the FDI inflows, however most of this is towards the oil sector and the sectors such as agriculture and tourism, which really need a boost still suffer from low investments. On the whole the foreign direct investment sector or FDI sector inflow has improved due to better government policies but the sectors which need these cash inflows are still left high and dry.

Even though some work which has been done in the investment regime should attract even more foreign investment, but with corruption prevalent in this regime it becomes difficult for the policies to bring in much positive change. Therefore in the next question the experts were asked if they thought that the corruption and bureaucratic influence over the investment regime also act as barrier for attracting FDI in Nigeria. 100% of the experts agreed with this statement.

According to an expert, “Corruption and bureaucracy are seen as one of the barriers for attracting FDI and this factor couples with the issue of insecurity in the country”. In all the third world countries this function is prevailing in both the macro and micro environment and hence affecting FDI of the country. The increasing rate of corruption in Nigeria projects a negative image of the country. This negative image is multiplied with the increasing violence and crimes in the country. This image can be improved by strict law and order and hence help the country not only make the situation better but also help in making it a better nation.

In the seventh question the experts were asked if they believed that the policy of the Nigerian government to enact tariff and regulation for raising the fiscal revenue was a positive strategy. Majority of the respondents agreed that this was definitely a positive strategy but only if implementation steps are targeted at appropriate individuals, institutions and agencies involved; because big-earners evade taxes in the country. A few experts were unsure whether this raise will bring a positive change or not. It all dependent if this step was taken in the right direction or not, otherwise it would create even more problems for the Nigerian economy.

The experts were then asked if they thought that the rules, regulations and policies related to the investment are complicated enough to discourage the foreign investors. Almost 80% of the experts believed that these rules and regulations did not discourage the investors in fact the NIPC that brought about the issue of 100% foreign investment ownership as against the former 40%. This reflects that the investments regulations of Nigeria cannot be called as hostile and they definitely do not discourage the investors.

On the other hand, some of the respondents said that “even though the rules and regulations are definitely not hostile in this country but the frequent change of government and each bringing in changes in the FDI sector sometimes discourage the investors”. They think that if the government is unstable there is no guarantee that the economy will prosper.

In the next question the respondents were questioned if they thought that the high tariffs and regulation fee by the government helped the local investors in anyway by discouraging the foreign investors and industries. None of the respondents agreed that higher tariffs and regulation fee had any effect on the foreign investors. Such tariffs and fee are usually for the protection of domestic products and does not as such hinder the foreign investments. One of the respondents said that the government had aimed these tariffs and fee in order to protect the local investors however it did not work out so and therefore this does not have any effect on the foreign investments.

In the tenth question the experts were asked to give their expert advice on how the private sector can play a role in increasing the FDI inflow by integrating with the foreign investors. According to one of the experts the private sector should be able to attract FDI inflow through partnership, this can only be done when they enhance their turnover and expand market share control. Foreign investors find it easier to penetrate through such established ventures that have built integrity also.

Moreover, the experts also pointed out that by integrating with foreign investors, developing a blueprint and mapping out strategies the private sector can definitely play a very important role in increasing the FDI inflow. Nigeria also needs to renew its business policies and make sure it is up to pace with the world in terms of globalization so that more and more investments come in from outside the country. The government should make sure that its policies favor the local producers so that these local manufacturers then help in attracting more FDI.

After discussing how the private sector can attract foreign investment the experts were then asked to present their ideas on the policies of the government which act as a barrier to attracting foreign investment in the country. A few experts pointed out some government parastatals such as the Nigerian Exporting Promotion Council (NEPC); Nigerian Import Promotion Council (NIPC); Nigerian Export Processing Zone Authority (NEPZA) whose activities and policies have been somewhat hostile towards attracting foreign investment. Policies such as allowing to import cheap finished products from Asian countries have also had a negative impact on the FDI of Nigeria.

A few experts also believed that it is not the policies which hinder the increase in the foreign investment, but it is the corruption prevailing in the FDI sector which has spread from the top level to the very roots of this sector. The corrupted officers think about their benefit first and neglect what their decision will do to the economy of the country. Hence the corruption of this sector has more influence on the FDI than the policies itself. The investors feel insecure and hence refrain from investing in countries with an unstable economy.

So, how can is it possible to attract and encourage the foreign investors to invest in the country. For this reason, in the next question the respondents were asked to give their expert advice on how the government can work towards encouraging and supporting the foreign investors in the country. The respondents replied that first of all the policies of government’s extra-ministerial establishments that constitute bottlenecks should be scraped; there should be an enabling environment for business to thrive.

Once again, there should be a committed effort on part of the government to tackle head long the problem of Niger/Delta. Without the keen interest of the government in FDI it will be difficult for this sector to prosper. The government through the provision of necessary infrastructure and enforcement of financial offence laws can encourage and support foreign investors to invest in the country. Moreover, with the help of economic and trade liberalization investments in Nigeria can be made attractive.

The government has been continuously paying more attention to the oil and gas sector and other sectors have been neglected. For example; the manufacturing sector has been totally neglected and so is the FDI sector. The government should pay attention to all the sectors so that none of the sectors get neglected and the economy prospers as a whole. The FDI sector needs special attention of the government in terms of policies and even infrastructure.

In the next question the respondents were asked about the role of NIPC in facilitating and encouraging the foreign direct investors in Nigeria. In view of the 1995 decree that created NIPC, it has played great role in the area of promoting investment. It allows 100% ownership of foreign investment and also advocated for Nigeria laws to apply equally to domestic and foreign concerns. For example: The Money laundering Act of 2003, securities & exchange Act 1999 and privatization Act of 1999 that gave birth to the BPE to prepare public enterprises for market. NIPC guaranteed foreign investors transfer of dividends through banks as an encouragement to foreign investors.

NIPC’s main role is to put forward recommendations which can help the government formulate policies conducive for FDI. Hence it can be seen that NIPC plays a major role in facilitating and encouraging the foreign direct investors in Nigeria. Another expert pointed out that NIPC plays a very pivotal role as the establishment is the number one platform where all that enter into the country in form of import are handled, hence, the role cannot be over-emphasized. Provision of friendly policies, enabling environment etc are various responsibilities of NIPC.

In the next question the respondents were asked if they thought that the environmental uncertainty in Nigerian business world is also a factor affecting the FDI inflows. Almost all the respondents believed that environmental uncertainty of the Nigerian business world was definitely one of the reasons for lower investment levels in the country. However it was also pointed out that this issue was common all over the world with USA under salvage condition. Uncertainty in the business environment is not uncommon; however along with other factors it does affect the FDI inflow of Nigeria.

After discussing one reason which might be hindering the FDI inflow in Nigeria, the experts were then asked to point out various other limitations which were responsible for low FDI inflows in the country. A few respondents pointed out that the main limiting factor was the infrastructure situation which foreign investors have no control over. The cost of providing a proper infrastructure by the investors is very high and therefore most of the investors after spending sometime in the country decide to go back to their country as companies are not making any profits.

An expert pointed out his conversation with a Chinese who ran an iron smelting company in the North-Western ancient city of Kano. According to him he operates below break-even and is deciding to go back to his country due to high infrastructure cost. He pointed out epileptic power supply which he couldn’t control and therefore could not make any profit.

Stringent government policies and business environment is another reason why foreign investors refrain from investing in Nigeria and even if they do, most of them go back to their country. Environmental insecurity and uncertainty is another limitation which is responsible for low FDI in the country. These uncertainties come in the form of changing government and inconsistent economic and trade policies. Lack of government patronage for local made products and importing cheap Asian products is another reason of low FDI in the country.

Apart from these limitations there are various other reasons which instead of encouraging the foreign investors to invest in the country discourage them. Therefore, in the next question the respondents were asked why foreign investment was not encouraged in Nigeria. The biggest fear was allowing the economy to fall in the hands of foreigners especially in firms with national interest at stake. Discouraging government policies over the years, corruption of political office holders, decay in infrastructural development, fear of insecurity of their investments and foreseeable political upheavals are a few reasons why FDI is not appreciated in Nigeria. Inconsistency in government politics is yet another reason and is probably the root cause of many other reasons; list has been growing with the passage of time.

Interviewees were then asked to give their view on whether Nigeria offered the foreign investors cheap labor and low cost of production as an attraction to invest and set up their production sites in this country. None of the respondents believed that Nigeria gave or offered cheap labor and better and lower infrastructure costs to attract FDI. They believed that this did not attract foreign investors. The skilled labor has declined to such a level that investors embark upon expensive trainings after employment because universities and vocational training has deteriorated perhaps due to lack of funding.

However one of the experts pointed out that Nigeria definitely presented cheap labor to these foreign investors. Even though these workers are poorly paid and are over worked, but they do earn more than they would earn at any local company. But they are unskilled therefore are paid less and hence these foreign investor get more workers for lesser amount of money.

In the next question the experts were asked to point out the differences between the present investment regime with the past investment regime. All of the respondents agreed that this investment regime was definitely better than any past investment regime. Since 1986, when SAP was introduced, many reforms have been made, such as in the banking sector and insurance sector, however on the whole improvement has been noticed and it is a great achievement for a Third World African country.

This investment regime is definitely a more dedicated and committed one as compared to the lukewarm and lackadaisical attitude of the past governments and investment regimes. Many examples can be pointed out which make this regime a better one, such as the lifting of bans on some restricted investment areas, consolidation of some key economic sectors which has resulted in widening of operational horizon especially in banking and communication sectors. On the whole this investment regime is more liberalized and encourages FDI inflows in the country.

In the next question the respondents were asked about the FDI inflow supporting the economic development of Nigeria. It was noticed that it is bringing about more capital formation, more productivity, more income and of course enhancing capacity of the workforce. Hence FDI is really supporting quite an average amount of economic development of the country. However, it cannot be said that FDI in Nigeria has been helping in a lot of development, as not much FDI is coming in the country due to various reasons mentioned above. A little improvement in the job creation and employment rate has been noticed but with a little help from the government in attracting FDI, a lot more can be done.

In the next question the interviewees were asked to give their expert advice on how Nigeria can be made attractive so that it becomes a lucrative investment destination for foreign investors. The main issue which almost every expert pointed out was corruption problem prevailing in the government. Therefore, it was pointed out that in order to attract foreign investors, one main thing which should be eliminated completely is corruption.

Nigeria should utilize its potential to the fullest. Many investors refrain from investing in Nigeria also due to the political instability of the country. It should be ensured that the country has continuous and prolonged political and economic stability as nobody wants to invest in a country which is unstable itself. Moreover, extra strict policies should be reformed in order to ensure friendly environment of the business world. Genuine concessionary trade agreements, unlike the failed Ajaokuta steel revival agreement should be developed in order to attract more FDI.

A proper guidance plan should be devised for foreign investors whos show interest in investing in Nigeria so that they are able to avoid pitfalls and get to know the trade rules and regulations of the country. Moreover, this guidance plan should also help these investors to avoid falling into the hands of corrupt and greedy officials. The government should make sure that the business environment of Nigeria is secure and free from corruption so that investing in Nigeria seems more lucrative to the investors. This would also help create a good reputation of the country which has already been destroyed due to the insecurity and inefficiency of the government officials.

Due to all the above problems and limitations, Nigeria faces quite low foreign direct investment. Therefore, in the next question the respondents were asked to discuss the negative consequences of low FDI inflows. According to the experts “there are numerous consequences of low foreign investments”. Lack of balance of trade is an important part of any economy as imbalance in this leads to capital flight and poverty. Hence results of low FDI can be noticed in Nigeria in terms of poverty and lower employment rates as more business coming in the country means more jobs for the people. Slow economic growth is yet another consequence of low foreign investment in the country.

The gross domestic product is the yardstick for measuring the living standards and prosperity of any country. Due to low FDI GDP of any country is also affected. Other macroeconomic variables which are important for the development of the nation are also affected due to lesser foreign investments such as inflation etc. Inflation can be noticed when the country has lower FDI and hence crippling of goods and services. Another important role of FDI is help in maintaining the foreign reserves which can immediately go down with the decline in foreign direct investments. Devaluation of currency has also been identified as one of the consequences of lower FDI.

In the next question the respondents were asked about the importance of reducing environmental uncertainty and regulation complications for increasing the FDI inflows in the country. Instability in the business environment leads to the investing company to become unsure of their investments in the country. The investors want to invest in places where they are sure of their profits. An uncertainty in business and political environment sends investors packing including the domestic ones.

If the business environment of any country is stable and free of any kind of uncertainty, this creates and overall positive image of the country and hence more foreign investors want to invest in such country. Foreign investors’ return of investment is more secure and assured in countries where the political and business environment in not unstable. Therefore it is highly important to reduce environmental uncertainty and regulation complications.

NEEDS which is a product of the immediate past administration seeks to empower the citizens, evolves a developmental concept for the country which in turn is expected to transform into an avenue for foreign investors. After its launching in 2003, it played the role of amending monopoly powers and eased government controls over foreign investment. In the next question the experts were asked to explain their views on the role and progress of NEEDS in improving investment related conditions in Nigeria.

All the experts agreed that NEEDS could have played a greater role in the business world. However due to poor implementation not much positive impact has been noticed. Ambiguous definition of roles of government agencies and institutions involved are overlapping and at times somehow contradicting, therefore, the role of NEEDS in improving the investment conditions in Nigeria has not been much commendable.

In the next question the experts were as ked to give some recommendation which can help Nigeria in catching the attention of the foreign investors in different sectors to support the economic development. Respondents believed that the first and foremost thing is the political will hence, a sense of commitment demonstrated by the government, avoidance of cut-throat policies coupled with an atmosphere devoid of apprehension. Government has to improve infrastructures mainly power, transport etc and provide security for investments. Security of lives and properties should also be ensured, build infrastructure and speed up trials in financial crime related cases as this will bring a positive image of the country and companies would want to invest more here.

In the last question the respondents were asked to give some recommendations and suggestions for the FDI situation in Nigeria. A few respondents pointed out Liberalization of policies, encouragement and protection of local manufacturers, improvement in power sector, reduction in the price of petroleum products and development in the transport sector including railways. All of this will help in improving investments in Nigeria.

The role of government has also been pointed out which should be strict in terms of corruption which has been prevailing in the industry. Experts put forward suggestions about rule of law and recommended complete overhaul of the infrastructure (especially the power sector) which is part of the present administration 7 point agenda. Security of lives and property must be addressed practically to improve inflow of FDI. A more friendly business environment should be developed to attract investors.

Nigerian Trade links with developing countries

The third questionnaire was developed to define the trade links Nigeria has with the developing Nations. For this reason three countries have been under consideration whose relations with Nigeria are discussed with the experts of relevant field. This questionnaire also had 25 questions and the interviewees were selected on the basis of their experience in the relative field.

In the first question the respondents were asked to discuss the present situation of the trade sector and whether it supported the economic development of Nigeria or not. According to the experts the present situation of the trade sector of Nigeria is quite satisfactory and is getting better day by day.

The new market oriented economic development program vision 2010 is focusing on creating enabling environment like increased power supply generation, human capital development and transparency in government spending. This is a good indicator that the economy of Nigeria is moving towards prosperity. Another expert agreed that the trade related ministries at the present administration had a robust blue print in contributing to the economic advancement of the country. However, it was also pointed out that this was just a plan and if implemented properly the country can really show economic development and can move ahead with a great speed.

In the next question the respondents were asked to compare the present situation of the trade sector with the past situation of its contribution. Since the ratification of WTO (World Trade organization) Nigeria has witnessed quite many reforms. These reforms have turned out to be better for the trade sector of the country. Hence it was a common opinion among all the experts that the present situation of the trade sector of Nigeria was much better than the past situation.

As now it has been noticed that the past trade regime was definitely different than the present regime, as the present is a lot better than the past situation of the trade sector, therefore, in the next question the respondents were asked to explain the difference between the two. According to the respondents the present trade regime is purely capitalistic and more of free market type while the previous was regulated (Depending on the year range).

In the past, government controls were there in every faceting trade Now Nigeria is following an open market policy in the trade which is favorable for trade with other countries. It has also been noticed that this free trade is responsible for better trade relations Nigeria now has with other countries. The main difference between the past and present trade regime of Nigeria is better explained in the readiness and willingness of foreign countries and companies to trade with the country in recent times. On the other hand the increase in foreign investments which has been noticed recently is another indication of the changes being brought in the trade sector of Nigeria.

In the next question the respondents were asked to evaluate the trade policies of Nigeria at regional and international level. Experts pointed out that the trade policies of Nigeria were a lot better than the past. A lot of improvements have been noticed; however Nigeria still has to go a long way in terms of trade policies. Currently it is the signatory to many bilateral agreements which have proved to be better for the trade relations and policies of the country.

Among various agreements ECOWAS, Turkey, Benin, Bulgaria, Jamaica, Zimbabwe and WTO have been considered as the most important ones. The eagerness and responsiveness of Nigeria can be noticed from the fact that it accounts for almost 53% of over 354 products of the ECOWAS trade list and has funded the movement of ECOWAS capital with $7million. However the imports of Nigeria are still higher at the international level and the country has to curtail the imports in order to maintain the balance and ensure the prosperity of the economy.

In the next question the respondents were asked if they were satisfied with the policies and strategies adopted by the government of Nigeria to facilitate the trade related activities. Almost 33% of the respondents agreed that in its own terms, Nigeria had was one of the best in trade policies and strategies, but if we compare it to the developed and developing nations it still has a long way to go. The rest of the respondents were not much satisfied with the policies and strategies adopted by the government however they said that the country was definitely moving towards betterment and soon would be considered as one of the prosperous nations.

In the next question the interviewees were asked if they thought that the Nigerian industries had failed to compete at international level because of strict trade policies enacted by the Nigerian government. A very few respondents believed that the main reason why Nigerian industries could not compete at the international level was not because of strict trade policies but due to lack of technological development and skilled manpower.

However, rest of the respondents said that to a large extent the strict tariffs and trade policies were the main reason why it was difficult for the local industries to compete with the international ones as it was difficult for the local industries to meet the government requirements in order to enter the international market. This discouragement coming from the government dialed the local industries to compete at the international level.

The respondents were then asked if they thought that the present trade policy of Nigeria truly worked for the diversification of the economy towards the non oil sectors. 60% of the respondents believed that the current policies were not doing any better than the policies of the past as these policies also did not work for the betterment of other sectors except for the oil sector. As Nigeria is an oil dependent economy, so there is a need for policies and reforms which would focus more on other sectors as they have been completely neglected and there is a need for diversification of the economy towards the non-oil sectors.

The rest of the respondents said that even though in the past Nigeria’s policies completely favored oil sector, but today a lot of work is being done for the betterment of other sectors, therefore it would not be untrue to say that the present trade policy of Nigeria truly works for the diversification of the economy towards the non oil sectors.

In the next question the interviewees were asked about the major reforms required in the Nigerian system to make trade regime liberal and progressive. One of the respondents pointed out that liberalization was the key word here. Trade liberalization was very important and if it is implemented it will remove all the stringent policies and bottlenecks and allow progressive developments. Another expert mentioned that “2010 initiative which in his point of view would certainly do better for the trade sector of Nigeria”. Respondents believed that the tariffs on materials import should be reduced. Moreover, reforms were needed in nations import export policies also.

SAP in Nigeria came as a result of drop oil export earnings. SAP was implemented basically to restructure and diversity the productive base of economy so that the Nigerian economy could be diversified to the non oil sectors. In order to reduce the dependency of oil sector SAP proposed some measures for the reforms in other non-oil sectors. Therefore, SAP came as a promoter of non-oil sectors. In the next question the respondents were asked to give their opinion on the role SAP has played and its affect on the trade scenario of Nigeria.

According to one of the experts the positive aspect of SAP was chopped by the country’s debt portfolio then as trade arrears for the period 1982 to 1983. SAP proclaimed a free market economy that phased out import license used by previous governments. Incentives for attracting FDI were introduced although miraculously they pushed people to having low purchasing power. Another expert pointed out that the intentions of introducing SAP were always good but with the maneuvers of saboteurs who manipulated the idea devastated the economy. On the whole the respondents believed that SAP had done a lot to improve the trade conditions of Nigeria, however a lot more could have been done if the people had taken more interest and had emphasized more on the betterment of the trade sector instead of their individual conditions.

In the next question the respondents were asked to define how they saw the foreign relations of Nigeria with developing countries. Respondents were also asked to give their opinion on how well and effectively these trade relations with other countries were managed. According to the respondents the trade relations of Nigeria with the developing nations is growing fast as in the recent years here have been increase recorded in the trade volume between Nigeria and UN, India and China.

Nigeria is the major exporter of crude oil to these countries; in return these countries help Nigeria’s economic development. This relation of Nigeria with the developing nations reflects the good bond which is being developed among various countries and Nigeria. Developed countries are now investing in Nigeria and are helping its economy to prosper by training its workforce and bringing in new technology in the country. On the whole all the experts see Nigeria as having good relations with the developing countries and it has also pointed out that these relations are managed well and effectively and in the future can be really beneficial for the economy of Nigeria.

In the next question the respondents were asked whether they were satisfied with the efforts of the government in promoting good relations of Nigeria with other countries. All of the respondents were very much satisfied with the efforts government was taking to promote these trade relations. However, a few experts added that there has always been room for improvement as far as relationship of Nigeria with other countries is concerned. The government can promote these relations which on the other hand can help the economy of Nigeria.

To be more specific, in the next question the respondents were asked to give their view on Nigeria’s trade relations with USA, China and India. Respondents pointed out that USA remains Nigeria’s major export partner accounting for 48.9% of its exports in 1996. It was also pointed out that trade with China this year hit $3billion making China a big partner too outside oil and gas trade. However, even though the trade relations of Nigeria and these countries are very good, it is still improving and it has been predicted that in the coming years Nigeria will have excellent relations with the developing nations.

Nigeria is considered quite strict as far as its tariffs, import bans and trade regime is concerned. These factors hinder the trade relations of Nigeria with other countries. If the government takes little effort in this area too, it can help Nigeria develop good relations with many other countries. On the whole Nigeria has very good trade relations with USA, India and China.

In the next question the respondents were asked to explain if they saw any improvements in the trade relations of USA, India, China and Nigeria as a result of government efforts. All of the respondents agreed that they definitely saw a lot of improvement in the trade relations between these countries. The trade rules and regulations were stricter in the past and it was difficult for the government to maintain any kind of trade relations with any countries. Besides the reputation of Nigeria was also not good and hence the country was not able to benefit from any good relations with the developing nations.

However, recently, with great effort of the government the trade relations between China, India and United States have definitely gone well. One of the respondents pointed out that the relationship between India, China, United States and Nigeria is a demand and supply kind. Although China and India can be said to be great beneficiaries if this trade as the market opening seem to give room for their cheap products in the country with poor competitive ability. In the recent years there has been an increase in the trade volume between these countries and Nigeria. Nigeria’s economic development is possible due to the foreign investment coming from these countries and on the other hand these countries are able to import crude oil to their country from Nigeria.

In the next question the respondents were asked whether they believed that the recent rise recorded in the trade volume between US and Nigeria is a positive sign for Nigerian economic development. The experts pointed out that United States is the mini index of the world’s economy, therefore by the extension of this implication if the sales with USA are going good this means that the economy of that country will definitely do better in the near future even if it is not going that well at present. Therefore, almost all the respondents believed that the recent rise in the recorded trade volume between US and Nigeria is a definite indicator of the good relations between Nigeria and USA and the economic development of Nigeria.

In the next question the respondents were asked to define the main factors that contribute towards the rise in trade volume between US and Nigeria in recent days. Uninterrupted democratic government in Nigeria is one of the main reasons of this trade bond between the two nations. Other factors include open market policy of Nigeria, the loosening of the strict rules and regulations of trade of Nigeria which were major hindrance in developing trade relations with many countries, relative peace and stability in Nigeria and government’s action towards corrupted officials which had destroyed the name of Nigeria among many countries.

It is difficult to invest in a country where peace is not prevalent and the government is corrupt, so as soon as Nigeria’s government had taken a step forward and tried making its relations better in terms of trade, tariffs and other regulations, more FDI started coming in the country and trade volume started to increase. Lesser government control and open market policy is yet another reason responsible for the rise in trade volume between US and Nigeria in recent days.

After quite some discussion of trade relations between Nigeria and US, in the next question he interviewees were asked to shed some light on the impact of improvement in trade relations between China and Nigeria. As China is known for its low priced, easily available goods, therefore one thing which all the experts pointed out was the fierce competition which the local industries will face. The local industry will definitely suffer if more products from China started coming in. Both the nations, Nigeria and China are known for their economies of scale, hence if both of these nations work together they can definitely bring a drastic positive change in the economy. On the other hand, the local people in Nigeria would be able to enjoy cheap products coming in from the international market.

In the next question the experts were asked about the benefits and positive impacts on the Nigerian economy being the largest trading partner of India in African region. In the recent past the trade relations between India and Nigeria have grown tremendously. More and more volumes of trade have been recorded. Experts pointed out that this is not unconnected with the recent visit of Indian prime minister to Nigeria. India requires the oil Nigeria has and Nigeria can benefit from the goods and services India is providing to Nigeria at a reasonable price range. This means that both the countries can benefit from each other and with mutual cooperation and especially Nigeria can use this trade bond with other countries to make its economy better.

As the trade relation between India and Nigeria is going through a phase of increased cooperation, therefore it would not be untrue to say that in the near future this relationship will become even stronger. The main impact of this relationship is the fact the Nigeria has now become the largest trade partner of India in the African region. Various industries of Nigeria can be improved in which India has shown interest such as fertilizer, petrochemicals, power, oil and gas.

In the next question the respondents were asked how the improved trade relations with the developing countries can support the economic development of Nigeria. The respondents believed that the readiness of any developing country to enter into partnership trade with Nigeria is a function of how viable it is to trade in Nigeria. Nigeria is richly endowed that business prospects are unimaginable. With more developing countries therefore trading with the country, it’s an index of development has become even better.

By enhancing their its relationship with the developing nations, Nigeria can one day also step in this category instead of still being known as under developed country. Availability of goods and services, better living conditions, higher employment rates and a better GDP and prospering economy are all resultant factors of having trade relations with developed nations.

As Nigeria is now trying to develop trade relations with countries like USA, India and China, therefore in the next question the respondents were asked to define the major issues that hinder further strengthening of these trade relations of Nigeria with the developing nations. The main issue which was pointed out by quite a few experts was mistrust on part of those saddled with the responsibilities of paddling the affairs of the various sectors of the economy; bad representation by office holders; once more, corruption and some other things. Corruption was the main problem, as mentioned earlier, which hindered the foreign companies to invest in this country.

However, with prompt action from the government this issue is being taken care of, and it is hoped that it in the near mistrust and irresponsibility of the officers will not be an issue in trade relations between Nigeria and other developing nations. Another important aspect pointed out by an expert was the purchasing power of Nigerian investors which was quite weak. Without the development in the GDP and economy of the country this buying power will not increase and hence a hindrance in further strengthening of the trade relations will always be there.

In the next question the experts were asked whether they thought that the private sector can also work for improving the trade relations of Nigeria with countries like china, India and US. All the respondents agreed to this point that the private sector can do a lot to improve the trade relation of Nigeria with other countries.

The respondents were then asked to define the role of different government agencies and organizations in improving trade relations of Nigeria with different countries. According to these experts the role of different government agencies include information sharing among investors. Some organizations arrange trade tours for investors to certain countries and invite others to the country to influence each other’s decision on the need for trade among themselves. Hence the role of government agencies is very important. They help greatly in improving the trade relations of Nigeria with other developing countries.

The interviewees were then asked to give some suggestions on how the government of Nigeria can work for further improvement of trade relation of Nigeria with these developing nations. There are quite many strict policies, tariffs and high fees of trade which hinder the trade relationship development between Nigeria and different countries. Therefore the first thing the government can do is to review these policies and bring in some reforms.

The main objective should be the development of Nigerian economy which can be done through a better relationship with the rest of the world. Therefore, a political will which is completely different from the self gratification attitude of the Nigerian officers will help in further improvement of trade relation of Nigeria with the developing nations. Another useful way this could be done, which was pointed out by yet another respondent, is through display of products in form of fairs etc. this can be done through developmental banks to finance some trades and regions. One of the respondents also pointed out that by opening new market for goods and services can also help in building new relations and strengthening the existing ones.

In the next question the respondents were asked to present a few the positive consequences that Nigerian economy can enjoy as a result of improved trade relations with US, China and India. The experts pointed out that Nigeria can earn revenue, get raw materials for many sectors of its economy and create employment opportunities with the help of improved trade relations with other countries. As new companies enter the market they will create jobs and hence ht unemployment rate can go down.

New products and services at lower rate can also help raise the living standard of an average Nigerian. Another expert pointed out that increased Gross Domestic Product-GDP, better living standard for the masses, adequate food supply, and relative employment opportunities are few of the many advantages associated with improved relationship of Nigeria with US, India and China. Moreover, Nigeria can also sell its oil and gas to other countries and venture new markets uninterrupted.

In this question the respondents were asked to name the most important sectors of Nigerian economy that possess great potential for supporting trade relations of Nigeria with US, China and India. Oil and gas, pharmaceuticals, agriculture, agriculture, tourism, textiles and telecommunications were considered to be the important sectors of the Nigerian economy which possess great potential for supporting trade relations of Nigeria.

In the last question the experts were asked to give recommendations and suggestions for the Nigerian government and private sector for bringing improvement in the trade relations of Nigeria with developing countries. According to one of the experts, free flow of information from both sides in relation to their products is an important thing. He also suggested that standard requirement of each country must not be compromised to the detriment of the citizenry.

Developing a road map with time frame to achieve such, seriousness on part of the government contrary to the wishy-washy of the past administrations, private sectors’ readiness, as part of its corporate social responsibilities, to give back to the society, was another recommendation given by one of the respondents.

A few respondents also pointed out that venturing new market can also help Nigeria to improve its trade relations with other countries. Nigeria can help the developing nations to meet their oil and gas demands and hence build up and strengthen its relationship with them.

Key Findings of Secondary Research

The method selected for conducting secondary research for the dissertation is the “secondary analysis of data” that was done by reviewing the exiting related material including research reports, articles, books and journals. The main focus of the study is upon three sectors of economy that include agriculture, foreign direct investment and trade sector.

Thus these three sectors are studied in details to understand their relative importance for the economic development and after that the performance of these three sectors in Nigeria is studied in depth to find out that how these three sectors are progressing in Nigeria, what role they are playing for the economic development of the country and what are the major problems and limitations encountered by these three sectors of Nigerian economy. The secondary analysis of data enabled to have deep understanding of all these issues and following are the Min findings that are derived from the secondary research. All the three sectors were studied separately and the findings of the research are also presented separately for each sector

Agriculture Sector

The secondary research allows having deep understanding of the importance and contribution of agriculture sector for the economic development and the role, problems and limitations of Nigerian agriculture sector is also studied. It is found that the agriculture sector possesses great importance and potential to accelerate the economic development of countries and all over the world; countries are witnessing fast economic development when they concentrate positively towards increasing the productivity and performance of their agriculture sectors.

The importance of agriculture is also reflected from that fact that many of the international organizations use to keep the development of agriculture sector on their top agenda and they have also established different agencies and department that are meant to work for the promotion and support of agriculture activities all around the world. For this purpose WTO, UNEP, UNESCO, UNDP and FAO are running different programs to encourage the countries to invest more in the agriculture sector so that more research and development work can enable high productivity and performance of the agriculture sectors.

It is also found that the living conditions of the people attached with the agriculture sector have main role in designing the overall livelihood of the population of the agriculture based countries. The countries paying attention towards the living conditions of the agricultural population are enjoying an overall better livelihood of the population whereas in countries where the people related with agriculture field are living in poor conditions, the overall conditions of living of that country is also poor.

In case of Nigeria, it is found that more then 70 percent of people are associated with the agriculture sector but these people are living in poor conditions. As a result big proportion of Nigerian population is living beyond the poverty line. Thus the agriculture sector is playing vital role in defining the overall livelihood of the population in Nigeria. Due to poor conditions of Nigerian agriculture sector, the people working for the sector are living below poverty line and hence the population is witnessing the affects of these conditions.

The primary research also make it clear that the research and development work is very essential for the agriculture sector as it cal allow the countries to use advance methods of production. In this way the countries can reduce the cost of production and can also produce more to export different products to different countries and increase their foreign reserves. In Nigeria there is lack of employment of modern technology for production due to which the Nigerian farmers are using old methods of production.

The cost of most of the agriculture products is also very high in Nigeria. Due to low productivity the country fails to fulfill the food requirement of the population and is facing the serous issue of food security. At present Nigeria uses to export many agriculture products from different countries to meet its food requirements and for this purpose the country uses to pay lot of money on account of import bills. This is also an important reason due to which the agriculture sector in Nigeria is also playing positive role in the economic development of the country.

The history of Nigerian agriculture sector shows that in the beginning years of establishment, the sector was productive enough that it fulfills the food requirements of the country in good manner. Moreover the productivity of the sector allow the country to export certain agriculture products to different other countries however the oil boom in 1970s resulted in the neglect of the agriculture sector, badly affected the productivity of the sector. There are certain reforms implemented in the sector from time to time however there are lesser efforts that generate positive results in favor of the sector.

At present there are many problems and limitations faced by the Nigerian agriculture sector including lack of research and development work, unskilled labor, low productivity, old methods of production, high production cost, lack of adequate finances, weak infrastructure and many more. The findings of the secondary research shows that the conditions of agriculture sector are not very hopeful but the performance of the sector in 1960s make it cleat that the sector possesses the capability to accelerate the economic growth of the country.

Foreign Direct Investment

The secondary research conducted around the topic of foreign direct investment in general and in reference of Nigeria highlighted the importance of foreign direct investment for the countries in detailed manner. Moreover the problems and opportunities associated with Nigerian investment regime are also studied to get a clear picture of the entire situation. The secondary research clarifies that foreign direct investment is an important economic variable that is becoming more important along with the passage of time due to the advancement of technology that allows the countries to get involve in more business activities with other countries.

Foreign direct investment can boost the economic growth of a country and the governments of the developing countries are focusing on making their investment regime attractive for the foreign investors.

In this regard the countries are making their investment policies more flexible so that the investors can feel easy to invest in different projects of the country. the relationship between foreign direct investment and economic development is found from the statistics that show that the developing countries are getting major share in the global FDI inflows whereas the less developed and under developing countries are getting less share in global FDI that shows that the countries getting more FDI are witnessing high rates of economic development and countries grabbing low shares of foreign direct investment inflows are struggling with their economies.

Foreign direct investment brings several important advantages to the countries along with foreign reserves. When firms of developing countries invest and start their operation in any country, then the skills, management capabilities and working patterns of the international firms are also transferred in the host countries. In this way the host countries are benefited from the foreign companies’ business operations and an overall improvement in the business scenario of the host countries occur.

In order to attract foreign direct investment it is very important that the business environment of the host country must be supportive for the investment and business operations so that the foreign investors can find it easy to start and carry on their business in other countries. It is found that in most of the sub Saharan countries the business environment is not supportive for the foreign investment. There is uncertainty in the business environment of most of the sub Saharan African countries due to which the foreign investors avoid to go in these countries. In Nigeria also there is high degree of uncertainty prevail in the business environment due to which the flow of foreign direct investment is very low in the country. The rules, regulations and regulation process are also very complicated from the foreign investors coming to Nigeria.

Nigerian Investment Promotion Cooperation NIPC is playing important role in making the Nigerian investment regime attractive for the foreign investors however corruption prevails at each and every level of business in the country due to which the efforts of NIPC are also not generating very positive results. NIPC has taken many positive steps to facilitate and encourage the foreign investors and there are many facilities allowed to the foreign investors that were not given to them before. Moreover NIPC has also arranged for different summits, trade agreements and committees establishment to promote trade with different countries.

NIPC also arrange different trade fairs and expo in different countries so that the businessman of different countries can know about the potential of the Nigerian people and can also be informed about the trade and investment opportunities present in the country. However at present there is still great need of making the Nigerian investment regime more liberal because according to international standards of trade and investment, the Nigerian investment regime is strict and unattrcative.WTO has also advice the country to reduce the import duties and taxes so that it become easy for the foreign investors to invest in Nigeria.

It is also found from secondary analysis of data that there are many sectors in Nigerian economy that have great potential for attractive foreign investment. The Nigerian telecommunication sector is especially progressing very well to attract the foreign investment and at present there are many international companies that have shown their interest in the Nigerian telecommunications sector but even in this sector there are some critical problems that are hindering the foreign investors.

The weak infrastructure of the country is an important barrier that discourages the international firms and investors. If the country manages to make its infrastructure strong then there is great possibility that Nigeria can catch the attention of foreign investors and the country can witness high rate of economic development after getting the support of the foreign direct investment inflows.

The review of FDI history to Nigeria shows that the government of Nigeria has taken several important steps to restructure the Nigerian investment regime and to attract and encourage the foreign investors. In this regard there are many reforms and policies also formulated and enacted by the Nigerian government but these reforms and policies also failed to attract more investment in the country and there is still need to implement some policies that can make investment in the country more profitable and easy for the foreign companies. The major barriers surrounding the Nigerian investment regime are uncertain business environment, weak infrastructure, corruption and high tariffs and import duties.

Trade Relations with Developing Countries

Trade is also regarded as the vehicle of economic development and the countries can enjoy several benefits as a result of keeping sound trade relations with different countries. The importance of international trade is also rising along with technological development. The communication advancement allows the countries to establish trade links with other countries. In this situation the competition is also rising as there are more countries and companies involved in the trade relations. The countries have to develop attractive trade policies so that they can be able to have trade relations with many countries and thus can enjoy benefits of foreign trade.

The developing nations are also concentrating more on the development of the trade relations with other countries and these countries have also made their trade policies attractive for the countries. The standards maintain by the international trade organizations are also very important to follow. However most of the undeveloped countries have failed to follow these standards and as a result they are not having string trade relations with different countries. International trade is also linked with the economic development and there are various economic variables that are affected from the international trade. Thus the improvement in international trade relations result in improvement of different

It is found from the secondary analysis of data that Nigeria is an important country in the African region due to which many of the countries are interested in having strong relations with Nigeria in trade grounds. However the present trade policies of Nigeria are very strict and many countries find it quite unprofitable and uneasy to get involve in trade relations with Nigeria. Although it is an important trade destination for all the countries focusing on west Africa but most of the trade transactions of developing nations with Nigeria are limited to oil and oil based products. The other sectors are not playing active role in international trade as they are neglected as a result of main focus on oil.

Nigeria is also a member of WTO and use to actively participate in different activities of the organization but the import duties and tariffs are still very high that many of the countries are discourage to get involve in trading with Nigeria.

Nigeria has also signed different MOUs and trade packs with many of the countries at different times and it also uses to exchange trade delegations on different occasions. As a result there is some level of improvement in the international trade relations of Nigeria but despite these improvements Nigeria is unable to play an active role in the international trade scenario because some important barriers are hindering the path of the country towards maintain good trade relations at international level. These barriers include certain import restrictions, import bans, high tariffs rates and tariff peaks.

The present situation of Nigerian trade relations with developing countries in not very much positive however the country is managing to maintain good trade relations with many of the developing nations like US, India and China. Nigeria is witnessing improvement in trade relations with these countries and the facts and figures described in the secondary analysis of data has shown that there is considerable increase in the trade volume between Nigeria and US during last few years.

There are several efforts made at official level to promote the trade relations of these countries like signing of pacts, trade agreements and MOUs. As a result of these efforts US- Nigeria trade volume hit N3trn in 2007. Moreover the trade relations of Nigeria are improving in India and China also.

Nigeria has become the largest trade partner of India and China in the African region. The trade volume of Nigeria is increasing with India and China also and has reached the level of USD 3 billion with china and $875million with India in 2006. However most of the trade volume is contributed by the imports and there are lesser items exported from Nigeria to other countries and it is very important that Nigeria must develop its industries so that it can export various manufactured items to other countries and can secure trade balance.

In this way the secondary analysis of data allows to have deep understanding of certain issues related with the research. However there are some issues that are not explored in details from the secondary research and thus primary research is conducted to have deep understanding of all these issues. The next section will present the main findings derived from the primary research that is the in depth interview of the experts associated with the Nigerian agriculture, FDI and Trade sector.

Key Findings of Primary and Secondary Research – Contradictions and Similarities

The research is conducted by employing both the secondary as well as primary research methodologies. There are the same issues that are explored with the help of these two research methods. The secondary analysis of data is conducted to have overview of the situation with the help of the review of the existing material and the in depth interviews of the experts of the fields are conducting to have detailed insight over these issues.

The findings of the secondary and primary research show that there are several similarities found in the secondary analysis of data and in the opinions of the experts belonging to the three fields. There are little contradictions found in the views of the experts and the review of the researches. In this way the primary research supported very well the findings of the secondary research. There are many problems identified in the secondary research that are hindering the development of the Nigerian agriculture, trade and FDI sectors. The experts also confirm by expressing their views that there problems are hindering the growth of these sectors.

The possible solutions of these problems are also almost common in the secondary and primary research finings. The review of the existing research show that there must be diversification of Nigerian economy, improvement in the infrastructure, reduction of corruption and formulation of adequate policies to support the growth and development of these sector and the experts also insisted in their interviews about these steps and confirmed that these are the issues essential to be resolved so that these three sectors can be able to support the economic development of the country.

Along with these similarities there are little contradictions found in the opinions of the experts and the secondary research findings. For example the role of the government is much criticizes in the secondary material but many of the experts praised the role of the government and said that they are quite satisfied with the present role of the government to support the development and growth of these sectors. In this way the primary and secondary research findings are put together so that these can be analyzed to get the answers of the research questions.

Summary

This chapter has presented a detailed analysis and description of the entire research findings. Both types of research i.e. primary and secondary were studies and their results were discussed in this chapter.

The main focus of the study is upon three sectors of economy that include agriculture, foreign direct investment and trade sector. Thus these three sectors are studied in detail to understand their relative importance for the economic development and after that the performance of these three sectors in Nigeria is studied in depth to find out that how these three sectors are progressing in Nigeria, what role they are playing for the economic development of the country and what are the major problems and limitations encountered by these three sectors of Nigerian economy. All the three sectors were studied separately and the findings of the research are also presented separately for each sector

It is found that the agriculture sector possesses great importance and potential to accelerate the economic development of countries and all over the world; countries are witnessing fast economic development when they concentrate positively towards increasing the productivity and performance of their agriculture sectors. Moreover the productivity of the sector allow the country to export certain agriculture products to different other countries however the oil boom in 1970s resulted in the neglect of the agriculture sector, badly affected the productivity of the sector. The findings of the secondary research shows that the conditions of agriculture sector are not very hopeful but the performance of the sector in 1960s make it clear that the sector possesses the capability to accelerate the economic growth of the country.

Foreign direct investment can boost the economic growth of a country and the governments of the developing countries are focusing on making their investment regime attractive for the foreign investors. the relationship between foreign direct investment and economic development is found from the statistics that show that the developing countries are getting major share in the global FDI inflows whereas the less developed and under developing countries are getting less share in global FDI that shows that the countries getting more FDI are witnessing high rates of economic development and countries grabbing low shares of foreign direct investment inflows are struggling with their economies.

Trade is also regarded as the vehicle of economic development and the countries can enjoy several benefits as a result of keeping sound trade relations with different countries. The communication advancement allows the countries to establish trade links with other countries. The countries have to develop attractive trade policies so that they can be able to have trade relations with many countries and thus can enjoy benefits of foreign trade.

The developing nations are also concentrating more on the development of the trade relations with other countries and these countries have also made their trade policies attractive for the countries. It is found from the secondary analysis of data that Nigeria is an important country in the African region due to which many of the countries are interested in having strong relations with Nigeria in trade grounds.

However the present trade policies of Nigeria are very strict and many countries find it quite unprofitable and uneasy to get involve in trade relations with Nigeria. As a result there is some level of improvement in the international trade relations of Nigeria but despite these improvements Nigeria is unable to play an active role in the international trade scenario because some important barriers are hindering the path of the country towards maintain good trade relations at international level.

The present situation of Nigerian trade relations with developing countries in not very much positive however the country is managing to maintain good trade relations with many of the developing nations like US, India and China. As a result of these efforts US- Nigeria trade volume hit N3trn in 2007. Moreover the trade relations of Nigeria are improving in India and China also.

Uninterrupted democratic government in Nigeria is one of the main reasons of this trade bond between the two nations. Other factors include open market policy of Nigeria, the loosening of the strict rules and regulations of trade of Nigeria which were major hindrance in developing trade relations with many countries, relative peace and stability in Nigeria and government’s action towards corrupted officials which had destroyed the name of Nigeria among many countries. There are quite many strict policies, tariffs and high fees of trade which hinder the trade relationship development between Nigeria and different countries.

Discussion of Arising Issues

Introduction

This chapter presents the analysis of the findings of secondary and primary research conducted for the dissertation. The secondary research is done through the review of the related literature around the topic and the key finings of the secondary research are presented in the last chapter. The primary research is the interviews of the experts attached with three fields and the findings of these interviews are also presented in the last chapter.

The following part is the analysis of the findings of these secondary and primary researches. The analysis of the secondary as well as primary research allows having a deep insight over the issue. In the light of the analysis of the research findings, the main issue of the dissertation is discussed and then the research questions are also answered to affirm that all the research objectives are successfully obtained.

Interpretation and Analysis of Research Findings

In this section the analysis of both the primary and secondary research findings, described in the last chapter, is presented with respect to all of the three sectors separately.

Analysis of Secondary Research

The secondary research for the dissertation is done by conducting the literature review on the topic. In this regard the performance of agriculture sector, trade sector and international trade relation of Nigeria with developing countries are studied. This literature review allows having a complete picture of these three. The analysis of the key findings of the secondary reach is presented in the following sections separately for each sector studied with the help of existing literature.

Agriculture Sector

The importance of the agriculture sector for economic development is very clearly understood from the secondary research findings. It is clear now that the role of the agriculture sector could not be neglected and the countries paying proper attention towards the growth and development of their agriculture sector are also witnessing improvement in the rate of economic development. When the contribution of the agriculture sector goes on increasing in the total GDP of the country, then the economic growth rate also tends to increase.

In case of Nigeria, it is found that during the early decade of independence, the country used to focus more on the development and growth of the agriculture sector however after the oil boom in 1970s, this sector is badly neglected by the government and the other authorities. As a result the Nigerian agriculture sector lost its ways. After loosing the flourishing growth trend, the productivity of the Nigerian agriculture sector was badly affected and it also failed to meet the food requirement of the population of the country. As a result the country started facing the issue of food insecurity. At present the condition of the Nigerian agriculture sector is not much hopeful because there are certain major problems that are surrounding the sector.

The Nigerian farmers are mostly indifferent towards the usage of modern technology and method of production is their farms, mainly because they don’t have enough financial resources to purchase and apply the modern machinery and techniques of production in their farms. They are stick to their traditional old production method due to which now only the productivity of the sector is very low but also the cost of production for several agriculture products is also very high.

Due to low productivity of the Nigerian agriculture sector, the Nigerian government has to import several agriculture products from other countries to meet the food requirement of their own. For this they have to spend lot of money for their import bills.

The taxes and subsidies system, lack of research and development work and weak infrastructure of the country are other major problems, encountered by the Nigerian agriculture sector. In sum, it can be analyzed that the present performance of Nigerian agriculture sector is not hopeful and there is need of some major reforms for improvement in the performance and productivity of the sector. Moreover the attitude of the government is the leading player in this scenario. If Nigerian government and officials will pay proper attention towards the solution of the problems faced by the Nigerian agriculture sector, then the sector can produce more and can also meet the food requirement of the country.

Thus the oil based economy is the most important reason behind the low performance and productivity of Nigerian agriculture sector and it is very essential to diversity the Nigerian economy so that the other sector including agriculture sector can also develop after getting proper attention and support from the government. There is abundance of natural and human resources in Nigeria and proper management can enable the agriculture sector not only to feed its own population but also to export certain agriculture products. In this way the Nigerian economy can also get the support of the agriculture sector.

It is also observed from the secondary analysis of data that there is some level of change occurred in the policies and strategies of Nigerian government regarding the importance of agriculture sector and the Nigerian government has shown interest towards the diversification of economy. For this purpose the focus of the government would be on agriculture sector as well, however until and unless some positive and well planned steps would not be taken in favor of the Nigerian agriculture sector, there are little chances that this sector can contribute well in the economic development of the country.

Foreign Direct Investment

It became clear from the review of the literature that the foreign direct investment inflows and outflows possess great capability to accelerate and support the economic development of the countries. Thus it is very essential for the countries that they must formulate such policies and regulations that can work for making their investment regime attractive for the investor. Unfortunately in Nigeria the government and authorities have failed in designing such strategies and plans that can make Nigerian Investment regime attractive for the investors.

The review of the existing literature portrayed a clear picture of the Nigerian investment regime. The key findings of the literature review show that there are some very critical issues that are responsible for low level of foreign direct investment inflows in Nigeria. In Nigeria high degree of uncertainty prevails in the business world due to which the investors and the businessmen always remain confused about making their decisions regarding investing in different Nigerian sector.

The investment regime of Nigeria is also found quite unattractive for the foreign investors because there are high rates of taxes, import duties and tariffs enacted by the government. The investors are mostly discouraged by the government trade related policies and regulations.

In addition to these problems it is also found that corruption exists at almost each and every level within the Nigerian government and business world. This corruption has also appeared as an important reason behind lack of interest of investors. The process of licensing, registration and other business formalities is also very slow in Nigeria due to which investor found it very difficult to carry on their business activities in the country in smooth way.

The reports and recommendations of international trade organizations like WTO etc has also shown that the Nigerian government is required to take some major transformational reforms regarding the trade policies of the country so that the trade regime of the country could become attractive for the investors and the foreign companies and investors could be encouraged to invest their money in different sectors of Nigerian economy and in return the country can take the benefits of the foreign currency, skills and management strategies coming in the country long with the foreign investors.

There is a positive sign pointed out in the secondary analysis of data as well. It is discovered that different sectors of Nigerian economy possess great potential for development and there is growing interest of the foreign companies and investor towards these sector. The telecommunication sector has became an important destination and point of interest for the foreign investors and companies looking towards Nigeria however this sector also lack strong infrastructure and management thus it is important to develop these sector by providing the support of other sectors so that the investors can find it profitable and useful to start different projects in Nigeria and as a result the country can enjoy the benefits of foreign direct investment inflows.

It is also observed that the role of NICP is very important in the entire scenario however there is still need that NIPC must work more effectively and efficiently for the promotion of investment and trade. At present the performance of NIPC is not very supportive for the trade relative activities though it has taken many steps to facilitate the investors and businessmen however there is need of more strategic planning of the commission to promote foreign investment in the country.

Trade Relations with US, China and India

The review of the literature also threw light upon the trade relation of Nigeria with some developing countries like US, China and India. It is revealed from the study that Nigeria is witnessing improvement in the trade relations with important developing countries like US, china and India the facts and figures described in the literature review shows that the trade volume between Nigeria an =d these countries is also rising along with the passage of time. It shows a positive sign for Nigeria and this trend shows that of Nigeria will take some positive steps towards making the export import procedure more easy and acceptable for other countries, then there will further increase in the trade volume between Nigeria and developing countries.

The current situation of the trade relations of Nigeria with developing countries has shown that there is frequent exchange of business delegations between Nigeria and US, China and India. In this way both of the countries think about the possibilities of maintaining good trade relation and also attempt to foster the business cooperation through meetings and conferences. Moreover the signing of different agreements and trade pacts is also facilitating the trade relations of these countries.

However it is also observed that the trade volume between Nigeria and developing countries is mainly contributed by the imports to Nigeria from other countries for which Nigeria used to pay heavy bills. This is because of malfunctioning of Nigerian industries and sectors that it has to import several important commodities from other countries. On the other hand the export is limited to crude oil only and there are very few other commodities that Nigeria export to developing nation. There is need to develop industries and manufacturing sectors in Nigeria to enable it exporting more commodities to developing countries and thus to obtain a balance in imports and exports.

Analysis of Primary Research

The primary research for the dissertation is done by conducting in depth interviews of exports of the relevant fields. The dissertation mainly focuses upon three sectors including trade, agriculture and foreign direct investment. Thus the experts from thee three fields are selected according to their experience and time spend in the particular fields. Three separate questionnaires are then constructed to conduct the interviews of these experts.

Most of the questions of the questionnaires are kept open ended so that the respondents can express their opinions and experiences in detail. After getting appointments from the selected experts, the in depth interviews were conducted. Among total 30 conducted interviews, 10 were taken from agriculture sector, 10 from investment sector whereas 10 interviews were conducted from the experts belonging to the trade sector. The findings of these interviews are described in the last chapter and following is the analysis of these findings that is presented section wise for each sector to analyze the situation of each sector according to the views of the experts of the relevant fields.

Analysis of Views of Experts belonging to Agriculture Sector

The experts belonging to the Nigerian agriculture sector were interviewed using a structured questionnaire containing 25 questions. The responses of these interviews are described in the last chapter. It is analyzed from the responses collected from the experts of the agriculture sector that there is high degree of disappointment among the professionals regarding the performance of the agriculture sector because all of the respondents expressed their dissatisfaction regarding the performance of the Nigerian agriculture sector. The responses of the experts provide deep understanding of the problems of the farmers and there are many hidden issues highlighted as a result of these interviews.

Most of the experts are disappointed from the sector performance and believe that 1960s was a golden era for the Nigerian agriculture sector when it was productive enough that it not only meet the food requirements of the population but several items were exported to other countries as well. However after that, the performance and productivity was declined and at present Nigeria has to import several agricultural products from other countries to meet its food requirement and for this, the country uses to pay much amount on import bills.

This is a great tragedy in the opinion of the experts that one of the major exporters of agriculture products of yesterday has become the major importer of agriculture today due to malfunctioning of its agriculture sector. One of the experts highlighted the factors behind the decline in productivity of the Nigerian agriculture sector and said that “Deteriorating financing in forms of both credit and govt. capital budgetary allocation to the sector coupled with the discovery of oil are the summarized reasons behind the decline”. The responses of the experts clarified that the experts also believe that the boon in oil prices in 1970s has drawn negative impact on the performance and productivity of the agriculture sector.

The low share of the agriculture sector in the total GDP of the country is also an important reason of dissatisfaction among the experts as they are also ware of the fact that the agriculture sector must actively contribute in the economic development of the country through major share in the GDP but despite employing around 70 percent of the population, the sector stills contribute just around 17 percent that is not s satisfying share for this important sector. In this way the performance of the sector is regarded quite unsatisfactory and the experts also make it clear that it is very important to improve the performance of the sector to get help in the process of economic development.

These responses show that the experts are also feeling the need of improvement in the performance of the sector and they also want that the agriculture sector must play an active role for the economic development of the country. The low level of performance of the Nigerian agriculture sector appeared to be great point of worry for the experts belonging to the field.

The experts were also asked to point out the main reasons behind the low productivity and performance of the Nigerian agriculture sector and their responses make it very clear that the experts of the fields are strongly feeling the need of government’s proper attention and concern for the field. Most of the experts expressed their views that the attitude of the government towards the sector is an important reason behind the low performance of the Nigerian agriculture sector.

There is lack of proper budgetary allocation for the sector and adequate policies are also not formulated to support the sector due to which there is no proper management in the sector. In the words of one of the interviewees the main reasons behind the low productivity of Nigerian agriculture sector includes “Lack of modern skill and financial support in form of guaranteed loans for asset purchases, lack of modern research atmosphere (which is costly), inadequate extension services and the dispersed nature of the farm settlements (Small scale) form part of the limitations attributable to lack of better performance

In addition to the government’s lack of concern in making policies to support the sector, the experts also feel that the oil dependency of Nigerian economy is an important reason behind the low productivity of the sector. The importance of oil sector and the focus of the government towards the sector have resulted in the situation where all the revenues went to support the oil sector and the agriculture sector is badly neglected.

In this way the attitude of the government appeared to be an important factor responsible for low level of performance of the Nigerian agriculture sector. Such opinions of the experts made it very clear that the people belonging to the Nigerian agriculture sector are strongly feeling the need of government attention and they want the government to focus on this sector also by reducing its concerns and attention towards the oil sectors.

The use of advanced and update technology is also lacking in the Nigerian agriculture sector as the experts working in the field are highly disappointed from the present situation of the sector regarding the use of modern technology for production. It is found that there are little impacts of global technological advancements drawn upon the sector. However the general opinion of the experts also gives the impression that there is some level of awareness among the people and they want to use advance technology but the level of their awareness and willingness to use the update technology is very low.

These opinions of the experts clarified that there is much need of creating awareness among the Nigerian farmers to use update technology and method of production. In the opinions of an expert “the Nigerian government should focus more on financing researches and skill acquisition while the farmers should concentrate on production. Sourcing for market should also be encouraged. Even with this globalization USA is assisting its wheat farmers with marketing and other logistics.”

The partnership between the private and the public sector is also an important suggestion given by the experts in this perspective. Some of the experts believe that if the private sector will work with the public sector then it will become possible that the Nigerian farmers will be able to use technological advancements in their production process. At the same time the need of research and development work is also felt by the experts as some of the experts express their views regarding the importance of research and development work in the field.

Thus it became very clear from the responses of the experts collected for this question that at present Nigerian agriculture sector is not equipped with modern and update technology and there is need of research and development work as well as private public sector partnership to facilitate and allow the sector using the advanced technology for the production of agriculture products.

The opinions of the experts associated with the Nigerian agriculture sector also reflect the observations of these experts about the changes occurring in the global scenario. The experts see that Nigeria being a part of the global village is also getting the affects of technological advancements occurring in the agriculture sector globally however due to lack of positive attitude of the Nigerian government, these changes are failed to make favorable impacts upon the performance of the Nigerian agriculture sector. It shows that the government of Nigeria is not taking such steps and policies that can take this sector aligned with the global trends of agriculture production.

It is also an important point to notice that the country is not only witnessing the positive sides of changes occurring in the global agriculture scenario but there are negative affects also that are coming in to the country.

For example the issue of food insecurity that has become serious for many of the countries, is an important point of concern for the Nigerian people as well due to low productivity of Nigerian agriculture sector the population of the country is facing shortage of food and it is very necessary that the country must take advantage of the advancements in technology to enhance its productivity. Thus it became clear from the views of the experts collected for this question that there is need of proper strategic planning from the government side to enable Nigeria taking benefits of advancements and facing the issue of food insecurity.

The experts also pointed out number of limitations encountered by the Nigerian agriculture sector and it is further clarified from these responses that the oil dependency of the country is the major factor responsible for low performance of the Nigerian agriculture sector. The government use to allocate most of the developmental programs and funds to the oil sectors and there are lesser plans and funds meant for the agriculture sector that’s why the sector is struggling with financial and managerial attention shortage. Due to this lack of attention, there is low trend of conducting research and development in their field that is also a great limitation of this sector.

Moreover the corruption of the leaders and inadequate extensions services and the dispersed nature of farm settlements are other important issues that appear as limitations of the Nigerian agriculture sector.

It is observed from the responses of the experts that almost all of the problems and limitations pointed out by the experts are linked with the attitude of the government. As the government is not giving due attention towards the agriculture sector that’s why there is financial resources shortages, lack of research and development work and high level of corruption; all these factors are the main limitations of the Nigerian agriculture sector. If the government will pay due attention to the sector then these limitations and problems could be reduced and the sector can perform better.

Despite all the problems, limitations and present low level performance, the experts belonging to the agriculture sector strongly believe that the Nigerian agriculture sector possesses great potential to support the economic development of Nigeria. It shows that despite all the disappointment, there are some rays of hopes in the minds of these experts and they are not totally disappointed and hopeless from the performance of the sector.

This reflects the positive side of the picture that the experts still see the chances of improvement in the performance of the sector. In this regard the past performance of the sector is also good example for these people. The Nigerian agriculture sector was productive enough in 60s to meet the requirement of the country thus the experts hope that if given proper attention and management, this sector can retain its performance.

It shows that the Nigerian agriculture sector greatly needs management skills, planning; research and development work and all these things can enable the sector to support the economic development of the country very well. The responses of the experts collected for this question possess great importance in predicting the future of the Nigerian agriculture sector because these responses show that there are concerns at some level to improve the performance of the sector and experts are also aware that how the performance of this sector could be improves, the identification of the problems and their solution from the experts’ side is something very supportive for the sector as this awareness can bring some level of positive changes in the position of the agriculture sector.

In order to bring this improvement the experts also suggested some steps that Nigerian government can improve the productivity of the agriculture sector by “giving more tax holiday to the exporters and re branding the quality of the export products through financing researches”.

There are several steps taken by the government from time to time with the intention of bringing some positive changes in the agriculture secotr. Some of these steps generated positive results whereas some of them remained useless. Among these steps an important one is the abolition of the agriculture boards that has became a controversial issue for the experts belonging to the field. Almost half of the respondents accessed for the interviews believe that the abolition of the agriculture board was the right step of the government whereas rest of half expresses their views that this was not a favorable step.

These opinions show that there is not a general agreement among the experts regarding this issue and there are many challenges in front of the Nigerian sector even after the abolition of these boards that are equally serious then the challenges and problems faced by the sector in the presence of the boards. Thus it can be said that the establishment and then demolition of the agriculture boards and creation of free market is not something that defines the performance of the Nigerian agriculture sector but there are some other important issues that have even more impact on the performance of this sector including the concern and attention of the government, funds allocation etc.

The role and importance of the agriculture boards is also understood from these responses that these boards are important for limiting the role of the middleman etc but at the same time their inefficiency was also wastage of funds and finances.

The role of African agriculture bank is also criticized by the agriculture sector experts as they believe that the bank do provide credit facility to the sector but it is also very commonly observed by these experts that the deserving farmers are not given the credits and the officials misuse their authority by providing loans to wrong people. The deserving farmers often fail to meet the terms and conditions of the bank and remain ineligible to take bank loan. As a result the bank is not as much supportive for the sector as it could be. Thus the role of this bank should also be made better so that it can truly serve the sector because the present role of the bank is not much supportive and positive for the Nigerian agriculture sector.

The limitations and problems of the agriculture sector identified by the experts earlier are also regarded responsible for low productivity of this sector by these experts. There is a general consensus among the experts that the Nigerian agriculture sector now tends to produce as compared with its productivity during 1960s mainly due to over dependency upon oil sector, lack of government attention, and lack of adequate finance and lack of research and development work.

Thus it is found that there are three four major issues and problems that are badly affecting the agriculture sector. These factors are not only hindering the growth and development of the sector but also causing the low productivity of the sector and creating food insecurity issue in the country.

The responses of the Nigerian agriculture sector experts also clarified that there is not much unawareness among the Nigerian farmers regarding the use of modern and advanced technology but these grass root farmers are unable to use these technology due to the fact that they don’t have access o adequate financial resources. One of the experts clarified in his interview that “It’s never due to unawareness, the campaign for mechanized farming has been on for over two decades now, the major quagmire is the resources for the grass root farmers to acquire it, which boils down to my answer on African Development Bank and the leadership problem”.

The opinions of the experts help in the identification of an important problem that the terms, conditions and requirements of African agriculture board are also discouraging for the grass root farmers because they often don’t meet these requirement and hence get no credit from the bank. Thus it is found that it is the problem of unwillingness or unawareness but the main issue is the unavailability of financial resources that hinders the usage of advanced technology in Nigerian farms that finally resulted in high cost of production and low productivity.

There are many negative impacts of the low productivity of the agriculture sector came out from the responses of the experts that the low productivity cause food shortage due to which the government import several products from other country and pays high import bills. Moreover the livelihood of the people belonging to the agriculture sector also remain at very low level that cause poverty in the country because 70 percent of the population is associated with this sector and malfunctioning of this sector is creating poor conditions in the entire country.

The insistence of the experts for the cooperation of government turned out as an important solution to the problems of the Nigerian agriculture sector because it came out from the opinions of the experts that many of the problems and limitations of this sector are caused due to lack of cooperation of the government. So the experts suggested that “there is a serious need for reforms in the true sense of it, only if the government is going to be sincere. So many things are wrong with the sectors which need to be revamped”.

Just like all other problems of the sector, the use of modern technology and machinery in the sector is also possible through the cooperation of the government because the Nigerian farmers are lagging behind in using the advanced technology mainly due to insufficient credit facilities. an important solution of the problem is pointed out from the responses of the experts that if government make it possible for the grass root farmers to get credit on early terms and through simple process and requirements, then they can get hold of adequate finance and can increase the [productivity of their farms through the employment of moderns and advanced technology and machinery.

It is also very important to encourage the people and organizations to invest in the agriculture sector because through this way also the sector can get finance and improve its performance. The availability of adequate finance is necessary not only for the employment of modern machines and method of production but also to finance the research and development work.

The opinions of the experts also bring out an important point that Nigerian agriculture sector can perform better if the farmers will learn the methods and techniques of farming employs by the farmers of different developing countries like china and India etc. however for this learning also, there is need of research and development work that depends upon the availability of finance. Thus finance can solve many of the problems of the Nigerian agriculture sector so the government should take some positive steps towards the easy and fair availability of finance to the grass root farmers and the researchers related with the sector.

The experts of the field also pointed out an important thing that along with finance and machinery availability the training and skill development of the farmers is also very necessary because for proper usage of the modern machinery it is also very important the users of the machines must have knowledge of these machines and equipment otherwise they can not make proper use of the technology.

In addition to this, it is also very important that the young generation of the farmers must take interest in the agriculture activities. It is important to encourage the youngsters to take active part in the agriculture production because it is also found from the secondary research that the young generation of the farmers after getting disappointed from the situation of the sector started leaving the profession of their insisters and this trend is leading to another problem of unemployment in the country.

Thus the government has to establish different institutions not only for training, education and skill development of the farmers but also for motivation and encouragement of the youngsters. It is also important to clarify the minds of the traditional farmers that the machinery usage will not replace them but it will assist and facilitate them. The reduction in the interest rate of loans is also an important suggestion given by the experts because the high rates of credits often discourage the farmers to take loans from banks.

The interview responses also clarified that most of the experts belonging to the agriculture field are in favor of reducing the import of several agriculture items from other countries however at the same time the experts are keeping an eye on the reality that importing more agriculture products in indispensable for Nigeria as the productivity of Nigerian agriculture sector is very low.

Thus the analysis of the responses of the experts belonging to the agriculture field shows that these experts are concerned regarding the present situation of Nigerian agriculture sector. They have deep insight over the problem, limitations and hindrances faced by the Nigerian agriculture sector and also have some practical suggestions in mind to help sector overcoming these problems. The analysis of the responses collected from the experts belonging to the Nigerian agriculture sector help in understand different issues and problems that are hindering growth and high productivity of the Nigerian agriculture sector.

Moreover the suggestions given by these experts are also of great value because these are the people operating in the field for many years and whatever they suggest for the betterment of the sector, will be in favor and betterment of the sector as these people understand these problems very closely and their suggestion possesses great worth for the improvement of the sector.

Analysis of Views of Experts belonging to foreign direct investment

The experts belonging to foreign direct investment field were also interviewed with the help of a structures questionnaire. There were total 10 interviews conducted from these experts. The responses collected from these interviews are already described in the last chapter. These responses are going to further analyze to make the entire scene more clearly in the light of the opinions of these experts as they have expressed their views in details regarding Nigerian investment regime.

It became obvious from the interviews of the experts associated with investment field that the Nigerian investment regime is surrounding by number of problems and limitations due to which the rate of foreign direct investment inflows is also very low. The experts have also observed that ranging from corruption; registration complexities to weak infrastructure there are number of small and big problems that are discouraging the foreign investors.

It is also revealed from the interview responses that there are some positive impacts of government policies also coming out to make the situation better. Especially the decision of the Nigerian government to establish NIPC and allow 100 percent ownership to foreign investors in some of the fields is regarded one of the most significant step that work for encouraging the foreign investors. Thus there is an overall satisfaction among the experts regarding the role of NIPC.

The experts also share their opinions that as a result of efforts made by NIPC, now the Nigerian investment regime is free from much complicated rules and regulations that were the main feature of Nigerian investment system earlier. As a result there is encouragement among the foreign investors to initiate different projects in country. The experts also share their observations that “the role of NIPC cannot be over-emphasized; provision of friendly policies, enabling environment to mention but a very few”.

Another positive aspect of Nigerian investment regime also pointed out in the responses of the experts. It is noticed that there are many sectors in Nigerian economy that possess great potential for foreign investment like oil, power, tourism, gas and telecommunication sector. As highlighted by one of the interviewees that “the Oil and gas, telecommunications, agric, tourism, power sector and solid minerals are some of the areas a foreign investor should explore in Nigeria”.

The role of government is also criticized as well as praised by the experts in making the investment regime of the country attractive for the foreign companies and investors. The experts believe that the government is taking some positive steps towards making investment regime attractive however it is also observed that sometimes the government uses to pay less attention towards protecting the local industries and in this way disappointment is created inside the country. In the same way the experts are also found supporting the government’s policies not facilitating and giving access to foreign investors inside the country as they think that the economy of the country will go in the hands of the foreigner this way and their own government will loose the control over several issues.

The policy of the government to protect the domestic industries is also supported by the experts as they believe that such steps would not result in creating disappointment among the foreign investors while the local industries are benefited. In the same way the experts have different views regarding the government’s policy to increase the fiscal revenue through import duties and tariffs. The experts also believe that “the formulation of policies in not enough but sustaining and continuous improvement of such policies, compiled with adequate supervision of policy implementation for retaining foreign attraction”.

On one hand this policy took the revenues to high level whereas on the other hand the traders are discouraged from this policy and investors find it difficult to invest in the country. Thus it is widely insisted by the experts that the government should carry on with its policies and strategies of supporting the investment related activities and it has to provide more support and facilities to the investors for encouraging them. There are many investor friendly policies made by the Nigerian government now and this trend must be continued to attract the investors. The establishment of NIPC and the implementation of different programs like NEEDS are regarded as positive and supportive steps of the Nigerian government in favor of the foreign direct investors as well as the domestic investors.

Overall the experts belonging to foreign direct investment field are found bit satisfied with the role of the government and the policies formulated. They believe that the problems exist in the regime because of corruption and insecurity and not because of government policies. Thus a positive aspect of the scene is unfolded in the responses of the experts. The experts also share their feelings that as compared with past, the conditions are getting much better for foreign investment because many of the policies enacted by the government from time to time have generated positive results. The experts believe that the present Nigerian investment regime is more committed and dedicated to serve and facilitate the investors as compared with past and these conditions must be improved and continue to retain the foreign investors to the country.

The experts are also concerned about the fact that the increase in foreign direct investment inflows are mostly directed to the oil and gas sector whereas the other sectors are badly neglected by the government as well as the foreign investors also. This is mainly due to low development and growth rate of these sectors that the foreign investors also avoid these sectors due to their weak infrastructure.

Thus the view of the experts belonging of foreign direct investment field also pointed out the same issue that there is great need that the Nigerian government must focus on the growth and development of the non oil sectors so that these sectors can also attract the foreign investment and can play an active role on the process of economic development. The importance of diversifying the Nigerian economy towards the non oil sectors is highly felt by the experts of the foreign direct investment field also.

There are almost common problems identified by the experts responsible for the low level of foreign investment in the country. Almost all of the experts share the common view that the corruption and bureaucratic influence over the investment regime is the main reason due to which the Nigerian investment regime is unable to progress well. The experts believe that “corruption is the fundamental factor coupled with the issue of insecurity in the country that hinders high inflows of FDI in the country”. Thus the control over the corruption is very important and crucial for attracting foreign investment in the country.

The importance of strengthening the private sector is also insisted by the experts. The experts belonging to the field are feeling the need of active role from the private sector to attract feeing direct investment. They believe that if the private sector companies expand their businesses on solid grounds then it will be an advantage not only for them but for the entire country because the foreign investors generally look for such companies to enter in a country through them. Thus there must be integration between the private sector and the foreign investor because together they can work effectively on several projects in different sectors of Nigerian economy.

The need of training and skill development of Nigerian labor is also felt by the experts as they observe that the availability of cheap labor is not a big deal for the foreign investors until the labor is skilled and capable to use modern technology. Thus trained and educated labor is also required to facilitate the investors otherwise they have to spend much time and money on the training of the local labor that often discourages them. Due to less educated and less skilled labor the foreign investors do employ them but they pay them relatively very low and the labor had to overwork against low wages.

The responses collected from the experts working in foreign direct investment field for many years also allow identifying some of the steps that can help Nigeria in making its investment regime conditions better. The opinions of many of the experts to improve the infrastructure threw the light in the importance of this issue that it is very necessary for Nigeria to built strong infrastructure so that the business activities could be carried out smoothly.

The foreign investors also need such business conditions where they can carry on their business activities with the active support of the infrastructure with out having delays due to transportation and communication barriers or problems. The experts clarified that “Nigeria must enhance its security network, Ensure security of lives and properties, build infrastructure, speed up trials in financial crime related cases and reduce corruption by at least 50% to attract FDI”.

It is also reveled that the present status of infrastructure of the country is not acceptable for encouraging the foreign investors. The observations of ay experts also disclosed that the weak infrastructure of the country has compelled some investors to go back to their countries as they were facing problems due to inadequate supply of energy resources to their business sites. As a result the country failed to get sufficient support from foreign direct investment inflows to accelerate its economic growth. The decaying infrastructure appeared to be an important barrier for the foreign direct investment inflows and must be improve.

Along with improving the infrastructure it is also noticed from the interview findings that many of the experts belonging to the field are not much satisfied with the laws and regulations enacted by the government on foreign investment and they believe that the investors much be encourage through removal of offensive laws and regulations. The uncertainty of the business environment is also an important issue that must be work out in the context of attracting foreign investment.

An important problem is highlighted by the experts that the above mentioned problems and limitations are discouraging not only the foreign investors to go back homes, but the domestic investors are also compelled to windup their business and look for another ways in different other countries.

This is also a problem that can turn in to brain drain situation in the country and must be avoided. In order to cope up with the identified problems the experts also put forward several suggestions that can work for the improvement of the conditions of Nigerian investment regime. One of the respondents expressed his views that “Liberalization of policies, encouragement and protection of local manufacturers, improvement in power sector, reduction in the price of petroleum products and development in the transport sector including railways will help to improve investment by foreigners in Nigeria is very important to make Nigeria a preferable destination of foreign investors.

At also became clear from the responses of the experts that the country is facing many problems and limitations in the context of economic development that can be reduced with the help of the foreign direct investment however the present level of foreign direct investment is not satisfactory enough to support the economy of the country. in order to het adequate support from FDI for the economic development it is very necessary that the foreign direct investment inflow must be increased by providing different facilities to the foreign investors and by removing the problems and limitations mentioned earlier.

Analysis of Views of Experts belonging to Trade Sector

In order to have detailed overview of the trade relation of Nigeria with developing countries including India, China and USA, secondary analysis of data was conducted however some of the issues remained unfolded and the primary research is also conducted to have detailed information about these issues as well. The findings of the primary research described in the last chapter presented the views and opinions and the experts belonging to the Nigerian trade sector as well and following is the analysis of these findings to have complete understanding of the issue in the light of the opinions of the experts.

The opinions of the experts working in the trade sector make it very clear that these experts are also much satisfied with the policies and strategies of the government. The experts commonly believe that the conditions of the Nigerian trade sector are improving along with the passage of time because the government is now taking much supportive steps for the promotion of international trade relations. As a result the situation is better then past.

There are many reforms introduced in the sector by the government directed by WTO and these reforms have also resulted in the improvement of the overall situation. In past the trade regime was not much open and capitalist but in present days there is much improvement brought by the government. The experts mostly praised the present policies of the government directed towards improving the trade relations with other countries. the opinion of one of the interviewees that “I think all trade-related ministries in the present administration have a robust blue print in contributing to the economic advancement of the country if sincerely implemented”; make it very clear that the experts are satisfied with the government present policies however they are also concerned with sincere implementation of these policies.

It indicates that according to the opinions of the experts working in Nigerian trade sector, the trade policies of Nigeria favorable for enhancing the international trade relation and the role of the government is also found satisfying in the views of the experts belonging to the field.

An important problem of increasing the trade relation with other countries is also highlighted by the experts that mostly Nigeria uses to import several commodities from other countries and the export volume tends to be very low. Due to this reason the country fails to create balance in the export and imports. It is necessary that Nigeria must take some steps to reduce its imports and increase its exports. The rise in the imports is also creating negative affects upon the local manufacturers.

The commodities coming from the other countries, especially from China are generally low in prices and high in quality as compared with locally produced commodities. As a result the domestic industries are badly suffering in the country because they fail to face the competition with foreign made products due to lack of using advanced technology, machinery and methods of production. The experts are found much worried regarding this matter and one of the experts expressed his views that “due to rise in trade with other countries like China the local industry will suffer it for lack of competition”.

The opinions of the experts also help in identifying the main problems that are still discouraging other countries to built trade relations with Nigeria. In the opinions of an expert “Import tariff in Nigeria is still on the higher side compared to international level” and it clearly indicates that the experts associated with this field are well aware of the fact that the high import duties and tariffs are discouraging the trade operations with other countries. In addition to this it is also observed from the responses of the experts that view the performance of Nigerian trade sector not much satisfactory at international level and for this they mainly blame the “poor technology and unskilled manpower of the country”

The experts are also noticing that the government is taking some positive moves to promote Nigerian trade relation at international level through different strategies and planning at different departmental and agencies level. One of the experts pointed out that “the role of the government in the trade scenario includes information sharing among investors. Some organizations arrange trade tours for investors to certain countries and invite others to the country to influence each other’s decision on the need for trade among themselves”.

The opinions of the experts also clarified that there is much more room for improvement in the policies and strategies of the government and the Nigerian government must tent to promote the trade relations at international level through information management, display of products in form of fairs and using development banks to finance some trades in the regions.

The major reforms implemented in the Nigerian trade sector in form of SAP are also viewed positive by most of the experts. Most of the opinions of the experts were in favor of the policies of SAP for example one of the experts told that in his view “SAP helped a lot in improving trade conditions in Nigeria”. Other experts also believe that most of the intentions at the inception SAP were good however proper management and sincere implementation of the policies is also very important to bring out positive results from these policies.

Thus there is a general satisfaction among the experts regarding the trade sector of the country that shows that the sector is moving in the right direction and the government is also some positive steps in favor of the growth and development of this sector. Nigeria also get funds and trade guidelines as a result of these agreements so this is also a positive side of the picture that Nigeria is improving the situation with the help of regional and international cooperation. Furthermore it is found that the trade relations of Nigeria are growing well with US, China and India but there is great need that Nigerian government also concentrates towards exporting more commodities rather importing them and this is possible only through the development and high productivity of the local Nigerian industries.

Discussion of Main Issues

The main issue of the dissertation was to study the importance of agriculture, trade relations with developing countries, and FDI for the economic development of countries, especially in reference to Nigeria, to understand the role, developments, problems, limitations and solutions of these sectors in relation with Nigeria economy and to formulate some workable suggestions that can help the country in improving the performance of these sectors so that these can play active role in the economic development of the country. In order to achieve these objectives, information and data is collected from secondary and primary sources and the findings and analysis of this information and data allow having deep insight and understanding of the main issue upon which the entire study is based.

It is revealed from the research that the agriculture, FDI and trade sector possess great potential for economic development and in Nigeria also these sectors can work for the acceleration of economic development but unfortunately the oil based economy of the country provides little opportunities for the growth of these sectors and there are many problems and limitations faced by these sectors in Nigeria.

It is found that the attitude and attention of the government can play vital role in defining the role and contribution of these sectors in the economic development of the country and it is also very important for Nigeria to diversity its economy towards the non oil sectors. In agriculture sector the conditions are found more neglected as compared with FDI and trade. There is general satisfaction regarding the role of the government and overall progress of the trade and FDI sector but much more is required to be done in the agriculture sector.

It is very important that the Nigerian agriculture sector should be enabling to produce more so that the country can meet the challenge of food insecurity and poverty. On the other hand the local industries and non oil sector are in great need of development to attract foreign direct investment.

Thus the main issue is the diversification of the economy towards the non oil sector because when the government will pay attention towards the development of the these sectors also, then there will be more productivity of these sector with high quality and low cost of production. All this could result in high inflow of FDI and rise in exports of the country. the overall situation of the country is expected to improve as a result of all these developments and it can be predicted that majority of Nigerian population living below the poverty line at present will also be able to enjoy better livelihood resulting from the growth and development of the non oil sectors.

Answering the Research Questions

The research is based on the objective of studying the impact of agriculture, foreign direct investment, and trade relations of Nigeria with China, US and India. For this purpose the dissertation strives to provide a general understanding about the importance of these drivers of economic growth and their contribution to the economic development and then analyzes these factors specifically with reference to Nigeria including the historical developments, problems, issues, and limitations surrounding these sectors. In this regard, the research study is aimed at finding out the answers of the some specific research questions that are pointed out in the research methodology as well as at the end of secondary analysis of data.

The first research question is to find out that what are the main factors influencing the performance and contribution of Nigerian agriculture sector in the overall economic development of the country. In order to find out the answer of this question, both the secondary and primary research methods are employed. The secondary research threw light upon various issues and factors that are influencing the growth and development of Nigerian agriculture sector. Moreover the interviews of the professionals belonging to the sector also highlight many problems and limitations that are influencing the growth and development of the sector.

It is found that the oil dependency of Nigerian economy is the most important factor that affects the growth and development of Nigerian agriculture sector. Both the secondary as well as primary research findings revealed that the Nigerian agriculture sector used to perform well till the end of 1960s but the boom in oil prices in 1970s took all the concentration of the government towards the oil sectors whereas the agriculture sector was badly neglected.

All the funds, budget allocations, projects, strategies and management skills were then directed to the oil sector leaving the agriculture sector in miserable conditions. As a result the conditions of the agriculture sector become worst and the productivity went down. Earlier the sector was productive enough not only to meet the food requirements of the company but also to export various agriculture items to different other countries. After the oil prices boom, the productivity of the agriculture sector went too down that the country had to start importing various agriculture products.

In addition to the oil dependency of the sector, there are certain other important factors that influence the performance of the Nigerian agriculture sector including lack of financial resources, less research and development work, lesser usage of modern and up date technology and difficulties in getting finance however the root cause of all of these problems is identified as the attitude of the government and if the Nigerian government will commit to take serious steps for the improvement of the sector then there are no reasons that the sector will perform in same effective manner as it was performing before.

The second research question was to find out that how the performance of Nigerian agriculture sector can be made better so that it can face the challenge of food insecurity and poverty prevailing in the country. The findings and analysis of the secondary and primary research make it very clear that at present the Nigerian agriculture sector is not in position to face the serious challenges of food insecurity and poverty due to low productivity.

In order to face these challenges it is essential that there must be rise in the productivity of the Nigerian agriculture sector. However it has been long time that this sector is no able to produce enough that it can efficiently work for the reduction of poverty and assuring food security in the country because there are less financial facilities available to the farmers due to which they are using old methods of production. As a result the time and the cost of production of agriculture products are very high and the country has to import various food items from different countries. Moreover the people are also compelled to live below the poverty line.

In order to enable the Nigerian agriculture sector performing and producing well, it is important that the government must give proper attention towards this sector and must take some solid steps towards the diversification of the economy towards the non oil sectors. There is need of transforming the policies related with the agriculture sector and the government must formulate new plans and strategies for the agriculture sector that can work for easy provision of credits to the grass root farmers.

There should also be more research and development work in the sector that can allow the usage of advanced appropriate technology as well as adoption of the production methods employed by other developing countries. Thus the secondary analysis of data and the opinions of the experts belonging to the field help in findings out the answer of this research questions and it is described in details in the dissertation that what steps can enable Nigerian agriculture sector to face the challenges of food security and poverty.

The third research question was to find out that the main developments, problems, and issues associated with the agriculture sector in Nigeria. With the help of secondary and primary research methods, the developments occurred in the Nigerian agriculture sector were studied in details and it is found that after 1960s the sector is witnessing decline in performance and productivity. The secondary research specifically described the historical developments of the sector in detailed way.

The main problems encountered by the Nigerian agriculture sector are studied in details with the help of the secondary analysis of data. There is a separate section allocated in the review of the literature that presented the review of the research studies describing the problems of the Nigerian agriculture sector. With the help of this review many of the problems surrounding the Nigerian agriculture sector were highlighted. Furthermore the opinions and views of the experts of the field also threw light over the problems faced by the Nigerian agriculture sector.

It is found from the primary research that the main problem with the sector is the indifferent attitude of Nigerian government towards the sector due to which the sector is struggling with inadequate finance, old methods of production and little support of research and development work. There are many issues identified by the experts of the field that are creating problems for the Nigerian agriculture sector growth.

For example the respondents disclose that there is lack of usage of advanced technology mainly due to financial resources but there is another important issue associated with this problem. Some of the Nigerian farmers want to avoid the usage of machinery and advanced techniques as they think that machinery will replace them and if there will be more use of machinery in the farms, and then the low level worker or labor will become useless and hence will be terminated from their works.

This fear of unemployment is also an important reason that prevents the usage of modern machinery in Nigerian farms. In this way the questions of the third research question is also obtained successfully with the help of the [primary and secondary research and the development, problems and issues associated with the Nigerian agriculture sector are studied in details.

The next three questions were related with the foreign direct investment sector. The fourth question of the research was to analyze the overall situation of the investment regime in Nigeria in the perspective of attracting foreign direct investment. In order to do this analysis, help is taken from both the secondary and primary research methods. The secondary analysis of data allow having detailed overview of the entire situation of the investment regime of Nigeria and it is found that the conditions are getting better for the foreign investor now as compared with the past and there are many problems and limitations also pointed out with the help of the secondary analysis of data.

However to get deep insight over these problems and issues and to find out their solution, the interviews of the experts belonging to the field also conducted and it is found from the findings and analysis of the primary research that the experts of the field are also satisfied with the present situation of the Nigerian investment regime as they see that there are many improvements as compared with past.

It is found from the research that the present situation of Nigerian investment regime is attractive for the foreign investors as compared with the last decades because there are many investor friendly policies implemented by the government to facilitate the investors. But at the same time there are several critical issues and problems that are discouraging the foreign investors and it is very important to overcome these problems also.

For example the weak and decaying infrastructure of the country appeared as one of the most discouraging factor for the foreign investors because their business operations are badly affected due to unsmooth supply of energy resources and they find no other way then to pack their businesses and go back to their countries. Thus the improvement of the infrastructure is the basic requirement for attractive foreign direct investment;

At the same time, the corruption and uncertainty in the Nigerian business environment is also highly impeding the growth of investment regime in the country and the foreign investors often find it difficult and less profitable to do their businesses in Nigeria. Thus the overview of the Nigerian investment regime unfolded any important issues and aspects of the situation and in this way the answer of the fourth research question is also achieved with the help of the secondary and primary research findings and analysis.

The next research question was to find out that what are the steps and strategies that can help Nigeria in making its investment regime liberal and attractive for the foreign investors. In order to find out the answer of this question also, both the secondary and primary research methods were employed. The secondary analysis of data threw the light over certain issues that must be resolved for making the Nigerian investment regime attractive for the foreign investors. However the interviews of the experts belonging to the field provide much detailed understanding of the issue as these people talk in details about the problems of the sector and their possible solution.

It is revealed that the government is playing much supportive role in favor of making the investment regime attractive and liberal and there are many policies and steps also taken by the Nigerian government that have resulted in the encouragement of the foreign investors. However despite all these efforts the foreign direct investment inflows are low in the country and the economy is still not adequate support from foreign direct investment. This is because the investment conditions of the country are still strict according to the international standards and there are several barriers and limitation that are surrounding the Nigerian investment regime.

There is needed to take some revolutionary steps to remove these barriers. In this regard the improvement of the infrastructure is very important. Moreover the government must work out to reduce the uncertainty prevailing in the Nigerian business environment so that the foreign investor can gain confident and trust over the business conditions of the country and can make their investment with out worries.

In addition to this the government must also work out to reduce corruption because it is also an important problem faced by the people coming in the country. Due to corruption in the agencies and departments, the foreign investors failed to get fast and fair registration process and often they take back their decisions to start projects in the country. Hence there are many steps identified in the analysis of the research that can help the country in making its investment regime attractive for the foreign investors. In this way this research question is also well answered with the help of the findings and analysis of the secondary and primary research.

The next research question was to identify the sectors of Nigerian economy have potential to become attractive destination for the foreign investors and how these sectors can be made attractive. It is found from the findings and analysis of the secondary and the primary research that there are many sectors in the Nigerian economy that can become attractive destination for the foreign investors however it is found from the secondary as well as the primary research that the oil based economy of Nigeria is attractive most other foreign direct investment in the oil sectors and due to less developed non oil sectors, the flow of foreign direct investment in very low there.

Despite the fact that oil sectors attract more foreign direct investment it is also found that there are many other sectors of Nigerian economy that are catching the attention of the foreign investors like the telecommunication, tourism and gas sector. Now the foreign investors are also initiating different projects in these sectors that are a positive sign for the country. At the same time it is also necessary that the Nigerian government must focus on the development and growth of the non oil sectors so that these sectors can also play significant role in the economic development of the country by attracting more foreign direct investment inflows.

The improvement of the infrastructure to support the development of these sectors is very necessary and there must be investors friendly policies formulated and implemented by the government in these sectors as well. In this way the answer of this research question is also found with the help of secondary and primary research and the sectors of Nigerian economy are identified that possess potential for attracting foreign direct investment.

Moreover the steps needed to improve the conditions of these sectors are also identified in the research findings and analysis. The experts are also satisfied with the progress of Nigerian trade sector on regional as well as international growing because the country has signed several trade agreements and packs that have resulted in regional trade integration between the countries. Finally the answers of the research questions related with the foreign direct investment are also achieved successfully with the help of the secondary and primary research,

The next and last three research questions are about the trade relations of Nigeria with US, China and India. The seventh question was to find out that what are the trade policies of Nigeria and effects of these policies on the trade relations of Nigeria with developing countries like India, China, and USA. It is found from the secondary and the primary research that there is gradual improvement observed in the trade policies of the country due to which the trade relation of Nigeria are getting much better with the developing countries including India, China and USA.

The facts and figured described in the secondary analysis of data also show that there is improvement in Nigerian trade relations with these countries and the interview responses of the experts of the field further confirmed that the country is moving in the right direction towards strengthening the trade relations with developing countries.

The trade policies of the country are also improving as the time passes and now the Nigerian trade policies are acceptable for many of the country. As a result there is rise in the trade volume between Nigeria and US, China and India. There are positive effects of Nigerian trade policies drawn upon its trade relations with many of the countries. It is revealed from the research that many of the countries not view Nigeria as the most important trade partner in Africa and in West Africa Nigeria has became the largest trade partner of many of the important countries of the world.

The eighth research question is to find out that how can Nigeria improve its image at international level to become preferable trade partner for the developing countries it is found from the secondary and primary research that the country needs to liberal into trade policies by cutting down the tariffs and import duties. In the same way it is also found that some of the countries see the shortage of skilled man power and technological adoptability in the county that’s why these countries avoid having trade relations with Nigeria.

The ninth and the last research question was to identify the reason that despite growth in the trade volume between Nigeria and developing countries, Nigeria is still struggling with the issues of foreign currency reserves and balance of payment etc. It is revealed from the findings of the secondary analysis of data and the opinions of the experts of the field that in most of the cases the rise in the trade volume is contributed by the imports and there is lesser items exported from Nigeria to other countries. As a result the country uses to pay high import bills to these countries and have to spend lot of money on this account. On the other hand most of the exports of the country are limited to oil sector and due to less developed non oil sectors, there are less manufactured item exported from Nigeria to other countries.

As the country uses to export various commodities from other countries especially from china, its local industries are badly affecting. Because China provides many item in Nigeria at relatively low cost thus the domestic industries are badly suffering because the demand is met by the Chinese products and there is no scope for the products manufactured by the local manufactures using old traditional methods with high cost of production. In this regard it is important to promote the domestic industries by restricting the import of several products from other countries and to develop the local industries so that they can produce the products with same quality and price using appropriate technology and machinery.

In this way the answer of this research question is also obtained and finally all the research questions are successfully answered with the help of the findings and analysis of the secondary and primary research. Thus the study met its objective by achieving the answers of all of the research questions decided for the study.

Summary

The chapter presented the detailed analysis of the findings of the secondary and the primary research. The analysis is presented separately for all the three sectors and in the light of this analysis and interpretation, the research questions are answered and the main issues of the dissertation are also discussed. In this way the main objective of the dissertation is achieve by answering the research questions and discussing different issues in detailed upon which the entire research study is based.

It is noticed that there are many sectors in Nigerian economy that possess great potential for foreign investment like oil, power, tourism, gas and telecommunication sector. The role of government is also criticized as well as praised by the experts in making the investment regime of the country attractive for the foreign companies and investors. The importance of diversifying the Nigerian economy towards the non oil sectors is highly felt by the experts of the foreign direct investment field also. There are almost common problems identified by the experts responsible for the low level of foreign investment in the country.

The secondary research threw light upon various issues and factors that are influencing the growth and development of Nigerian agriculture sector. The third research question was to find out that the main developments, problems, and issues associated with the agriculture sector in Nigeria. The secondary research specifically described the historical developments of the sector in detailed way.

There are many issues identified by the experts of the field that are creating problems for the Nigerian agriculture sector growth. The next three questions were related with the foreign direct investment sector. The next research question was to identify the sectors of Nigerian economy have potential to become attractive destination for the foreign investors and how these sectors can be made attractive. Despite the fact that oil sectors attract more foreign direct investment it is also found that there are many other sectors of Nigerian economy that are catching the attention of the foreign investors like the telecommunication, tourism and gas sector.

Now the foreign investors are also initiating different projects in these sectors that are a positive sign for the country. The experts are also satisfied with the progress of Nigerian trade sector on regional as well as international growing because the country has signed several trade agreements and packs that have resulted in regional trade integration between the countries. The trade policies of the country are also improving as the time passes and now the Nigerian trade policies are acceptable for many of the country. There are positive effects of Nigerian trade policies drawn upon its trade relations with many of the countries.

Conclusion and recommendations

Introduction

The main aim of this chapter is to provide a summary and conclusion to all the work that has been done for this research and all the material and data which has been provided in this report. The chapter will present the final words on the topic under discussion and will summarize the entire research in order to present the main points under discussion. This will also include summary of the primary and secondary research and in the end will also put forward various recommendations and suggestions that are meant for the Nigerian government and the businesses operating in the agriculture and trade sector.

Recommendations about how these sectors can contribute more to the economy of Nigeria will also be presented. These recommendations and suggestions are also presented because it is also one of the key objectives of the research to formulate some suggestions that can work for the improvement of these sectors so that they can contribute more towards the progress of the economy and the research outcomes can be implemented and can be used to better the economic condition of Nigeria. Apart from this, during the end this chapter also presents various limitations and problems associated with this research. In some areas there is a need for further research work, such areas have also been pointed out in this chapter.

Research Summary

Economic development of any country is dependent of various key factors which drive the economy. Out of these economic drivers agriculture, trade and FDI hold great importance and hence in this research these three economic variables will be under consideration. The research study is mainly focused on studying the impact of the developments and problems associated with these sectors in Nigeria to have an understanding that how these sectors are contributing to the economic development of the country.

The research is also aimed at identifying the main problems surrounding these factors so that the identification of these problems and their solutions can work for improving the economic conditions of Nigeria. For this purpose the research study employs a qualitative research approach; all the issues related with the topic of the research are explored with the help of secondary analysis of data and in-depth interviews of the experts associated with these three fields in Nigeria.

The research study is basically aimed at studying and analyzing the impacts of the performance and growth of the agriculture, FDI, and trade relations of Nigeria with US, China, and India on the economic development of the country. It will also study the importance of these sectors for the economy of Nigeria. The research will also put forward some recommendations for the government which will help in making the performance of these sectors better so that they can contribute to the economy of Nigeria in a better way.

This study is exploratory and descriptive in nature. Qualitative approach is emphasized in this research in order to attain the objectives of the research. Even though quantitative research methods hold much importance in helping attain the research objectives, however in this research quantitative research methods will not be of much use. For a deep understanding of the subject ‘in-depth interviews’ of almost 30 experts belonging to the agriculture and trade sectors is also conducted.

This will help understand the topic and various issues related to the topic in the light of the opinions and views of the experts belonging to these fields. These interviews are based on structured questionnaires and experts being interviewed would be the ones who have a good experience of the related field. The upcoming sections of this report will discuss more about the interviews, expert selection method and interpretation of the information.

The outcome of this study will be applied as with the help of this study certain recommendations will be forwarded which can help bringing some improvement in the situation. These recommendations will be in form of the workable suggestions that can help in improving the performances of these three sectors and to make their positive contribution in the economic development of Nigeria particularly in the field of trade, food security and environment.

The agriculture sector possesses great importance in the economic scenario of Nigeria. The agriculture sector not only provided employment to major proportion of the population but the contribution of the agriculture sector is also major in the total GDP of Nigeria. In the 1960s, the agriculture sector not only produced 70 percent of the Nigeria exports but almost 95 percent of the food needs of the country were also met by the sector successfully. The government started focusing mainly on the oil sector and the lack of economic diversification resulted in the inefficient performance of the agriculture sector and the people of Nigeria started facing problems in getting basic food items. In the next decade the contribution of the agriculture sector also declined in the total GDP of the country.

The Nigerian agriculture sector faces the major problems due to lack of formulation and implementation of systematic planning and strategies for the development of the sector. In the year 1986 there was the establishment of a free market for all the agricultural products after the abolition of the government marketing boards for agriculture products. In order to reduce the dependency of oil sector SAP proposed some measures for the reforms in the agriculture sector and the price policy was improved to encourage the export of the agriculture goods. The pre SAP era policies implemented in the Nigerian agriculture sector include “price control (administered output prices for export commodities), guaranteed minimum price for grains, input subsidy, centralized marketing and export monopoly”

Later the government introduced Guaranteed Minimum Prices (GMP) to assure the fixation of the floor prices for the agriculture products that the government will give in case of fall of the market prices below the minimum price level. In the year 1986 there was the establishment of a free market for all the agricultural products after the abolition of the government marketing boards for agriculture products. In order to reduce the dependency of oil sector SAP proposed some measures for the reforms in the agriculture sector and the price policy was improved to encourage the export of the agriculture goods.

The main problems and limitations faced by the Nigerian agriculture sector are also identified in the above review of the research studies and it is found that the root cause of the low performance and productivity of the Nigerian agriculture sector are the strategies and policies of the government implemented in the agriculture sector. It is also found that after the 1970s, the Nigerian government used to focus on the development and growth of the Nigerian agriculture sector through introducing different polices and plans in the sector.

However, most of these plans proved to be useless for the agriculture sector due to mismanagement, corruption, and lack of real interest of the government officials. Lack of technology adaptation, less focus on the research and development work, and inaccessibility of the Nigerian farmers to the financial resources are also among the major problems surrounding the agriculture sector. It is also found that the oil prices boom in the global market drew negative impacts on the performance of the Nigerian agriculture sector because after that era the government tightened the policies related with the sector and also increased the interventions in the sector.

This led to reduction of the productivity of the sector which was badly affected. However, from time to time the government used to formulate different policies and plans for the improvement of the agriculture sector but most of them lacked direct focus on the root causes of low productivity of the sector due to which the Nigerian agriculture sector is still struggling with low growth rate and low contribution to the total GDP of the country.

Another important factor which is responsible for the growth and development of any economy is foreign direct investment. Unluckily due to lack of interest of the government for this sector it has not been able to make a lot of contribution to the economy. According to many experts, foreign direct investment is a key element for a prosperous economy. Not only it generates employment for the host country but also elevates the living standard of the people. Through foreign direct investment management skills and technologies are also exchanged between the host and investor country. In this way foreign direct investment accounts for economic development and most of the developing countries are well supported by foreign direct investment in their development process.

Nigeria has a lot of human as well as natural resources and hence is a good option for foreign investment. Foreign direct investment inflows in Nigeria are highly influenced by the trade policies and tariff systems implemented in the trade regime of country from time to time. During 1970 to 1976 the government of Nigeria took some positive steps to attract the foreign direct investment and for this purpose the trade and investment policies were made less restrictive. If the government focuses more on this sector than just the oil sector, then as this country is one of the most important African countries, it can attract a lot of foreign investment.

As the oil and gas sectors have potential for more investment return, therefore investors are more interested in investing in these sectors than in the FDI or agricultural sector. Nigerian government has taken some steps for the improvement of the conditions of the Nigerian investment regime.

This is a positive step and people of Nigeria hope that it will definitely yield good results. Nigerian government has realized the importance of attracting foreign direct investment in the country for supporting the economic development. Almost 60% of the contribution to the economy comes from the oil sector; therefore not much attention has been given to other sectors such as agriculture and trade. FDI has also been neglected and needs reforms and new regulations and other efforts to attract investors.

The African countries are also attempting to attract more foreign direct investment in their different sectors of economy and Nigeria, the most important economic centre of the African regions is also taking different steps to attract foreign investors and multinational companies to the country. Nigeria also joined New Partnership for Africa’s Development (NEPAD) to organize its efforts to attract foreign direct investment in different sectors.

The problems of corruption, inadequate infrastructure and restricted trade regime are the main barriers hindering the rise in foreign direct investment inflows in Nigeria however it is also a fact that different sector of Nigerian economy especially the communication and service sector possess great potential for the foreign investors and if managed properly these sectors can accelerate the economic growth of the country by attracting multinational companies and investors. Julius (2003) notices that the investment regime in Nigeria is facing some very serious challenges and due to these challenges the flow of foreign direct investment is very low in the country. As a result the other sectors lack development and the flow of foreign investment also remains very low in different sectors of Nigerian economy.

Another important aspect which helps in the development and prosperity of the economy is the trade links that country has with the developed nations. In this context, in order to study the trade links Nigeria has with the developing countries, China, India and USA are studies with respect to their relations with Nigeria. International Trade is identified as a major factor that has strong relationship with the economic growth and it is supposed that strong export growth can accelerate the economy of a country. Trade is regarded as the engine of the economic development because if the trade policies of any country are well designed then the country can get many benefits in form of creation of many jobs, increased competition and exchange of knowledge and skills.

It has been noticed that there is a definite relationship between international trade and economic development. However, it has also been noticed that this relationship is dependent on the country and the region of the world. Therefore, a definite relationship between the two cannot be defined. In many cases international trade helps in increasing the growth rate of the country and hence helps in economic development. International trade also helps in assuring transmission of technology from one country to the other. Skilled labor and technology helps in the advancement productivity levels and increases the skills and technology of the country.

Even though Nigeria has quite good relationship with many developing nations, the trade relations it has with China, India and USA were discussed in detail in this research. Many factors hinder this trade relationship of Nigeria with other countries. Among these barriers the tariff peaks are very important because in Nigeria there are very high tariffs rates and tariff peaks implemented on different commodities. Moreover there are certain import restrictions that further narrow down the scope of trade in Nigeria.

These import restrictions include import ban and import licensing. Nigerian government has also enacted some special licensing requirements on the trade of certain products especially on the petroleum products and generation units and these licenses have to be secured three month before the arrival of the products on the entry point. This policy is also been criticized by many of the Nigerian trade partner countries like China and US.

Nigeria has very strong trade relations with United States. This relationship is getting even stronger day by day. A continuous rise in the trade between Nigeria and US has been noticed. This increase in the trade is the main reason of excellent trade relations Nigeria has with this country. The governments of United Stated and Nigeria have also taken some positive steps for the development of bilateral trade relations between the two countries.

USA and Nigeria also meet at the platform of WTO and share various opinions on certain trade related issues. Both the countries have officially agreed that both of the countries will work for further development of the bilateral trade relations by increasing the exchange of certain goods and services. Moreover whenever the officials will feel the needs, they will also sign agreements at appropriate level related with the matters of trade intellectual property, labor, and transfer of technology, technical cooperation, and investment issues.

Moreover USA and Nigeria agreed to raise consultancy on investment and trade matters to promote the bilateral trade relations and if the experts notice that there are some trade and investment issues that can badly affect the trade relations then they will go for the resolution of such issues through agreements and treaties at relative level.

A recent increase in the trade level volume between Nigeria and US has been noticed. This has made Nigeria one of the biggest trade partners of United States present in the African region. The main reason for increase in the trade levels between Nigeria and United States is the oil imports which are being bought by US in large quantity. Another important reason for this strong relationship between US and Nigeria is due to import of machinery, wheat and motor vehicles. Due to this relationship US has become a major foreign investor for Nigeria.

Apart from US, Nigeria also has good trade relationship with India. This relationship is continuously building up and is said to be going through a phase of increased cooperation. It has been predicted that there will be an increase in the trade between Nigeria and India. The reason for this is the continuously increasing imports and exports between both the countries. Nigeria has been trying to reform its strict trade regulations, and this is yet another reason why developing nations are taking more interest in this country.

Nigerian officials are trying to promote FDI, import and export related activities among the two countries. As a result, today Nigeria is one of the largest partners of India. The Nigerian government is encouraging the Indian investors to invest their money in different sectors of Nigerian economy and as a result of these efforts the Indian multinational companies have shown their interest to invest in different Nigerian industries like fertilizer, petrochemicals, power, oil and gas.

India and Nigeria has moved a step ahead in this trade relationship by signing a strategic partnership pact in 2007. As India and Nigeria have no contentions and issues which can hinder their relationship, therefore both of the countries enjoy a friendly trade relationship. Moreover, India and Nigeria also have a common social and political perspective on many things which helps them maintain their relationship and make it even stronger. Continuous visits of officials from Nigeria to India and vice versa is also a positive sign in this relationship. Various Indian companies are operating in Nigeria, which is yet another positive sign. On the whole Nigeria and India have a fairly good trade relationship which is further strengthening.

The third country whose relationship with Nigeria has been discussed in detail in this research is China. China has a fairly good relationship with Nigeria as Nigeria provides fuel to the ever growing economy of China. China imports major portions of its petroleum form Nigeria. Chinese government has also showed its willingness to support Nigeria on different grounds and the visits of the officials of both the countries to each other further strengthen their relationships.

Nigeria has signed an agreement with the Chinese company Petro China, which is a positive sign in this growing trade relationship between the two countries. A few researchers have pointed out that Nigeria and China have strong ties between their cultures, history and politics. These common factors have further strengthened the trade relationship of both the countries. China is the fastest growing economy of the world whereas Nigeria has become the fastest growing economy of African region and both of these countries also share communist background.

When Nigeria adopted trade liberalization policies and open its gates for the foreign investors and importers then soon China became an important trade partner of Nigeria and at present there are many industries and sectors In Nigeria where Chinese people are working in considerable proportion. On the other hand many of the Nigerian people are also living in china conducting different business activities in different industries and sectors of Chinese economy.

The agriculture sectors, FDI, and trade relations with the developing countries possess great importance for the economic development of any country and the efficient performances of these sectors have proved to be beneficial for the economic growth of different countries all over the world. This research study will be an attempt to bring some level of change in the economic development of Nigeria through the analysis and identification of the barriers and limitations encountered by the agriculture, trade relations, and FDI in Nigeria.

Moreover, the research study is conducted with the expectation of exploring and identifying the main causes that are affecting the performance and growth level of the agriculture, FDI, and trade relations of Nigeria with India, China, and USA; and the issues that are preventing these sectors to perform an effective role in the economic development of the country. The expected outcomes of the research study will be qualitative in nature as the entire research study is conducted by employing two different qualitative research methods.

The dissertation will present in-depth analysis and examination of the performance, growth level, and problems of the three selected economic drivers of the Nigerian economy with the help of the secondary analysis of data.

Furthermore, the interviews of the experts of these sectors will also provide deep insight to all the issues and aspects related to the topic of the dissertation. It is also expected that the opinions of the experts working in these fields and the analysis of the research works done by different social scientists will be helpful in formulating such suggestions and recommendations as will be workable for the country and can be practically implemented in these sectors with the hope of bringing some level of improvement. Finally, all of these efforts are done with the expectations that in the end the benefit will reach to the Nigerian economy.

This research has used a mix methodological approach to achieve its objectives. For this reason a secondary analysis of the subject which is the literature review and primary analysis with the help of interviews is done. Both of these research methods are used for this study in order to get an in-depth knowledge of the subject and keeping in mind the relevance of these research methods for the study. In order to have a deep understanding of the topic and discuss the background issues related to the study, the literature review has been conducted. The main research questions have been drawn with the help of reviewing the literature review.

The main objective of this research is to study and analyze the performance and growth of agriculture, FDI and trade relations with US, China and India. Moreover, the study was also aimed at finding the impact of these variables on the economic development of the country.

This research used a mix methodological approach to achieve its objectives. For this reason a secondary analysis of the subject which is the literature review and primary analysis with the help of interviews was done. Both of these research methods are used for this study in order to get an in-depth knowledge of the subject and keeping in mind the relevance of these research methods for the study. In order to have a deep understanding of the topic and discuss the background issues related to the study, the literature review has been conducted. The main research questions have been drawn with the help of reviewing the literature review.

The answers to these research questions will be discussed in chapter seven. The answers to these research questions will be obtained with the help of the literature review. The literature review helps in answering these questions as it contains analysis of the studies based on FDI and growth of agriculture and its impact on the economic development.

As most of the questions are based on these issues and the relation of Nigeria with China, United States and India, therefore a review of the second, third and forth chapters of this research gives a clear understanding of the subject and helps in answering the research questions. The last chapter has given detailed information about the trade relations of Nigeria with India, China and United States. Thus the qualitative study of the secondary data will help in finding the answers to the research questions and will help in addressing the common issues in this research.

The primary research results were obtained with the help of interviews. These interviews are conducted with the help of structured questionnaires. These interviews are taken to be more qualitative in nature, even though are conducted with the help of very structured and planned interview questions. Even though in any qualitative interviewing the interviewer can slightly depart from the actual given questions in order to get more information out of the expert, however, in this research the interviewer will strictly adhere to the given questions as these questions already contain all necessary questions which should be asked in order to achieve the objective of this research report.

In the end report presents a few recommendations for the government to follow which can help it focus on the non oil sectors of Nigeria and hence make them better. These sectors have the potential to do better but are not able to do so due to the negligence of the government.

Research conclusions

It can be concluded from this research that the agriculture, FDI and trade relations of any country with the developing nations, play a very important role in the development of its economy. The role of the agricultural sector cannot be neglected if the country wants its economy to prosper.

Before the oil boom in Nigeria during the 1970’s, the agricultural sector was given more attention and hence developments in this sector were continuously noticed. However, after the 1970’s as Nigeria became oil based economy, agricultural sector was given less and less attention, and more attention was given to the oil and petroleum sector of the country. The food insecurity which the country now faces and it has been predicted that this food shortage will increase more, is due to the negligence of the government incase of the agricultural sector.

Even though the government is now taking action to promote the investments in this sector also, however more changes are required in case of the policies and strategies of this sector. Agricultural sector of Nigeria has played a very important role in the prosperity of Nigeria’s economy and can play an even greater role of the government pays a little more attention to this sector. Therefore, with the help of primary and secondary analysis it can be concluded that the agricultural sector of Nigeria has the potential to contribute more to the economy of Nigeria and with a little help from the government this sector can definitely help in the elimination of food scarcity in the country.

The foreign direct investment is also an important segment of any economy. From this research it can be concluded that there are some serious issues related to FDI of Nigeria which are responsible for low level of foreign direct investment inflows in the country. In Nigeria high degree of uncertainty prevails in the business world due to which the investors refrain from investing in this country. The investment regime of Nigeria is also found quite unattractive for the foreign investors because there are high rates of taxes, import duties and tariffs enacted by the government. Even though the government is now taking interest in this sector, but more reforms are needed in order to make investment in Nigeria an attractive option.

From the above research it can also be concluded that corruption prevails in Nigeria from the very root to the highest government officials. All the sectors of the country including the government are getting affected by such high-level of corruption. This corruption is also a factor why investors refrain from investing in this country. Even WTO has requested the Nigerian government to take action against the corrupt officers.

The study unfolded many important issues related with the Nigerian economy and the contribution of Nigerian agriculture, FDI and trade sectors in the economic development of the country. It also clarified that the governments have to play supporting role in the development and growth of trade, FDI and agriculture sector by formulating and implementing different policies and strategies in favor of these sectors. The diversification of economy towards non oil sectors also appeared as important factor that can work for the improvement of the performance of the non oil sectors in most of the oil based economies.

It is essential to work for resolving all these issues to enable these sectors playing important and active role in Nigerian economic development because these sectors possess great potential to support the economy. There are many sectors in Nigerian economy that can be attractive destination for the foreign investors like telecommunication, tourism and agriculture sector but there is need for strengthening the infrastructure of these sectors so that the investors and traders from other countries find it profitable to get involve in business in these sectors.

The identification of the major problems and limitations faced by the Nigerian agriculture, trade and FDI sector enable to formulated some workable suggestions for the improvement of performance of these sectors and finally the research study presented a detailed analysis of the performance and problems of Nigerian trade, agriculture and FDI sector and examine their part and present role in the economic development of the country.

On the whole it can be concluded with the help of primary and secondary research that Nigeria has a lot of potential and not only has abundance of natural resources but also human resources. The government of Nigeria has identified problematic factors in the trade, FDI and agricultural sector and has taken certain actions also which have proved to be beneficial. However, strategic plan has to be developed and action has to be taken which can enhance the performance of these sectors. The recommendations in the next section of this chapter present a few actions which the government can take in order to enhance the performance of the sectors under consideration and hence make the economy of Nigeria better.

Policy recommendations

The research study aims to put forward some suggestions and recommendations for the Nigerian government that are expected to make the situation of the sectors under consideration better and supportive for the economic growth of the country. These suggestions and recommendations are basically drawn from three sources; the opinions of the experts who are all the high level officials working in the agriculture, trade and government sector of the country, the research studies done by the social scientists, and the comparative analysis of both.

Nigerian government has played an important but a non supportive role for the agriculture and FDI sectors. Being oil based economy, most of the attention was given to the petroleum sector and agriculture and trade sectors were left high and dry. There are many issues which the government has to focus on in order to bring in revolutionary changes in these sectors so that these sectors can contribute more towards the economic development of the country.

An important recommendation for the government of Nigeria which is also given by the experts and many social scientists, whose work has been studied in the literature review section of this report, is the need for a diverse economy. Nigeria needs to diversify its economy towards non oil sectors. Nigeria is among the major producer as well as the export of crude oil but despite this fact the economy of the country lie at very low level due to the mismanagement of resources and corruption etc.

The fluctuations in the oil prices in the global market further works for destabilizing the economy but despite all these facts the government of country ignored the non oil sectors and as a result the country is listed among the poorest nations of the world. Now there are some signs that show the realization of the government for diversification the economy and it is very necessary that the government must pay attention towards the non oil sector so that other industries can grow as well, in this regard the government should make investments in non oil sectors to support their development.

Thus it is suggested that the diversification of the economy towards the non oil sector would be the most significant and positive steps towards the development and improvement in the agriculture and trade sectors. An analysis of the relationship of Nigeria with other countries such as China, US and India revealed that Nigeria can have better trade relations with these countries if it had a little change in its policies. Nigeria has very strict policies on trade and foreign investment, which has a negative affect on its relationship with the developing nations. Nigeria should follow this strategy to diversify its economy and make an overall improvement.

As mentioned earlier, the trade regime of Nigeria at present is not regarded as a favorable trade regime for the investors. The country has not implemented the trade liberalization measures in true sense and till present there is ban on the import of certain items and the duties and tariffs rates are also very high. Due to these problems the foreign investors are not encouraged to come in Nigeria and invest in different industries. Thus the government has to work out to make this situation better.

There must be an open policy adopted by the government of Nigeria like China that allows an easy access to the foreign investors to the domestic markets and industries of the country due to which more FDI came in the country and different sectors started flourishing in China. Nigeria government must work for the encouragement of the foreign investors by showing them different investment opportunities in the country and by facilitating and encouraging them through different incentives and flexibilities in the business operations. Thus it is concluded that the government of Nigeria must work for the liberalization of the economy only then the agricultural sector and trade can grow in the country like other developing nations.

For the agricultural sector, there is s need for finance providers. The only African bank which provides loans to the farmers has such high paper work requirements that it is difficult for the an ordinary person to obtain that loan. Moreover, other banks provide loans, however at a very high rate. The local investors at the same time are also less interested in giving their money to the agriculture sector because they see little scope of getting high returns on their investment from this sector.

In this regard the government has to make some arrangements and should establish special banks or financial institution that can grant loans to the grass root farmers on easy terms and conditions so that they can carry on with different activities in efficient manner after getting sufficient finance from the banks or institution specially meant for the agriculture industry. The government also has to assure through a check and balance system that there will be no corruption in the matters of giving finance to the farmers and all the funds and loans given by regional and international financial institutions will also be hand over to the agricultural sector with complete honesty and fairness so that the sector can take the benefits from the aids and can progress in positive direction.

The investment in the agriculture sector of Nigeria is very low due to which there is lack of research and development work and at the same time the farmers are not able to cope with the changes occurring in the technology world. This is one of the major causes of low level performance of the Nigerian agricultural sector. The investors are not encouraged to invest in Nigeria due to many factors like law and order situation, complications of the business procedures and lack of technical adoptability in the agriculture sector.

The government can play a significant role in this regard and can encourage the foreign investors to invest in this sector of the country by simplifying the business procedures and providing several incentives to them. The flow of foreign direct investment can bring many positive changes in the country so the government of Nigeria has to take some solid steps to attract the foreign investors. In this regard the functioning of the government agencies and departments is also very important.

The organizations like NIPC etc should also work more effectively for attracting foreign investment in the country by assisting and facilitating the foreign investors. Thus the government has to work for making such departments and agencies more efficient by lowering down the level of bureaucratic control over these agencies so that they can work fairly and efficiently for attracting foreign investments in the country. The examples of developing countries like China, India and US also show that in these countries the foreign investors are provided an investor friendly environment due to which the level of FDI increases in these countries and various sectors also get support from this investment to become better and productive.

Another issue which has to be addressed is the lack of infrastructure development in various sectors of Nigeria. People also feel insecure investing in the non oil sectors of Nigeria. It is the government which can put this confidence in people by firstly making these non oil sectors better. Investments should b made in the development of the infrastructure. This will help raise the reputation bar of these sectors and hence more investments will start pouring in.

The uncertain business environment in Nigeria is also a reason why people refrain from investing in the country. The social scientists have also observed that the socio political situation in Nigeria is very uncertain due to which the business activities are also badly affected. In this regard the government has to make sure through its reforms and strategies that there will be stability in the business environment that can allow the businessmen to take the decisions regarding their business with full confidence.

The stability of business environment in China, India and US is a powerful motive for the business people to become efficient and productive and the manufacturing industry of these countries progress well after getting the support of the stable environment. Just like these countries, Nigeria also needs stable business environment where companies can freely work for enhancing the productivity and efficiency of their business.

Limitations of research

The main aim and objectives of this research have been successfully achieved with the help of employing a mix methodological approach. However, there are some limitations and problems which were faced during this research. First of all, even though a lot of data is available for the trade sector of Nigeria, there is very little authentic data for the Agricultural sector available, due to which the research study has to rely upon the research works done by different social scientists and these research studies mostly describe the facts rather providing much the figures and statistical data.

As a result not much statistical data is provided in the research and only qualitative information or theoretical information can be found in the report. On the other hand much information about the foreign investment and trade sectors were found and examination and analysis of this information was done successfully.

In addition to this there were major problems which were faced during the interviewing process. It was difficult to get time from experts of all the fields and interview them. Few of them agreed and hence only ten interviewees were available per sector, altogether almost 30 interviews were conducted. Due to shortage of time many important questions in the questionnaire had to be cut down.

The information provided for the research in the literature review section, has been collected from various resources. It has been assumed that the information provided by these sources was correct. Moreover, it was also assumed that the facts and figures provided in these sources were also correct.

Area of further research

The research study has analyzed the agriculture and trade sectors of the country and the relationship Nigeria has with various developing nations. In this regard it is very important to keep in mind the limitations and problems of these two sectors of the country. The social scientists should put forward recommendations with the help of which the agricultural sector can enhance its performance and the trade sector is able to draw in more investment.

Research can also be done in order to find how it would be possible to make the investors focus on other sectors of the country than just the oil and gas sector. In order to follow the paths of the developing nation and to adopt technology, maintain high quality standard and conduct research and development work, it is very necessary that there must be sufficient financial resources that the sector lacks. Research can also be conducted in areas which can help the government enhance the performance of the agricultural sector of the country.

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Appendix

Questionnaire

Nigeria Economy: Role of Agriculture, FDI and Trade Relations with China, India and the USA

Questionnaire (Agricultural Sector)

Contact Name and Designation
Company Name
Address:
Phone Number:
City/ State:
E-mail /Fax:
Web Address of Company:
Years of Working Experience in Related Field:
  1. Are you satisfied with the present situation, performance and contribution of the agriculture sector in the economic development of Nigeria?
  2. What do you think is the main reason behind the decline of the performance and productivity of Nigerian agriculture sector after 1960s?
  3. Do you think that the agriculture sector of Nigeria is update with the requirements and advancements of the modern world?
  4. Do you think that Nigerian agriculture sector is influenced by the revolutionary changes and development occurred in the agriculture sectors of the developed countries?
  5. What are the main limitations that hinder better performance of the agriculture sector in Nigeria?
  6. Do you think that the Nigerian agriculture sector has the potential to support the economic development of the country is better way as compared with the present contribution?
  7. Do you think that the abolition of the Nigerian agriculture board and the set up of free market was a positive move in favor of agriculture sector growth?
  8. How do you see the role of African agriculture bank in providing financial opportunities to the farmers of Nigeria?
  9. What are the main reasons behind the decline of the productivity and export of Nigerian agriculture sector after 1960s?
  10. What do you think is the reason behind employment of old cultivation and farming methods in Nigerian farms? Is it mainly due to unawareness or lack of financial support to get machinery etc.
  11. How advanced farming and cultivation technology can be introduced in the Nigerian agriculture sector to make it more productive and efficient?
  12. What incentives should be provided to the farmers to facilitate them to adopt updated farming technology in production of different agriculture goods?
  13. How the private sector can be mobilized to invest and support the development and growth of agriculture sector in the country?
  14. What should be the role of government in facilitating and encouraging the agriculture sector to be more productive and efficient?
  15. Do you think that Nigeria should cut down the amount of food item import to provide safety cover to the local farmers and food producers?
  16. How Nigeria can retain its position as the major importer of cocoa and other agriculture products in the world?
  17. How do see the influence of the agriculture sector productivity on the trade volume of the country?
  18. Do you think that the trade import/export polices of Nigeria are favorable for the agriculture sector?
  19. Do you feel the need of reforms in the management and policies related with the agriculture sector in Nigeria?
  20. Do you think that the agriculture sector in Nigeria possesses the capability and resources to meet the food requirements of the inhabitants and to face the challenge of food insecurity?
  21. What are the issues that must be resolved at government level to enable the agriculture sector to fulfill the feeding demands of the country?
  22. How do you see the role of government and its policies in promoting and supporting the activities and operations of the agriculture sector?
  23. Do you think that the decision to establish the Export process Zones in Calabar, Enugu, Kaduna, Jos, and Lagos was a positive move towards the development of the agriculture sector in Nigeria?
  24. How the private sector and the social scientists can play role to improve the position and performance of the Nigerian agriculture sector?
  25. What steps can work out for the improvement of the performance and productivity of the agriculture sector in Nigeria? Recommendations and Suggestions

Questionnaire (FDI)

  1. How will you analyze the current situation of Nigerian investment regime?
  2. Do you think that the present business environment of the country is attractive for the foreign investors?
  3. Which sectors of Nigerian economy possess great potential and opportunities for the foreign investors?
  4. How do you see the role of government enacted trade and tariff policies in attracting the foreign direct investment in the country?
  5. Do you see any improvement in the situation of foreign direct investment inflow as compared with past as a result of government policies?
  6. Do you think that the corruption and bureaucratic influence over the investment regime also act as barrier for attracting FDI in Nigeria?
  7. Do you think that the policy of the Nigerian government to enact tariff and regulation for raising the fiscal revenue was a positive strategy?
  8. Do you think that the rules, regulations and policies related with the investment are complicated enough to discourage the foreign investors?
  9. Do you think that the high tariffs and regulation fee protect the local investors by discouraging the foreign investors and industries?
  10. How the private sector can play role in increasing FDI inflow by integrating with the foreign investors?
  11. What policies of government are the main barriers in attracting foreign investors in the country?
  12. How the government can work for encouraging and supporting the foreign investors in the country?
  13. What is the role of NIPC is facilitating and encouraging the foreign direct investors in Nigeria?
  14. Do you think that the environmental uncertainty in Nigerian business world is also a factor affecting the FDI inflows?
  15. What are the main problems and limitations that are responsible for low FDI inflows in Nigeria?
  16. What are the main reasons due to which the foreign investors are not encourages to invest in different sectors of Nigerian economy?
  17. Do you think Nigeria offers the foreign investors cheap labor and low cost of production as an attraction to invest and set up their production sites here?
  18. What are the main differences observed in the present investment regime of Nigeria as compared with past?
  19. How much the FDI inflows support the economic development of Nigeria?
  20. How Nigeria can be made an attractive investment destination for the foreign investors?
  21. What are the negative consequences that Nigerian economy faces due to low FDI inflows?
  22. What is the importance of reducing environmental uncertainty and regulations complications for increasing the FDI inflows in the country?
  23. How do you see the role and progress of NEEDS in improving the investment related conditions in Nigeria?
  24. What steps can help Nigeria in catching the attention of the foreign investors in different sectors to support the economic development?
  25. What are your suggestions and recommendations for improving the FDI situation in Nigeria?

Questionnaire for the Expert of Trade Sector

  1. How do you see the present situation of the trade sector in supporting the economic development of Nigeria?
  2. Do you think that the present situation of the trade sector is better as compared with the past?
  3. What are the main differences in the present trade regime of the country as compared with past?
  4. How do you evaluate the trade policies of Nigeria at regional and international level?
  5. Are you satisfied with the policies and strategies adopted by the government of Nigeria to facilitate the trade related activities?
  6. Do you believe that Nigerian industries failed to compete at international level because of strict trade policies enacted by the Nigerian government?
  7. Do you think that the present trade policy of Nigeria truly works for the diversification of the economy towards the non oil sectors?
  8. What are the major reforms required in the Nigerian system to make trade regime liberal and progressive?
  9. How do you see the effects of SAP on the trade scenario of Nigeria?
  10. How do you see the foreign relations of Nigeria with developing countries? Are they managed effectively enough to maintain good trade relations with foreign countries?
  11. Are you satisfied with the efforts of the government to promote the trade relations of Nigeria with developing countries?
  12. How do you see the trade relations of Nigeria with USA, China, and India?
  13. Do you see improvement in the trade relations of US, China, and India and Nigeria as a result of government efforts?
  14. Do you believe that the recent rise recorded in the trade volume between US and Nigeria is a positive sign for Nigerian economic development?
  15. What are the main factors that contribute towards the rise in trade volume between US and Nigeria is recent days?
  16. What would be the impacts of the improvement in trade relations of China and Nigeria?
  17. What are the benefits and positive impacts on the Nigerian economy being the largest trade partner of India in African region?
  18. How the improved trade relations with the developing countries can support the economic development of Nigeria?
  19. What are the major issues that hinder further strength of the trade relations between US, China, Inida and Nigeria?
  20. Do you think that the private sector can also work for improving the trade relations of Nigeria with developing countries like china, India and US?
  21. What is the role of different government agencies and organizations in improving trade relations of Nigeria with different countries?
  22. How the government of Nigeria can work for further improvement of trade relation of Nigeria with these developing nations?
  23. What are the positive consequences that Nigerian economy can enjoy as a result of improved trade relations with US, China and India?
  24. What are the most important sectors of Nigerian economy that possess great potential for supporting trade relations of Nigeria with US, China and India?
  25. What are your recommendations and suggestions for the Nigerian government and private sector for bringing improvement in the trade relations of Nigeria with developing countries?
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1. YourDissertation. "Nigerian Economy: Agriculture and Trade Relations." November 15, 2021. https://yourdissertation.com/dissertation-examples/nigerian-economy-agriculture-and-trade-relations/.


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YourDissertation. "Nigerian Economy: Agriculture and Trade Relations." November 15, 2021. https://yourdissertation.com/dissertation-examples/nigerian-economy-agriculture-and-trade-relations/.

References

YourDissertation. 2021. "Nigerian Economy: Agriculture and Trade Relations." November 15, 2021. https://yourdissertation.com/dissertation-examples/nigerian-economy-agriculture-and-trade-relations/.

References

YourDissertation. (2021) 'Nigerian Economy: Agriculture and Trade Relations'. 15 November.

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