Parallel Session IIId: Agricultural Expenditure and TFP of Ghanaian and Nigerian Agriculture

1. LAUTECH, Ogbomoso Nigeria; IFPRI Senegal
Agricultural Expenditure and TFP of
Ghanaian and Nigerian Agriculture
J. Ajetomobi &T. Fousseini

2. #2023 AGRODEP CONFERENCE
Presentation Outline
• Motivation for the study
• CAADP as agent of transformation
• CAADP Performance in Nigeria and Ghana
• Objective of the study
• Methodology
• Results and Discussion
• Conclusion

3. #2023 AGRODEP CONFERENCE
Motivation

4. #2023 AGRODEP CONFERENCE
CAADP as agent of transformation
• The Comprehensive Africa Agricultural Programme (CAADP) is an African Agriculture
social transformation agenda
• The aim of CAADP is basically to
• help African governments in their preparation of quality strategies and investment
plans,
• enable policy environments to implement the plans, and
• translate the plans into effective programmes capable of promoting growth and
reducing poverty
• One of the cardinal goals of CAADP is to increase public investment in agriculture by a
minimum of 10 percent of national budgets, and to raise agricultural productivity by at
least 6 percent. Many countries are not on tract on the goals.

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Nigeria and Ghana Case Study
• Apart from recommitting to CAADP process and boosting intratrade, Nigeria is out of
track on other commitments and budget allocation to agriculture has been below the
agreed 10%
• Out of 40 indicators to track the achievement of CAADP 2025 target, Nigeria was not on
track in 32. The implementation of the nation’s agricultural investment plan is yet to
fully reflect in the national budget.
• In Ghana, government’s public spending on agriculture has fallen short of 10 percent of
its total expenditure in most years since 1961 and in recent times, the share was less
than 3%.
• Badiane et al., (2017) shows that the implied growth rates for Nigeria and Ghana are
significantly higher than would be expected based on recent performance

6. #2023 AGRODEP CONFERENCE
Objective of the Study
• In Ghana and Nigeria, increase in public expenditure in agriculture to meet the CAADP
Malabo target of 10 percent is still a challenge
• It is yet to be made clear the extent to which existing expenditure contributes to
agricultural productivity growth in both nations.
• The objective of this paper therefore is to investigate the contribution of government
expenditure on agriculture to Agricultural sector’s TFP growth in Nigeria and Ghana

7. #2023 AGRODEP CONFERENCE
ARDL Model
∆𝑙𝑛𝑇𝐹𝑃 = 𝑎0 + 𝑏1𝑙𝑛𝑇𝐹𝑃𝑡−1 + 𝑏2𝑙𝑛𝑎𝑔𝐸𝑥𝑝𝑡−1 + 𝑏3𝑙𝑛𝑎𝑔𝑂𝑝𝑒𝑛𝑡−1 + 𝑏5𝑙𝑛𝑖𝑛𝑓𝑙𝑡−1
+ 𝑎1𝑖∆𝑙𝑛𝑇𝐹𝑃𝑡−𝑖 + 𝑎2𝑖𝑙𝑛∆𝑎𝑔𝐸𝑥𝑝𝑡−𝑖 +
𝑞
𝑖=1
𝑝
𝑖=1
𝑎3𝑖∆𝑎𝑔𝑂𝑝𝑒𝑛𝑡−𝑖
𝑞
𝑖=1
+ 𝑎5𝑖∆𝑙𝑛𝑖𝑛𝑓𝑙𝑡−𝑖
𝑞
𝑖=1
+ 𝑒𝑡
Malmquist indexes from DEA are compared with the TFP estimates from growth accounting
approach

8. #2023 AGRODEP CONFERENCE
ARDL Model
Variables Definitions Sources
Agricultural output Gross production value (constant 2014-2016 in
thousand USD).
FAO
Agricultural labor Economically active population in agriculture WDI
Agricultural land Land used in crop production (‘000 Ha) FAO
Agricultural tractor Units of agricultural tractors in use AFDB Socio-economic database
Irrigation area equipped for irrigation AFDB Socio-economic database
Fertilizer Quantity of NPK Fertilizer expressed in metric
tonnes
AFDB Socio-economic database
Livestock Cattle equivalent of asses, cattle, goats, horses, pig
and sheep. 1.0 for asses and cattle; 0.1 for sheep
and goat, 0.4 for pig, and 2.0 for horse.
FAO,
https://lacrossecounty.org/
TFP Malmquist index Author’s calculation
TFPFU Growth accounting TFP by Fuglie IFPRI
Agricultural Trade openness (open) Ratio of agricultural import and export to
agricultural GDP
PWT10.0
agriculture expenditure Ratio of agriculture expenditure in government
total expenditure (%)
IFPRI
Inflation (infl) Inflation, consumer prices (annual %) WDI
Rainfall Total annual rainfall in mm World Bank Climate Portal

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Variable Description
Variable Ghana
(N=38)
Nigeria
(N=38)
Overall
(N=76)
TFP: DEA Approach
Mean (SD) 1.04 (0.305) 1.02 (0.171) 1.03 (0.245)
TFP: Fugile Estimates
Mean (SD) 95.0 (23.7) 84.1 (16.5) 89.6 (21.0)
Agric. expenditure
Mean (SD) 2.55 (2.83) 3.78 (2.51) 3.17 (2.73)
Agricultural openness
Mean (SD) 6.98 (2.07) 1.89 (0.627) 4.43 (2.98)
Rainfall
Mean (SD) 1140 (109) 1120 (95.0) 1130 (102)
Inflation
Mean (SD) 26.4 (25.2) 19.4 (17.2) 22.9 (21.7)

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ARDL Estimate: Nigeria
DEA Approach TFP Growth Accounting TFP
Variable Coefficient t-statistic p-value Coefficient t-statistics p-value
Long-run Coefficient
Log(Expenditure) -0.077 0.339 0.738 0.148 0.331 0.777
Short-run Coefficients
D(log(Expenditure) 0.107 0.665 0.594 -0.013 -0.426 0.673
D(log(Expenditure, 1) 0.057* 1.694 0.102 0.006 0.600 0.553
ECT -0.347*** -7.254 0.000 -0.169 -3.976 0.000
Adjusted R Squared 0.658 0.580
F 10.48*** 0.000 6.49** 0.000

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ARDL Estimate: Nigeria
Variable Coefficient t-statistic p-value Coefficient t-statistics p-value
Long-run
Coefficient
Expenditure 0.122*** 4.5180 0.000 3.914 0.074 0.942
Short-run
Coefficients
D(TFP, 1) 0.242* 1.849 0.075 -0.550*** -3.836 0.001
D(Expenditure) 0.184** 2.240 0.033 0.045** 2.417 0.022
D(Expenditure, 1) 0.005*** 0.064 0.950 0.011 0.636 0.530
ECT 0.923*** -7.989 0.000
Adjusted R
Squared
0.833 0.968
F 25.97*** 0.000 98.62*** 0.000

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Conclusion
• Nigeria and Ghana like several other SSA nations are out of track in many CAADP
commitments
• TFP growth are still below the 6% CAADP target
• Over the analysis period, the TFP declines slightly in Ghana while it rises slightly in
Nigeria.
• Agricultural expenditure is a less important driver of agricultural productivity growth in
Nigeria compared to Ghana in long run.
• A possible explanation for this behaviour may be the high level of political instability
and weak national agricultural extension system in Nigeria.

13. THANK YOU