Tewodaj Mogues POLICY SEMINAR Information, Governance, and Rural Service Delivery Co-Organized by IFPRI and the CGIAR Research Program on Policies, Institutions, and Markets (PIM)

1. Budgetary Influence under Information Asymmetries:
Evidence from Nigeria’s Subnational
Agricultural Investments
Tewodaj Mogues, Senior Economist, IMF
(Paper written while Senior Research Fellow at IFPRI,
with Tolulope Olofinbiyi)
IFPRI Policy Seminar: Information, Governance, and Rural Service Delivery
21. October 2019, Washington DC

2. Under- and Misinvestments in Agriculture –
What Role Does Information Play?
• With food price crises and changing climates’ effect on
agricultural productivity, sharper lens on public investments
for agriculture (World Bank 2007; de Janvry 2010; Ligon and Sadoulet 2017)
• Investments with proven high returns neglected, those with
little welfare impacts gain strong budgetary attention (Fan and
Saurkar 2008; de Janvry and Sadoulet 2010; Benin and Yu 2013)
• What role does information (expertise, local knowledge)
play in shaping how—and how much—public investments in
agriculture are made?
• We apply a principal-agent model to understand how
information is used in the decentralised context of Nigeria,
by considering information asymmetries in three principal-
agent relationships (Holmstrom 1979; Jones 2003)

3. Empirical Approach and Data
Empirical method
• Process tracing qualitative
method (Beach and Pedersen
2013; Collier 2011)
• Embedded case study design
• Key-informants: 79 senior
decisionmakers
• Detailed public spending
data from study areas
Study areas
• 3 States: Cross River,
Niger, Ondo
• 3 local governments:
Akamkpa, Wushishi, Odigbo

4. 1. Nonsectoral Executives vs. Agric. Leaders:
Locus of Influence ≠ locus of Information
• Subnational non-sectoral chief executives, despite their limited
agricultural expertise, have an outsized influence in state and local
level budgetary allocation to and within agriculture
• Influence extends over all spending categories, throughout budget
cycle, and into minute details
• Agricultural technical leaders are de facto marginal players

5. 2. Higher vs. Lower Tiers of Government:
Lower-tier info. advantage unused in LGAs
• Information advantage that lower-tier governments have over higher-
tiers is not exploited in the state-LGA relationship: local governments’
budgets are strongly controlled by states
• States override formula-driven allocations to LGAs, heavily drive the
budget prioritization process, and have high discretion over local project
selection and project funding

6. 2. Higher vs. Lower Tiers of Government:
Lower-tier info. advantage fully used in states
• Entire state budget process plays out among state agencies,
without any presence of federal agencies in guiding public
investment prioritisation
• Not only do federal agencies have no influence, they also do not
have information about amounts of state expenditures

7. 3. Citizens vs. Government:
People’s limited info. disfavours agriculture
• Politicians direct resources to those investments that are easier
for ordinary people to attribute to government’s action
• Investments characterised by short duration from spending
allocation until output generation received greater priority
• Agriculture was not favoured in both these contexts
Political leaders Citizens

8. Investments by subnational elected executives focused on visible, rapidly delivered
infrastructure, goods and services
Needed Directions for Policy
FMARD’s recent reform
Directions of potential benefit for quality of investment choices