Foreign Capital Distribution in Nigeria: Policy Implications for the Agricultural Sector

Stimulation of foreign resources into Nigeria is to transform the economy as neoclassical economics promised. Successive governments in Nigeria usually attract large inflows, yet, small proportion is usually distributed to the agricultural sector despite the importance of this sector and the need for such capital. This study therefore focuses on the policy implication of sectoral distribution of foreign capital for the agricultural sector in Nigeria. The main objective is to examine the contribution of foreign capital to growth in the agricultural sector. Secondary data are employed for analysis. The relevant data are obtained from Central Bank of Nigeria (CBN) Statistical Bulletin. Simple percentages, tables and charts are the tools of analysis, while regression and correlation techniques are the inferential statistical approaches applied. Findings show that distribution of capital inflow in Nigeria does not reflect theoretical position that capital should flow to sectors of need, particularly, where there are abundant raw materials. This theoretical postulation has not been upheld in Nigeria where capital inflow was found to be randomly distributed. This has had negative effect on the contribution of foreign capital to growth in agricultural sector. It is therefore recommended that government should pursue policies like tax holidays and production subsidies for foreign investments in the agricultural sector.