Infrastructure and Agricultural Value Chain in Nigeria: 1981-2019, Vector Error Correction Mechanism (VECM) Approach
Mechanism (VECM). The data were collected from CBN and World Development Indicator on the agricultural value chain, infrastructure, exchange rate and trade openness. The Augmented Dickey-Fuller (ADF) and Phillip Peron (PP) unit root test results confirmed that all the variables were stationary at the first level difference, i. e I (1) and Johansen Co-integration test established long-run relationship among the variables. The Toda-Yamamoto test established a two-way or bi-directional causality between the agricultural value chain and infrastructure in Nigeria. The results of VECM) showed that infrastructure and trade openness had a significant and direct effect on the agricultural value chain, while the exchange rate had an inverse and significant effect on it. This implies that 1% increases in infrastructure and trade openness increase the agricultural value chain by 52.6% and 6.1 units respectively. While 1% increase in exchange rate decreases the agricultural value chain by 11.7% on average. Also, the broad money supply was not statistically significant thus, implying that broad money supply had zero effect agricultural value chain over the period investigated. Hence, the study recommended that governments at federal, state and grass-root levels must declare a state of emergency on infrastructure deficiency in the country by taking a holistic approach through continuous and productive spending on infrastructural development. The holistic approach must include the provision of certain infrastructural facilities such as motorable roads for agricultural products, storage facilities at all levels of government, provision of farm equipment and communication that would encourage agricultural value chain in Nigeria.