WEEK 5

MARKET STRUCTURES
Concept of Market
In everyday speech, market refers to a fixed place where people meet to buy and sell. But in relation
to Economics, market does not necessarily refer to a fixed place. It is defined as any arrangement,
system or organization whereby buyers and sellers of goods and services are brought into contact and
can transact business with one another. The means of contact could be through internet, phone, letter
or telegraphic system or a fixed place like the regular marketplace.

Types of Market
Market could be classified based on the types of commodities bought and sold (i.e. consumer goods
market, labour market and capital and money market), or on the basis of channel of distribution
(resale and wholesale market), or the bases of prices.
Under this discussion, we shall look at the type of market on the basis of prices.

Types of Market (On the Basis of Prices)

1. Perfect Competition/Market
2. Imperfect Competition/Market

1. Perfect Competition/Market
A perfect market is a market structure in which prices are determined by the forces of demand and
supply. It is a market without government intervention. It should be noted that in the real world a
perfect market does not exist in its pure form.

Features of a Perfect Market

a. Free entry and free exit of buyers and sellers
b. Homogenous commodity so there will be no room for consumer to prefer one to another
c. Uniformity of prices. Each single competitor cannot influence price.
d. Large number of buyers and sellers
e. There are a large number of buyers and sellers such that no single person can influence
price.
f. Perfect knowledge of the market transactions available to everyone.

Advantages of Perfect Competition

a. Since there are large numbers of buyers and sellers, it becomes impossible for a single buyer or
seller to influence price. This helps to prevent consumer exploitation
b. The freedom of entry and exit of producers/sellers enhances competition and results in
production of high quality products
c. Normal profits are earned by firms in the long run. Since there is no room to make abnormal
profits, this brings about efficient allocation of resources.
d. Consumers benefit maximally since there is no room to make abnormal profit

Disadvantages of Perfect Market

a. It leads to waste of resources. There is capacity underutilization under perfect competition since
each firm produces an insignificant proportion of the total output and therefore may not enjoy
economies of scale.
b. Capacity under-utilization may lead to lying off workers and unemployment of labour.

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 2. Imperfect Competition/Market
An imperfect market is a market in which the forces of demand and supply are not allowed to operate
freely. There are different degrees of regulations of the market forces. In practical terms, it is
imperfect competition that operates in most markets
Types of Imperfect Markets
a. Monopolistic competition
b. Oligopoly
c. Duopoly
d. Monopsony
e. Oligopoly
f. Monopoly

a. Monopolistic Competition
This is a market situation in which there are many producers or sellers producing or selling identical
but non-homogenous commodity. Goods arenon-homogenous because of the branding of the
commodity. Examples include daily newspapers from different publishing houses, producers of several
bottled non-alcoholic drinks, etc.
b. Oligopoly
An Oligolistic market is one in which there are few producers or sellers but many buyers. Large capital
requirement may limit the buyers. Examples are network owners like MTN, Glo Network, etc. Oligopoly
is more competitive that monopoly but it is less competitive than monopolistic competition
c. Duopoly
This is a market in which there are only two sellers or producers of a commodity but there are many
buyers.
d. Monopsony
A monopsony is market situation in which there is a single buyer but there are many buyers.
e. Oligopsony
This is a market situation is which there are few buyers and many sellers of a commodity.
f. Monopoly
Monopoly is a market situation in which a producer is the only seller of a particular good that has no
close substitute. By implication, a monopolist can charge whatever price it wants and consumers are
left with no choice than to purchase the product even at high prices.

Features of Imperfect Market

a. Heterogeneous commodity
b. There is only one or very few buyers and/or sellers
c. There is an imperfect knowledge of market
d. There is no free entry into or exit from the market
e. Preferential treatment exists since there is no uniform prices

Review of Cost and Revenue Curves

Costs are expenses incurred during production. We shall examine the following types of cost incurred
during process of production.
a. Total Cost
This is made up of total fixed cost and total variable cost, i.e. TC = TFC + TVC, where TFC is total
fixed cost and TVC is total variable cost

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 b. Total Fixed Cost
These are the costs that do not change with the level of production. They remain constant whether
the firm is working at full capacity or not. Examples are rent, purchase of equipment and machinery,
top management salary. These expenses are usually fixed in the short run.
Mathematically, TFC = TC - TVC

c. Total Variable Cost:

These are expenses that vary as output increases or decreases. Example of variable costs include
money spent on raw materials, wages, fuel, maintenance of machinery and vehicle, etc

d. Average Cost or Average Total Costs

This is total cost divided by output. It is referred to as unit cost of output. Average cost can be divided
into Average Fixed Cost (AFC) and Average Variable Cost (AVC).
Mathematically, AC = T𝐶/𝑄 where Q is the level of output

Or AC = AFC + AVC

e. Marginal Cost (MC)

This is the change in total cost as a result of a unit change in output. Marginal cost is influenced by
variable cost but not fixed cost. Mathematically,
MC = Change in total cost Or: TCn - TCn-1
Change in quantity

Concept of Revenue
We shall consider three revenue concepts
1. Total Revenue
This is the total amount of income a firm or producer receives from the sale of its product. Total
revenue can be derived by multiplying output by unit price

TR = QP, where Q is level of output and P is price

2. Average Revenue
This is the total revenue divided by the number of units sold. It is the price per unit. It is derived thus:
AR = 𝑇𝑅/𝑄 where TR is total revenue and Q is level of output.

3. Marginal Revenue
This is the increase in revenue resulting from one unit increase in sales.

WEEK 6-7
Price and Quantity Determination under Perfect Competition

Price Determination
Under perfect competition, price is determined by the forces of demand and supply since no single firm
can dictate the price of its good. Firms in perfect competitive market are price takers. Therefore firm’s
individual demand curve has a horizontal Price line. The demand curve is perfectly elastic. This is
illustrated in the diagram below:

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 Demand Curve facing a Perfect Competitor
Quantity Determination
Under perfect competition, profit is maximized at the level of output where marginal cost equals
marginal revenue (𝑀𝐶 = 𝑀𝑅). However, it is possible for the firm to make abnormal profit in the short
run. Since the firm’s marginal and average costs fall with increasing output, he can sell at a price
higher than the marginal cost of production, thereby earning abnormal profit. This is shown in the
diagram below:

Equilibrium Conditions under Perfect Competition (Short Run)

In the diagram above, while the MC and AC are falling, the firm makes an abnormal profit of PMST.
OPMQ is the total revenue while OTSQ is the total cost of production, hence the profit PMST.

However, in the long run, the abnormal profits of perfect competition firms are wiped off. He is in
equilibrium and makes normal profit. Equilibrium is achieved when the firm produces the level of
output at which: MC = MR = AC = AR = MR = D = P. The slope of MC must be greater than
the slope of MR at equilibrium (i.e. MC must cut MR from below).

This is shown in the diagram below:

Equilibrium Conditions under Perfect Competition
in the Long Run

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Price and Quantity Determination under Monopoly
A monopoly has the power to determine either price or output but not both at the same time.
Unlike an individual firm under perfect competition, who faces a horizontal demand curve, a monopolist
faces a downward sloping average revenue or demand curve. This means that the monopolist can sell
more only by reducing his price. His demand curve is price inelastic.

Price Determination under monopoly

Like the perfectly competitive firm, a monopolist will maximize his profit by producing the quantity that
equates marginal cost with marginal revenue (𝑀𝐶 = 𝑀𝑅). This means that the monopolist will continue
to expand his output as long as marginal cost does not exceed marginal revenue. He can therefore
make abnormal profits both in the short run and in the long run. This is illustrated in the diagram
bellow:

In the diagram above, the monopolist maximizes his profit at point of output where his marginal cost is
equal to marginal revenue but not to the point where marginal cost is equal to price. Thus he makes
abnormal or supernormal profit by the excess of price (Pm) over marginal cost. In the diagram, above,
the monopolist makes a supernormal profit of shaded area.

PRICE DISCRIMINATION
Sometimes, a monopolist can charge two or more different prices for the same commodity. The
process of selling a particular commodity at different prices (in different markets) is called price
discrimination. Such price discrimination may be possible and profitable under certain conditions.
1. Market segmentation: If there are separate market or if he is able to create different markets, it will
be possible to sell at different prices in the different markets. The ability to create separate market is
called differentiation or segmentation. An example is the different markets existing in different
countries because of the use of tariffs.
2. Different price elasticities of demand in the different markets : If there are different elasticities’ of
demand, the seller will sell at a higher price in the market with an elastic demand. He may sell at a
lower price in the market with an inelastic demand. These lead to profit maximization.
3. Little cost of separating the markets: If the cost of separating the market is small, price
discrimination becomes possible. For example it cost N.E.P.A. little or nothing to charge industrial
users. Users cannot easily change their industrial sites to residences.
4. Ignorance on the part of consumers: If the consumer is not aware of prices being paid by others (or
the ruling market price) it will be possible for the monopolist to charge him a different price, which in
most cases will be higher.
5. High transportation costs: It becomes possible for the monopolist to charge difference prices if
transportation costs are high. The consumer may find it uneconomical to incur a high transport cost to
go to another place to purchase a commodity because of a little difference in price and so he may buy
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at higher price even if he knows that the monopolist is selling the same commodity at a cheaper price
somewhere else.

CAUSES OF MONOPOLY
1. Act of parliament: This is a legal instrument by government conferring special monopoly of some
organizations to produce or supply certain goods or services e.g. public corporations
2. Patent law: This law confers on a firm special privilege to protect it new invention and it tends to
scare away other competitors
3. Level of technology: When a firm develops high level of technology, which makes goods cheaper,
this may force other competitors out of production.
4. Effective advertising: The success of a firm in effective advertising may force other competitors out
of business
5. Protection of public interest: Deliberate effort to protect public interest by government may confer
certain monopoly or some firms e.g. N.E.P.A.
6. Natural cause: Certain areas may enjoy the production or supply of certain goods due to natural
endowment e.g. crude oil in Niger Delta
7. Merging of producers: The merging of producers will make them stronger to be able to eliminate
other competitors in business.

Advantages of monopoly
1. Standardizations: - They produce quality and standardized product
2. Centralized management: - They have centralized body which determines the price or the output
since they cannot determine both price and output at the same time.
3. Economies of large scale production: - This serves as advantage to the firm and the public.
4. Greater efficiency: - They make research in order to produce at reduced cost so as to maximize their
profit.
5. It avoids wastage: - People carry out researches which may lead to the discovery of new product in
order to enjoy patent right
6. Better use of resources: -The type of wastages experienced in a competitive market is greatly
avoided.
7. Increase in supply: - Increase in production leads to increase in the quantity of goods supplied to
the market.
8. Greater opportunity to expand operations : - More profit made by the firm makes them to expand
their production.
9. It avoids wastage: - The type of wastage experienced under perfect competition is greatly avoided
under monopoly.

Disadvantages of monopoly
1. Danger of exploitation:- Monopoly can charge high price to exploit consumers since they have
control over the price of their commodity.
2. It leads to hoarding: - They may hoard their products in order to create artificial scarcity in a bid to
charge high price.
3. Decline in efficiency: - Since there is no competition, there may not be efficiency in their operation
4. Overproduction and waste: - They may waste resources especially if the firm is a public corporation.
5. Loss of freedom of choice: - Consumer cannot choose and they cannot control the quality of the
products. They are forced to consume whatever is produced by monopolist.

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Control of monopoly
1. Provision of substitute products
2. Privatization
3. Stoppage of issuance of patent law
4. Discouraging merging of firms
5. Reduction of tariffs

WEEK 8
TOPIC: INDUSTRIALIZATION

DEFINITION OF CONCEPTS
Industry- Industry can be defined as commercial production and sale of goods or a specific branch of
production and trade. In these sense, industry refers to a collective term for a group of activities
directed to the production of a given class of commodities or a group of firms engaged in the same
area of production, example, all firms producing textiles belong to the textile industry.
Firm– This refers to a single unit or entity that carries out production of goods or services. It is a
single independently administered business unit of an industry.
Factory and Plant – Factory is an industrial building where laborers manufacture goods or supervise
machines processing one product into another. Typically, factories gather and concentrate resources
such as labour and capital, e.g. shoe factory, whereas plant is an asset of a business which includes
land, buildings, machinery and all equipment permanently employed. Example is electric plant or power
plant.
Industrialization – This involves the establishment of as many industries as possible. It is the
process of increasing the numerical number of industries in an economy.
Industrial Estate – An industrial estate also known as industrial park is an area zoned and planned
for the purpose of industrial development.

Location of Industry
Location of firm means the siting of firm in a particular place. It is the aim of any investor to make
maximum profit. The location chosen by the entrepreneur will have an effect on the profit he will
make. The entrepreneur will therefore locate his firm in a place which he considers the most
economical or which minimizes his total, average and marginal cost of production.
Alfred Weber (1868-1958) pioneered the work on location of industry way back in 1910. His theory
was based on the principle that a business would seek to locate where costs could be minimized.

Factors that influence the location of industries

(1) Availability of land: - Land is very crucial to industry because industry cannot be built in the air.
(2) Proximity of Raw materials: - An industry tends to be located near the source of raw-material if
the material is bulky and the finished product is light. E.g. cement factories are located at
Ewekoro, Yandev(Gboko), and Nkalagu (in Nigeria) because these places have large deposits of
limestone.
(3) Supply of labour: - Industries tend to be located in the cities and towns where there are surplus
of both skilled and semi-skilled labour.
(4) Availability of power supply: - Industries are usually attracted to the source of power, industries
are located near the coal mines.

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 (5) Nearness to large markets: - Bulky or heavy goods, such as furniture, blocks and bottled drinks
are expensive to transport and are, therefore produced near the market.
(6) Closeness to financial institutions: - This is for easy access for safekeeping their money and for
credit facility. This is not all that important.
(7) Transport cost: - Availability of transport facilities at reasonable expense is also essential since
transport costs come into total cost of production.
(8) Political factor: - Both local and foreign investors consider siting industries in places free from
political unrest.
(9) Government policy: - Governments often influence the location of industries either by direct
participation in the establishment of industries or by giving firms encouragement to set up in
particular areas.
(10) Climatic factor: - Climate determines the type of things to be produced in particular
areas so also the siting of industries.
(11) Natural factors: - The location of extractive industries depends on where raw-materials
could be found. Mining, for example, is possible only where minerals could be found.

Localization of Industries
Localization of industries refers to the concentration of firms in a particular area or locality. The
essence of this is for firms to enjoy external economies of scale that have been created by pioneer
industries in the area of technology, transportation, communication, accommodation and other
facilities.
Advantages of localization of industries
(1) It promotes division of labour and specialization among firms
(2) It leads to the pooling of skilled labour and raw materials
(3) It facilitates the timely acquisition of skilled labour by the new firms
(4) It facilitates the springing up of subsidiary firms
(5) It enhances reduction in the cost of production in different ways
(6) Common problems can be identified together and panacea can jointly be proffered for them.
Disadvantages of localization of industry
(1) Localization encourages uneven development
(2) It is characterized by the risk of unemployment
(3) It encourages concentration of industries and the resultant effects of this will be problem of
regional planning, problems of accommodation, overcrowding and high cost living.
(4) There is the risk of air pollution
(5) Where the firms are concentrated can be points of target during war.
ROLE OF INDUSTRIALISATION IN ECONOMIC DEVELOPMENT
(1) It leads to the diversification of the economy
(2) It leads to the expansion of employment opportunities
(3) It can lead to the development of agro allied industries
(4) It helps in developing and making use of skilled labour
(5) It enhances the utilization of both human and non-human resources to the fullest
HOW THE GOVERNMENT ENCOURAGES INDUSTRAILIZATION
i. Tax incentives to industries: - Government may give tax holidays to the growing firms in order
to compete favourably with the existing ones.
ii. Development of infrastructure: - Adequate infrastructure like good road, stable power supply,
pipe borne water, etc will attract both local and foreign investors.

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 iii. Protection of infant industries : - Infant industries are the newly established industries. They
should be protected like giving tax holidays, subsidies in order to compete with their
counterparts.
iv. The establishment of financial institutions to aid private enterprise.
v. Direct government participation: - Government can also be involved especially in import
substitution industries to discourage excessive importation.
vi. Manpower training: - People should be trained in order to develop entrepreneurial skills that will
help them start their own business.
vii. Conscious development planning: -The planning should incorporate industrialization.
viii.The government could give assistance to private enterprises- provision of technical and
management advice, industrial research, and the provision of certain industrial inputs at
subsidized rates
ix. Direct government intervention by decree and legislations.
x. Removal of administrative bottlenecks which hinder industrial growth.
STRATEGIES OF INDUSTRIALISATION
(1) Sectorial consideration: - This advocates the development of all sectors of the economy and
areas of the country hand in hand. This strategy is aimed at discouraging lopsidedness in the
achievement of industrialization.
(2) Import substitution: - This is a means of replacing imported goods with domestic production.
Instead of importing certain goods, arrangements will be made to establish industries similar to
the ones abroad to produce such goods that were hitherto imported.
(3) Export promotion: - This strategy involves efforts of government geared towards the promotion
of industries that can produce goods that are exportable. This helps a country to reduce its
over-dependence on foreign made goods thereby saving foreign exchange that can be used in
industrial components.
(4) Size of firm: - Many people advocate small scale industrial development strategy while others
favour large-scale method. The proponents of small-scale method opine that since Nigeria and
other West African countries belong to the group of poor nations which lack adequate capital
and other resources, they should therefore start their process of industrialization from the
rudiment.
(5) Technique of production: - In Nigeria where we have abundance of labour, people advocate for
labour-intensive technique of production as against capital intensive methods of production in
order to reduce unemployment.
Problems of industrialization in West Africa
(1) Shortage of capital
(2) Low level of Technology
(3) Inadequate infrastructure
(4) Shortage of skilled labour
(5) Poor implementation of plans
(6) Political instability
(7) Lack of dedication on the part of leader

WEEK 8
TOPIC: INDUSTRIES IN NIGERIA

Introduction to Industries in Nigeria

Nigeria is one of the many developing nations of the world. As a result of this, there are
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quite a number of industries in the country. Although many of these industries are
generally located in major cities such as Lagos, Port Harcourt and Kano, they still manage
to cut across various sectors of the economy. Most of the manufacturing industries in
the country include those in mining, agricultural production, rubber, wood, textiles,
cement manufacturing as well as the manufacturing of other construction materials.
There are also those involved in food production, footwear, petrochemicals, fertiliser,
printing, ceramics, iron and steel etc. Indeed, the Nigerian economy is assorted
even though some unfortunate circumstances/situations have consistently hampered
growth.

Types of Industries in Nigeria

There are many types of industries in Nigeria, examples of which include-

1. Mining
2. Construction
3. Manufacturing
4. Agriculture
5. Retail
6. Education’
7. Entertainment
8. Fashion
9. Transportation
10. Hospitality etc.

WEEK 9
TOPIC: INDUSTRIALIZATION

INFANT INDUSTRIES
Infant industries are newly established industries that are at the developing stage and need protection
so that their products can effectively compete with products of long established international
businesses.
Arguments for Infant Industries
(1) Infant industries need to be protected so that the economy can become self-reliant.
(2) Protection of infant industries encourages domestic production.
(3) It encourages consumption of locally produced goods.
(4) It conserves scarce foreign exchange which can be used for industrialization.
(5)Infant industries create employment for the citizens.
(6) It develops the local market by increasing the production to meet up with ever-increasing demand.
(7) Infant industries spirit develops indigenous technology and expertise.
(8) It attracts more foreign investments.
(9) It can also be used to prevent dumping.
(10) It increases the level of domestic income, this is because, and the country is no more depending
on the imported goods again.
(11) It reduces importation of goods, thereby improving the balance of payment position.
(12) Protection of infant industries encourages industrialization leading to diversification of the
economy
(13) If infant industries are protected, with time they will be a source of revenue to government
through tax payments.
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Argument against protecting them
1. They may never grow up as a result of over-protection
2. It denies consumers in a country their freedom of choice
3. Consumers may pay higher prices for the locally produced goods as a result
of no competition.
4. Once they are protected, it becomes difficult to dismantle the array of
protection. They may continue to be protected indefinitely.
Sources of finance available to infant industries
I bank loan
ii Issuing of shares.
iii Sales of debentures
iv ploughed back profit
v Trade credit
vi Borrowing from other sources
viii Assistance from government
ix Sales of properties/assets

NIGERIA’S INDIGENIZATION POLICY

Indigenization is the transfer of ownership and control of business enterprises from foreigners to the
indigenes. It is a policy designed to ensure greater participation of indigenes in the ownership, control
and management of business enterprises. The major aim is to reduce foreign domination of the
economy and ensure indigenous participation.
The Nigerian indigenization decree was promulgated in February, 1972. It was government policy
aimed at increasing the participation of Nigerians in commerce and industry, and reducing foreign
domination of the economy, thereby reducing the drain in foreign exchange.
The decree reserves the right to own and participate in some enterprises exclusively or partially for the
government and people of Nigeria. The decree was divided into two schedules:
Schedule 1: under this schedule, some business enterprises that do not require much capital to set up
are reserved exclusively for the indigenes. They are mainly small scale enterprises such as cinemas,
pool betting, and candle and block manufacturing, rice milling, garment sewing, etc.
Schedule 2: Under this schedule, foreigners can participate but must reserve 40% equity participation
for Nigerians. Some of the businesses under this schedule include beer brewing, cement, soap, bicycle
manufacturing, shipping, furniture making, etc.
As a result of the shortcomings of the decree, it was revised in 1977- ‘’The Nigerian Enterprises
Promotion Decree’’. The decree this time classified enterprises into three schedules.
Schedule 1: this schedule was increased by the inclusion of some businesses like clock and jewelry
manufacturing, etc. the decree reserved 100% equity participation for indigenes.
Schedule 2: under this schedule, the equity participation of indigenes was increased from 40% to 60%.
Schedule 3: this schedule introduced the equity participation of indigenes which must not be less than
40%

REASONS FOR OR OBJECTIVES OF INDIGENISATION POLICY

The reasons for indigenization policy are stated below:
1. To ensure that the means of production and distribution are controlled by Nigerians and not
foreigners.
2. To be able to control business enterprises in the country.
3. To ensure that the country is self-reliant
4. for industrial development of the country.

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5. So that the indigenes will have control over their resources.
6. To create greater opportunities for Nigerian indigenous businessmen.
7. To maximize the local retention of profits.
8. To create opportunity for the training of indigenous personnel in management.
9. To raise the level of production of intermediate and capital goods.
ADVANTAGES OF INDIGENISATION
1. It ensures indigenous participation: - It gives room for Nigerians to be involved in industrialization
2. Development of local technology: - It helps in the development of local technology.
3. Acceleration of industrial development: - It speeds up industrial development in the country.
4. It reduces foreign control of the economy: - It reduces the involvement of expatriate in Nigeria
economy.
5. Leads to local retention of profit: - Profit will be retained instead of being used to develop foreign
countries.
6. Ensures self-reliance: -It reduces over-dependence on other countries.
7. Provision of employment opportunities : - It provides employment opportunities for people.
8. Development of private initiatives : - There is room for development of initiatives because it will be
highly rewarded.
9. Industrial development: - It develops industries in the country.
10. Increase in standard of living: - Increase in production will increase output which will eventually
increase the living standard of people.
DISADVANTAGES OF INDIGENISATION
1. Discouragement of foreign investment
2. It can lead to disharmony between countries
3. It can lead to capital flight
4. Inexperience and incompetence can destroy business
5. Rich people can hijack the economy

NATIONALISATION
Nationalization may be referred to as the taken over or transfer from private to state government
ownership of enterprises for economic, social and political reasons through the act of parliament.
Industries involved in nationalization are known as nationalized industries. Individual owners of
nationalized industries are paid compensation by the government, either in the form or cash or gilt-
edged.
ADVANTAGES OF NATIONALISATION
1. The government uses nationalization to control or even eliminate the exploitation of consumers
2. Nationalization eliminates competition, thereby controlling wastages
3. It enables the government to provide essential commodities to consumers at affordable prices
4. The nationalization of key industries enables the government to have a more effective control of the
economy.
5. It ensures steady supply of essential services like electricity, water, etc.
7. It eliminates wastage of resources
8. It encourages efficient use of resources
9. It is also a plan to protect strategic industries
10. It ensures equitable distribution of resources
11. It eliminates monopoly.
DISADVANTAGES OF NATIONALISATION
1. It discourages private investment
2. Nationalization promotes state monopoly

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3. It promotes inefficiency and wastage of public funds
4. Most of the nationalized industries become unprofitable if badly managed
5. The process of decision making becomes slow
6. Resources can be misallocated
7. Corruption and mismanagement
EVALUATION
i. Explain what government has done to encourage industrialization in Nigeria. Back up your
answer with fifteen points.
ii. Explain five arguments for and five arguments against infant industries.
iii. Explain the objectives indigenization policy.

WEEK 10-11
Agriculture

Problems of Agriculture
(1) Land tenure system: - land tenure system in West Africa discourages farmers. It does
not encourage large scale farming since land is owned by the community, and as a result
does not make provision for willingness to embark on large scale farming.
(2) Poor marketing facilities: - there are no organized marketing channels for farm
produce. There is also lack of proper pricing for agricultural produce.
(3) Inadequate storage and processing facilities: - this forces farmers in Nigeria to
embark on low productivity and practice small scale farming since they do not have storage
facilities where they can store the excess products if they produce more crops.
(4) Poor transportation system: - this prevents the farmers from carrying their crops to
areas where they can attract prices and are therefore forced to sell them within their
locality where they attract low prices because of bad roads.
(5) Natural disasters: - natural disasters like flood, drought, etc may occur and this will
reduce agricultural productivity.
(6) Use of crude implement: - subsistence farmers, as a result of illiteracy, shy away from
using modern methods. It may be lack of funds to buy some of the modern agricultural
inputs. They use hoes and cutlasses because agriculture has not been mechanized in
Nigeria.
(7) Illiteracy of the farmers: - a lot of number of farmers is illiterates and as a result they
cannot make use of modern techniques in agriculture.
(8) Lack of technical knows how: - many farmers especially the illiterate ones lack
requisite technical knowledge and modern skills to raise the standard of farming and
agricultural production in their countries.
(9) Lack of social or basic amenities: - lack of social amenities like electricity, pipe-borne
water and proper health care makes able body’s men and women to migrate from rural to
urban areas in search of non-existent jobs.
(10) Problems of pests and diseases: - pests and diseases are not controlled by majority
of the farmers. Pests and diseases generally reduce the quantity, quality and income of the
farmers.
Solution or Remedy to the problems of Agriculture
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 (1) Provision of agricultural extension programmes in order to educate farmers in the modern
agriculture agricultural extension officers should be sent to various locations teaching
them the various modern techniques of improving them the various modern techniques of
improving agricultural yields.
(2) Provision of medical facilities: more hospitals should be built, doctors and nurses posted to
them and more drugs should be made available.
(3) Provision of credit facilities: many farmers cannot afford to buy the necessary agricultural
machines such as tractors, harvesters etc. To reduce this problem, government should
help farmers by providing this equipment for them at reduced cost so that they will be
able to make use of them.

Agricultural policies in Nigeria

In Nigeria, the federal government decided to embark on certain agricultural policies or
programmes in order to improve the level of agriculture in the country. Some of those
agricultural programmes and their objectives are stated below:
(1) Operation feed the nation (OFN): OFN was launched in 1976 by the Obasanjo
Military Administration. Its aim is to mobilize Nigerians to take active part in growing their
own food which will lead to increase in food production in the country.
(2) Provision of credit facility: the role of credit facility to agricultural development was
recognised to promote government to establish the Nigerian Agricultural Development
Bank with its headquarters in Kaduna. The bank gives loans directly to farmers, individual,
organisations and established institutions.
(3) The River Basin Development Authorities: the eleven RBDA was established in 1976
under decree no 25 by Federal government. The aim of River Basin Development
Authorities is to develop land and water resources for the general development of
agriculture in Nigeria.
(4) The land use Decree: This body was promulgated in 1978 and incorporated into the
1979 constitution. The decrease was aimed at reforming the land tenure system which
had constituted a bottleneck to large-scale farming in Nigeria.
(5) Green revolution: the second republic government of Shehu Shagari in an effort to
curb shortage of food in the country and increase food production launched green
revolution in 1980. Their aim is to boost agricultural production.

MARKETING OF AGRICULTURAL COMMODITTIES

Marketing entails the performance of all business activities involved in the flow of farm produce
from the production point until they get to the final consumers. The marketing of agricultural
commodities in Nigeria is not organized. Some farmers sell their farm produce at the farm-gate
while some take their own to local markets nearest to them. We have two broad categories of
markets in Nigeria (a) Domestic markets and (b) export marketing through marketing boards
(1) Domestic Markets: sales of farm produce in this market could be in large or small
quantities. Farmers here usually have markets they visit either on daily, weekly, monthly
or quarterly basis to sell their farm produce.
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 (2) Export marketing through marketing boards: as a result of poor storage processing
and packaging some farm produce got damaged. So marketing boards were established
part of SAP in Nigeria. Marketing boards are government agencies established to take care
of the marketing of agricultural commodities.
Functions of Marketing Boards
(1) They organize the marketing of all major agricultural products. They are to gather, grade
and maintain the high quality products.
(2) Their work is to stabilize farmers’ income and commodity prices.
(3) They generate revenue which brings great economic value to the government.
(4) They supply funds for research programmes
Merits or Advantages of Marketing Boards
(1) The farmers benefit from the stability of commodity prices
(2) The nation benefits from the provision of certain infrastructural facilities, as well as
scholarship schemes and enlightenment provided by the marketing boards.
(3) They also benefits from the result of research findings.

Prospects for Agriculture in Nigeria

There are future prospects for agriculture in West Africa, especially in Nigeria. This is because
of attention being given to agriculture presently by the various governments of West Africa.
No country in West Africa now wants to continue importing food which can be readily
produced in the country. Let us take Nigeria for instance, used to spend billions of dollars in
the importation of rice under embargo. i.e. there system has encouraged the back to land
campaign raging on in the country to the extent that even graduate of other disciplines apart
from agricultural science are now in the lead. It has even become one of the greatest
employers of labour now.

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