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INDIGENIZATION

Indigenization is the policy initiated by the government to ensure and accelerate the participation of Nigerian citizens in the ownership and management of business organizations hitherto owned by foreigners. Indigenization transfers ownership of some foreign business operating in Nigeria to indigenous entrepreneurs.  The major objective is to reduce the power of control of the economy by foreigners.

 

THE NIGERIAN ENTERPRISES PROMOTION DECREE 1972

This was the first attempt to ensure that Nigerians were participating actively in the economic development of their country, through the ownership and management of enterprises. The federal government promulgated the Nigerian Enterprises Promotion Decree in 1972.  The Decree was divided into three schedules or phases.

 

SCHEDULE 1

This covers enterprises or businesses reserved exclusively for Nigerians.  These businesses which are small-scale in nature include:

  1. Cinemas
  2. Hair dressing
  3. Retail trade
  4. Block making
  5. Clearing and forwarding
  6. Printing and publishing of newspapers etc.

In all about forty businesses were reserved for Nigerians i.e. Nigerians must have 100% equity participation.

 

SCHEDULE 2

This covers about fifty seven businesses that can be undertaken by foreigners so long as Nigerians hold or have not less than sixty percent participating (or equity) shares.  Such businesses include banking, insurance, construction, mining, breweries etc.

 

SCHEDULE 3

This covers businesses which are open to foreign investments provide Nigerians hold not less than forty percent participating shares.  The businesses under this schedule include textile, tobacco and drug manufacturing hotels, airlines, telecommunication etc.

See also  PRIVATIZATION /COMMERCIALIZATION

The Nigerian Enterprises Promotion Decree was amended (revised) in 1977.

 

EVALUATION

  1. What is Indigenization?
  2. Differentiate between Indigenization and Nationalization.

 

ADVANTAGES (IMPORTANCE OR OBJECTIVES) OF INDIGENIZATION

  1. Increase in participation of indigenes in the economy.
  2. Reduction of foreign control of the economy.
  3. Encouragement of local retention of profit.
  4. Promotion of industrialization.
  5. Creation of employment opportunity for citizens.
  6. Enhancement of self-reliance i.e reduction in dependency on foreign powers.
  7. Improvement in standard of living of citizen.
  8. Economic stability of the country.

 

DISADVANTAGES OF INDIGENIZATION

  1. It discourages foreign investors.
  2. It resulted in concentration of wealth in the hands of few indigenes.
  3. It widens the gap between the rich and the poor.
  4. It leads to economic instability.
  5. It may result in the retaliation by foreign countries affected by the policy.
  6. It may lead to political instability.

 

EVALUATION

  1. State six advantages of the indigenization policy.
  2. What are the criticisms leveled against indigenization.

 

WEEKEND ASSIGNMENT

  1. One disadvantage of indigenization is that it ___(a) discourages foreign control of an economy (b) encourages local retention of profits (c) encourages the participation of indigenes in economic development (d) discourages foreign investment
  2. The transfer of ownership of a business from foreigners to citizens of a country is known as ___ (a) privatization (b) nationalization (c) indigenization          (d) commercialization
  3. The Nigerian Enterprises Promotion Decree was first passed in ___ (a) 1970 (b) 1972 (c) 1977 (d) 1982
  4. The least of the advantages of indigenization is that ___ (a) the standard of living of the indigenes is improved (b) the economy is controlled by the nationals (c) entrepreneurial skill is developed (d) foreigner’s domination is avoided
  5. The main difference between nationalization and indigenization is in terms of ___
See also  INSURANCE III

(a) efficiency     (b) profit          (c) technology        (d) shareholding

 

THEORY

  1. Describe five benefits derived by Nigerians as a result of indigenity.
  2. Explain the various schedules phrases of the Nigerian Enterprises Promotion Decree

 

See also

NATIONALIZATION

AUTHORITY: SPAN OF CONTROL

STRUCTURE OF A BUSINESS

USES (PURPOSES) OF AN ORGANISATION CHART

DEPARTMENTS IN A BUSINESS ORGANISATION

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