Mellorando
Banned
Indigenization is the transfer of ownership and control of business Enterprise from foreigners to 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 to ensure indigenous participation. Indigenization tries to stimulate indigenous enterpreneurship.
The main advantage of indigenization is that it creates opportunities for development of industries which in turn creates employment opportunities of the people. On the other hand the disadvantage is that is discourages any foreign investments on the country.
Problems Associated with Indigenisation:
1. Inadequately Trained Indigenous Manpower may Destabilize the Economy
The Indigenisation Policy was launched in 1972, barely twelve years from independence, at a time when the bulk of the Nigerian labour market consisted mainly of unskilled and semi-skilled manpower, and agriculture was the main economic activity. As such, the business concerns that had been retrieved from foreign investors and capitalists, were most often than not left dormant, owing to an absence of the indigenous managerial and technical know-how required for a smooth continuity of the production process. With the absence of the invaluable technical ability needed for the running of the indigenised businesses, many of them have since ground to a halt.
2. Sabotage
As soon as the indigenisation decree was launched, several cunning foreigners who were about being dispossessed of their businesses devised a clever strategy that would enable them to appear to have relinquished control, but in reality, they would still manage their businesses through the agency of their indigenous associates. With the capital provided by the foreigners, their Nigerian colleagues would acquire their businesses and would, according to government regulations, continue normal business operations without attracting suspicion.
Unknown to the authorities, these indigenous business owners would continually remit massive amounts of money to the original owners. The natives would own the indigenised firms in name, while the foreigners would still retain the actual control over their businesses.
3. Lack of Capital to Acquire the indigenised Firms may Halt Production
Although the Indigenisation Decree required the indigenes to acquire several stipulated industries from the control of foreigners, the policy was greatly hindered by the shortage of indigenous capital, limiting the ability of the masses to acquire control over the idigenised industries. Many Nigerians were interested in acquiring the various business assets but were incapacitated by the lack of investment capital.
4. The incidence of Capital Outflow From the Economy
In the occasion of foreigners actually disposing of their assets, their interest in the Nigerian economy would be severely weakened and most often than not, the distraught investors quickly moved all their capital back to their nations of origin.
The main advantage of indigenization is that it creates opportunities for development of industries which in turn creates employment opportunities of the people. On the other hand the disadvantage is that is discourages any foreign investments on the country.
Problems Associated with Indigenisation:
1. Inadequately Trained Indigenous Manpower may Destabilize the Economy
The Indigenisation Policy was launched in 1972, barely twelve years from independence, at a time when the bulk of the Nigerian labour market consisted mainly of unskilled and semi-skilled manpower, and agriculture was the main economic activity. As such, the business concerns that had been retrieved from foreign investors and capitalists, were most often than not left dormant, owing to an absence of the indigenous managerial and technical know-how required for a smooth continuity of the production process. With the absence of the invaluable technical ability needed for the running of the indigenised businesses, many of them have since ground to a halt.
2. Sabotage
As soon as the indigenisation decree was launched, several cunning foreigners who were about being dispossessed of their businesses devised a clever strategy that would enable them to appear to have relinquished control, but in reality, they would still manage their businesses through the agency of their indigenous associates. With the capital provided by the foreigners, their Nigerian colleagues would acquire their businesses and would, according to government regulations, continue normal business operations without attracting suspicion.
Unknown to the authorities, these indigenous business owners would continually remit massive amounts of money to the original owners. The natives would own the indigenised firms in name, while the foreigners would still retain the actual control over their businesses.
3. Lack of Capital to Acquire the indigenised Firms may Halt Production
Although the Indigenisation Decree required the indigenes to acquire several stipulated industries from the control of foreigners, the policy was greatly hindered by the shortage of indigenous capital, limiting the ability of the masses to acquire control over the idigenised industries. Many Nigerians were interested in acquiring the various business assets but were incapacitated by the lack of investment capital.
4. The incidence of Capital Outflow From the Economy
In the occasion of foreigners actually disposing of their assets, their interest in the Nigerian economy would be severely weakened and most often than not, the distraught investors quickly moved all their capital back to their nations of origin.
