Indigenization

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Welcome to class! 

In today’s class, we will be talking about indigenization. Enjoy the class!

Indigenization

CONTENT

1. Meaning of Indigenization.
2. The Nigerian Enterprises Promotion Decree 1972 & 1977
3. Advantages and disadvantages of 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. Hairdressing
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.

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. The economic stability of the country.

Disadvantages of indigenization

1. It discourages foreign investors.
2. It resulted in the 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.

General evaluation

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

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.

 

In our next class, we will be talking about Privatization.  We hope you enjoyed the class.

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