Theory question 110
Government and BusinessCommerce 2 (answer five questions)
(a) Differentiate between Indigenisation and Nationalisation.
(b) Give five advantages and three disadvantages of Indigenisation.
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(a) Indigenisation is a policy that transfers ownership and control of businesses from foreigners to citizens (individual Nigerians and government), e.g. the Nigerian Enterprises Promotion Decrees of 1972 and 1977. Nationalisation is the government taking over ownership and control of privately owned businesses (local or foreign), making them public enterprises. Differences: who acquires ownership (citizens/private persons vs the State); aim (economic independence and local participation vs public control of strategic industries); compensation and scope.
(b) Advantages (any five): increases Nigerians' participation and control of the economy; reduces foreign domination and repatriation of profits; develops local entrepreneurs and managerial skills; creates employment and promotion for citizens; keeps profits in the country; encourages use of local raw materials and technology; promotes economic independence and national pride.
Disadvantages (any three): discourages foreign investment and capital inflow; shortage of local capital, skills and technology; fronting – Nigerians used as fronts for foreigners; shares concentrated in the hands of a few rich people; possible fall in efficiency and quality; may lead to loss of foreign expertise and technology.
In (a) show who takes over in each case.