THE IMPACT OF MULTINATIONAL CORPORATIONS ON NIGERIA’S INDIGENOUS INDUSTRIES

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Multinational corporations are those powerful mega conglomerates that came into being in Nigeria after the abolition of the slave trade. They became more prominent during the heydays colonialism and have even dominated the Nigerian economy after her independence. In his contributions towards the emergence of Multinational Corporation in Africa, Rodney (1972), reasoned that: “after the abolition of the slave trade. The European countries needed a market for surplus products and place to access cheap raw material and labour, Africa thus became the obvious destination”.

Consequently, today, Multinational corporations like the United African Company (UAC), Paterson and Zachonis (pz), Lever Brother, Coca-Cola Company, Mobil oil, Shell B P, Total Elfina, Schlumberger, to mention but few adorn the landscape of the Nigerian economy. On the strength of these corporations Okereke and Ekpe (2002), submit that: “these corporations are powerful conglomerates whose resources base are so formidable to the point of weakening and challenge and competition from indigenous entrepreneur. They straddle their host economies like colossus and their domination is hardly challenged”.

These multinational corporations are very rich in all ramifications because of the profit they make in Nigeria. For instance, Nigeria is one of the largest producers of oil the world which accounts for over 80% of   her income. Since   this sector of the economy is effectively controlled by Multinational corporations, who make enormous profit from the industry, one expects that they should spearhead the developmental process of Nigerian. But unfortunately, the reverse has been the case. Most multinational companies have been fingered on several occasions playing active roles in the under development of Nigeria.  The Halliburton scandal of bribery and tax evasion and the Siemens bribery scandal are example of Multinational Corporations consciously under developing Nigeria. However, certain scholars hold a contrary view to this position.

This paper therefore aims at espousing critically, the contributions of Multinational corporations towards the development of Nigeria and its impact on the indigenous industries.

STATEMENT OF PROBLEM

Multinational companies like United Africa Company, PZ, Unilever, Mobil, Shell, EIF Oil Companies, etc, exists everywhere in Nigeria. Because of their formidable resources base, they dominate the economy, straddle the indigenous entrepreneur and in the process create a monopoly and accumulate unimaginable profits. Then question may now arise: How much is their contributions to the socio-economic cum political development of our country given their enormous, economic resources. According to Mansbach (1976), Multinational Corporations create and sustain a clientele (domestic elite) whose attention is far from the benefit of the host countries. Rather, they are content with the status quo and their primary energies focused on the foreign firms abroad.

Also according to Okereke and Ekpe:“rather than re-invest their profits in the economy of the host countries, in to generate other economic activities and hence expand the economy, the Multinational corporations repatriate profits to their home countries in what is often referred to as capital-Flight” (2004:112).

They equally contend that the domination of the economy of underdeveloped countries like Nigeria by multinational corporations, hinder the development of an independent nation bourgeoisie capable of internally generated and initiated development, thus retarding in these societies.

In the oil sector which is the economic mainstay in Nigeria, the multinational corporation perpetrate heinous activities, especially in the Niger-Delta region, such as environmental degradation without adequate compensation, gas flaring which destroys wildlife, seafood‟s and farmland and discriminatory employment and remuneration policies.

Socially, the activities of multinational corporations have led to an increase in anti-social activities like drug – abuses, prostitution, kidnapping and murder, (Cole 2009). On the effect of these kidnappings on the socio-economic development of Nigeria, Ajaero submits that Nigeria lost N2.456  trillion in 2006, N 2.69 trillion in 2007 and N2.97 trillion in 2008 through attacks on oil installations resulting in shutdowns and spillages (New swatch

4.5:2oo9).

Equally, Nigeria has lost billions of Naira to foreign countries through act perpetrate by multinational companies such tax evasion, bribery (Halliburton case) under-declaration of profit, overin voicing,  smuggling, racketeering, etc (Ibeanu 2009).

The question now is, what contributions have these multinational corporations made towards the developments of Nigeria? If the negative contributions outweigh the positive ones, what can be done to redress the imbalance? Also what has the government of Nigeria done either by legislation or other means to act against the all the allegations levied against these multinationals? These and many more questions will be answered in the course of paper.

OBJECTIVE OF STUDY

This study seeks to examine the activities of MNCs in Nigeria, because there have been allegations against these MNCs on whether their intentions of investing in foreign land is good or not, so the major aims of these work in relation to Nigeria are as follows:

•         To examine the activities of major multinational corporations in Nigeria, and the main focus will be on: Shell BP, UAC, UBA Bank

•         To examine the impact of multinational corporations on the development of Nigeria using indices like bribery and corruption, tax evasion, employment policy transfer of technology etc.

•         To examine the socio-economic and political implications of their existence in Nigeria.  

RESEARCH QUESTION

The following research questions were made and answered for the purpose of the study and they are:

•         What are the various roles these multinational corporations have played in Nigeria, since entering into the country as a business entity?

•         To what extent has multinational corporations impacted on the development of Nigeria.

•         What are the socio-economic and political implications of the existence of multinational corporations in Nigeria?

SIGNIFICANCE OF STUDY

•         The Nigerian economy has remained under-developed quite unlike that of the Asian

Tigers like India, Indonesia, and Malaysia whose economics were worse-off than that of

Nigeria few years ago. This has happened inspite of the oil-producing status of the Nigeria recognized worldwide and largely controlled by Multinational corporations. This study will help espouse the contributions of these conglomerates to her development/under-development.

•         Recently, there has been embarrassing revelations of tax evasion, smuggling, bribery, etc, involving Multinational Corporations. This paper will reveal the economic effects of such scandalous activities on the Nigeria economic development.

•         The final recommendations will add to the growing literature on    the Nigeria development and encourage further research.

SCOPE OF THE STUDY

This research work will focus its attention on the activities of MNCs in Nigeria in relation to their impact on it‟s on the development/underdevelopment of Nigeria and its economy at large. The scope of the issues that will be examined is limited to the overall objectives of the research. The causes, effect and solutions to any anomalies shall be comprehensively addressed. However the time coverage for this research work is 1960 to 2015.

 METHODOLOGY

Qualitative methodology will be employed for the purpose of this study in which the use of secondary data will also be employed for the purpose of this study. 

LIMITATIONS

FINANCE: Lack of sufficient funds to execute the research project will be a hindrance for the successful execution of this research work because, quantitative methodology was supposed to be used to gather data for this research work, but because of the high cost transportation involved in traveling to places like Abuja and the Niger-Delta region of Nigeria to administer questionnaires and conduct interviews to experts in the field relating to this particular work, funding has made it impossible for me to embark on such 

Organization OF THE STUDY

This research work is structured as a five chapter work, such that the general introduction is covered by chapter one, chapter two is meant for literature review, chapter three for research methodology, chapter four is devoted to data presentation and analysis while chapter five is meant for conclusions, recommendations and suggestion for further studies.

DEFINITION OF TERMS

MULTINATIONAL CORPORATIONS: An enterprise operating in several countries but

managed from one (home) country. Generally, any company orgroupthat derives a quarter of itsrevenuefromoperationsoutside of its home country is considered a multinational corporation. multinational corporation (MNC),  also called transnational corporation,  anycorporationthat is registered and operates in more than one country at a time. Generally thecorporationhas its headquarters in one country and operates wholly or partially owned subsidiaries in other countries. Its subsidiaries report to the corporation‟s central headquarters.

CONGLOMERATE: A corporation formed by the combination of of several smaller

corporations whose activities are unrelated to the corporation‟s primary activity.

INDIGENOUS: Chiefly of living things born or engendered in, native to a land or region, especially before an intrusion

INDUSTRY: Businesses of the same type, considered as a whole or uncountable economic businesses that produce goods as opposed to services or the sector of the economy consisting of large scale enterprises.