Classwork Series and Exercises {Commerce – SS1}: Historical Background of Commerce

SS 1 Commerce First Term Week 2

Topic: Historical Background of Commerce

CONTENTS

• History of Commerce
• Factors Affecting the Growth of Commerce
• The Barter System: Introduction and Problems

HISTORY OF COMMERCE IN NIGERIA

In the olden days people engaged in subsistence production. This means they were producing goods for themselves and their families. Later they started interacting with one another because it was difficult for them to meet all their daily requirements. The system of exchanging goods for goods called trade by barter then came into existence. This became apparent in order to meet their numerous wants. This is the genesis of exchange and perhaps the beginning of commercial activities the world over. Trading activities were however, limited to internal trade only.

The first form of foreign trade in Nigeria was the trans-sahara trade in which camels were used as means of transportation.

The development of caravan routes across the desert linked Nigeria with the North African traders The Arab merchants brought goods like sail, cowries, copper, cloth, books, etc which were exchanged for kolanuts, slaves, gold, hides, etc. Important towns like Kano. Bornu. Zaria, Katsina played crucial roles during that period.

Afterwards, another contact was made with the Europeans and that actually boosted commercial activities in Nigeria. This started in the fifteenth century1 when the missionaries came to Africa. The European traders brought weapons, books, cloths, etc and exchanged them for slaves and palm oil. The initial commercial towns that served as important trading routes to the sea were Badagry, Bonny, Opobo and Calabar. King Jaja of Opobo played a great rote in the development of commerce in Nigeria.

After the abolition of slave trade by the British government the first breakthrough in commercial activities in Nigeria was the establishment of United African Company (UAC) and Royal Niger Company. With the introduction of colonial rule, law and order was instituted and by 1960s, Nigeria had become a force 10 be reckoned with in the export of palm oil, cocoa, groundnut and later crude oil.

Also, during the 1960’s. The exploration of crude oil brought businessmen from all over the world to Nigeria. That process changed the face of commercial activities in Nigeria. Huge revenue was generated to develop the infrastructural facilities, e.g. communication system, roads, flyovers, railways, airports, moderns’ seaports, etc.

At present, commercial activities have reached a crucial stage in Nigeria with the introduction of sophisticated modern technology such as computer, e-mails, internet, etc to facilitate trade. Main commercial centres have developed in many cities and towns like Lagos. Ibadan, Kano. Port Harcourt. Warri, Kaduna, llorin among others.

FACTORS AFFECTING THE GROWTH OF COMMERCE IN WEST AFRICA

• Insufficient capital: African countries lack sufficient capital to cope with the expanding nature of business activities; the level of capital formation is low.
• Political instability: Constant change of government and war has hindered investment in West-Africa. Foreign investors are afraid to invest in the sub-region.
• Low savings: The culture of saving is very low in West Africa and Africa as a whole; hence there is no money for commercial transactions.
• Low per capital income: Per capita income is very low. Majorly of people in this region are living below the poverty line. The low level of income leads to low purchasing power for the people.
• Lack of adequate commercial facilities: The various aids to trade, such as banks’, insurance, warehouses, and tourism are not well developed and this has greatly hindered commerce.
• Predominance of primary production: Majority of people in this region is engaged it primary agricultural production which does not favour speedy commercial growth.
• Poor transport and communication system: The region has very poor road network as well as poor communication systems. Most of the people have no access to telephone or internet.
• Low levels of education and illiteracy: The high rate of illiteracy in this region has also afflicted the growth of commerce. Many of the people are not educated: they can neither read nor write and consequently cannot interact with foreign traders in a business transaction.
• Absence of well developed market: Market in West Africa are not well developed to accommodate large scale commercial activities.

THE BARTER SYSTEM

The barters system is also known as trade by barter and it was practiced in the olden days. It may be defined as a form of trading in which goods are exchanged directly for other goods without the use of money as a medium of exchange. Example of this is when some has yam and is in need of rice, he must local somebody who has rice and is equally in need of yam before the exchange could take place.

PROBLEMS OF BARTER SYSTEM

• Problem of double coincidence of wants
• There is no fixed rate or measurement of exchange
• Problems created by bulkiness of some goods
• Wastage of time and effort
• There is no room for deferred payment or it involve immediate settlement.

Test & Exercise

• In the olden days, …… was used as a means of transportation (a) camel (b) Jeep (c) Horse (d) truck
• In the olden days, people engage in ____ farming. (a) subsistence (b) Annual (c) Large (d) production
• _________ is one of the factors affecting the growth of commerce in West Africa. (a) Development of insurance (b) Development of warehouse (c) Emergence of specialization (d) Insufficient capital
• The following are the factors affecting the growth of commerce except ____ (a) Low saving (b) Role of advertising (c) Poor transportation system (d) Political instability.
• In trade by barter, goods are exchanged for _____ (a) services (b) Money (c) goods (d) Products