Commerce, SS2, Week 6
Topic: Indigenization
Content:
- Meaning of Indigenization
- Reasons for indigenization
- Advantages and disadvantages of indigenization
Meaning of Indigenization
Indigenization is defined as the transfer of full or part ownership of business enterprise from foreigners to indigenes or greater participation of business enterprises.
t is a policy designed to ensure greater participation of indigenes in the ownership, control and management of business enterprise.
Reasons for indigenization
The major reason for indigenization is to reduce the domination foreigners or foreign participation in business and encouraging Nigerians to own, manage and control strategic sector of the Economy.
Advantages of Indigenization
Advantages of indigenization are as follows:
- It creates employment opportunities for the indigenes as indigenous workers occupies post vacated by the foreigners in industries.
- Development of private initiatives
- It ensures indigenous participation as greater member of the indigenes participate in running of the business in the country.
- It ensures self reliance: It affords Nigeria the opportunity for self reliance and economic emancipation
- Industrial potentials will be fully utilized
- Goods /product becomes cheaper because it is cheaper to maintain indigenous executives and workers than foreign executives and workers therefore reducing cost of manpower.
Disadvantages of Indigenization
- Discouragement of foreign investment; it can reduce and discourage foreign investment in the country.
- It can lead to capital flight; indigenization can lead to capital flight as foreign investors will be forced to relocate to other country.
- Inexperience and incompetence can destroy the business ; as a result of indigenization, business can be transfer to people who are not experienced and competence enough to handle such business.This will definitely affect the success of the business
- Indigenization policy can also lead to new breed of rich Nigerians who uses this means to exploit Nigerians.
Test and Exercise
- Define indigenization
- Give reasons for indigenization
- What are the advantages and the disadvantages of Indigenization
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