THE IMPACT OF MULTINATIONAL CORPORATIONS ON NIGERIA’S INDIGENOUS INDUSTRIES

THE IMPACT OF MULTINATIONAL CORPORATIONS ON NIGERIA’S INDIGENOUS INDUSTRIES

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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Multinational corporations are those powerful mega conglomerates that came into being in Nigeria after the abolition of 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

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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.

1.2 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).

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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 multi-national companies such tax evasion, bribery (Halliburton case) under-declaration of profit, over-in 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.

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1.3 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.

1.4 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?

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