NAME: TEMITOPE AJIBODE

SUBJECT: ECONOMICS HOLIDAY ASSIGNMENT

CLASS: SS2 GREEN (GIRLS)

SCHOOL: THE BELLS COMPREHENSIVE SECONDARY SCHOOL

TEACHER: MR. AMBROSE

Indigenization

Indigenization is the transfer of ownership and control of the business enterprises from foreigners to the indigenes. It is a policy designed to ensure greater participation of indigenes in the ownership, control and management of business enterprises. The major aim is to reduce foreign domination of the economy and ensure indigenous participation. In 1927, the Federal Government of Nigeria promulgated the Nigerian Enterprises Promotion Decree. The decree reserves the right to own and participate in some enterprises exclusively or partially for the government and the people of Nigeria. The decree was divided into two schedules: Schedule I: Under this schedule, some business enterprises that do not require much capital to set up are reserved exclusively for the indigenes. They are mainly small scale enterprises such as cinemas, pool betting, candle and block manufacturing, rice milling, garment sewing etc. Schedule II: Under this schedule, foreigners can participate but must reserve 40% equity participation for Nigerians. Some of the businesses under this schedule include beer brewing, cement, soap, bicycle manufacturing, shipping, furniture making, etc.

As a result of the shortcoming of the decree, it was revised in 1977. The decree this time classified enterprises into three schedules: Schedule I: This schedule was increased by the inclusion of some business like clock and jewelry manufacturing, etc. The decree reserved 100% equity participation for indigenes. Schedule II: Under this schedule, the equity participation of indigenes was increased from 40% to 60%. Schedule III: This schedule introduced the equity participation which must not be less than 40%. Reasons for the promulgation of the Nigerian Enterprises Promotion Decree are as follows: 1. To ensure that the means of production and distribution are controlled by the Nigerians and not foreigners. 2. To be able to control business enterprises in the country. 3. To ensure that the country is self-reliant. 4. For industrial development of the country. 5. So that the indigenes will have control over their resources. Advantages of indigenization 1. Ensures indigenous participation: Indigenization ensures greater participation of indigenes in the control and running of business enterprises in the country.

2. Development of local technology: It leads to the development of local skills and technology. 3. Acceleration of industrial development: It leads to the promotion and acceleration of industrial development. 4. Provision of employment opportunities: It creates employment opportunities for the indigenes. 5. Increase in standard of living: The standard of living of the people will increase through participation in business enterprises. 6. Ensures self-reliance: Indigenization eliminates the problem of dependence on foreign goods by ensuring selfreliance.

Disadvantages of indigenization 1. Discouragement of foreign investment: Indigenization can discourage foreign investment in a country. 2. It can lead to disharmony between countries: Indigenization can lead to disharmony among countries of the world as friendship will be discouraged. 3. It can lead to capital flight: It can lead to capital flight as foreign investors will be forced to relocate to other countries. 4. Inexperience and incompetence can destroy business: Due to indigenization, business can be transferre to people

who are not experienced and competent enough to handle such business. 5. Rich people can hijack the economy: Few rich people can use their financial wealth to buy and take over all such business enterprises.

Nationalization

Nationalization is a deliberate policy by which government takes over the control and ownership of private enterprises due to economic, political, social or strategic reasons. In other words, nationalization is the process by which the government takes over the ownership and management of an industry from private control, by bringing it under its exclusive control. Enterprises are brought under state control and ownership as a result of economic, political, social and strategic reasons. Nationalized industries exist to provide services; they are not profit oriented. Reasons for nationalization 1. To prevent exploitation: Nationalization of enterprises can take place in order to prevent monopolistic exploitation of the citizens.

2. For strategic reasons: Government can take over the ownership and control of an enterprise for strategic reasons like security, defense and politics. 3. To avoid foreign dominance of the economy: Government can also take over some companies in order to prevent dominance of the economy by foreigners. 4. Need for large capital: For an industry to perform effectively and efficiently, it may need large capital which can only be provided by the government. 5. To provide uninterrupted services: Government can take over an enterprise in order to ensure constant and uninterrupted supply of its products or services. 6. Political reason: Break in diplomatic relations between two countries can necessitate nationalization. Political differences can encourage retaliatory measures being taken against each other, e.g. America and Iraq at the instance of the Gulf War. Advantages of Nationalization 1. Helps to check exploitation: Nationalization of an industry helps to check exploitation by foreign businessmen. 2. Ensures steady supply of essential services: It ensures the provision and steady supply of essential services.

3. Elimination of waste: Nationalization helps to prevent and eliminate wasteful competition. 4. Encourages efficient use of resources: It encourages more efficient use of economic resources. 5. Protection of strategic industries: It helps to protect and develop key strategic industries which cannot be left in private hands. 6. Mobilization of capital: Large capital can be mobilized to ensure large scale investment.

Disadvantages of Nationalization 1. Prevention of private initiatives: Private initiatives can be destroyed when the government takes over a few or all industries. 2. Low productivity and inefficiency: Lack of competition can encourage low productivity and inefficiency. 3. Consumers can be exploited: By nationalizing an enterprise, government may arrogate to itself monopolistic power which can be used to exploit consumers, e.g. NEPA. 4. Corruption and mismanagement: Most nationalized industries are not efficiently managed due to corruption and ineptitude.

5. Resources can be misallocated: The resources of the country may be misallocated due to political interference.

Privatization

Privatization is a policy designed to enable individuals and private or corporate organizations take over the ownership and control of government businesses such as public companies and corporations. Reasons for Privatization

1. Efficient management: Privatization helps to develop a good and efficient management of enterprises. 2. Participation of private individuals: It also assists individuals to participate in economic activities through ownership of enterprises. 3. To generate more revenue: It assists the government to generate more revenue. 4. Autonomy of enterprises: It helps to provide autonomy of the enterprises. 5. Removal of unproductive enterprises: They also assist to remove or disinvest from unproductive enterprises in the economy.

Advantages of Privatization

1. Reduction in public expenditure: Privatization helps in reducing public expenditure on enterprises that are not viable. 2. It promotes efficiency: Privatization helps to promote efficiency in production. 3. Generation of more revenue: The policy helps to boost the generation of more revenue for the government. 4. Emergence of innovation: The existence of competition in the industry assists in the emergence of innovation. 5. Better choice by consumers: The policy assists the consumers to have a wide range of choice where there are abundant products. Disadvantages of Privatization 1. Poor standard of living: Privatization leads to poor standard of living of the people due to a shift in interest from pure service delivery to profit maximization. 2. High cost of products: This policy is aimed at profit maximization hence it is usually associated with high cost of products or goods.

3. Reduction in employment: Many workers are usually laid off when industries are privatized. 4. Uneven distribution of income: Income is often unevenly distributed as few individuals are now in control of the industries. 5. Loss of consumers welfare scheme; Under privatization, consumers welfare is not catered for. Monetization Monetization is the process of converting or establishing something into legal tender. It usually refers to the coining of currency or the printing of banknotes by central banks, but things such as gold, diamonds and emeralds, and art can also be monetized. Even intrinsically worthless items can be made into money, as long as they are difficult to make or acquire. Monetization may also refer to exchanging securities for currency, selling a possession, charging for something that used to be free or making money on goods or services that were previously unprofitable.

Joint Ventures Joint ventures refer to those businesses in which private investors and governments are in partnership.

In other words, these are ventures which are set up by the government in collaboration with private firms. One of the major purposes of setting up a joint venture is to combine some of the advantages of government and private ownership and reduce the problems of complete government or complete private ownership. It also eliminates the inefficiency associated with public corporations. Government can participate in joint venture with private firms in various ways. Some of the ways include: 1. Acquisition of part of the ownership of an already existing company. 2. Government may provide a larger portion of the capital required to set up such a venture. 3. Government may provide the basic infrastructure e.g. electricity, water, telephone services, etc. 4. Government may purchase a larger portion of the shares of the joint ventures. Joint ventures are common in car assemblies, cement manufacturing, mineral exploration and production, etc.