(a) Differentiate between Indigenisation and Nationalisation.
(b) Give five advantages and three disadvantages of Indigenisation.
Explanation
(a) Nationalization; is the act of bringing an industry under exclusive state ownership and control, whereas indigenization can be viewed as policy initiatives designed to accelerate the greater participation of Nigerians in the ownership and management of business enterprises in Nigeria. Under Nationalization, the government acquires the whole of the industry and remains the only shareholder, but under indigenization, individual Nigerians within the private sector either hold the majority shares or are the only shareholders. Nationalization transfers ownership to the government not withstanding whether the business was owned by local people or foreigners while indigenization transfers ownership of foreign business to private citizens of the country.
(b) Advantages of indigenization are:
(i) It fosters and accelerates the pace of industrial development.
(ii) It affords Nigerians opportunity for self reliance and economic emancipation.
(iii) It affords Nigerians the opportunity to acquire the much needed industrial, technological know-how and ensures the development of domestic technology.
(iv) It ensures greater participation of Nigerians in the economic and business life of the country.
(v) There is saving in foreign exchange since it is cheaper to maintain an indigenous executive than a foreign executive.
(vi) It forestalls the exploitative tendency of foreign businessmen in the country.
(vii) It creates employment opportunities for the indigenes of the country.
(viii) It ensures retention of profits in the country and reduces repatriation of profits overseas.
Disadvantages of indigenization include:
(i) It discourages foreign investment, thus starving the country of the foreign capital that is needed to stimulate economic growth.
(ii) Indigenisation policy can give birth to a new breed of exploiters.
(iii) Transfer of ownership of business enterprises to Nigerian citizens did not result in a corresponding efficiency in the management of the business by the Nigerians who took over.
(iv) Indigenization can lead to capital flight.
(v) It can discourage friendship among nations.