(a) Distinguish between nationalization and indigenization
(b) State five advantages of nationalization and three disadvantages of indigenization
Explanation
(a) Difference between nationalization and indigenization: Nationalization is the act of bringing industry or part of it under exclusive ownership and control of the state/government while indigenization is a policy initiative designed to accelerate the greater participation of indigenes in the ownership and management of business enterprises in their country.
(b) Advantages of nationalization:
(i) Nationalization leads to standardization of the products of the nationalized industry.
(ii) It ensures that important social services are provided at affordable costs to the consumers.
(iii) It may lead to rationalization and elimination of waste.
(iv) It provides employment opportunities to the citizens.
(v) It ensures the development of local skills and technology in the areas involved.
(vi) Nationalization may mean more efficient production and distribution e.g. water supply.
(vii) To prevent exploitation of consumers/prevention of monopoly.
(b) Disadvantages of Indigenization:
(i) It may lead to retaliation/disharmony/disagreement/conflict among nations/countries.
(ii) Despite indigenization, indigenes still rely heavily on foreign market for machinery, spare parts, raw materials and technology.
(iii) Indigenization has not resulted in corresponding efficiency by the citizens/poor performance.
(iv) Equity control is not matched with management control. Hence management control of the indigenized industries still remains in foreign hands/ fronting.
(v) It discourages foreign investment thereby denying the country of the foreign capital that is needed to stimulate economic growth.
(vi) Indigenization policy tends to be a disincentive to economic development when viewed from the perspective of the rapid decline in domestic output of goods and services.
(vii) The indigenization policy tended to concentrate shares into a few rich individuals who could afford to buy the shares of the indigenized enterprises, thus widening the gap between the rich and the poor.
(viii) Insufficient local funds required for participation in specified enterprises hindered the establishment of indigenized enterprises.