a. What is internal trade?
b. Outline five problems limiting internal trade in Nigeria.
c. Identify four importance of internal trade in Nigeria
Explanation
(a) Internal trade refers to the exchange of goods, services, and resources within the boundaries of a particular country or region. It involves commercial transactions and economic activities conducted between individuals, businesses, or entities located within the same country or geographic area.
OR
Internal trade refers to the buying and selling of goods and services within the geographical boundaries of a country. It involves the exchange of goods and services between different regions, states or cities within the country.
(b) -Poor Trade Facilitation: Inefficient trade facilitation processes, including cumbersome documentation requirements, lack of harmonization in trade regulations across states, and delays in clearing goods at ports and borders, increase transaction costs and hinder internal trade.
-High Cost of Finance: Limited access to affordable credit and high interest rates make it difficult for small and medium-sized enterprises (SMEs) to access capital for business expansion and investment in internal trade.
-Poor infrastructure: Nigeria's poor road network, insufficient transport systems, and inadequate storage facilities make it difficult to move goods from one location to another, resulting in delays, high transportation costs, and damage to goods.
-Inconsistent Policies and Regulations: Frequent changes in policies and regulations at various levels of government create uncertainty and hamper trade activities. Inconsistent policies can result in confusion, compliance difficulties, and discourage investment in the country.
-Multiple taxation: The multiplicity of taxes imposed on traders, including local government levies, state taxes, and federal duties, makes trading in Nigeria very expensive, reducing profitability for traders.
-Corruption: Bribery and extortion of traders by government officials, security forces, and market leaders have been a persistent problem in Nigeria, discouraging many from engaging in formal internal trade.
-Insecurity: Insurgency, banditry, and other forms of violence in different parts of Nigeria have adversely affected internal trade, discouraging traders from entering certain regions, causing loss of life and property, and disrupting supply chains.
-Multiple Checkpoints and Roadblocks: Excessive checkpoints, roadblocks, and extortion by security personnel pose significant challenges to internal trade. These checkpoints cause delays, corruption, and raise the cost of doing business.
-Inefficient Customs Procedures: Cumbersome customs procedures, including excessive paperwork and delays in clearing goods, hinder the smooth flow of trade within Nigeria. This leads to increased transaction costs and negatively affects the competitiveness of local businesses.
(c) -Revenue Generation: Internal trade generates revenue for the government through taxes, duties, and other levies imposed on trade activities. These revenues can be used to fund infrastructure development, social welfare programs, and other public services, contributing to the overall socio-economic development of the country
-Social Integration: Internal trade promotes social integration by connecting people from different regions and cultures within Nigeria. It facilitates the exchange of ideas, knowledge, and cultural practices, fostering unity and a sense of national identity. It also helps to reduce regional disparities and promotes social cohesion.
-Diversification of Economy: Internal trade promotes the diversification of the Nigerian economy. It allows for the exchange of a wide range of goods and services, which encourages the development of various sectors, such as agriculture, manufacturing, and services. This diversification reduces dependence on a single industry, making the economy more resilient to external shocks.
-Encourages Investment: A vibrant internal trade environment attracts domestic and foreign investment. When businesses have access to a large and diverse market, they are more likely to invest in expanding their operations, building infrastructure, and creating employment opportunities. This, in turn, drives economic growth and development.
-Economic growth: Internal trade drives economic growth by promoting the exchange of goods and services between regions, stimulating competition, encouraging innovation, and creating jobs.
-Market Efficiency: Internal trade helps to create a more efficient market by facilitating the movement of goods from areas of surplus to areas of demand. This ensures that products are available at competitive prices throughout the country, reducing regional disparities and ensuring optimal allocation of resources.
-Poverty reduction: Internal trade provides income and employment opportunities for many Nigerians, particularly those in the informal sector, helping to reduce poverty in the country.
-Regional integration: Internal trade promotes regional integration by encouraging the exchange of goods and services between different regions, enhancing economic cooperation and social cohesion.
-Enhanced food security: Internal trade promotes access to food in different regions, ensuring that people have enough food to eat, no matter where they live. This is particularly important in times of food shortages or when certain foods are unavailable in a particular region.