ECONOMIC REFORM PROGRAMS | EFCC, ICPC, NAFDAC & SON

Before June 2004, there were 89 banks in Nigeria with 3,382 branches network.  The banking sector was characterized with structural and operational weaknesses such as:

1. Low capital base: Dominance of a few banks.
2. Insolvency and illiquidity
3. Over dependence on public sector deposit and foreign exchange trading.
4. Poor asset quality.
5. Weak corporate governance – A system with low depositor confidence
6. Banks that could not effectively support the real sector of the economy at 24% of GDP, compared to Africa average of 78% and 272% for developed countries.

The professor Charles Soludo led Central Bank, reduce the banks to 25 with capital base of N25 billion this led to merger and acquisition in the banking industries.

The aim of re-capitalization of banks includes:

1. To ensure strong financial base.
2. To increase deposits’ confidence in banks.
3. To enhance liquidity and solvency of the banks.
4. To increase loan to real sectors.
5. To encourage banks to practice real retail banking instead of depending on public sectors fund.

INDIGENIZATION; NATIONALIZATION; COMMERCIALIZATION and PRIVATIZATION POLICY

INDIGENIZATION

Indigenization may be defined as a process through which the government through the used of law increase the level of participation of citizens (indigenes) of a country in the ownership and management of business enterprises and the industrial sectors of the country’s economy.

The objective of the indigenization policy is to give Nigerians increased involvement in her ownership , control and management of business enterprise that were formerly dominated by foreigners in the country. The fulcrum of the policy was the Nigerian. Enterprises Promotion Decree (1972)

The NEPD (1977) grouped businesses under three categories

1. The first group consists of businesses reserved exclusively for Nigerians (i.e. 100% reserved for Nigerians) e.g. manufacturing of blocks, candles etc.
2. The second group consist of businesses which can be undertaken by foreigners so long as Nigerians hold or have not less than 60 per cent participating shares eg banking, insurance, construction, mining, beer brewing
3. The third group consist of businesses which are open to foreign investments provided Nigerians hold not less than 40 per cent participating shares eg textile, tobacco and drug manufacturing hotels, synthetic resins, distilling etc.

The NEPD (1992) was revised in 1977

OBJECTIVES OF THE INDIGENIZATION POLICY

1. To promote and encourage the participation of indigenes of the country actively and effectively in the industrial sector of their economy
2. To reduce foreign control of the country’s economy
3. To promote industrialization through the use of indigenous technology
4. To reduce the country dependency on foreigners
5. Creation of employment opportunities for indigenes
6. To encourage local retention of profits made
7. To avoid neo-colonialism and imperialism
8. To improve the income and standard of living of the people
9. To ensure economic stability in the country

 Advantage / Importance of Indigenization

1. Increase in participation of indigenes in the economy
2. Reduction of foreign control of an economy
3. Encouragement of local retention of profits
4. Promotion of Industrialization
5. Creation of employment opportunities
6. Enhancement of self-reliance i.e. reduction in dependency
7. Improvement in standard of living
8. Economic stability is enhanced

Disadvantages of Indigenization Policy

1. Discouragement of Foreign investors
2. Concentration of wealth in the hands of few indigenes
3. It widens the gap between the rich and the poor
4. It may lead to economic instability
5. It may result in retaliation by the foreign countries involved
6. It may lead to political instability

PROBLEMS OF INDIGENIZATION IN NIGERIA

1. Shortage of Capital: The indigenes do not have enough capital to take over the business
2. Lack of technical and managerial skills
3. Reduction of Foreign investments
4. Widespread incidence of fronting i.e. collusion between indigenes and foreigners who uses the indigenes as cover to perpetuate their continuing ownership of the businesses
5. Mismanagement of the business taken over by indigenes

NATIONALIZATION

This may be defined as the taking over by the government of privately owned businesses.

It involves the transfer of ownership of privately owned business enterprises to the government for economic, social and political reasons.

Such industries taken over by the government are known as nationalized industries and the individual owners of the affected businesses are paid compensation by the government.

 Reasons why government nationalize industries

1. To prevent the exploitation of the consumer
2. To ensure state security and for political considerations.
3. To provide employment for the citizens
4. To generate revenue that will be used for development
5. To ensure fair and equitable distribution of social and economic amenities
6. To break private monopoly power
7. To provide the large capital required to establish or run some business especially where private interests cannot raises such capital.

Advantages of Nationalization

1. It eliminates wasteful competition
2. It enables the government to provide essential goods and services to consumers at a affordable prices
3. It is used by the government to protect the consumer i.e. to prevent the exploitation of consumers
4. It promotes steady supply of goods and services
5. It leads to the elimination of monopoly by private businessmen
6. It [provides employment opportunities
7. It enhances government control of the economy

Disadvantages of Nationalization

1. It destroys private initiatives
2. It promotes state monopoly
3. Nationalized businesses become inefficient
4. Corruption and embezzlement of funds is rampant among nationalized industries
5. Bureaucracy and political interference in the nationalized businesses

COMMERCIALIZATION AND PRIVATIZATION

Commercialization is a process whereby state owned  enterprises are restructured (re-organized) and run with the primary aim of turning them into profit making entities. The policy makes it possible for state owned enterprises to explore all avenue of making profit.

Privatization is the process whereby ownership and control of businesses, companies, industries or corporations are transferred from government (public sector) to private individual’s i.e. private sector.

Advantages of commercialization and privatization or the objectives of the government’s privatization policy

1. It promotes efficiency in the business that are commercialized or privatized
2. Government generates a lot of revenue during the implementation of the policies
3. It leads to competition and innovation as well as improvement in the quality of goods and services
4. There is a great reduction in the level of public expenditure one enterprises that are not viable
5. It deepens or widens the capital market
6. It gives the consumers an increase range of choice

Disadvantages of commercialization and privatization

1. It leads to uneven distribution of income
2. It leads to increases in prices
3. It leads to mass retrenchment of workers
4. Both commercialization and privatization fuel inflation
5. It leads to reduction or lowering of the standard of living of the citizen
6. It may result in strikes, protests and public unrest
7. The privatization process may not be transparent – allowing a few rich people to take over choice government businesses

EVALUATION QUESTION

1. Define the term commercialization.
2. Why do government take privatize some business?

THEORY

1. Define the term privatization.
2. State two objectives of commercialization.

ECONOMIC AND FINANCIAL CRIME COMMISSION

The commission was established in 2003 to investigate financial crimes such as advanced free fraud and money laundering. The agency has its head office in Abuja.

ROLES OF EFCC

1. Sanitization of banks
2. Aggressive investigation and prosecution of cases of past evasion.
3. Fighting cybercrime and advanced free fraud using smart technology.
4. Initiating legislative intervention in key areas that will aid anticorruption fight.

INDEPENDENT CORRUPT PRACTICE COMMISION

As provided in section 3(3) of the act 2000, the commission consist of the chairman and twelve members. Two of whom represents each of the six geopolitical zones of the country.

 ROLES OF ICPC

1. To receive and investigate complaints from members of the public on allegations on corrupt practices.
2. To examine the practices system and procedures of public bodies.
3. To instruct, advise, and assist any officer, agency or parastatal on ways by which fraud or corruption may be eliminated.
4. To advise heads of public bodies of any change in practice with the effective discharge with the duties of public bodies.
5. To reduce incident of bribery.
6. To educate the public on and against bribery, corruption and related offences.

NATIONAL AGENCY FOR FOOD AND DRUG ADMINISTRATION AND CONTROL (NAFDAC)

The organization is headed by chairman who preside over a governing council appointed by the president on the recommendation of the minister of health.

ROLES OF NAFDAC

1. Regulation and control of importation, exportation, manufacture, advertisement, distribution, sales and use of drugs, cosmetics, medical devices, bottled water and chemicals.
2. Conducts appropriate tests and ensure complaint with standard specification designated and approved by the council for effective control of quality control.
3. Undertake the registration of food, drugs, medical devices etc.
4. Establish and maintain relevant laboratories in strategic areas of Nigeria.
5. Undertake inspection of imported foods, drugs, cosmetics etc in order to establish a relevant quality assurance system.

STANDARD ORGANIZATION OF NIGERIA (SON)

The highest decision making body of SON is the Nigeria Standard Council. The federal government, on the recommendation of the minister of industry appoint members of the council who are drawn from both public and private sectors hold office for a term of four years. The permanent secretary in the ministry of industry is the chairman.

STATUTORY FUNCTIONS OF SON

1. To investigate the quality of facilities materials and products in Nigeria.
2. To ensure reference standard for verification of measures and measuring instruments.
3. To compile and inventory of products requiring standardization.
4. To foster interest in recommendation and maintenance of acceptable standard by industry and general public.
5. To undertake preparation and distribution of standard samples.
6. To register and regulate standard marks and specifications.

EVALUATION

1. State five effects of computer on Nigerian economy.
2. Outline five problems that characterize Nigerian banking sector before recapitalization.

THEORY

1. Outline any five positive effects of computer on the economy of the country.
2. In your opinion, has recapitalization of banks helped the economy of Nigeria

GENERAL EVALUATION

1. 2013 SSCE QUESTION OBJECTIVE AND THEORY
2. 2014 SSCE QUESTION OBJECTIVE AND THEORY
3. 2015 SSCE QUESTION OBJECTIVE AND THEORY
4. 2016 SSCE QUESTION OBJECTIVE AND THEORY
5. 2017 SSCE QUESTION OBJECTIVE AND THEORY
6. 2018 SSCE QUESTION OBJECTIVE AND THEORY

See also

ECONOMIC DEVELOPMENT CHALLENGES | POVERTY, HIV/AIDS, CORRUPTION & POWER INADEQUANCY

CURRENT ECONOMIC PLANS | MDGs, NEEDS & VISION 2020 (GOALS, VISIONS & OBJECTIVES)

INTERNATIONAL ORGANIZATION | ECOWAS, IMF, IBRD, ADB, ECA, UNCTAD, EU

ECONOMIC GROWTH AND DEVELOPMENT | CAUSES, SOLUTIONS, STATEGRIES, CHARACTERISTICS

LABOUR AS A FACTOR OF PRODUCTION