University of Nigeria Research Publications
OCHIGBO, Daniel Abel
Aut
hor
PG/Ph.D/98/29888
Title
The Impact of Globalisation on the
Management of Businesses in the Rural Communities of Nigeria
Facu
lty
Business Administration
Dep
artm
ent
Management
Dat
e
June, 2005
Sign
atur
e
THE IMPACT OF GLOBALISATION ON THE MANAGEMENT OF BUSINESSES IN THE
RURAL COMMUNITIES OF NIGERIA
OCHIGBO, DANIEL AHEL PG /Ph.D/98/298SS
A Thesis submitted to the DEPARTMENT OF MANAGEMENT
UNIVERSITY OF NIGERIA ENUGU CAMPUS
June, 2005
THE IMPACT OF GLOBALISATION ON THE MANAGEMENT OF BUSINESSES IN THE
RURAL COMMUNITIES OF NIGERIA
A Thesis submitted to the DEPARTMENT OF MANAGEMENT
UNIVERSITY OF NIGERIA ENUGU CAMPUS
I n partial fulfillment of the requirements for the award of Doctor of Philosophy (Ph.D) Degree in Management
CERTIFICATION
Ochigbo, Daniel Abel, a postgraduate student in the Department of
Management with Reg. No.PG/Ph.D/98/29888, has satisfactorily completed
the requirements for course and research work for the degree of Doctor of
Philosophy in Management.
The work embodied in this thesis is original and has not been submitted in
part or full for any other diploma or degree of this or any other University. 6
I
Dr. ~ . ~ . ~ . ' ~ w u r u m Head of Department pervisor 7
APPROVAL PAGE
This Thesis has been read and approvcd for the 1;acully of Business Administration, University Nigeria, Enugu Campus.
- - --
EXTERNAL EXAMINER
INrfERNAL, EXAMINEK
This Thesis is dedicated as follows:
To my Parents, Mr. George Daniel Ochigbo
and Late Dear Mum, Mrs. Janet Enyigbo Ochigbo.
To my late Uncle, S/Sgt. Jonathan Abah Ochigbo b
To my Dear wife, Rhoda Piangsat Ochigbo.
To my Loving Children:
Victor Oche Israel Emoche Obed Ogbada Anita Onyaebo
The Lord God Almighty is acknowledged as the 'all in all' of the researcher, without
whose enablement and empowerment, this research work and programme would have
been impossible. All glory and honour is ascribed to Him.
The greatest appreciation to the human instruments in this work, goes to his Supervisor,
Prof. E.U.L Imaga, who sacrificed so much of his time and efforts in making sound input
through critical advice and corrections. Indeed, he has been an invaluable source of
academic inspiration and tutorship in the Ph.D program. He cannot be forgotten!
# The researcher is also greatly indebted to Dr. U.J.1: Ewuruin, his Head of Department,
who made great input and also offered sound counsel into this work. His 'incxhaustiblc'
patience is hereby acknowledged.
The very kind effort of Prof. I. Nwosu is hereby acknowledged.
Special appreciation goes to Mr.C.0 Chukwu, immediate past Head, Department of
Management, other members of the academic staff, which include Chief J. Ezeh,
Dr.O.Uchendu, Chief P.C Unamka, Dr. A .0 Eke and Mr. V.A Onodugo. The kind
contribution and assistance of Dr. A.M.0 Anyafo, is also acknowledged. Mrs. Igwebike,
the Secretary of the Department of Management, is also appreciated, for her support.
Same goes for Mrs. N.E Iroka, the former secretary of the Department.
The researcher deeply appreciates the assistance of the Library officials of the Institute of
Agricultural Research (IAR), Ahmadu Bello University, Zaria; International Institute for
Tropical Agricultural (IITA), Ibadan; Agricultural and Rural Management Training
Institute, (ARMTI) Ilorin; Raw Materials Research Development Council, Abuja and
Federal Ministry of Agriculture and rural Development, Abuja.
The researcher is very thankful to his research assistants, who helped in data collection,
namely, Mr. Idris Dauda, Mrs. Hannah I. Ujah, Mrs. L. Okwori, Mr. Bulus Tawal and
Mr. Terwase Isaac Ayima.
This research work enjoyed the useful academic contributions of his childhood friend and
classmate, in the person of' Dr. Sunday Jeremiah Abba. He gave the initial boost for this
Ph.D programme. The researcher also appreciates the 'academic sessions' with Mr. G.U.
Ugwuanyj@d(Mr. Ekoja B. Ekoja. The researcher is very much thankful to Mr. John
Dollay Adigizey For all the 'troubles' he underwent in thc course of this work.
The researcher highly treasures the active support and encouragement of the following
'Amazing' friends: Mr. & Mrs. Edward Dassah, Mr. & Mrs. Yakubu Kadiya, Pastor & ' Mrs. Anointing Pam, Mr. & Mrs. Dauda Gyang, Mr. & Mrs. Stephen D. Marah, Mr. &
Mrs. Habila Dung, Mr. & Mrs. Ezekiel Ladapo (London) and not the least, Pastor & Mrs.
L.C.Pam.
The researcher appreciates his Boss, Mr. Albert Kattiems, without whose understanding,
this work and programme would have been stampeded. In the same vein, he appreciates
Mr. Bako Arri, Mr. James D. Milaham, Mr. Mohammed Ogoshi Onawo, Mr. 'Muyiwa
ndejokun, Alhaji Abdulkadir Adamu and Hon. Bello M. Mutawalle. Mr. Gani
Ojagbohunmi, who gave advice and literature assistance, when most needed, will not be
(forgotten.
incomplete without Mr. Sylvester Fwangkut, Mr. Melchizedek
Mr. Emma Barau, Mallam Usman S. Adamu, all Colleagues in Pioneer
They are highly appreciated for their solidarity and support.
(Similarly, tribute is paid to Mr. Dike Ogu, Mr. llgwueze Thomas, Miss. Obiageli
hrgwuja, Mi. Gideon Emerole, Alh. Garba Umar, Mr. Emeka Diwe, Mr. Alex Wazhi,
I r. Augustine Odung, Mr. & Mrs. Ayuba Dangs, Mr. Monde Sani, Mr. Andrew Okwoli
and Mr. Emmanuel Dakat for all their assistance.
The researcher owes a debt of gratitude to Mr. bi Mrs. Isaac Ditep Kwatinak, Mr. & Mrs.
Kachallah Malgwi, Mr. and Mrs. Gideon Para-Mallam, Mr. & Mrs. Victor Tukura,
Pastor & Mrs. Sam Gar, Mr. bi Mrs. Mike Adcgbile, Rev. & Rev. (Mrs.) Jacob Langs,
Rev. & Rev (Mrs.) Habila Kim, Rev. & Mrs. Yakubu Pam, Pastor Yakubu Bameyi, Mr.
Lazarus Ukaonu, Mr. & Mrs. Dan Nwoji, Mr. Nelson Sokwaibe and Mrs. Gladys Dike.
The researcher owes a debt of gratitude to the loving support of his Dear wife, Rhoda,
and children: Victor, Israel, Obed and Anita. They have come to understand and accept
his sporadic availability in the home, within the period of this work. Similarly, the
parents of the researcher, Mr. & Mrs. George Daniel Ochigbo are appreciated for their
encouragement. Mr. Paul Ochonu (CP), Capt. N . 0 Ochigbo, and Mr. Michael Ojih, the
researcher's uncles, are hereby acknowledged for their moral encouragement. Miss Rose b
Mershak, the researcher's sister in-law, is similarly appreciated l i ~ r her prayers and
support.
The researcher further acknowledges the prayers and support of the following:
Bishop B.A. Kwashi, Bishop Lamido, Rev, Ramnan Wuyep, Gen. J.N. Shagaya (Rtd.),
Rlr. & Mrs. G.0.S Miri, Mr. & Mrs. S.P.M Gunkat, Mr. & Mrs. Nath Nmadu, Dr. A.A.
Okdoli, Mrs. Margaret Pearce, Mr. Ben Dele Okoro, Dr. & Dr. (Mrs.) F. Nimzing, Dr.
(Mrs) Doris Bitrus, Mrs. Fatima Usman, Mr. Baley Saleh, Mr. & Mrs. Aaron Rengkwat,
Mr. & Mrs. Micah Pwaspo, Mr. Emmanuel Dadirep, Mr. & Mrs. Rima Shawulu, Mr.
C.N. Agu, Evang. & Mrs. Francis Omo-Fregene, Mr. Jude Uyanwanne and Dr. Robsom
0 hayi.
Finally, the researcher appreciates the efforts of Miss. Medina Ogwuche who produced
this work. She 'has had no rest' since the commencement of this work and programme.
Mr. Monday Madaki who made several trips between JosIAbuja and Enugu, is most
warmly appreciated.
The Good Lord will bless and keep them all.! ! !
Ochigbo, Daniel Abel
vii
ABSTRACT
Busincss organisations at thc rural community lcvcl hold thc kcy to mcaningli.~l cconomic twak through for Nigeria. Such enterprises, possibly bctter than their urban counterparts, possess numerous advantages such as low cost o r production, simplicity and flexibility or operation, conservation of foreign exchange and the promotion of cven development.
However, Nigeria, in spite of its potentials, continues to fall prey and victim to numerous problems such as an underdeveloped rural sector, including improperly managed business organizations.
As if to add to this problem, Nigeria's admission into the World Trade Organisation (WTO) in 1995, marked the era of a Trade Liberalisation regime for the country, which meant a largely unhindered accessibility of' the country to a floodgate of challenges, including imports, with obvious constraining effects on businesses. Indeed, the market, trade and operations of the businesses in the rural areas were thrown into a disadvantaged , position, which had a further implication, of compromising the industrial potentials and future of the country. Globalisation is thus feared to possess the threat of constraining the performance of' Nigeria's rural businesses. Furthermore, the neglect of sound and proven management approaches both at macro-economic and micro level of rural businesses continues to stunt Nigeria's growth prospects, given the potentials of the enterprises to the stimulation of economic development.
This research is thus prompted by the challenges posed by the above descriptions, which is aimed at transforming the business outlook of the country, particularly at the rural !wel.
The research design adopted, is survey research, which answered four research questions. Four Hypotheses were testcd at 0.05 lcvcl of significance.
Data was collected fioin a sample of 166 Managers of rural entcrprises covering six States within the North Central geo-political rcgion of Nigeria. They include, Platcau, Benue, Niger, Nasarawa, Kogi and Kwara States. In addition, sccondary data was collected in support of the research work.
The major instrument for data collection was the questionnaire. Both inferential and descriptive statistics were used to analyse data. Statistical tools employed include the student t-test, chi-square (X2) and correlation and regression tests.
The analysis and hypothesized findings (at 95% confidence level) showed variously that the rate of change in global output does differ from rural enterprises output and that rural businesses do not depend much on foreign exchange for their operations. The findings further revealed that poor managerial capability of rural enterprises affects their productivity and also that Trade Liberalisation has a significant effect on rural business operation and management.
--- I he implications of the tindings generaiiy inciude the need for a new management pcrspcctivc and framework for Nigerian ;Lira! sector busincsscs, including a rc- examination of agreements and commitments to international organisations. Rccomn~cndations Lvcrc made both within spccific a id gcncra! lc\& and inchdc thc !ici that conscious and deliberate elforts bc nude to reposition the international and giobai
. , contznts of oLir SUS~~CSSCS. .l'iii'i.i i:i ;ti:><> ;i r i ~ i ' i i LO i.C;iSSC:<S a id i - C V ~ C ~ Nigcri;i'., agreement with the World '1 rade Organislthn ( W'1'0). being tllc midwii'e of globalisat io~i and 'l'rade Liberalisation.
TABLE OF CONTENTS 'Title Page ................................................................................................ i . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Certification 11 ...
Approval Page .......................................................................................... 111
Dedication ............................................................................................... iv Acknowledgement ...................................................................................... v ... Abstract ................................................................................................. viii Table of Contents ....................................................................................... x . .
.......................................................................................... List of Tables xvii List of Figures and Appendices ...................................................................... xx
CHAPTER ONE: INTRODUCTION ........................................................... 1
Background Of The Study .............................................................................. 1,
Statement Of The Problem .............................................................................. 5
Research Questions ....................................................................................... 6
Objectives of the Study .................................................................................. 7
Hypotheses ................................................................................................. 7
Significance of The Study ............................................................................... 8
Scope Of The Study ....................................................................................... 9
Limitations of the Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Definition of Concepts ................................................................................. 10
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
References ............................................................................................... 14
CHAPTER TWO: REVIEW OF RELATED LITERATURE ............................. 15
Macro Management of International Trade ..........................................
.................................... Determinants and effects of International Trade
................................ Specialisation and inequality in International Trade
Management of Protectionism and International Trade in the Nigerian ................................................................................... Context
Nigeria in International Trade ......................................................................... 20
X
............................................ Trade Relations between Nigeria and other Countries 21
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nigeria's Balance of Trade 26
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . World Trade Organisation (WTO) 27
.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I he f Iistorical 13ackgrountl 27
Structure and Functions 01 the World Trade Organisation (WTO) .............................. 28
Macro Management of the l'rovisions oS'l'he World l'rade Organisation (WTO) .............................................................................................. Agreement 29
................................................. General Agreement on Trade and Tariffs (GA'IT) 30
GATT and Basic Provisions regarding Multilateral Agreements on Trade in Goods ........ 33
Appraisal and Assessment of the Implications or GATT as thcy bear on b
................................................................................ 'l'he Nigerian Economy 41
Developments in the Work1 Trade Organisation (WTO): Implications for Nigeria as a ........................................................................................ developing nation 43
.................................. The Developed Countries and Developing Countries in W.1'0 43
........................................................ Poor Countries and uneven Trading Pattern 47
.................................... The Poor Vs . The Rich Countries: A Comparative Analysis 49
................................................ United States and Violation of Trade Agreements 50
Nigeria's Membership of the W'l'O and Implications lor Businesses ........................... 51
Collapse of Trade 'Talks at WTO Ministerial Meeting in Cancum. Mexico .................. 54
............................... Planning and Organizing Trade Liberalisation and Globalisation 55
................................................................................................ Definition 55
.......................................................................... Implication of Globalisation 57
........................................................ Global Output and Implications Sor Nigeria 59
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Effect of Globalisation on Turnover 62
........................ Effect of Globalisation on Personnel/[-Iuman Iiesources Management 67
Effect of Globalisation on E'roduction Management (Technology) ............................ 70
Global Subsidy and its Implication .................................................................. 71
Nigeria's Businesses and the effect of uncontrolled Imports .................................... 72
Capacity Utilisation Rates ............................................................................ 75
Globalisation and Agriculture - Implication ror Businesses .................................... 75
Implications of Globalisation for Africa ............................................................ 79
African Growth and Opportunity Act (AGOA) and Globalisation ............................. 81
The effect of Globalisation and Tradc 1. ibcralisation on Nigeria's Businesses .............. 83
Government and the Managenlent o1"l'radc I . ibcralisation in Nigeria. ....................... 89
Business Development in Nigeria .................................................................. 91
History of Business Development in Nigeria ..................................................... 91
General Drawbacks of Business Organisations in Nigeria ...................................... 93
The Concept and Application of Management .................................................... 97
Management .......................................................................................... 97
Globalisation and Management ..................................................................... 98
.............................................................................................. Good Plan 99
Management Functions ............................................................................. -99
Effective and Good Management ................................................................. 100
Japanese Management Philosophy ................................................................ 102
Contingency and Situational Managenicnt ...................................................... 103
Visionary Management ............................................................................ 103
Proactivity ............................................................................................ 104
Rural Communities in Nigeria .................................................................... 104
xii
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Meaning I04
...................................................... Features of Rural Communities in Nigeria 106
................................................................. Rural Economy and Development 110
Management of Activities of Rural Coininunities/'Iypes 01 Rural Economies in ................................................................................................. Nigeria 112
Farming Coininunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
................................................................................. Fishing Communities 113
Pastoral Communities ............................................................................... 114
.................................................................................... Craft Communities 114 b
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hunting Communities 115
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Lumbering Communities I15
............................................................. Gathering or Collecting Coinmunitics 116
................................................. Rural Communities and Business Developmcnt 116
............................................ Rural Businesses and Contribution to Development 118
.......................................................................................... Introduction 118
........................... Approaches to Rural Business Development and Industrialisation 120
....................................................... Strategies For Rural Businesses in Nigeria 121
............................................ Contributions of Rural Businesses to Development 123
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Obstacles to Rural Business Devclopmcnt 125
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Rural Transportation 128
................................................ Rural Industralisation and the factor of poverty 130
.................................... The role of small-scale businesses in rural Development 132
............................................................................................ Summary 134
... X l l l
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References 1 37
................................... CHAPTER THREE: RESEARCH METHODOLOGY 148
..................................................................................... Research Design 148
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Data and Sources 149
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Primaiy Sources 149
.................................................................................. Secondary Sources 149
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Population of the Study 149
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sampling I50
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sample size determination for Managers 150
............................................................................ Sample from population 151
Instrumentation ...................................................................................... 551
............................................................................ Validity and Reliability 152
........................................................................................ Data Analyses 153
References ............................................................................................ 154
CHAPTER FOUlkANALYSlS AND I'IWSEN'I'ATION OF DATA ......... 155
............................................................................ Analysis of Data 155
....................................... Questionnaire Administration and I<cturn Kate 156
Distribution of Rural businesses by States and year of .............................................................................. Establishment 158
Distribution and Spread of Rural Busincss hy Industry Classification ............. 160
...................... Distribution of Rural Busincsscs by sources of raw material 163
.................................. Factors Influencing Location of Rural Businesses 164
......................................... Locational Advantages for Rural Businesses 165
.......................................... Locational Difficulties of Itural Busincsscs 167
................................. Nature and Type of Customers of Rural 13usincsses 168
...................... Educational Qualifications 01' Managcrs of Rural 13usincsses I68
................... Educational Qualifications of Junior Staff of Rural Businesses 170
.................... Educational Qualification of' Senior Stafl' of Rural Busincsscs 170
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Location of Customers of Rural Busincsscs 171
xiv
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Production/Output oi' Rural 13usincsscs ( 1 !N5.3003) 172
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Test of Hypothesis No 1 I72
........................................ Turnover of Rural Rusinesses (1 995 - 2003) 174
......... Foreign Exchange input/consumption by Rural Businesses (1 995.2003) 175
....................................... Subsidy Element enjoyed by Rural Businesses 176
..................................... Import Profile of Rural Businesses (1 995.2003) 177
................................. International Busincss Contact of Rural Businesses 178
....................................................... Competition in Rural Businesses 179
...................................... Competition and Impact on Rural Businesscs 180
............................... Strongly Competing Substitutes of Rural Businesses 180
................................... Nature of Product Substit~~tcs in Rural Busiilcsscs 181
Effect of Oversca S~ibs t i t~ i~cs o n Rural Busincsscs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18J
................................................ Major constraints oS Rural Rusiixsscs 1 82
Management Function of Planning in Rural Businesses ............................ 183
.......................... Management Meetings as a function in Rural Businesses 184
Managerial checks and control in Rural Businesses ................................ 185
................................................................. Test of Hypothesis No.2 185
Effect of Trade Liberalisation on Personnel of Rural Businesses ................ 191
Impact of Trade Liberalisation on the enginecring Function of ......................................................................... Rural Businesses 192
Impact of Trade Liberalisation on Productiori Management of ......................................................................... Rural Businesses 192
Impact of Trade Liberalisation on Raw Materials I'rocureinent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and Management 193
Impact of Trade Liberalisation on Sales of Rural 13usinesses ..................... 193
................................................................. Test of Hypothesis Igo.3 193
Impact of Global Imports on Rural Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 196
Impact of Global Subsidy on the operation of Rural Businesses .................. 197
Impact of Trade Liberalisation on Foreign Exchange in Rural Businesses ....... 198
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Test of Hypothesis No.4 198
General effect of Trade Liberalisation on Rural Businesses ....................... 20 1
CHAPTER FIVE: DISCUSSION OF RESULTS AND IMPLICATIONS ........... 202
General information on rural businesses and Implications ............................ 202
Years of Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202
Industry/Product ClassiLica~ion ol'rural businesses.. ................................... 204
Locational Factors, advantages and difficulties ......................................... 105 International Contact for Rural Businesses.. ............................................. 206
Major Constraints of Rural Businesses ................................................... 207
Managerial Capabilities and productivity of Rural Business Managers .............. 209
Globalisation and Impact on Management of Rural Business ......................... 210
Management Implications of Globalisation on Rural Business Output .............. 211
Sales and Foreign Exchange ............................................................... 213
Summary ...................................................................................... 214
References ................................................................................... 215
CHAPTER SIX: SUMMARY. RECOMMISN1)ATlONS AND CONCLUSION ............... 217
Summary ...................................................................................... 217
Recommendation ............................................................................ 223
Conclusion .................................................................................... 228
................................................................ Need for further Research.. 229
References .................................................................................... 229
Bibliography ................................................................................. 230
Appendices ................................................................................... 243
xvi
LIST OF TABLES Number
Table 1:
Table 2:
'lablc 3:
Table 4:
Table 5:
l'ablc 6:
'l'ablc 7:
Table 8:
l'ablc 9:
Table 10:
'Table 11 :
Table 12:
Table 13:
Table 14:
Table 15 :
'Table 16:
Table 17:
Table 18:
Title
Summary of Trade between Nigerian and Russia (1 992-1 996) .................... 23
Summary of Trade between Nigeria and France (1 996 1997) ....................... 24
Summary of Trade between Nigeria and Brazil (1 993 - 1998) ...................... 24
Summary of Trade between Nigeria and Libya (1 992 - 1997) ..................... 24
Summary of Nigeria's Trade with China (I 990 .. 996) ................................ 25
Suinmary of Nigcria's Balance of Trade (1 990 - 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Y carly rates of Forcign Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
4 Nigeria's Import Profile 1995 . 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Makc-up of the Sampling Population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151
Questionnaire Administration and Return Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156
Distribution of Rural Businesses by States .......................................... 157
Distribution of Rural Businesses by State and year of Establishment .......... 158
Industry/Product Classification of Rural businesses by States .................. 160
Ranking of Industry/Prodiict Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
Distribution of Rural Businesses by Source of Raw Matcl-ial . . . . . . . . . . . . . . . . 163
1:actors Influencing Location of Rural Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Respondents' opinion on locational advantages ................................... 165
I . ocational Difficulties of Rural Businesses.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
'Table 19:
Table 20:
Table 2 1 :
Table 22:
Table 23:
Table 24:
'l'able 25:
Table 26:
'l'able 27:
Table 28:
Table 29:
'l'able 30:
Table 3 1 :
Table 32:
Table 33:
Table 34:
Tablc 35:
Table 36:
Tablc 37:
'I'ablc 38:
.................................. Nature and Type of Customers of Rural Businesses 168
....................... Educational Qualification of Managers of Rural Businesses 168
Educational Qualification of Junior Staff of Rural Businesses ..................... 170
Educational Qualifications of Senior Staff of Rural Businesses ................... 170
.......................................... Location of Customers of Rural Businesses 171
Production/Output of Rural Businesses (1 995 - 2003) .............................. 172
l'urnover of Rural Businesses (1 995 - 2003) ........................................ 174
Foreign Exchange Input/Consumption by Rural Businesses (1 995 . 2003) ..... 175
Subsidy Element enjoyed by Rural Businesses & rate of change(1995.2003) .. 176 4
Import Content in Rural Businesses and ratc of change (1 995 . 2003) .......... 177
International Contact of Rural Businesses ........................................... 178
Respondents' Rating of Competition in their Businesses .......................... 179
Managers' assessment of the Impact of competition on their businesses ........ 180
.... Respondents' Opinion as to the presence of strongly competing substitutes 180
Respondents' Opinion as to the nature of product substitutes ..................... 181
................ Respondents' rating of the effect of Overseas' product substitutes 181
Showing main constraints of Rural Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
Management function of Planning in Rural Businesses ............................. 183
Management of Meetings as a function in Rural Businesses ....................... 184
Managerial Checks and Control in Rural Businesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185
xviii
Table 39: Test Analysis summary of the management function of budgetinglplanning in ...................................................................... relation to turnover 187
Table 40:
Table 4 1 :
Table 42:
Table 43:
Table 44:
Table 45:
'Iable 46:
Table 47:
Table 48
Table 49
Table 50:
Table 5 1 :
Table 52:
'Iable 53:
Table 54:
................................................ Test Analysis . Management Meetings 189
.................................................. Test Statistics . Checks and Control 190
........... Managers' opinion of the effect of Trade Liberalisation on Personnel 191
................................... Trade Liberalisation and Impact on Engineering 192
...................................... Trade Liberalisation and Impact on Production 192
Impact of Trade Liberalisation on Raw Materials Procurement/Management ... 193
...................... Inlpact of Trade Liberalisation on Sales of Rural Businesses 193
b Test Analysis . Observed Frequency as effect of Trade Liberalisation ............ 195
Calculated expected frequency - as effect of Trade Liberalisation . . . . . . . . . . . . . . . 195
(Chi-square calculations) of the effect of Trade ..................................................... 1. iberalisation on Rural Businesses 196
..................................... Global Imports and Impact on Rural Businesses 196
............. Global Subsidy and Impact on the operation and of Rural Businesses 197
....... Impact of Trade Liberalisation on Foreign Exchange in Rural Businesses 198
Test Analysis . change in foreign exchange and change in ........................................................... Turnover of Rural Businesses 199
General effect of Trade Liberalisation on Rural Businesses ........................ 201
xix
LIST OF FIGURES
......................................... Distribution of Rural Businesses by States.. .I57
Factors influencing Rural Business Location.. ...................................... .I65
.................... Educational Qualification of Managers of Rural Businesses.. .I69
...................... Two-Tailed t-test at 0.05 Significance Level (Hypothesisl). .I73
............................................. Major Constraints of Rural Businesses.. .I83
............................ Two - tailed at 0.05 significance level (Hypothesis 2). .I87
............................ Two - tailed at 0.05 significance level (Hypothesis 2). .I89
WTO Structure ( Appendix). b
APPENDICES
Manufacturing Capacity Utilisation Rates
List of Rural Income Generating Enterprises
WTO Structure
Hypothesis No. 1 (Workings and Calculations)
Hypothesis No.2 (Workings and Calculations)
Hypothesis No.3 (Workings and Calculations)
Hypothesis No.4 (Workings and Calculations)
Changes in World Output
Questionnaire
List of Businesses and Locations
Statistical Table - t Distribution
Statistical Table - Chi Square Distribution
CHAPTER ONE
INTRODUCTION
1. Background Of The Study
The Nigerian economy has undergone profound changes in the last two
decades and has remained in a tailspin. It was an economy that placed the
nation in the ranks of the middle income countries in the 1970's and early
1980's. However, by the year 2000, Nigeria's position and status had
plummeted to a low level. The 2000 Human Development report ranked
Nigeria as 151st, a mere 23 places away from the bottom and trailing
behind countries such as Haiti, Djibouti, Mauritania, Sudan and Ghana.
The nation had thus been on a steady trend of precipitate decline.
Nigeria depends on oil (crude) to about 90 per cent for her total export
earnings, 30 per cent of its Gross Domestic Product (GDP) and about 80
percent of National Budget resources. Indeed, a combination of the
factors of declining oil prices, overly an~bitious industrialisation
programmes, neglect of the agricultural sector, excessive borrowing from
foreign sources and continuing widespread mismanagement, have
continued to promote the country's economic stagnation and decline.
(Todaro, 1992:32).
At the background of the aforementioned problems is the need to accord
business organizations in rural conununities, proper recognition.
Aluko, as cited in Otite and Okali (1990:18) supporting this position,
maintains that:
No socio-economic development of Nigeria can occur
or succeed without du.e consideration being given to
the development and utilization of the rural human and
material resources. 'The Nigerian Society and its
economy are predoniixu~tly rural. This rural sector
currently possesses the potential for spearheading the
supply and development of food and hnds required to
sustain the nation, its industries and its econoiny.
With over 70% of Nigerians living in rural areas and also living below the
poverty line, the stock of rural infrastructure has virtually collapsed, which
thrusts on any "great nation" the enormous and daunting challenge of
reversing the trend towards boosting production, processing and
marketing, in order to improve the life of the rural population through
thriving business organisations. This is important in an e n v i r o n v t that
characterizes Nigeria's output by low yield and poor quality levels
generally.
A Transformed Nigerian economy, according to Mass Movement for
Social and Economic Reconstruction - MAMSER in Social
Transformation for Self Reliance (1 992: 12), must possess characteristics
that would overcome among others, the structural crisis features prevalent
in the economy such as;
Low capacity utilisation of manufacturing industries
High Cost of production of goods and services
Slow growth in agriculture and industry etc.
Balance of payments disequilibrium
Poor export performance
Acute shortage of foreign exchange
Huge external and internal debts
Low and deteriorating level of external and domestic terms of trade
High and rapidly rising rate of domestic inflation
Unprecedented rising level of unemployment of the most
energetic, imaginative, innovative and highly skilled
Low or negative growth rate of domestic products.
Growing poverty as evidenced by low consumption levels and
declining per capita income.
Deteriorating standard of living of the mass of the people
Growing economic inequalities
Ever widening income inequality
Remedial actions, therefore aimed at establishing business organizations
in the rural areas, will no doubt create jobs and wealth at the rural level,
curb rural - urban migration, reduce overall poverty level as well as ptract
foreign exchange earnings. These are all geared towards raising living
standards. Besides, such rurally located businesses possess unique
advantages of low cost of production due to proximity to sources of raw
materials, promotion of even and balanced development, curbing rural-
urban migration, gairhl employment, conservation of foreign exchange,
amongst other benefits.
Nigeria, however, became a signatory to, and therefore, a member of the
World Trade Organisation (WTO) in 1995, which meant that she had
accepted the organisation's provisions for globalisation and trade
liberalization. Though Nigeria's new status enabled her to acquire the
capacity to internationalise her export potentials through competitive
offerings of products and services, the new membership status also opened
the country to a floodgate of challenges.
In a self-appraisal of the effect and impact of Globalisation, Nigeria's
President had stated:
We have operated that agreement for
nearly five years and we all now know its
implications on our manufacturing sector,
agricultural products and our rural market
and commodities. While we accept that
we cannot return to protectionist era...
certain actions need to be taken by the
nation to safeguard its local industries
without violating the treaty. (The
Guardian, December, 3, 1999 ;.4).
Nigeria's position has thus triggered a spiral of questions on the industrial
potentials and therefore, future of the country, particularly, within the
framework of rural communities, which hold the key to hture sustainable
development and capacity building.
Within such a scenario, can Nigerian Firms, within
globalisation stand the weight of global output, imports and
subsidy? For instance, in looking at global subsidy, consider a
situation whereby:
on a yearly basis, farmers of the industrialized nations are
subsidised to the tune of $350 billion while total official aid by
the same countries is only about $50b yearly, to the developing
nations.
Subsidy for a cow in Europe is $2.5 billion per day, yet 3 billion
people (half of the world's population) live on less than $2 per
day.
Farmers in the developed world are subsidised to the tune of
$lbillion per day, which is six times the amount rich nations
currently vote as development aid worldwide
The Japanese government subsidises rice production to the tune of
700% of the cost of production. How then can the same farmers
in Thailand or Nigeria export competitively?
What then are the inlplications of all these on the management of
rural business fmns?
Statement of the Problem
Nigeria is a country blessed with some of the best human and material resources
in the world, yet it has recorded successive failures in harnessing these resources
for meaninghl industrial take-oE Countries with little or no resourcfs have
recorded phenomenal economic strides and growth through simply repositioning
the management of their rural business organizations, in order to attract global
capital.
Rural business Firms must be rightly positioned and fiom the standpoint of sound
and proper management, given their enormous advantages, resources and
potentials, particularly, within the context of today's global environment.
Aluko as cited in Otite and Okali (1990:438) in supporting this assertion, believes
that rural communities must not be regarded as mere producers of food and the
raw material needs of urban dwellers. Instead, they should be seen as entities
entitled to balanced emphasis in regard to the importance of rural business
organizations, without which "the rural areas will continue to be depressed. This
way, rural depopulation and urban migration will grow unabated".
For Nigeria to therefore take advantage of her potentials, such that would enhance
her economic greatness, sound management of businesses within an age of
globalisation must be emphasized, particularly at the level of rural con~rnunities.
This would be made possible through proven managerial tools and techniques.
Will a borderless economy predicated on Trade Liberalisation of the WTO allow
surviving large firms to thrive, not less the rural counterparts that are severely
disadvantaged structurally? What therefore is the effect and impact of global
output on the output of rural firms? What is the effect of globalisation (trade
liberalization) on the management of the rural business? Can local firms
compete with their superior oversea peers within the parameters of say, sales
turnover and foreign exchange in a global setting? Will an "uneven playing
field" ever secure a hture of high productivity for rural business? For how long
shall the rural peripheries continue to only specialize on a narrow range of
agricultural and resource extractive fmctions in an age of globalisation? What
then are the impacts and effects of Trade Liberalisation on business organisations
within the rural Communities?
The WTO, ordinarily, offers a level playing ground, between the rich and poor
countries, but the economies of the developed countries are at an advantage.
Unless the threat of globalisation against firms in the rural communities are
contained, and the pacing advances of its derivatives through the provisions of the
World Trade Organisation (WTO) are checked, the dream of greatness by Nigeria
as a developing nation may never be achieved. Nigeria may thus continue to
remain a low price producer of prinlary commodities and raw materials for the
developed nations while sustaining their market of manufactures. This can only be
checked where sound and proper management of businesses at the rural level are
stressed, and, in today's unipolar world of globalisation.
Nigerian rural business firms, therefore appear unfit for global
competition, given their weak productive and operational base.
Research Questions
The above problem as described, is fixther broken down into sub problems as
fo 110 ws:
1. What is the impact of global output on rural businesses' output?
. . 11. How adequate is the managerial capabilities of operators of rural
businesses and what is the bearing on productivity?
iii. How impactful is globalisation (as expressed through trade liberalization)
on the management of rural businesses?
iv. What is the relationship between the sales profile of rural businesses and
foreign exchange?
Objectives of the Study b
This study has the general objective of examining the current status of rural
businesses in Nigeria.
The specific objectives of the study include the following:
i) To study the relationship between rural businesses'output and global
output.
ii) To assess the managerial capacity of businesses in rural areas, vis a vis the
engendering of high productivity.
iii) To determine the relationship between Trade Liberalisation and the
management of rural businesses.
iv) To assess the relationship between sales profile of rural enterprises and
foreign exchange.
Hypotheses
To achieve the objectives of this study, the following hypotheses are formulated:
Hal: Global output has no impact on rural businesses.(' There is no difference in the rate of change between rural output and global output)
Ho2: Poor managerial capability of rural businesses does not account for their low productivity.
Ho3: Trade Liberalisation has no significant ef5ect on the management of rural businesses.
Ho4: Sales Turnover of rural businesses has no relationship with foreign exchange.
Significance of the Study
Rural firms have always formed the basis for most programmes of hurnan
endeavour. However, business organisations in our rural communities, which
contains the majority of the population remain neglected, even when they should
be responsible for the bulk of food supplies and raw materials.
The same raw materials end up in the factories of the western nations, and are in b
turn exported to the developing countries as manufactures in the form of capital
and intermediate goods, on which they spend considerable foreign exchange
earnings. This state of paradox persists, hi spite of the very many so-called lofty
efforts by government to pursue business growth and development.
This study can boast of significance, given the enormity of potentials available
within rural business organizations, through the provision of food, various raw
materials for industries and therefore, as a haven for employment. Furthermore,
this study derives significance, given that it seeks to:
1. make case for the promotion of companies within Rural Communities as
the mainstay of the economy and a formidable purveyor for the much
needed industrial "Revolution". This way, it would facilitate the greatest
possible development of agriculture-fed companies, for a massive
production of food and industrial raw materials.
. . 11. define a priority status for rural business organisations, being the simplest
and easiest propeller of economic leap in the march towards meaningful
business development and industrialisation.
. . . 111.
iv.
v.
vi.
vii.
advocate a developnient aimed at balanced growth of the economy
through an equal growth enforcement of the rural business firms.
make case for reduction of mass poverty through the creation of usefd
employment opportunities available in the business firms.
rninirnise the phenomenon of external dependence on imports and reliance
on foreign aid through the provision of renewed insight into the potentials
of rural firms.
provide some answers to the small and medium enterprises sector, at the
rural level, which is confronted with the challenges of "...lack of reliable
data and statistics.. .general lack of information.. .in terms of available raw
materials, available technology, available markets. . ." (Adelaja, 2004:2)
beam a study 'searchlight' on rural businesses that have for long remained
neglected, for the purposes of better management, so as to respond
appropriately to the challenges available within current global
developments.
The Researcher's visits to some of the States such as Benue State Ministry of
Commerce and Industries including the state Chamber of commerce, Industries,
Mines and Agriculture (BECCIMA) lent credence to the fact that only large scale
businesses within the urban centres are being emphasized. This fact, thus draws
out fbrther significance to this work.
On the whole, the research is a topical one that is relevant to Nigeria's
developmental aspirations, as the rural businesses remain quite germane to that
goal.
Scope of the Study
The study will not be able to cover businesses in rural communities within the 774
local governments of Nigeria, especially that they do not fit into any exact format
or structure. Their nature, type and number vary fi-om community to community.
As such, only the States of Plateau, Benue, Nasarawa, Niger, Kwara and Kogi, all,
in the Federal Republic of Nigeria will form the basis for this study. These States
form the 'Middle Belt States' within the North Central geo-political region of the
country.
The Limitations of the Study
The major problem of this study had to do with the difficulties of conducting
research within a rural environment, given the many prevalent odds and b
inadequacies.
Rural businesses lacked the formal organizational structures available within their
urbdlarge scale counterparts. This constituted difficulties in obtaining
informat ion.
Furthermore, direct researches on rural businesses are virtually non-existent and
thus posed problem as to literature.
Definition of Concepts
The study has employed the use of some terms, terminologies and phrases, which
require definitions. In addition, some may ordinarily reveal ambiguities. They
however, represent meanings as submitted below:
Round
This means a session of talks, negotiation and discussions (e.g Uruguay Round).
"Globalisation
This refers to a process of increasing integration of national economies that will
lead to greater global interdependence. The situation makes the entire global
system and component parts h s e across large distances, with obvious
implications for Trade Liberalisation. This highlights the
underdeveloped/developing world, in the areas of output, imports, subsidy and
trade, and has multiplier effect on labour, sales, raw materials, spares etc.
"Trade Liberalisation
This connotes a dismantling and removal of International Trade barriers as a
result of globalisation including reduction in the level of tariffs, which leads to the
proliferation of imports. #
Management
The concept refers to an activity performed within the main functions of planning,
organising, directing and control, to ensure efficiency and effectiveness of
operations of business organizations and to achieve objectives.
Protectionism
This means the imposition of trade barriers such as Tariffs and non-tariff barriers
such as quotas and agreements for the purpose of protecting local and home
industries.
General Agreement on Trade and Tariffs (GATT)
This is a technical concept, which refers to an agreement of member nations, as
contracting parties, for the purpose of regulating World Trade. It came into being
in 1948 with 23 founding members, and eventually led to full liberalization of
global trade. The three aspects GATT are the agreement itself, its role in
settlement of disputes between nations and the sponsorship of tariff reductions
and other barriers to free trade.
Sanitary and Phytosanitary (SPS) Measures)
By this, is meant food safety and animal plant health.
Rural Community
This is a grouping of people and household, in a location, away fiom an urban
area, and consists largely of farmers engaged mainly in rudimentary and
subsistence agriculture, as against a mechanized style. As a rule of the thumb,
state capitals are excluded fiom the definition.
Rural Business
This has the same meaning as rural community (above) but as applied to brsiness
organisation of most times, a small scale or medium scale, with no. of workers
ranging between 10-200.(i .e not below 10 workers).
The definition of Robock (1952: l43), of rural industries, as manufacturing
enterprises sited near agricultural raw materials, forestry raw materials, fishery
raw materials, other natural resources and/or local government area markets, is
relevant to this study.
Domestic/International Trade
This refers to official commercial transactions of buying, selling, importing and
exporting of general merchandise either at intra agency, state, local or community
levels within a country (domestic) or between countries (International).
Comparative advantage
This is the idea that nations should concentrate and specialize in the products they
can produce most cheaply, while trading with others, in the things they need.
'Tariff
This is a futed percentage tax on the value of an imported product, usually levied
at the point of entry into the importing country.
Terms of Trade
This is the ratio of a country's average export price to its average import price.
Whenever this ratio decreases, i.e. when import prices rise at a faster rate than
export prices, a country's terms of trade is said to worsen.
Unrestricted Trade
This refers to trade of imports governed by generous and liberal tariff tax and duty
regimes, which allow for large inflow of goods into the economy. B
Rural Output
This refers to the aggregate total or volume of production in whatever unit used,
for the rural business enterprise, converted into tons for the period of study.
Global Output
This is the summation of regional and country, as world production figures,
always expressed in percentage terms, for the respective years of reference.
Intellectual Property
This is a concept referring to issues related to investment in ideas, creativity,
copyrights, trademarks, geographical names and how such name are used to
identify products, industrial designs, integrated circuit layout-designs and
undisclosed information such as trade secrets. Intellectual property should be
protected when trade is involved.
*The terms are used in reference to Nigeria, to rhyme with her admittance to the
World Trade Organisation (WTO) in 1995.
Summary
In this introductory chapter, the backgroqd of the study was traced which
presented Nigeria as a nation of potentials, yet with numerous problems including
that of rural developrent, which naturally affects the growth of rural businesses,
thus possessing globalisation implications. The Statement of the problem,
alongside objectives of the study were considered, for which four hypotheses
were formulated.
The chapter ended with highlights on the significance, scope and limitations of
the study. Concepts relevant to the study were also defmed.
8
References
Adelaja, M.A (2004). Address presented as Director General, Small and Medium Enterprises Development Agency of Nigeria. (SMEDAN) at the official FIag-off of Nationwide Survey/ Census of MSMES in all Local Governments of the Federation, Abuia. 121h arch, 2004
Aluko, S.A (1990). Industry in the Rural Setting cited in Otite, 0. and Okali, C. (1990). Readings in Nigerian Rural Society and Rural economy. Heineman Educational Books wig.)
Social Transformation for Self Reliance (1992):Proceedings of a National Conference -MAMSER; Fountain Publications, Ibadan, Nigeria.
The Guardian, December, 3, 1994. Government begins rural growth Drive.
Todaro, M.P. (1992). Economics for the Developing world. Longman, London.
Robock, S.H., (!952). Journal of Farm Economics. Vo1.34.p.360 cited in Olayide et al, Elements of rural Economics, Ibadan University Press Publishing House.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
2. Macro Management of International Trade
Samuelson (1967) believes so much in the universal efficacy of
International trade that he describes and qualifies it as a bride that is
wooed by all.
Nigeria is endowed with abundance in agricultural and natural resources.
With its population of over 100 million, it is potentially, the largest single
market in Afiica.
b
According to WTO policy bulletin (2001), trade enriches life through the
benefits of greater choices and opens minds to new ideas and cultures,
binding people together in a dynamic and complex network of mutually
beneficial commercial relationship. It W h e r adds that trade is central to
human health, prosperity and social welfare. "Many of the goods we buy,
the services we use and the foods we eat, depend on foreign trade".
Free trade generates economic growth. It encourages specialization,
which in turn, enhances productivity and efficiency. A more open world
trade system ensures that all countries can benefit from access to the six
billion customers in the global market place.
Determinants and effects of International Trade
Mai-Lafiya (1996: 120) believes that International Trade "deals with the
balance of payment of nations, the relationship between various national
currencies and the roles of international economic organizations in the
international economy". He defends that economic interdependence
among nations is on the increase.
Ojo (l982:183) also advances the reasons for international specialization
to include location-specific nature of some resources, climatic differences,
differences in skill and technical knowledge and differences in resource
endowment .
Madden (1992:23) however disagrees with the classical economic
theorists who believe that countries should produce what they can most
cheaply do and trade in the same products for other goods. He, instead,
advances what he considers the 'modern commonsensical' argument that
it would be suicidal for third world countries to continue to believe that
their future depended on commodities. He adds that;
b
they may be able to produce them cheaply,
but if the price is declining and substitutes are
threatening, if there is over production and rich
countries now do more of their trading with
each other, continuing to rely on commodities
appear fool hardy.
Madden, therefore concludes that many third world countries and
communities, of which Nigeria is one, can compete successfdly in the
world market, provided they are accorded a level playing field.
Specialization and inequality in International Trade
Gabriel (1999:4) believes that events within trade circles began to assume
new dimensions when intrigues replaced honesty in trade relations. He
posits that in place of equitable exchange for local raw materials and
precious ornaments and settlement of disputes on the basis of justice and
fair play as known to mankind, European Traders introduced deceit and
force.
Trade is the main engine of growth in any economy as it encourages
specialization. Everyone exchanges what he can produce for what he
cannot. Specialization creates a vacuum of wants just as it could
encourage excess production. This relationship has always been the
building block for international trade. Classical economics has therefore,
always encouraged international dependence and therefore trade between
nation states since World War 11. 'The growth rate of world trade in those
countries whose economies were agriculturally based, differed greatly
from those with advanced technology, leading to a discrepancy in world
trade. Exports of nations with advanced production techniques gave them
competitive advantage due to the use of machineries with high efficiency,
which led to the earning of high foreign exchange. b
Agbadu-Fishirn (2002:2) suggests that the International Division of labour
is a creation of the unusual share in World Trade such that some countries
export more than others and in industrial products, which is a necessary
impetus for economic development, while the exports of other countries
are basically primary products.
Management of Protectionisnl and International Trade in the
Nigerian context
The arguments in favour of the use of protective measures to safeguard
economies have been generally overwhelming, with developing countries
in the vanguard of the campaign. With a generally disadvantaged rural
sector, protectionism can not be taken for granted in the interest of
Nigeria's rural industrialisation drive.
Ahmad (1998:xxi) lists the main reasons for trade protection, as, the need
to protect infant industries, ensure food security, redistribute income
through the protection of specific agricultural industries and the
enhancement of incomes of small producers.
Ojo (1 982: 187-1 88) lists some of the reasons for the imposition of tariffs,
(which k the major and often used protective instrument) to include:
1.
. . 11.
... 111.
iv.
v.
Protection of infant industries. The early industrialization of the
advanced economies of United States of America and Britain took
place under such a scheme.
Tariffs check excessive importation, which leads to leakage of
foreign exchange. B
Tariffs help to correct adverse balance of payments situations.
Protectionism helps to prevent 'dumping' which essentially, is the
sale to a foreign marke.t of a good at a very low price, relative to
the country of purchase own price (and possibly at a price below
marginal cost) for the purpose of gaining a monopoly advantage
within the foreign market. Developing countries are always the
victims of this economic problem and where it occurs, special
tariffs could be used to counter such policies.
Tariffs have the advantage of diversifying production.
Oyelabi (1979:3) submits that the impressive growth of the Nigerian
manufacturing sector during the decades of the 1960's both in terms of
aggregatehectoral output and in sub sectoral diversity is attributable,
partly, to the existence of a protective umbrella. The Nigerian protective
matrix has always included tarqs, different kinds of subsidies, quotas,
licensing and outright ban of imports. Other measures which have
influenced the pace and pattern of industrialization include stabilization or
price level policy, interest rate and credit policy, export promotion efforts
and other trade policies.
Goddard (1976:3), in tracing the development of Zaria's industrial
structure, cites how the curtailment of imported goods in the earlier part of
the last century gave protection to the indigenous entrepreneur. It also
encouraged the introduction and spread of implements such as grinding
machines for corn and vegetables, tinsmithing making containers and
lamps fiom used tins. Others included silversmithing, producing jewelry
and ornaments fiom local 'silver', small industries in the fields of baking,
printing, photography, mechanical workshops and dry cleaning. ,
Simmons (1 975: 160) writing on "The small scale rural food processing
industry in northern Nigeria" projected a bleak and uncertain fkture for the
food processing industry, in view of what he regarded as potential
increasing rural demand for ''modern products" combined with
governmental encouragement of industries in the form of loans and import
assistance. He M h e r warned that:
the nation as a whole stands to lose if women
are removed fiorn productive employment in
food processing, particularly, as Islamic
customs, lack of formal education, and limited
financial resources restrict alternative
employment opportunities for rural women.
Mai-Lafiya (1 996: 120- 12 1) asserts that most developed countries have been
protecting their economies against international trade repercussions and cites
the example of the building of reservoir of crude oil by the United States to
protect itself' against any world fluctuation. He fbrther states that even where
the developed nations succeed in some of their protectionist measures, they
cannot wallow, w i t h a complete alienation fiom the rest of the world as they
would require the others for the marketing of their products.
Culbertson (1 986: 123-128) argues extensively against fiee trade believing that
any trade policy that tries to force fiee trade on the world, is a display of folly
and doomed to fail. He listed the threats to free trade to include unequal
national competition, wage competition among countries and limitations to
productive capabilities through demands and markets. He further mentions
some 'underlying myths of fiee trade' and interprets them as a set of ideas
within a narrow range of thinking, dictated by classical economists.
b
Culbertson, instead, suggests 'a realistic trade policy' predicated on a structure
that recognizes a world of effective national economies engaged in a mutually
beneficial and constructive competition which ultimately appreciates the
"particular needs, capabilities, national differences in circumstances,
ideologies, administrative capabilities and other factors, "instead of any
general system for arranging international trade.
Nigeria in International Trade
Trade, generally, has been part and parcel of the life of man for as old as
creation and can occur either at a very local level, in the street markets or
between communities, countries or continents. Madden (1992:8-9) maintains
that the exchange of goods, services and money, defmes survival and
prosperity and forms the basis of communities and nations. Trade should
therefore benefit the poor, help countries and communities to develop and
respect the environment. The biases in the system however tend to favour the
rich and powerful. Madden adds
Because of historical roots, accidental factors and
conscious decisions, the trading system prevents
far too many fiom sharing the fruits of development.
Goddard (1973:2), writing on "industry in Zaria", traces the history of
traditional crafts in the town and insists that the increase in commercial
contact with Europe at the turn of the century influenced the decay of
those crafts.
Olaloku et a1 (1982) see external trade as the main driving force that
contributed to the growth of the Nigerian economy in at least three ways,
as follows: b
a) Imports supplemented local production
b) External trade served as a source of revenue i.e through indirect taxes
on imports and exports, which complemented direct taxes.
c) The thrust of governmental development efforts, either through the
provision of infrastructure, agricultural productivity or acceleration of
the pace of industrialization, had been predicated on the foreign sector
of the economy, particularly, after the post- war period.
Trade Relations between Nigeria and other countries.
Fajana (1982) is of the view that most developing countries, in the process
of economic development, encounter the basic problem of trade gap. He
quotes Meir (1963), who puts it more succinctly:
In the course of development, the rate of growth of
national output and the demand for import tends to
exceed the export-based capacity to import.. .especially
during the early phases when the increase in
investment is sizable and structural changes are
considerable. The poor country then confronts a
conflict between accelerating its internal development
and maintaining external balance.
The World Bank Economic Report (1 974: 16- 17) reveals an interesting
characteristic of Nigeria's economic development since the end of the second
world war. There has been the rapid integration of the economy into the world
market given that the volume of its exports increased virtually threefold as against
imports which increased eightfold between 1945 and 1960. Groundnuts
contributed the largest growth in export volume, having increased fiom 180,000
tons in 1945 to over 600,000 tons in 1963 when Nigeria became the world's
major exporter of the product. Within this period, exports of Cocoa, Timber,
Cotton and Rubber also increased significantly, leading to a diversified export
economy. This situation progressively deteriorated to a situation whereby prices
of Nigeria's exports continued to decline while import prices rose continuously.
By 1971, liberalization of imports and postwar increase in consumer demands led
to a 60% increase in consumer imports.
The dominant feature that typifies Nigeria's export trade relationship has been the
predominance of primary products translating into the relative insignificance of
manufactures. Nigeria's most important single export commodity continues to be
crude petroleum, contributing about 90% of total export earnings. This trend has
earned the country the garb of a mono-cultural economy, particularly that
agriculture continues to be neglected. Indeed, a concomitance of the increase in
importance of petroleum among the list of exports, is the fall in the dependence of
agriculture.
The Federal Oflice of Statistics' 1998 review of the Nigerian economy
(1999:79), on external trade, reveals the total value of Nigeria's trade in 1998 to
be N842.2 billion which is a decline of 31.7% over the corresponding figure of
N1233.2 billion for 1997. The report revealed further that crude oil and related
products predominantly accounted for 96.7% and 96.4% of total export earnings
in 1998 and 1997 respectively, while advising that there should be a deliberate
policy of government to restore the country to the forefront of a major exporter
and producer as the case was in the 1950's and 1960's.
A close analysis of this trend places Nigeria as a net importer of most
commodities and thus a disadvantaged inember and player of the world trade
community, and which has telling effects on its rural industrialisation strive,
particularly that its rural sector perpetually remains a victim of
underdevelopment. b
A few other randomly picked examples of Nigeria's trade relationship will suffice
as follows:
Table 1 Summary of Trade Between Nigeria and Russia 1992 - 1996(N)
1 Year Export Import I Vol. Of Trade 1 Bal Of Trade I
Source: Federal Office of Statistics, Trade Tabulation.1992 - 1996. 1 NB: 1996 ligures - Jiuluary to Jwe only.
1
1992 1993 1994 1995 Jan- June. 1 996
6,186,226 36,3 00,467 47,872,980 92,487,560 76.186.862
309,555,913 423,959,504 661,586,720
1,19 1,572,997 466.733.232
3 15,742,139 460,259,97 1 709,459,700
1,284,060,557 542.920.094
- 303,369,687 - 387,659,637 - 6 13,7 13,740
- 1,099,085,437 - 390.546.370
Table 2 Summary of Trade Between Nigeria and France 1993 - 1997(W000)
Year / Import 1 Export / Vol. Of Trade 1 Bal. Of Trade
I I I I -.-- Source: Fcderal Olfrce of Statistics.
NB : 1'997 Figures - January- Jonc only.
Table 3 Summary of Trade Between Nigeria and Brazil (1993 - 1998)
Year ( Import I Export I Vol. Of Trade I Bal. Of Trade
L l I 1
Source: Federal OlTiu: of Statistics
Table 4 Summary of Trade Between Nigeria and Libya (1992 - 1997) (W000)
Source: Federal Office of Statistics
Table.5 Summary of Nigeria's Trade with China 1990 - 1996
Year 1 Import I Export ( VoL Of Trade I Bal. Of Trade
Source: Federal Capital Olfia: of Statistics.
ND: 1996 Figures (Jam~ay to June).
Table 6 Summary of Nigeria's Balance of Trade ( 1990 - 2001)
NON-OIL
MILLION)
2000
1 Quarter
2nd Quarter
31d Quarter
4th Quarter
2001
1' Quarter (220,507.3)
2nd Quarter (254,69 1.5)
3rd Quarter (263,694.3)
4" Quarter (229,905.6)
Sources: Federal Oflice ofStatisticdCentraI Bank ofNigeria
Nigeria's Balance Of Trade
Table 6 above, revealed that Nigeria's Balance of Trade in non-oil commodities
were generally better in the period before 1995 as against the period 1996 - 2001 .
The average Trade Balance in the period 1990 - 1995 is (174,035.75) as against
(619,429.3), representing the post - Trade Liberalisation period. The rate of
increase between the 2 periods show 255.9%. It is also instructive to note that a
major jump in the negative balance of Trade was in 1995, which for the 1" time
revealed an increase rate of 400.65% over the preceding year.
Generally speaking, Nigeria's trade relationship with other countries appear to be
in favour of the other countries.
A situation where Nigeria's trade relationship with other countries, particularly,
the developed countries is characterized by negative balance of trade accounts,
only suggests that the era of globalisation and therefore Trade liberalization,
represented by the period 1995 upwards (when Nigeria became a member'of the
WTO) may only mean negative and adverse economic consequences for it.
World Trade Organisation (WTO).
The Historical Background
The Post-Second World War period evolved new international law instruments
for the conduct of international trade, generally known as the Breton Woods
system. It is thus witlin this context that the World Trade Organisation was
conceived and born.
The World Trade Organisation was signed on April, 15'' 1994. Nigeria, as a
signatory to this agreement is categorized as developing country under Article
27, paragraph 2 (D) of the agreement.
The Institutions that emerged fiom the Breton Woods system include the
International Bank for Reconstruction and Development (IBRD), and better
known as World Bank), the Intermtional Monetary Fund (IMF), the General
Agreement on Trade and Tariff (GATT) and the now d e h c t International Trade
Organisation (ITO) which was intended to regulate, stimulate and expand
International Trade (Presner, 199 1 : 1 85).
Structure and Functions of the World Tmde Organisation (WTO).
The Secretariat of the World Trade Organisation, is headed by a Director-General,
who is responsible for the appointment and assignment of duties to his staff, and
who does not receive any instructions from any government. Decision making in
the organisation is done by consensus but where there is none, decisions are made
through voting and members possess equal voting rights. However, the European
community has votes that are equivalent to the number of countries within the
community. b
The Ministerial Conference is the highest decision making level of the
organisation and consists of representatives of all members which meets at least
Organisation in handling issues related to the multilateral Trade Agreements.
The ministerial conference is followed by the General Council, which is
composed of representatives of member countries and is responsible for dispute
settlement and Trade Policy review, amongst other duties.
There are a host of other committees that handle particular duties such as
The Committee on Trade and Development, Committee on Trade and
environment, Committee on balance of payments restrictions and the Committee
on Budget, Finance and Administration. They all perform assignments thrust on
them by their respective Agreements and also, the General Council. (see WTO
Structure in Appendix 'C').
Article 111 of the agreement that established the World Trade Organisation vests in
once in every two years. This body carries out the functions of World Trade
I
the organisation the responsibility of facilitating the implementation,
administration and operation and to fwther the objectives of the agreement
including the one on multilateral Trade Agreements. By joining the WTO,
tnember governments undertake to make laws that comply with WTO agreements
and to change laws that are contrary to the agreements. Not all member
governments are able to effectively participate in the WTO, particularly, the least
developed countries which need assistance to increase their participation capacity.
In Surmnary, the WTO remains the only international organisation, which deals
with global rules of trade within nations. Its main function is to ensure that trade
flows smoothly, predictably and freely. It does this by administering trade
agreements, acting as a forum for trade negotiation, settling trade disputes,
reviewing national trade policies, assisting developing countries in trade,policy
issues through technical assistance and training programmes and cooperating
with other international organizations. 'The WTO, which came into being in 1995,
as one of the youngest of the international organizations, is the successor to
GATT, which was established in the wake of the second world war. GATT and
WTO have helped in creating strong trading nations, given that the past five
decades have seen merchandise exports grow by 6% annually on average. Total
trade in 1997 was also 14 times the level of 1950. (WTO policy Bulletin 2001).
Macro Management of the Provisions of The World Trade
Organisation (WTO) Agreement.
Provisions of the World Trade Organisation Agreement comprehensively
addresses most aspects of international Trade such as the constituent documents
establishing the World Trade Organisation, the GATT 1994, pluraterial
agreements on government procurements, the Reiry and Beff agreement
ministerial decisions, declarations and understandings on financial matters as part
of the Marrakesh Agreement on WI'O of April, 15, 1994. Other provisions
include the Agreement on Agriculture, textiles and Clothing, trade-related
investment measures, import licences and procedures, General Agreement on
Trade in services and Trade related aspects of intellectual property rights.
General Agreement on Trade and Tariffs (GATT)
The World Trade Organisation agreement now encompasses GATT, which
became effective on January 1, 1994, with Nigeria becoming a member in 1960
after gaining political independence, having acceded to the general agreement
under article xxvi 5(c) under protocol of provisional application.
GATT 1994 remains an integral part of the WTO, just as the WTO is besonling
the sole international mechanism for the regulation of World Trade. With the fall
of the soviet Union and China's preoccupation with Trade matters with the west,
the WTO could be referred to as sumlarking and representing the economic and
political philosophy of a new world order programmed by the west for itself. One
may therefore safely conclude that while the WTO agreement may be said to have
represented a reliable international instrument for the regulation of trade, it may
still be difficult to understand outside the hctor of western economic interests.
The basic principles of the GATT focused on gradual trade liberalization,
reciprocity, non-discrimination, transparency of regulations, fair trade and the use
of quantitative import restrictions only under difficult economic situations.
Under the GATT rounds of multilateral Tariff negotiations, there have been eight
major tariff-cutting rounds, which are logical extensions of the United States
"reciprocal trade agreements since each participating country "trades" tariff
concessions (reductions) for concessions fkom its partners and the Most Favoured
Nation clause applies. The initial GATT two rounds held during 1949 - 1951
when the International Trade Organisation was giving way and substantially
lowered tariffs. This level was quite sensitive to tariff cuts at the time, in fact the
3 0
United States operated fiom a position of strength while the already weakened
European Industries were protected by quotas and other direct controls. The
many nations that either belonged to GATT or accepted its terms aside fiom the
industrial nations, included many Least Developed Countries (LDC's) while,
many of the formerly communist states either belonged or intended to join.
However, the Least Developed Countxies generally continued to adopt
protectionist policies.
The next three Rounds couldn't achieve much success with protectionist pressures
beginning to mount. The sixth Round (1 964 - 1967) was the Kennedy Round
owing to an initiative by the Kennedy Adnlinistration in the United States which
sought to block the emergence of the European Common market fiom b
fragmenting the industrial world into exclusi.ve trade blocs.
The seventh General Agreement on Trad.e and Tariff session known as the Tokyo
Round was concluded in 1979. This Round, slashed a further one third off tariffs
on manufactures, on the average.
The Uruguay Round and the eighth in the series of negotiations has been about
the most ambitious. It is so named because the preliininary meeting was held in
Punta Del Este, Uruguay in 1986. The main objectives of the Round included:
a) A one third overall cut in tariffs
b) Phasing out of the nlulti Fiber Arrangement (MFA)
c) A comprehensive agreement on intellectual property
protection
d) Guidelines restricting trade - related investment measures
(TRIMS)
An agreement applying General Agreement on Trade and
Tariff rules to services.
Reduction of agricultural support mechanisms
Improvement on the General Agreement on Trade and
Tariff dispute settlement mechanisms
Reduction/removal ofNon Trade Barriers (NTBs)
Updated General Agreement on Trade and Tariff rules on
safeguards and voluntary. b
Strengthening of the General Agreement on Trade and
Tariff lodges.
The various negotiations of GATT ended with the final act of the Uruguay
round and the Marrakesh Agreement establishing the World Trade
Ogranisation effective January 1, 1995, with its Headquarters at Geneva,
Switzerland.
GATT negotiations have affected all aspects of World Trade wherein
many developing countries including Nigeria took part, thus paving way
for trade and related issues to be negotiated within the Least Developed
Countries.Gabrie1 (1 999:2 1) believes that the real problem now, at least
for the developing Countries such as Nigeria, is its impact on the local
industry.
GATT and Basic Pruvisiuns regarding Multilateral Agreements on
'Trade in Goods
The multilateral agreement on Trade in goods are a set of rules binding all
members of the World Trade Organisation. Some major provisions of the
agreements under the Trade in goods according to (Ogunlana 1998:21-33),
include the following:
a. General Agreement on Tariffs and Trade 1994
This agreement includes all the provisions of the GATT dated 30'
October, 1947, annexed to the final act adopted at the conclusion
b of the second session of the united Nations Conference on trade
and employment. It is amended by the terms of legal instruments
which came into force before the WTO agreement, provision of the
other legal instruments of the General agreement on tariffs and
trade 1947. It came into force before the WTO agreement, the
understandings under the GATT 1994, including those of the
articles relating to trade, waivers of obligations and interpretations
of such other articles and the Marrakesh protocols of GATT 1994.
The objective of all the above is to ensure that tariff and non tariff
barriers to trade are eliminated or reduced to a band compatible
with global trade and the general principles of non discriminatory
trade.
b. Agreement on Agricultui-e.
This agreement is a product of the Punta del Este declaration, and
has the objective of establishing a fair and market- oriented
agricultural trading system with a long term objective of providing
for substantial progressive reductions in agricultural support and
protection sustained over an agreed period of time.
c. Agreement On the application of Sanitary and phytosanitary
measures.
This provision ensures that any sanitary or phytosanitary measure b
is applied and to the extent necessary to protect human, animal or
plant lives or health, based on scientific principles.
d. Agreement on Textiles and Clothing.
This agreement recognizes the Multi Fiber Agreement (MFA)
earlier on negotiated in 1994 and renewed several times. The long
and short term agreements on cotton textiles which later
succeeded the MFA, was based on the principle that industrial
countries need special protection against market disruption by
lower cost suppliers. Though this is a breach of GATT principles
of non discrimination, soniehow, the agreement has an agreed time
limit and therefore expected to expire without further extension
after 10 years of the coming into effect of the WTO agreement. By
this time, the textiles and clothing sector shall have been fully
integrated into GATT 1994.
e. Agreement On Technical Barriers to trade.
Article 12 of the agreement provides for special and differential
treatment for developing countries, and urges the developed
counterparts to consider the special development financial trade
needs of developing countries in ensuring that such technical
regulations, standard and confornlity assessment procedures do not b
create unnecessary obstacles to the exports of developing
countries. The agreement also provides for the committee on
Technical barriers to trade to consider and make for consultation
among members on relevant matters to the agreement.
f. Agreement on Trade Related Investment Measures (TRIMS).
The agreement calls for the declaration and notification of the
WTO on all trade related investment measures and putting a
machinery in motion for the elimination of all such measures
within two years for developed countries and for five and seven
years, in the cases of developing countries and the Leas1
Developed countries respectively.
g. Agreement on Implerneritation of Article V1 of the General
Agreement on Trade and Tariff 1994 (The Anti Dumping
Measures.)
This agreement defines a product as being dumped "when it is
introduced into the commerce of another country at less than it's
normal value i.e. if? the export price of a product exported fiom one
country to another country, is less than the comparable price in the
ordinary course of trade, fo'r the like product when destined for
consumption in the exporting country. Moreover, where there are 4
no sales of such products in the exporting country's domestic
market to enable assessment of the margin of dumping, the price of
such similar product exported to a third country shall be a
reference price, which should have taken into consideration,
reasonable amount for adnlinistrative selling and general costs and
for profit."
The agreement also provides for the determination of injury
suffered as domestic injury from dumping activities, calling for
restraint in the application of anti-dumping duties against
developing countries.
h. Agreement On Implementation of Articles VII Of The General
Agreement on Trade and Tariff 1994:
This has to do with issues of goods for customs purposes so that
the use of arbitrary or fictitious customs values are avoided.
I. Agreement On Pre-Shipment Inspection.
This ensures that much as is necessary to carry out pre- shipment
inspection, it should be without unnecessary delay and unequal
treatment of developing countries. The inspection is normally b
undertaken particularly by a number of developing countries for
the purposes of verification of quality, quantity and price of
imported goods.
.is Agreement on rules of origin.
This aims at ensuring that rules do not create unnecessary
disruption to international trade and here, rules of origin are
defined to mean those laws, regulations and administrative
determinations of general application applied by any member to
determine the country of origin of goods.
k Agreement on Import Licensing Procedures.
The agreement ensures that import-licensing procedures are made
transparent and predictable. The aim of the agreement is to avoid
arbitrary usage of import licensing in such a manner that
stampedes the growth of global trade.
1. Agreement on subsidies and Countervailing measures.
This agreement defines subsidy as
"the financial contribution of a government through a direct
transfer and potential transfer of funds, of liabilities, foregoing or
not, collecting government revenue that is otherwise due (e.g fiscal
incentives), provision of goods and services other than general b
i&astructure or purchase of goods and or offering income or price
support to an enterprise industry or group of enterprises or
industries.
Therefore, except as provided in the agreement on agriculture,
subsidies related to export or those contingent upon the use of
domestic over imported goods are generally prohibited under
GATT rules. It also provides for remedies where subsidies are of
adverse effects to other member countries.
As for the provisions fbr the application of countervailing
measures,
"it was agreed that deternination of injury arising fiom subsidies
should be based on positive evidence of subsidy and the effect on
domestic producers of such products. Moreover, the determination
of a threat of material injury should be based on fact and not
merely allegation, conjecture or remote possibility. The agreement
allows for a provisional application of countervailing duties during
the course of investigation if there is a substantial evidence that
serious injuries will be incurred should subsidies be retained. Such
provisional measures, however, have to be covered by cash
guarantee of equivalent sum of the estimated injury for a period
not exceeding four months. However, after necessary consultations
had taken place and a rnernlxr had satisfied itself of the existence #
and amount of subsidy Sound injurious to its economy, it may
impose countervailing duties on such products in accordance with
the provision of this article and to the extent necessary to
counteract subsidization which is causing injury".
The agreement however nude special and differential treatment of
developing countries as it provides exemption of five years for
developing member countries and eight years for the least
developed countries from the date of entry into force of the WTO
during which the above rules will not affect them The period may
however receive extension of two years as it is expected that
countries, which have attained competitiveness, shall phase out
subsidies within two years and they are those countries described
with a share of total world trade in the product to be at least 3.25%
for two consecutive years. As ibr transitional economies, they are
expected to phase out application of subsidies within seven years.
Developing countries are defihed as
i) Least Developed Countries (as designated by the
United Nations) and members of the WTO.
ii) WTO inember countries whose Gross National
Product (GNP) per capita is up to $1000 P.a. In b
this category, 20 countries were listed and include
Ghana and Nigeria.
m) Agreement on Safeguards.
The agreement
''provides rules under which safeguard measures may be applied. A
member is allowed to adopt safeguard measures against certain
products if it is determined or corfimed that such products are
being imported into the territory in such measured quantities
absolute or relative to domestic production or under such conditions
as to cause serious ir~jut-y to domestic industry. However, the
application of such measures requires that thorough investigation
be carried out to establish the need and extent of injury and its
application should be the extent that is necessary to remedy or
prevent serious injury and facilitate adjustment. The application of
the measures is expected to last for a maximum of eight years."
Safeguard measures are not applicable against products originating
fiom a developing country so long as its share of import and the
product concerned of the importing member is not more than 3%
import and provided also that developing countries with less than
3% import shares collectively account for not more than 9% of the
total import of the product. The developing countries are however #
allowed to apply safeguard rneasures for a maximum period of ten
years. (i.e. two years above the normal).
Appraisal and assessment of the Implications of GATT as they
bear on The Nigerian Economy
Jackson and Sykes (19955) state the purpose of
these Agreements: "Ensure that International
Trade is conducted in such a way that it will
ensure raising the standard of living, full
employment and a large and steadily growing
volume of real income and effective demands, and
expanding the production and trade in goods in
services, while allowing for the optional use of the
world's resources in accordance with the objective
of sustainable development, seeking both to
protect and precious the environment and enhance
the means for doing so in a manner consistent with
their respective needs and concerns at different
levels of economic developmeiif:".
However, Gabriel (1 999: 14- 15) insists that:
Those objectives have not been realised, are not being realised and are not realizable under the WTO.. .
Madden (1992:36) maintains that the great benefit of GATT remains the
fact that it provides some set of rules for world trade, which in some way
will stop the stronger nations ii-om abusing the weaker ones. He however
contends that even though world trade has increased many folds, the gap
between the richest and poorest of the world has increased. The already
better-off tend to do better out of GATT agreements. 4
Ogunlana (1988) traces Nigeria's descent from being an agricultural
economy, with Agricultural sector contributing over 50 percent of the
Gross Domestic product (GDP) and 80 percent of total foreign Exchange
earnings during the 1960's and early 1970's,) to one that is now heavily
dependent on imports. He sumnarises the problems that will attend to
Nigerians in view of the agreement of the Uruguay Round of Multilateral
trade negotiations, to include the following:
1. Loss of Trade Preferences - such as available in the Lome
convention where, as per the trade agreement under the ACP -
EEC cooperation, products of members are to enhance the
competitiveness of such products in the EC whcn considered along
with products from non-ACP Countries. Such an arrangement is
termed to be discriminatory and unacceptable under the General
Agreement on Trade and Tariff 1994.
, . 11.
... 111.
iv.
v.
vi
Reduced Export earnings.
Higher Cost of Food Imports:
Loss of revenue to Government.
Negative impact on local industries.
Absent capacity to take advantage of the benefits of the GATT as a
result of the combined effects of capacity under utilization by
industries, broken down state of social services, lack of a well
structured and coordinated export policy framework aqd the
competitiveness of exportable manufactured products even within
the domestic market.
Ogunlana however, believes that in the long term, and with some
preemptive measures aimed at containing the negative impacts of the
GATT rules, the economy can improve.
Developments in the World 'Trade Organisation(WT0): Implications
for Nigeria as a developing nation.
The Developed Countries and Developing Countries in WTO.
Udeala (1999:28) while tracing the birth of the World Trade Organisation,
believes that during negotiation, Mican Countries were not adequately
represented and that the WTO treaty has not in the real sense, promoted
fiee trade but has only created much gap between the developed and
developing countries.
He summarises the arguments against the World Trade Organisation by
the developing countries as follows:
1.
11.
... lu.
i.v
v.
vi.
The legal texts of the World Trade Organisation treaty was
constructed too technically, thereby making their comprehension
difficult.
Lack of human resources in most developing countries in relation
to World Trade Organisation and institutional capacity building.
Limited financial resources by developing countries to implement
the agreements. b
While the Uruguay Round was being negotiated, Nigeria and other
African Countries were implementing the International Monetary
Fund/World Bank sponsored Structural Adjustment programme
(SAP). This led to increased imports into developing countries
without corresponding exports to their external markets including
employments.
During the negotiations, which gave birth to the World Trade
Organisation, Nigeria wasn't adequately represented and therefore,
the agreement least reflected the needs and wishes of its people.
Barely had the dust of the 1986 SAP implementation settled, than
the General Agreement on Trade and Tariff contracting parties
established the World Tmde Organisation.
The implementation of the provision of World Trade Organisation
rules such as anti-dumping and domestic legislation have been
unable to solve balance of payments problems because the
procedure for conducting investigations by the World Trade
Organisation are too lengthy, cumbersome and expensive. For
example, it takes not less than three months to conduct an
investigation into any report of dumping, by which time the
dumped product must have been sold or vanished.
Mohammed (2000) as Prinle Minister of Malaysia had campaigned
for Malaysia to implement: the terms of globalisation on its
(Malaysian) own terms in view of its peculiarities. He maintains
that;
It may not always be possible of course but it is
critical to ensure that everybody benefits, both , the foreign investors and Malaysians. A step-
by-step approach is also important to avoid the
excesses and problems associated with all new
ideas, principles or processes
including glo balisation. The industrial
countries took more than 100 years to reach the
present stage of their development before they
proposed to adopt globalisation and
liberalisation. It is unfair to expect developing
countries to liberalist. and do away with the
protection of their borders at the same instant the
developed countries do.
Bello (1 990) believes that increasing poverty and receding sovereignty are
signposts of a globally disturbing phenomenon. He thus interprets the
relationship of a large portion of the developing countries to the
international economy to be one of transfonnation fiom dependence,
unequal integration to that of exclusion or marginalisation. He cites the
case of the developing countries as two largest countries of India and
China who have posted respectable GNP growth rates between 1980 and
1985 and who owe their satisfktory performance in the midst of declined
results of their neighbours to limited dependence on international trade
and minimal borrowing fiom international banks. Bello concludes
(1990:s)
. . . four decades after.. .the third world scene is bleak. There
is more poverty, more inequality, and less hope.. . A few
East Asian NICs (Newly Ii~dustrialising Countries) provide
a counter point to the dismal scene but.. . they face an
unenviable future of trade warfare with their maxi markets
in the west. b
According to WTO policy bulletin (2001) by February, 2001, developing
countries as a group initiated 66 out of the 224 disputes, with India, Brazil,
Mexico and Thailand being the most active. The United States and the
European Union have used the system the most, accounting for 69 and 54
times respectively. They are also the most frequently challenged by other
governments for not complying with WTO rules. The Bulletin admits that
smaller and poorer countries have capacity constraints.
They often do not have the resources to take their trade
disputes to the WTO. That is why the WTO has actively
endorsed the creation of the Geneva based advisory center
on WTO law, an independent centre which provides
developing countries with legal counsel at reduced costs.
Poor countries and uneven trading pattern
WTO policy bulletin (2001) asserts that whenever countries close
themselves off to global markets, poverty becomes intractable,
believing that;
Inward looking policies in Afiica and Latin America
depressed growth and squandered opportunities to reduce
poverty in the 1970s and 1980s. The centrally planned
economies of Eastern Europe and North Asia also performed
poorly in part because they were partly closed
b
Khor (2003:13) believes that the countries of the south have been unable to take
advantage of globalisation, as a result of several weaknesses. He hrther quotes
Nayyar (1997) who studied the uneven development pattern in globalisation and
against the poorer developing countries. He maintains that there were only I1
developing countries, which formed an integral part of globalisation in the 2oth
century. They accounted for 66% of total exports fiom developing countries in
1992 (up fiom 30% in the period 1970-1980); 66% of annual FDI inflows to
developing countries in 198 1- 1991 and most of portfolio investment flows to the
developing world. Some of the 11 countries have since been affected in serious
proportions by financial crises, debt and econoniic problems.
Khor believes that the weak position of the south is attributable to the following
factors:
a) weak economies due to lack of domestic economic capacity.
b) Weak social infrastructure.
c) Debt crises and burden of debt servicing.
d) Widened unequal gap due to development of technology.
e) Dictatorial regimes that undermined economic growth.
f) Lack of bargaining and negotiating strength.
g) The diminished influence of the UN, as against the Bretton woods
institutions and the WTO.
h4adden (1992:19-21) suggests 4 reasons for the crisis of economic relationship between
the developed and the developing countries which results in poor returns for the third
world as follows:
1.
. . u.
. . . lll.
iv.
Chronic over supply, in most of the markets. Many third world economies who
are unable to produce manufactured goods and who are desperate for foreign
exchange compete with each other in the same products such as Cocoa for
Chocolate, which is in Africa, Asia and Latin America.
b
Collapse of nearly all international commodity agreements (ICAs). The era of
'commodity power' brought about the establishment of the inflexibility of the
ICAs, the debt crisis and competition between the countries involved, led to the
death and virtual breakdown of all the ICAs.
The debt crises put pressure on many Third World countries to borrow heavily in
1970's fiom ever willing commercial banks in Europe, United States and Japan -
proceeds of oil deposits by oil producing OPEC. Unfortunately, prices fell at the
same time as interest rates on the loans rose, leaving third World Countries with
little income fiom exports to pay off debts.
The above situation was exacerbated by the IMF and the World Bank to refuse
M h e r loans to debtor Countries unless they agreed to increase their exports.
This structural adjustment policy thus forced third world countries to produce
more of the same commodities for shrinking, recession - hit markets.
The future for commodity producers therefore, remains a bleak one. Even where
they work together to ensure higher prices, Madden believes the changes in the
first world has induced a number of negative trends in the industrialized
countries, which the poorer countries may prove powerless to influence.
The Poor Vs. the Rich Countries: A Comparative Analysis
The Vanguard of December, 6, 1999. P.9 reports of the sidelining of
poorer countries by World Trade Organisation procedures, claiming that
during the Seattle talks in December, 1999, representatives from the
developing world had fiowned at the "backroom deal making" which had
made big powers such as the United States and Europe to be in control of
all agreements being drafted at the World Trade Organisation ministerial
conference. Clement Rohee, the Trade Minister of the Caribbean State of
Guyana denounced the so called "green room" system where Chairmen of
the conference's working groups invite selected countries to an exclusive
negotiating session even after open discussions had ended. He insisted
that deals had become a feature of talks and further opines
We are now totally marginalized fiom a process
hijacked by the wealthier nations". . . heavyweight
trading powers are working tirelessly "drafting and
redrafting proposals in such green room sessions,
but delegates fiom poorer countries expressed
frustration that they had no access to these decisive
proceedings.
Shridath Ramphal, Chief negotiator for the Caribbean complained and
openly expressed, that dissent was being ignored, insisting that "outsiders"
fiom the developing world wait in ignorance only to be asked later to
endorse a document that emerges fiom the green room in the thirteenth
hour.
World Bank President James Wolfensoh, at the Ministerial meeting of
the Seattle talks asked world leaders to allow poor countries become full
partners in the gains of world trade. He urged the wealthy nations to seek
to eliminate trade barriers for the benefit of the three billion people living
on less than $2 per day.
United States and Violation of Trade Agreements
The criticism that the World Trade Organisation has become an agent for
imperialism and a forum for industralized countries to impose unequal
terms of trade on the third world is reinforced by reports of inconsistencies
on the part of the United States in the application of its safeguafd laws.
Occasioned by the United States' imposition of tariffs by invoking the
WTO safeguard agreement, WTO member States had impressed on the
United States to drop the special tariffs it imposed in 2000 on steel piping
fiom South Korea. This prompted the European union and Australia to
accuse Washington of open violation of WTO accords. The WTO Dispute
Settlement Body (DSB) had adopted reports fiom a trade panel and
appeals judge to the effect that steel piping tariffs were a breach of trade
rules and should therefore, be promptly removed. However, Australian
Ambassador, David Spence had said that despite the clear and unequivocal
rulings, there was yet no evidence that the United States had taken
measures to comply in correcting inconsistencies in the application of the
safeguard laws since America through the action of its president, George
W. Bush was magnifling the situation fiu-ther by the introduction of new
tariffs to be in force for thee years with effect fiom March, 20, 2002.
Meanwhile, "Bush said they were needed to protect the ailing United
States steel industry fiom a surge of imports".
World Trade Organisation judges ruled in August, 2000 to the effect that
the United States must change a law which provided for civil and criminal
penalties, including fines and imprisonment for foreign companies found
by a United States Trade Court to be engaged in sales in the United States
below their market value in order to undermine United States competitors.
Nigeria's Membership of the WTO and Implications for Businesses
There are reported nloves by the Nigerian House of Representatives to
review Nigeria's membership of the World Trade Organisation. The
speaker of the House, Na'aba, Ghali Umar had frowned at lopsidedness in
benefit of the World Trade Organisation to Nigeria and also the bleak
manufacturing future it portended for Nigeria, having been in serious
recession, owing to fierce conlpetition from the developed countrjes. He
was W h e r reported to have lamented at the level of ignorance of some of
Nigeria's technocrats who negotiated for the country's membership of the
organisation. He says
Our industries have closed down because we have
turned our country into a dumpsite. How do you
expect them to effectively compete in an environment
like this when their counterparts are better
positioned?'(Business Times, March 1 1 th - 17" ,
2002, P.4).
The Guardian, April 2, 2002, P.22, in its editorial comment, argues for Nigeria's
continued membership of the World Trade Organisation, citing the opportunities
provided by the treaty and to renegotiate the country's areas of interest not
favoured by the agreement, particularly weak areas such as manufacturing and
areas of strength such as primary goods and trade in services. The paper believes
that shutting our doors against trade with other countries will send wrong signals
about Nigeria to the rest of the world, given its membership of other important
international organizations which are doininated by major trading partners. The
editorial review had traced the history of Nigeria's joining the World body on a
conclusive note that the military regime of 1993 - 1998 at the time, faced virtual
ostracisation fiom international bodies such as the commonwealth and the
European Union. The regime was therefore under pressure to sign the World
Trade Organisation treaty, a fact often cited by advocates of Nigeria's suspension
of membership. Nevertheless, the paper still believes that the issue of Nigeria's
membership of the trade body is as complex as it is complicated particularly that
the World Trade Organisation supervises trade among nations and also that
Nigeria's economy is largely driven by International Trade.
In real terms, the developing economies, which include Nigeria, are B
disadvantaged in spite of the provisions in the agreement which seeks to mitigate
the adverse eEects on them. Even though Nigeria has substantially liberalized its
current account and some trade related capital account transactions since the
introduction of the structural Adjustment programme (SAP) in 1986, the country
still suffers fiom the problem of low level of export of manufacture, badly needed
to gain competitive edge in the globalisation process.
Ebi (2000) points out that, Nigeria, as a contractual party to the WTO agreement
holds the potential of benefiting fiom trade opportunities in areas such as wood,
wood product, chemicals and mineral products just as its trade in services which
has persistently remained in deficit due to dismal performance in activities that
could generate foreign exchange such as shipping and air transportation and
unfavourable competition. He traces the major internal problem hindering
Nigeria's competitive participation in this global trading arrangement, to lack of
adequate knowledge on the competitive production of manufactured goods. He
concludes:
in spite of all its benefits, the institutional framework
of the multilateral system, indicates that the system
needs constant fine-tuning, for it to satisfy the needs
of all stakeholders.
Oguoka (1999) believes that Nigeria's membership of the global trading body has
only meant the wholesale drainage of its resources to the north as against the
interest of the exploited peoples of the South.
Abubakar (2002) writing under the heading of "Is World Trade Organisation
agreement turning Nigeria into a dumping ground?'agrees that the then military
government of Gen. Sani Abacha hastily signed the World Trade Organisation
agreement even while countries such as India, Malaysia, Singapore, Brazil and
other "Asian Tigers" were fighting the European led position on intellectual
property rights under the world Trade Organisation which was to the advantage of
the developed countries.
However, Bello (2002) as Nigeria's Minister of Commerce, does not see any
problem with the World Trade Organisation as such, but with the Nigerian who
relishes in the importation of low quality products including the ineffectiveness of
the law enforcement agencies. He cites Mauritius as a country and member of the
World Trade Organisation
which moved away fkom a per capita income of $180 to
$3,800. ... our problem with World Trade Organisation is
our ability to negotiate, our ability to interpret the complex
agreement to our benefit and we are doing that.
Kamaludeen (2001) observes that globalisation has not benefited Nigeria since its
level of production is still largely crude and unable to compete with international
standards.
Ahmad (1998:xxi) asserts that despite the enormous benefits of Free trade, all
governments, without exception, intervene to varying degrees in the workings of
natural market forces. However, many governments realize the folly of a long
term protection for inefficient industries and hence, the global move towards trade
liberalisation. The Trade liberalization initiatives culminated in the signing of the
Uruguay Round (UR) agreement and the subsequent establishment of the WTO
on January 1,1995.
Collapse of Trade Talks at WTO Ministerial Meeting in
Cancum, Mexico - September, lo th - 1 4th 2003.
The WTO trade talks held between September, 1 oth - 1 4 ~ ~ 2003 * collapsed due to sharp and serious differences between the
developed countries on the one hand, comprising of Europe, Japan
and the United States and the developing countries on the other
hand, whose cause was championed by Brazil, China and India. The
reason was adduced to the failure of Europe, Japan and United
States to agree to the removal of subsidy on agriculture in their
respective countries. This posed a major threat to world economy,
which has been teetering on the brink of recession.
The deadlock dwelled rnajorly on the four "Singapore issues" which
were first proposed in 1998 by the European Union and Japan, to
include:
a. How respective countries treat foreign investors
b. Standards for anti monopoly and cartel laws.
c. Greater transparency in government purchasing, which has
potentials of makiig foreign companies win public sector
business and
d. Trade facilitation, which would make things such as customs
procedures simpler.
The issues were passed to the Cancurn summit fiom the last WTO
meeting in Qatar, given their contentious nature.
The Guardian of September, 16, 2003, P.l describes the outcome of
the talks as it affects Nigeria thus
. . . if the rich nations rehsed to withdraw
fiom their position, it may spell doom, for
most African economies, especially that of
Nigeria where the agricultural sector is a
major contributor to the Nation's Gross
Donlestic product (GDP).
African leaders had agreed before the talks that if the principle of
comparative advantage is to underscore the success of globalisation,
then the developed countries must be willing to remove subsidies on
agriculture, which gives undue advantage to their farmers especially
that Afiican countries are mostly producers of agricultural
commodities.
Planning and organizing Trade Liberalisation and Globalisation:
The Nigerian Case.
Definition
SchuRan (2002:lO) defines globalisation as capitalism's new flagship, which
denotes the ability of international capital and Transnational corporations to
switch investments globally. In doing so, he believes that globalisation creates
wealth for few, while depressing local wages and conditions of employment for
the majority of people.
Lawanson (2000) sees globalisation as "a situation in which the entire global
system and its component parts become hsed through a process of synergism".
Mazrui (2001) describes globalisation as consisting of processes that lead towards
greater global inter-dependence and the increasing rapidity of exchange across
large distances.
Ajayi (2002a) on his own, defines globalisation as the increasing interaction and
integration of the economic activities of human societies around the world.'
Nigeria's President, Olusegun Obasanjo (2002) views globalisation thus:
The world has become one global village, which
means that not only should we avail ourselves of the
best that other nations have produced, but that we,
on our part, should be able to give our best to the
world. Globalisation means interdependence. It
also means self reliance through self denial".
(Speech made on the inevitability of globalisation and its challenges at the first
international Bitumen Summit held in Akure, Ondo State, in November, 2000).
At another forum, (in Jamaica, after receiving the symbolic key to the city of
Kingston as it honorary citizen) he had also observed
. . . Black people do not have to be told about
globalisation.. . because we have been globalised
into colonisation . . . slave trade . . . neo-colonialism
...p overty ... the lopsided nature of the world
economic situation. (The Punch, August, 15, 2002
P. 15).
Pasamba (1999) writing on "Globalisation with a human face," argues that
globalisation, is not entirely a new concept except for today's era in which
globalisation is being driven by market expansion through the opening of
new borders to trade, capital and information.
Implications of Globalisation
Obadan (2002) argues that Nigeria's mono cultural economy b f over
dependence on oil and low level of manufactured exports are bottlenecks
in its efforts to attempt to globalise. He however, says that Nigeria could
not close its economy to globalisation since it will be unable to produce
everything it needed. To him, Nigeria was already in a global economy
where flows of trade, capital and knowledge across national boundaries
were not only large but increasing yearly.
Ayua (2002) warns that if globalisation is not controlled, it could lead to a
take over of the local economy by foreign firms and that it could interfere
with local culture and cherished traditions. To him, fiee trade has
exacerbated some of the problems of Africa and Asia, stressing that the
success of globalisation has been unduly exaggerated. He believes that
even the newly industralised countries of Asia such as Thailand,
Singapore, Indonesia, Hong Kong and others had become vulnerable
under a global international economy. He nevertheless observes that
globalisation wasn't a total failure since the processes operate unevenly
across different countries and within countries as well as across different
social groups. He adds that the concept has brought democracy in some
countries.
Arowolo (2002a) believes that the reality of a borderless global economy,
integrated by the free flow of information, capital and goods (which
globalisation represents) has only worsened the problems of poverty,
misery and declining quality of life in Africa. He mentions the
implications of the new economic order to be the fact that though Africa
exports 30% more than it did in 1980, it receives 40% less income and
also that while the WTO and G.8 nations champion the removal of the
idant industries protection clauses which has crippled industrialisation
and generated unemployment, heavy agricultural subsidies in rich
countries only ensure that African farmers are paid "peanuts" for their
products. He nonetheless maintains that there appears to be no alkrnative
to globalisation as it has worked for countries that have toiled hard to align
their economies with the world economic system. He fkther observes that
Self interest remains the first law of the new economic
order. Thus China refbsed to open up its economy to
foreign competition until it was sure its local industries
could compete at the global level. The U.S recently had to
impose high tariffs on steel imports in order to protect its
own local producers. Most Mican leaders keep blaming
glo balisat ion because they are intellectually incapable of
adapting its basic concept to the local environment.
Schufian (2002: 10- 1 1) sun1marises some negative consequences of
globalisation on developing countries as follows.
1. series of years of consecutive negative financial flows (equivalent
to at least seven years of an economic hemorrhage).
. . 11.
... lll.
iv.
Between 1960 - 1999, there was a 60% fall in the prices of
commodities other tl~an oil, thus reducing two - thirds of
developing countries purclx,tsing power (UNDP 1997).
As a result, there is an increasing incidence of the yearly number
of hungry people around the world while poverty is becoming
increasingly feminised (70% of all the poor are women).
The annual losses to developing countries is estimated at $500 billion - an amount much higher than what they receive in foreign aid.
Global Output and Implications for Nigeria, as a developing nation
The Central Bank of Nigeria (CBN) Annual Report and Statement of
Accounts 1995 - 2003 summarises world output as follows:
1995 World Output
World output increased at the rate of 3.5%. The growth trend witnessed in
the previous year continued, just as total world trade increased in 1995.
However, the growth in industrial countries was uneven while that of the
developing countries remained stable. The stability picture is owed to the
positive recoveries in economies in transition, reforms, policy
improvement in developing countries and improvement in global trade and
investment flows. The year also revealed a general reduction in many
developing countries and those in transition. (CBN Annual Report and
Statement of Accounts 1995).
1996 World Output
World output grew at the rate of 4.00%. World economy performance
was generally satisfactory owing to general reduction in inflationary
pressures, relative exchange rate stability in most industrial countries and
general commitment to reforms hl developing countries. Lower output
performance in industrial countries was attributed to fiscal consolidations
while that of the developing economies was as a result of impressive
output growth rate which also enhanced economic finanical stability and
improvement of structural reforms. (CBN Annual Report and Statement
of Accounts 1996).
1997 World Output
Within the year world output grew at the rate of 4.10% which meant that
the pace of expansion of the world economy remained high and would
have been higher but for the currency turmoil in the E 4 Asian
economies. Industrial countries' real output accelerated in 1997 as a result
of low inflation, sustained output in the United States and United
Kingdom and widespread recovery in continental Europe. The volume of
World Trade expanded moderately due to increased global economic
activity, which in turn led to real export growth. (CBN Annual Report and
Statement of Accounts 1997).
1998 World Output
This year, global output grew at the rate of 2%, as a result of which
performance of the global economy weakened considerably. The volume
of trade decelerated sharply. This was as a result of fhther deepening of
recessionary trends in the East Asian emerging economies and Japan,
weak commodity prices and the ripple effect of the crises in Russia as
against other currencies, while deterioration in economic conditions in
Asia contributed substantially to low commodity prices, leading to slow
down in global demand and the volume of trade. (CBN Annual Report
and Statement of Accounts 1998).
1999 World Output
Global economic conditions improved relatively, as world output grew by
3%. This led to the return of confidence to emerging financial markets in
South East Asian economies, including Japan, after the turbulence. The
recovery was also bolstered by the general improvement in international
commodity prices following increased demand following efforts by
monetary authorities to keep inflation on the low side. The combined
effect of adverse terms of trade/low output leads to low relative share of
Africa's trade, and in particular, Nigeria's share in world trade. (CBN
Annual Report and Statement of Accounts 1999).
b
2000 World Output
World output grew at the rate of 4.7%, which led to a strengthening of the
world economy and with appreciable growth in all major regions of the
world. This resulted in a continued expansion of the United States
economy, robust growth in continental Europe and consolidation of
recovery in Asia, including Japan, as well as increased economic activities
in Africa. The pursuit of sound macroeconomic policies by most countries
moderated inflationary pressures, despite higher energy prices. (CBN
Annual Report and Statement of Accounts, 2000).
2001 World Output
World output declined, relative to the previous year, as it decreased to a
level of 2.4% growth. The pace of expansion of the world economy was
weak, even as growth in most regions remained sluggish. This was as a
result of slow down in the United States economy, continued recession in
Japan, weak demand in Europe, deteriorating financial conditions of
emerging markets, including low commodity prices, despite the decline in
global trade expansion. Nigeria. benefited from a stable oil price, as a
result of OPEC output cuts. (CBN Annual Report and Statement of
Accounts 2001).
2002 World Output
In 2002, world output grew marginally, as it went up to 3.0% as against
2.4% of the preceding year. The world economy experienced a slight
rebound as the down turn of 2001 was reversed. The increase in world
output was as a result of increased industrial production and enhanced
trade which was largely triggered by the post September, 1 l th 2001 policy
response which compelled n m y governments to pursue a&essive
policies to improve their economic fimdarnentals. Within the year, Asia
and other developing economies recorded high growth rates while major
advanced economies, as a group, recorded modest growth. (CBN Annual
Report and Statement of Accounts 2002).
2003 World Output
World output grew at 3.2%, recording a marginal improvement of 0.2%.
This low rate is attributable to the economic slowdown in industrial
countries of Western Europe during the first half of the year, which
affected other regions of the world. (CBN Annual Report and Statement
of Accounts 2003).
Effect of Globalisation on Turnover
The Guardian of June, 26, 2002 P.55 writing under "Unilever boss lists
benefits, challenges of globalisation" quotes Mr. Robert Clarke listing the
benefits of globalisation to include the guarantee of better products for
consumers and an enlarged market, adding that with it, the economy and
the consumer wins.
Tokunbo Alli (1999) Chairman of Manufacturers Association of Nigeria
(MAN) Ogun State, Nigeria, however advises against new treaties at the
Seattle Ministerial Conference. In his words,
with the harrowing experience of Nigerian
Manufacturers, World Trade Organisation agreement was
conceived by developed countries which have their
technological superiority to expand their markets in
developing countries and in reverse, banned entry of
products fiom these countries into theirs.
b
He explained that the fiee trade policy in the World Trade Organisation treaty
was injurious to the country's manufacturing sector, as locally made goods were
competing unfavourably with finished products. He fkther alleged that dumping
has been accentuated under the guise of fiee trade making Nigeria to become "a
net warehouse for fake and substandard goods".
Udeala (1999) mentions that the organized private sector in Nigeria is of the
belief that for the Nigerian econony to remain relevant within the globalised
economic system, the World Trading system must be reversed, seeing that the
massive influx of foreign finished goods has led to the near total collapse of local
industries. There is the fear that the developed countries would be dictating the
prices of finished goods and that of primary commodities produced within the
country.
He recommends Nigeria's membership of the World Trade Organisation in view
of the emerging globalisation of world economies since she cannot operate in
isolation, suggesting the need for technical assistance fiom the World Trade
Organisation and the developed Countries to realign its domestic regulations with
various requirements of the World Trade Organisation agreement and to develop
relevant institutions necessary for successiul implementation.
Nwuche (2002) in his paper "Nigeria's membership of the World Trade
Organisation and industrial capacity building" had called for a withdrawal of
Nigeria's membership t?om the global trading body. He says that "in content and
micro-economic implications, a basic feature of the World Trade Organisation
regime is that it is difficult especially for developing nations to favour their own
industries over imports from other countries". He wonders why Nigeria should
enter such a organisation which will only open markets for the benefit of
Transnational corporations especially that the World Trade Organisation rules b
insist on treating International corporations on level grounds with local
companies. He W h e r posits that,
China and India typically did not enter into
the World Trade Organisation agreement until
they had succeeded in building a strong
domestic productive industrial capability that
could sustain export.
Nigeria's Minister of Commerce, Mustapha Bello insists that Nigeria
would not quit the multilateral trade organisation despite previous
negotiations that led to the signing of the World Trade Organisation treaty.
He further adds that the World has become a global village and that,
Nigeria cannot shut her doors to the
world. Whoever holds that view should
think again. If the world should shut
their doors against us, we will suffer.
(The Guardian, February, 15, 2002
P.56).
Shonekan (2000) while subscribing to the view of globalisation as the
process of increasing integration of national econoniies, maintains that it is
not a recent phenomenon as with the end of the cold war, countries which
had hither to remained closed to the rest of the world, have opened up.
Even the advent of colonialism is seen as part of the evolution of the
process as the colonialists were motivated by the desire to create a more
integrated world through trade 'and investment flows, d f i s ion of ideas,
beliefs and culture.
Shonekan assesses the extent of Nigeria's participation in the globalisation b
process and concludes that Nigeria remains a weak player in the
international economic scene, particularly with its monocultural export
base of crude oil. He says that
The long and short of it all is that we are not yet in a
position to take advantage of the comparative
advantages that we have in various sectors due to the
weakness of technological capacity and lack of
enabling environment.. . Nigeria remains largely a
spectator even as the forces of globalisation promise
to radically redefine the structure of national
economies.
Trade liberalization, according to Shonekan should undergo some form of
modification to the benefit of local firms through tariff and tariff barriers.
the argument is that the fiee-for-all imports as we
have today threatens local manufacturing capability
with its numerous implications including loss of
Jobs.
Audu Ogbeh, as Chairman of Nigeria's Ruling Party and Special Adviser
to Nigeria's President on Agriculture blames Nigeria's unfavourable Trade
balance on its membership of the WTO, insisting that the negotiation
before the signing of the agreement with the WTO was not in the interest
of the country. He added:
We cannot carry on like this, or disaster will not be
far away. This goveriunent is looking at its
membership of WTO. We cannot be a member and
destroy our country.. . it is an attempt by strong
economies of the world to destroy smaller
economies. (This Day, October,21:22, 2003.vo1.9
no.3 104).
Gurrirab (2000) explains that globalisation has many advantages and
opens up many opportunities even though it makes developing economies
vulnerable. The expansion of exports is being outpaced by the growth of
imports from external imbalance. He quotes UNCTAD, which gives the
average trade deficit in the 1990s as higher than the 1970s by almost 3
percent of GDP. He doubts the benefit of globalisation and Trade
Liberalisation to the Indonesican economy stating that;
the domestic market is flooded with imported goods
including agricultural products like fruits, rice and sugar
against which local products cannot compete.
Gurrirab therefore, sums up his thoughts by advising a long, hard look at
the process of globalisation as "integration into the global economy should
not result in a disintegration at home".
Foreim Exchange Chan~es
The level of changes and convertibility of local to international currencies
has continued to determine Nigeria's competitiveness in regard to the
global community.
The table below gives a summary of the changes in foreign exchange
against the respective years.
Table 7: showing yearly rates of foreign exchange
11 Year I Foreign exchange 11
2003 -- 159.66 Source: CBN Annual Report and Statement of Accounts 1995 - 2003.
I
Effect of Globalisation on PersonneVHurnan Resources Management
In reporting Taiwan's new mernbership of the WTO, The Guardian,
January, 2, 2000 P.38, mentions the fact that Taiwan, the World's 14'
largest trading economy which had fought for admission since 1990 will
receive a mixed bag of blessings as its membership will connote mostly,
cheaper prices for consumers, but will remain a bad omen for agriculture
and labour-intensive industries while also causing already record high
unemployment levels to rise even Eurther.
1995 rate
100 I
However, Taiwan's Finance Minister, Yen Ching-Cha~ maintains that
any initial shock will be a price worth paying as he believes that
joining the economic United Nations,
the World Trade Organisation, is definitely
positive for raising our International status.
WTO policy bulletin (2001) agrees that trade can be a powerfid force for the
creation of jobs and poverty reduction but also subscribes to the fact that
Liberalization has negative effects on the labour market. The same way, new
export opportunities create new jobs in some places, pressure fiom foreign
competition can also result into job loss in previously protected sectors. b
The Nigerian Labour Congress, through its president, Adarns Oshiomole, during
its opening ceremony of the seventh delegates conference of National Union of
Textile, Garment and Tailoring workers of Nigeria (NUTGTWN) in Benin, Edo
State, Nigeria, alleged a loss of 500,000 job losses in the country as a result of the
World Trade Organisation agenda for econonlic globalisation. While
acknowledging that Nigeria is in an age of globalisation in which goods and
services flow fieely between countries, made possible by the spread of new
information technology and reduction in trade tariffs and removal of quotas, the
country must, against the background of worldwide controversies on the World
trade Organisation agreement, challenge wholesale liberalization. Oshiomole
(2002) maintains that:
...in this global trading arrangement, every
country and every responsible government
knows it must define its interests and goals
which explains why in spite of the world
wide rhetoric about trade liberalization,
United States still jealously protects its
textile industry and heavily subsidises
farming and high tech aerospace
industries.. . Europe spent billions of Euros
to protect their farmers while Asia protects
its domestic markets against foreign goods,
even as it dumps its own products on
African market.. . Africa and indeed,
Nigeria must therefore, avoid uncritical
acceptance of neo liberal ideology of
unrestrained trade liberalization as promoted
by International Monetary Fund (IMF) and
World Bank, which insist we must liberalise
trade and refuse to protect our industries.
Otobo (2002) criticises globalisation, attitudes of third World countries to
the concept of globalisation and the IMF and World Bank. He sees
globalisation as encouraging capital flow and has expanded the poverty
stretch on African Nations due to IMF and World Bank policies and
conditions, which are aimed at removing government from being prime
movers of development in the third world countries. Otobo lists some of
the consequences of globalisation to include increasing cases of
rationalizations, down-sizing, mergers, take over, bankruptcies,
techno10 gical changes, privatisation, commercialization, removal of
subsidies and drastic cuts in public expenditures and all with the resultant
effect of massive loss of jobs. He says:
Many Parastatals have been privatized without
becoming more effective.. . many workers in Africa
have become part time workers in orientation, pre-
occupied with how to supplement the pay packet,
deproletorinisation, de-industralisation and
pauperization.
Effect of Globalsiation on Production Management (Technology)
The Guardian of June, 26, 2002, P.55, writing under 'Unliever Boss lists benefits
and challenges of globalization' quotes Mr. Robert Clarke as listing the
challenges of globalisation, to include meeting benchmark international standards,
investing in technology and processes and taking advantage of regional trade
agreements to consolidate manufacturing options.
Madden (1992:ll) is of the view that many third World ~oun thes and
communities can compete successhlly in the world market, provided they are
given a level playing field. He dismisses the arguments that competition by the
third world producers will put Europeans out of work as he believes that only
three percent of manufactured goods bought in rich countries are supplied by the
Third World and that most jobs in the industralised world are only lost due to new
technology rather than cheap imports.
Madden (1992:21) suggests, as a way out, for poor countries which rely on
commodities to do more of the processing, and marketing of the raw materials
they produce. This way, they can stabilize prices, ensure a better return and move
away from commodity dependence.
Abalaka Joseph, Director General of the Standards Organisation of Nigeria (SON)
had warned Developing Countries including Nigeria on the implications of
signing new agreements at the meeting of the World Trade Organisation (WTO)
Ministerial Conference holding in Seattle, Washington, United States. (Business
Times, November, 22, 1999, P.3). He rather advised that already signed
agreements which sought to improve the quality of lives of their people could be
implemented. He believes that any of such new treaties would only exacerbate
the problems of developing countries and increase their economic colonization.
The report quotes Abalaka as saying that,
World Trade Organisation was conceived by developed
countries with a total different agenda - that of
expanding their markets in developing countries which
had banned the entry of products fiom developing
countries. This to him clearly showed that developed
countries were using their superior technology to seek
new markets for their rapidly advancing technology and
products.
Ajagu (2002) mentions that globalisation is now a reality which no mod8rnizing
country can run away fiom, describing it as the core of the new world economic
order. He advocates support within the broad fiamework of economic policy
instead of canvassing for outright prohibition of goods that compete with the
locally produced. He proposes a mixture of policies that would protect the local
industry as well as promote further investments, competition and enhance
efficiency. He also recommends that the Nigerian manufacturing sector should
partner with their foreign counterparts in order to access modem technology
which will make Nigerian manufactures internationally competitive and
acceptable.
Global Subsidy and its Implications
The World Trade Organisation fourth Ivlinisterial Conference was held in Doha,
Qatar November, 9-14, 2000. However, before the conference, developing
countries continued to amplifjr their grievances against many of the World Trade
Organisation issues. For instance, President Benjamin Mkapa, of Tanzania had
warned that if the conference failed to address issues that would arrest poverty,
his country would reject it. He accused the industrialized nations of hypocrisy as
they peg the prices of primary commodities of the developing countries and
impose trade barriers, while forcing the same developing countries to remove
subsidies on agricultural produce and to cut import duties. He maintained that
apart fiom coffee, other products of the countries of the South face similar
problems with the result being a deepened poverty for the people in the
developing countries where their idant industries cannot have a level playing
ground, given the influx of goods, (whose production is subsidized in developed
countries) industrial closures and unenlployrnent, amongst other side effects.
Mkapa says,
b
The price of raw Coffee has dropped by about 225
percent over the past 20 years, while a cup of
Coffee at a fashionable restaurant costs around
two dollars, a figure more than double the average
income of a Tanzanian farmer. (Financial Standard
December, 5,2001 p.41).
Nigeria's Businesses and the effect of uncontrolled Imports.
Of the many threats that surround Nigeria's Businesses organizations,
importations and its latter day version of 'dumping' appears to constitute the
major heading as a veritable antithesis and anathema to the sector. Nigeria has
progressively declined from a Nation of manufacturers to one of importations
with the attendant consequences of loss of billions of naira yearly. This is in
contrast to a country such as India, which by 1999 had at least 300 billion of its
population living below poverty line. According to India Development Report
(1999), the fiaction of the population below the poverty line dropped fiom 54% in
1983 to 36% in 1989 - 1990 in rural areas and from 35% to 38% in urban areas.
(This Day, vol.5, No. 1721, January, 8, 1999).
Ogbeh (2003) had complained of the high import bill of Nigeria since 1999,
which stood at over $42.7 billion. He makes a comparison of the situation thus
. . . in India, there are 214 categories of items that
importers cannot bring into the Asian country. 130
of such items are on the prohibitive list in China ... only 20 of such i tem are on the prohibitive list in
the country.
Between 1996 - 1998, Nigeria's industrial sector could be said to have registered
a healthy growth, averaging 7%. However, it's food import bill continued to rise
in an unabating manner. Central Bank of Nigeria, 1999 annual report shgws that
a total of $877.3m (N98.6b) was spent on food importation between January to
September, 1999 and prominent on the list of imports were rice, vegetable oil,
Frozen Chicken, Frozen Turkey and Fruit Juices. Furthermore, the aggregate cost
of importations between 1999 - 2001 is $38.149 billion (N4.3 trillion). A
situation whereby a reasonable amount of money is spent to import food items
that are available locally is regarded as unhealthy for the economy since
investment are only being made into other countries' economies and creating jobs
for their citizens.
This trend drew the attention of Iheusel Diehar (German Ambassador to
Nigeria) as he lamented and bemoaned that Nigeria has been preoccupied with the
expansion of its import basket while reducing local production profile despite
abundance of natural resources in your count ry... I
find it difficult to understand why Nigeria imports fruit
Juice. You have a lot of fertile ground that can
produce a lot of tropical h i t s . . . . your country is very
wealthy, in terms of natural resources. All you need to
do is to encourage local production, put in place
adequate infrastructure . . . . (The Guardian, December,
20, 2001, p.22).
The International Institute for tropical Agriculture (IITA), Ibadan, had
decried the unbridled importation of wheat into Nigeria, which is
estimated at over lOOmiUion tons yearly, while insisting that close
substitutes of the produce are in abundance within the country and ". .. despite significant breakthroughs by the Institute in the production of
many derivatives &om cassava, maize, cowpea and Soya beans, among
others ..." These breakthrough products were reported to be of the same
quality as those made fiom wheat but that the importation of wheat had
been posing a serious threat to the local market. (Business Times,&ugust,
4, 1997).
Table 8 showing Nigeria's In~port profile 1995 - 2003
11 1- I( Source: CBN annual Report and Statement of Accour~ls 1995 - 2003.
Year
1995
From an industrial stand point therefore, Nigeria could be described as a clay-
footed giant, which still relies on primitive technology with the attendant
consequence of stunted growth across critical areas of the economy. The earnings
Value of Imports (N'M)
755,127.70
from oil are yet to be made use of, in stimulating agriculture and industrialization,
making primary enterprises to dominate the economy. This way, the industrial
sector which is the anchor of poverty alleviation and unemployment reduction has
been effectively stultified. The capacity utilization rates for Nigeria's businesses
over the past many years bear eloquent testimony to this fact.
Capacity Utilisation Rates (1975 - 2001).
For the 8 - year period up to 1982, the capacity utilisation rate was an average of
73% whereas, beginning fTom 1983 to 2001, the rate dropped to 37.95%.
Interestingly, for the period 1990 - 1995 (largely representing the pre-trade
liberalisation period), capacity utilization was 36.21% as against the 6,- year
period of 1996 to 2001, which had an average rate of 34.56%. This is a drop of
1.65%, revealing only a marginal difference. (See Table in appendix 'A').
Globalisation and Agriculture - Implication for Businesses
Obijiofor (2001) laments the craze by Nigerians for foreign food such as rice,
vegetable oil, frozen Turkey, frozen Chicken and h i t juice, even when we
have, for example good quality rice in various parts of South Eastern Nigeria.
He thus recommends that:
In the 21st century, we need to reflect and ask the
serious questions about the factors that led to the
abandonment of the development of agriculture in
Nigeria. Why, for instance, have the groundnut
pyramids in the North disappeared from our
landscape? What happened to the robust Cocoa
farms in the West? How did the palm oil industry
collapse in the East? Why for example, did
Malaysia a nation, formerly reliant on Nigeria's
palm produce, suddenly beat us in our own
backyard?
Chand (1998) presents a sharply divided opinion in India as to the desirability of
India going for globalisation and liberalization of its agriculture and notes that
notwithstanding the debate, the Indian government has been taking bold steps in
recent years to adjust its policies to meet WTO requirements. It's export-import
policy for 1997 - 2002 reveals that several restrictions on fiee import and export
of agricultural commodities have been made less stringent. India, having been put
under much pressure to remove quantitative restrictions on imports, has been able
to accumulate relatively large foreign exchange reserves and maintain value of
payment, which has provoked the western world in trying to stop her fiom
getting concession fiom the WTO to maintain quantitative restrictions on some
items for some more years. Chand makes a case for liberalization, which should
result in growth with a human face in the wake of demands for a level playing
field in agricultural support between the developed countries and developing
countries.
Ahmad (1 998:xxiii) while commenting on Malaysia's domestic and trade policies
describes Malaysia's signing of various agreements on Trade Liberalisation as a
testimony to her strong stance as a proponent of Trade Liberalisation, which is
consistent with her development plans. However, the country took steps to
project, through tariffs and non-tar8 barriers such as quota to protect producers
and save foreign exchange in line with the import substitution strategy during the
1960's - 1970's.
Kobayashi (1 998:xvii) writing on "Effects of Trade Liberalisation on Agriculture
in Japan" maintains that when Japan encountered Trade Liberalisation on a
specific commodity, it introduced some counter measures as a support to
corresponding domestic production, especially when liberalization was expected
to cause a serious problem. Examples are in the cases of oil crops such as Soya
beans and Rapeseed, sugar and beef calves.
Madeley and Solagral (2001 :2-3) in an extensive review work on the impact of
Trade liberalization on Food security, present the views of the proponents of
Trade Liberalisation and the negative perspectives of the impact of Trade
Liberalisation.
Generally, the studies reveal, amongst others, the following:
1. Those negatively affected by sudden trade liberalization are the poorest
and those with hindered or limited access to capital b
. . 11. While most developing countries are according increasing priority to
export crops, the total export values are however not increasing in
proportionate terms and relationship.
. . . m. Most of the effects of trade liberalization on small scale farmers have
come from structural Adjustrnent programmes (SAPs) or regional trade
agreements rather than from the WTO Agreement on Agriculture (AOA).
The impact of the SAPs has been harsh, with the adjustments required in a
short time frame, which has been a burden to the poor.
iv. The prices of food to consumers are not always covered under
liberalization.
v. The impact on farmers vary, according to their produce and also according
to whether their countries are exposed to imports. The greater the
exposure of a country to food imports through dumping or commercial
channels, the greater the possibility of farmers being negatively affected.
vi.
vii.
viii.
ix.
While some countries are rceling under the efTect of Agreement On
Agriculture (as shown by the FA0 study) the full impact of the Agreement
on Agriculture may be unknown for many years.
While short-term impact should be contrasted to the medium and long-
term impact, trade liberalization has depleted the number of f m e r s
cultivating their land but instead leaving for food import dependent
countries thus resulting into a loss of food sovereignty. This could jettison
a country's room for maneuver in agricultural trade and also make long-
term recovery of its agricultural sector dficult.
The benefits and costs of liberalization are determined by the pace, b
sequencing and scope of liberalization measures as well as by the presence
or absence of government regulatory and supporting polices.
The gains of liberalization and globalisation are not traceable to the table
of the poor as disparities are on the rise around the world. The studies
conclude thus:
Clearly, the double standards of many of the world's
richest nations in preaching liberalization while practising
protectionism in crucial sectors such as agriculture once
again emerges as an obstacle to food security.
Furthermore, it claims that a new face of apartheid seems to
be spreading across the globe as inillions of people live in
wretched conditions side by side with those who enjoy
unprecedented prosperity.
WTO appears to have impacted negatively on Nigeria's agricultural development,
with similar effect fiom the dumping of foreign goods including highly subsidised
agricultural goods. This, no doubt contributes to an unsatisfactory balance of
payment situation, closure of businesses.
Sanlbo (2002:2) says that rice farms have disappeared in Nigeria due to lack of
subsidies for farm produce and lack of tariffs on imports, even while farmers in
the developed nations continue to enjoy subsidies, with the United States, recently
announcing tariffs on imported steel.
Implications of Giobalisation for Africa
Lawanson (2000) traces the history of Afiica from slave trade through the
brigandage of colonialism and the pillage of Africa's wealth through betroths
such as UNILEVER, and thus conchtdes that the entire arrangement of
globalisation is only a humane form of extracting surpluses from Afiica with the
net effect of euthanising an already, pauperized and traumatized continent. He
concludes by advising the continent's leaders to approach the issue of
globalisatioil with extreme caution, stressing that "the commanding heights of
our economy should not be put up for sale in a bazaar".
Bello (1990:4) predicts an economic collapse for Afiica, given that between 1980
and 1985, the economies of nine States in Afiica declined while those of eleven
recorded virtually no growth. All the plagues of under development which
include drought, deforestation, desertification which are created by inappropriate
agricultural practice, sharp drops in export prices, massive indebtedness, skewed
development priorities and civil war have made Africans the world's hungriest
and most malnourished people.
While Ochoche (2000) believes that Africa's peace and stability is dependent on
her state of economic development and that globalisation is a twin concept of
opportunities and challenges, being very multifaceted in nature, Nigeria's
Minister for cooperation and integration in Africa, Ogunkelu (2001) is of the view
that Afiica's poor performance at the World Trade Organisation is attributable to
certain factors that are inimical to globalisation which include absence of
favourable political climate, legislations that are inconsistent with World Trade
Organisation rules and agreements, poor infrastructural facilities in
telecommunications and power, constraints of low productivity and public sector
dialogues essential for the formulation of policies.
At a seminar organized by the coinmon Wealth Press Union (CPU) and the
British council in Ghana September, 2000, various threats to globalisation in West
Afiica were listed, to include:
Collapse of local industries
Loss of Sovereignty e
Cultural threats in the form of undermining of local fabrics, killing of local
industries through trade liberalization, dumping of old industrial
equipments from developed countries, lack of adequate health facilities,
stiff competition in exports and dependency on "hot" money.
Corruption
Weak economic base
High unemployment
Illiteracy
Lack of accountability
Collapsing educational standard
Bad governance
Weak international competition
Shipping political influence Overseas
Low value added exports with externdy determined prices.
(The Guardian, September, 27,2000 P.29).
Mazrui (2001) highlighted the dangers of globalisation to Afiica wherein he
points out that Afiica in the 21" century is likely to be one of the final battle
grounds for the forces of globalisation, pointing out that the phenomenon has its
winners and losers and that in the initial stages, Afiica has been among the losers.
The word "globalisation" is quite new, but the actual processes towards global
inter dependence and exchange, started centuries ago.
Daouas (2002:7-8) while agreeing that globalisation is multi-dimensional and
affects all spheres of life, be they economics, cultural, environmental and social
including relations between governments and nations of the five continents,
nevertheless disagrees that it has benefited the Least Developed Countries and the
Afiican Continent in particular, having led to a worsening of existing imbalances,
impeded development and aggravated poverty. This is so, given that the Least
Developed Countries contribute only about 2% of world trade output and about
1 % of foreign investment. b
Ajayi (2002) suggests many reasons to support Africa's integration with the
global economy to include mainly, Afiica's poor overall economic performance
which is also a result of factors that include its colonial past, disadvantageous
geography, lopsided economic dependence on exports of primary products and
macro economic policy of primary products and macro economic policy errors.
African Growth and Opportunity Act (AGOA) and Globalisation
On l g t h May, 2000 the President of USA, Bill Clinton signed into law the
historical trade and development act of 2000 containing the Afiican growth and
opportunity Act (AGOA). Essentially, the Act aims to:
I. Promote increased trade and investment between the United Sates and
sub-Saharan Afiican countries by providing eligible African countries
with liberal access to the US market.
. . 11. Promote economic development and reform in sub-Saharan Mica,
moving across a wide range of industries, granting benefits to
entrepreneurs, farmers and families.
iii. Promote increased access and opportunities for US investors and
businesses in Sub-Saharan Afi-ica.
AGOA gives Sub Sahara African suppliers a competitive edge over suppliers in
other countries which the United States does not have free trade agreement with.
An immediate trade benefit is in the textiles and apparel as AGOA extends duty
free and quota free benefits to imports into the US of a number of apparel items
and textile products used to make these goods produced in eligible Sub-Saharan
African countries.
The benefits of AGOA as targeted to the 48 Sub Saharan Af?ican countries
include progressive move towards a market based economy, the rule of law, the
elimination of barriers to US trade and investment and economic policies to
reduce poverty among others. (Nigeria: Commerce Today, July, 2001 P.7).
The act which provides a range of about 19000 products that can be exported to
the US duty free and quota free has however being severely criticized as
unhelpfd given the many rigid conditions attached to it such as the fact that the
fabric (for the textiles and apparel), must be partly or fully developed locally and
then assembled in Nigeria before exporting to the US. Alternatively the yarn to
produce the fabric originates from the US wlde the fabric is produced locally
before export. Many scholars have viewed these as conditions imposed to still
buy back what could have been beneficial opportunities to developing countries,
thus, making globalisation a lopsidedly beneficial development to the richer
nations.
The Effect of Globalisation and Tradc Liberalisation on Nigeria's Businesses.
Manufacturers Associations of Nigeria (MAN) 200 1 P.4 1 annual report highlights
the need for a critical assessment of implications of globalisation and trade
liberalization on Small and Medium Scale businesses (SMIs) thus,
The problems of globalisation and liberalization
under the WTO agreement will require critical
assessment in the nature of our economy and the
protection of the SMIs who are more in the
manufacturing sector and are very vulnerable. There
is need to consider their limited capability in the
context of stiff competition in the globalised world
economy.
Trade liberalisation is a derivative of globalisation which itself, is a product of the
WTO's operations aimed at a "borderless" global economy. Owolabi (199856)
is of the view that since the early 1980's the International economic scene has
been in the throes of the twin-paradigm concept of globalisation and liberalization
and believes that the concepts,
have set in, a process whereby producers and
investors increasingly behave as if the world
economy consisted of a single market and
production area with regional or national sub
sectors rather than a set of national economies
linked by trade and investment flows.
Shafaeddin (1 996) describes globalisation as:
The development of global network in the form
international consortia, cross-licensing agreements
and joint ventures, the aim of which is either to reduce
the cost of production by finding low cost suppliers
of factors of production and material inputs and
intermediate products, or by expanding the market
scope to enjoy economies of scale.
Owolabi traces the beginning of liberalisation to the situation of many developing
countries which became worsened by the debt crisis in the 1980's and which was
brought to the fore by Mexico in 1982 when it could no longer service its external
debt. From that time, all indebted developing countries were made to undertake a
policy reform package, which included trade liberalisation, privatisation,
reduction of public expenditure etc. Owolabi maintains that,
under the active prodding of International Monetary Fund
and World Bank, the forces of liberalisation have carried
the day. Obtaining the structural adjustment loans of these
institutions by the countries in crisis is conditioned on the
adoption of liberalisation policies. Would-be donors and
creditors line up behind the Bretton Woods institutions
whose approval of any Country's reform programme is
to them a "clean bill of health."
The introduction of Structural Adjustment Programme (SAP) by Nigeria, in 1986
was intended to improve the performance of the non-oil sector and to make the
economy less dependent on crude oil and imports while encouraging and
protecting local industries. Of the measures outlined to achieve these objectives
were exchange and trade liberalization, which meant the removal of all
restrictions to free trade, the adoption of several export incentives and the
adoption of a more realistic exchange rate policy.
Nigeria, has been implementing an economic liberalisation policy since 1995.
For instance Nigeria's 1995 budget was named a "budget of liberalisation" (Daily
sketch, Ibadan, January, 16, 1995. P.6). We thus had economic liberalism
blending with military autocracy, which Gabriel (1 999:2 1) believes,
... was done to appease the West, which was obviously
showing signs of frustration with the abuse of human rights
by the d e h c t military regime. It was then reasoned that if
the transnational corporations from the west were given
free hold of the economy, even at the expense of local
industries, the West might give the dictator free hand to
execute his dastardly conceived agenda. It was as a result b
of this that a new tariff structure for 1995 - 2000 was then
prepared to conform to World Trade Organisation's
requirement. The tariff was airned at narrowing the range
of custom duty rates, lower average rates, uniform rates
and lower import prohibitions. While totally abolishing
custom duties on water chemicals, and educational
materials, the new tariff structure also lowered tariffs on
essential commodities such as salt, milk,
plastics, detergents, footwear etc.
These measures were seriously devastating in impact on local businesses.
Government also went ahead to repeal some essential laws meant for the
protection of Nigerian industrialists. For instance the 1985 Nigerian enterprises
Promotion Act was repealed which the government justified on the excuse of
encouraging foreign investment. Since the promulgation of the 1 972
indigenisation decree, the Nigerian had developed a sense of pride but was being
suddenly exposed and abandoned without protection. This singular action opened
a floodgate that meant the return of all kinds of people under the guise of
investors but which actually resulted in what amounted to a destruction and
sacrifice of the economy. Multinational Corporations seized sectors where
Nigerians were already acquiring foreign technology, while also working towards
inventing local technology, which had the advantage of superior and more
sophisticated technological capacity and capability.
Ojo (1982: 186-1 87) believes that the advantages of free international trade
include the following:
1.
.. 11.
. . , 111.
iv.
v.
vi.
vii.
Ensuring a more efficient allocation of world resources.
Provision of greater variety and assortment of goods thereby increasing
their range of choice.
Increase in employment - opportunities throughout the globe. @
Promotion of technology - diffusion.
Opportunities for equal and low commodity prices globally, which should
enhance the welfare of the people.
Tendency for equal prices and for each factor of production throughout the
world.
The terms of trade of each country, (which is essentially the international
commodity exchange ratios), will be increased by making the price of
imports to fall relative to exports.
Sarnbo (2002:7-10) maintains that the consequences of globalisation include the
adoption of common standards and parameters in industry just as the local
manufacturer now possesses a higher burden of satisfling a more sophisticated
local market even as he can scan the international environment so as to remain in
contention. He warns that except necessary steps are taken, globalisation can lead
to many negative consequences such as reduced industrial productive capacity, if
industrial machines are not updated, exacerbation of the rural-urban phenomenon,
and diminished local research, if research equipments are not updated. Sambo
summaries his feelings thus
We should not allow sheer nationalism to blind us
to certain realities, which require expatriate
attention, made possible through globalisation,
... our local manufacturers should do well to join the
global village. This will necessitate our industrial
products to be of international standards. For this to
happen, our industrial sector will have to be greatly
improved and upgraded.
b
The net result and effect of this early rush at liberalization, has been the leaving of
the local industries at the mercy of trans-national Corporations just as no effort is
made to protect rural business organisations.
Owolabi sees a strong link between a country's quest for development and
expansion in her exports believing that profitable international trade is not
merely the exchange in goods and services but a lead to an urge for
improvement and advancement through acquisition of knowledge and skills,
employment of more imported foreign equipment, capital and ideas which
ultimately enhances the quality and quantity of output. He says Nigeria is yet to
take advantage of these benefits of international trade and that "countries that do
not want to be marginalized must jump &to the "train".
Analysts continue to bemoan the impact of allowing the full impact and weight
of the liberalisation regime to cripple the industrial potentials and future of the
country, citing the "unleveled playing field" argument especially, given the
manifest defects in the country's business environment. The case of dumping of
goods into the country has also served to exacerbate the situation thus worsening
the sliding fortunes of the manufacturing industry.
Okigbo (1998) had warned on the lack of a cautious approach to implementing
liberalization in the weaker economies to the advantage of the richer and
industrialized ones. He maintains:
It is a conmon doctrine that globalisation must be
accompanied, if not preceded by liberalization, in
order to be effective. But we should also be warned
that full scale liberalisation and de-regulation
cannot always protect the weak and may, in fact
strengthen the already strong. b
Okigbo therefore, advocates for a protective industrial policy as a guarantee for a
secure economic future, and as a foil against fkrther exploitation of less
industrialised countries. He campaigns for government not to completely
withdraw, but for it to engage itself to redesign what may be termed a strategic
integration into the global economy as being done by Japan and the newly
industrialised nations of South East Asia.
Manufacturers in Nigeria, have for long been advocating for the enthronement of
policy measures that will protect the interest of local businesses, just as they have
also been conlplaining of the trend of unbridled importation of fake and
substandard products into the country under the guise of trade liberalization.
The Manufacturers position is against the backdrop of rising mortality rate of its
member companies, given the massive influx of manufactured goods into the
economy within recent years. They have continued to recommend incentive
schemes that will promote small and medium enterprises, export and increased
inflow of foreign direct investment and research and development.
g
Government and the Management of Trade Liberalisatio~ in Nigeria
Within the year 2002, the Nigerian government had announced ban on the
iinportation of items such as textiles, cassava products and Poultry products. Of
particular interest is the situation of the textile sector. Abubakar (2002) in his
features report of Punch October, 8, 2002 reports on the negative effects of
Nigeria's 1995 signing of the WTO agreement which had meant a wholesale
impoverishment and disintegration of the local textile industry in the country with
the consequences of huge unsold inventory in warehouses, tying down of capital
and massive lay-off of workers.
B
As a result of many perceived inconsistencies in the agreement and its negative
implications on the country, the Nigerian government had set up a "Technical
Committee on restrictive import measures" to advise it on the real import needs of
the country and to suggest ways of averting dumping of goods on the country.
The Committee members were drawn from among others, the ministries of
industry, internal affairs, finance, Petroleum Resources, Transport, Justice, the
Board of Nigerian Customs and Excise and the Central Bank. The Committee
was specifically charged to take into account "the delicate balance between the
protection of the country's industries and the overall interests of consumers".
The Nigerian Information and National Orientation Minister, Gana, had remarked
Our Country is now like a dumping ground for cheap and sometimes
inferior foreign goods.. . what we are about to do is to ensure that our own
industries do not unnecessarily suffer as a result of the agreement ... the
World Trade Organisation had made it possible for some unpatriotic
Nigerians to import all manners of goods into the Count ry... such trivial
items like tooth brushes, tooth picks, fruit Juices and other trivialities have
found their ways into the country because of the free trade and low tariff
contained in the World Trade Organisation agreement. (The Guardian
January 2,2002, P.33).
The government is exploiting the safeguard provision in the agreement
which provides for any government to take measure sit deems fit against
turning it into a dumping ground.
Steps which the government announced to contain the adverse effects of
the WTO agreement included massive enlightenment campaign to
encourage patronage of locally made fabrics, drastic reduction in duties of
vital inputs of textile factories and additional reliefs on importation of
some raw materials, machinery and spare parts for local textiles,
production.
Arowolo (2002b) blames leaders of national governments for their failure
to properly articulate the two sides of globalisation. According to him, the
first side of the coin (which the International Monetary Fund emphasizes)
is about macro economic indices such as inflation, foreign exchange,
interest rates etc while the flip side of the coin is all about human
development and concerned with indices as employment rate, social
security, freedom, human rights etc. He emphasizes that self interest
remains the frst law of the new global economic order, and that
the plain lesson fiom the global economic trend is that
effective national governments, even in the developed
economies of the west have not abdicated to 'market
forces' their basic responsibility of improving the
quality of life. Every wise government has therefore,
taken the destiny of its nation in its own hand by
carehlly designing policies that would take care of
local jobs and living standards.
Business Development in Nigeria
History of Business Development in Nigeria.
Tadaro (1982:495) sees industrial development as a process of building a society's
capacity to process raw materials for the purpose of manufacturing commodities for
consumption and for firther production
Onyemelukwe (1 984: 161) agrees to Nigeria's long term potential in industrial
development, particularly, within the three main economic factors of production, namely,
land, labour and capital.
b
Of particular interest, is Nigeria's pattern of industrialization, particularly in the period
after the second world war, which Goddard (1973) submits as laid in the south,
particularly, Lagos, which had the advantage of being the seat of government, the largest
port and of course, the headquarters of most of the large commercial establishments in
the country.
Sokolski (1965:267) however, observed coilcenling Nigeria's industralisation:
Reality casts a pall on the assertions that industry
will soon serve as the smooth and straight road to
"economic freedom" for Nigeria. The path to the
realization of Nigeria's industrial potential maybe
charted, but it will not be an easy one to hew.
By 1957, Nigeria had commenced steps in conjunction with the then British government
aimed at empowering the private sector to be the thrust of economic activities and
through Laws such as the Industrial Development (Import Duty Relief) Act of 1957 and
the industrial development (income tax relief) act of 1958. Under the latter there was
pioneer industrial status guaranteeing tax holiday of period range of between three to five
years depending on amount of investment. By 1967, many industries had qualified for
and acquired the status cutting across many industrial sectors.
Nigeria therefore, remained largely a trading nation while manufacturing and value added
activities were concentrated in the hands of multinational companies such as West
Afiican Soap Company (now Lever Brothers), Paterson Zochonis (PZ), United African
Company (UAC) John Holt, Chellarams and AG L,eventis, among others.
According to the World Bank Economic Report (1974:5), the manufacturing sector has
expanded quite rapidly since 1960, with the growth or value added averaging over 11%
annually. Development, began fiom a small base, while the contribution of
manufacturing to Gross Domestic Product, remains below 10%. The surplus capcity of
earlier years are however disappearing in many industries while increases of recent in
output are out of pace with the rapid growth of consumer demand. The largest
manufacturing groups are predominantly foreign owned. Interestingly, the World Bank
report agrees that
over the longer term, agricultural modernization and
growth, higher farm incomes, and some correction of the
present imbalance between urban and rural incomes
could play an important role in the growth of
n~anufacturing
It is evident fiom the third and fourth National Development Plans (1975 - 1980) and
(198 1 - 1985) respectively that Nigeria depends on imported capital goods, spare parts
and accessories. As a result, by the end of 1976, the balance of payment, which had
consistently been favourable, came to a deficit position of N339.9 million. Industrial
production, which had grown by 19% in 1976, only grew by 3.09% in 1977. Indeed the
oil boom era of the early 1970s was not supportive of industrial growth. Within the era of
the oil boom, the cascading trend of industrialization continued with industrial growth
Plummeting fiom 18% in 1976 to12% in 1980.
The Central Bank of Nigeria (CBN) 1989 report stated that the manufacturing sector
recorded a growth rate of 2.2% as against 16.9% achieved in 1988. This performance
was attributed to and blamed on high production cost and weak consumer demand for
locally made goods. Import dependence continued to be the problem of the economy.
In the last decade, assets estimated at over N500 billion are reported to have been wasted
while unemployment in the form of job losses have hit over one million while capacity
utilization nose dived fiom as high a level as 65% to 29.7% by the end of 2001. Indeed
such statistical trend has been the lot of industries, particularly of manufacturing origin.
This much, the problems of the industrial sector have been so often rehearsed that they
are already a familiar chorus in Nigeria. The 1Ggerian industrial terrain has therefore
been on a steady decline and particularly since 1 986.
General Drawbacks of Business Organisatioris in Nigeria.
The generally poor state of Nigeria's business terrain has resulted in a trend of dormancy
across the various segments. A Manufacturers Association of Nigeria (MAN) survey of
businesses in 1999 revealed no growth in the lbur industrial sub sectors of pulp, paper
and paper products. Printing and publislung, with a decline of 0.18%, chenical and
Pharmaceuticals with a decline of 1.55%, basic metal iron and steel and fabricated metal
products declined by 2.80% and beverage and tobacco industries Sub sector which also
declined by 0.82%. The sub sector conventionally considered as most vital for
industrial growth, which is the basic metal and allied products, became the hardest hit.
The travails of Business organisations in Nigeria are therefore, generally stated as
follows:
1. Onyemelukwe identifies a major problem of Nigeria's businesses to be
the ineffective integration of the urban and rural sectors.
. . 11. The near total collapse of infiastructural support facilities and services,
which makes industries to source all such fdcilities privately. Examples
are electricity, roads, water, telecorntnunications amongst others.
... lu. Sokolski (1965:93) believes inG-astructural inadequacies is a major
problem and says of infrastructure as " the overhead capital of an
emerging nation":
Industries establishing themselves in East Central North America
give only rninimunl consideration to the existence of adequate
electricity and water supply, or to the adequacy of road and rail
routes and connections. They take these external economies , almost for granted. In the underdeveloped world, these services -
or lack thereof - play an important part in the decision on plant
location. Before building its sawmill at Sapele, the United
Afiica Company had already constructed hundreds of miles of
roads, as well as bridges across the non-fordable streams, in the
surrounding forest area. But concerns with less financial backing
cannot make these enormous outlays. They can only await the
provision of an adequate infrastructure before establishing
themselves in an underdeveloped country.
iv. There is prolonged energy crisis represented by the unending scarcity and
unstable supply of petroleum products in commercial quantities for
industries.
v. Inconsistent and unstable government policies and tariff regimes which
continue to serve as disincentives to industries, especially where products
cannot compete adequately with other substitutes, most times fiom across
the borders.
vi. The influx or uncontrolled 'dumping' of products into the economy and
which are most times fake, adulterated and substandard products.
vii. The collapse of investment banks in past years as a result of inefficiencies
and mismanagement of the same banks. Examples include the Nigerian
Industrial Development Bank (NIDB), Nigerian Bank for commerce and
Industry (NBCI), Nigeria Agricultural and Cooperative Bank (NACB) and
Peoples Bank of Nigeria (PBN). This meant the non-availability of long
term fbnding for industrial projects.
. . . vm. The consistent neglect of the sn~all and medium scale enterprises over the
years including Cottage industries. Indeed, the de-industrjalisaiton
syndrome was preceded by the unprecedented failure rate and collapse of
many of these enterprises which could have otherwise been successful but
became distressed due to reamns of devaluation of the naira that eroded
their capital base and the high interest rates which adversely afEected and
crippled their running costs.
ix. Multiple taxation and levies imposed by the difEerent levels and tiers of
government such as sales tax, property tax, tenement rate, mobile advert
tax, agricultural products levy, Pay As You Earn, (PAYE) tax, signboard
tax, educational levy etc.
x. Low capacity utilization. The problems of the industries in Nigeria as
summarized by all the headings above including others inherent within the
industrial landscape have meant a continuous capacity utilization drop rate
and poor level.
xi. Bello, (2002) adds to the list of problems of Nigeria's businesses. He
blames The Private Sector operators, for the collapse of their industries,
citing the 1960's and 70's when our local textile and garment sectors
boonled but when the Private Sector saw cheap imports fioni Asia,
"instead of them to impress on government to halt these imports, they
joined in importation and closed down their factories in order to make
greater profits.
xii. All the factors listed above naturally translate to a high cost of doing
business in Nigeria, thus further making the Nigerian business very
uncompetitive while hanging on it a doomed export potential and
unsecured future. Sokolski observes, concerning the development of
Nigeria's business terrain,
a general barrier to its acceleration is the higher cost of b
conducting operations in Nigeria in contradistinction
with the more advanced countries.
xiii. Ajayi (2002b) identifies the pitfalls in Afiica's manufacturing which he
described as not competitive due to reasons such as failure of policies to
promote technical capacities for efficiency, which is necessary for
successful industrialization. Manufacturing is transaction - intensive and
transaction costs in Afiica tends to be high due to high tariff and non-tariff
barriers, high international transport cost, poor telephone systems and
unreliable idrastructure. As a result, the manufacturing sector is almost
non-existent in some Countries while small in others.
xiv. The Federal Ofice of Statistics 1998 review of the Nigerian economy,
(199950) while reviewing the specific performance of the manufacturing
industry attests to the weak and poor performance of the industry, citing
the problems of unsold inventory due to consumer declined purchasing
power. The review fixther traces the lack luster performance of industries
to lower domestic input cost, port tariffpolicy and multiple taxation.
xv. A weakened consumer purchasing power, which has eroded consumer
dernand for products.
These impediments to businesses, which are assumed to be lopsidedly
applicable to the urban industries, portend very grim and dim potentials to
the rurally located industries, which are disadvantaged on many fronts, not
the least, of wlich are infi-astructural inadequacies.
The Concept and Application of management
The problems of Trade liberalization in Nigeria, as defined by Nigeria's eqtry and
admittance into the World Trade Organisation has been widely acknowledged as a
subject and factor of failure by government. The bureaucrats and practitioners in
government had embarked on what has been variously described as an
unnecessary and early rush into the organization. The net implications of this for
management at the micro level of rural enterprises have further served to expose
the imperatives of the concept of management, the absence of which means very
dim prospects for the effective management and good performance of business
organizations in rural areas.
Management
Nwachukwu (19882) says of "Management and Managing".
There is no human endeavour that does not require
proper management for its proper functioning. All
types of orgrvlizat ions - government establishments,
business enterprises, hospitals, cooperatives,
churches, whether profit making or non-profit
making, require good management to function
effectively.
Akpala (1990) sees management as a process that combines and utilizes, or
allocates an organisation's inputs through planning, organizing, directing and
controlling in order to produce outputs desired by customers so as to achieve
organizational objectives.
Imaga (2001:170) surmmrises the concept of management to mean the planning,
organising, directing and controlling of the rare resources of knowledge, people,
information and technology to attain quantitative and qualitative stated result with
economic efficiency and effectiveness.
Nwachukwu (1988b:xvii-2) sees management as one of the most important
human activities that cut across all organizations, believing that no, human
endeavour can do without "proper management for its proper functioning." He
traces the problems of development as a big one to Afiica, insisting that the
economic backwardness of Aiiica, and therefore, Nigeria, is not traceable to
maldistribution of resources, physical katures, climate, size, location, or culture
but that ". . . of the factors that are necessary for economic take off, none is to be
stressed more often than management."
Drucker (1974:13) describes Management as the crucial factor in economic and
social development.
Globalisation and Management
Bateman and Snell (2002:8) maintain that isolationism has become a thing of the
past and prescribe this idea for business organizations that must survive
worldwide competition in the global niarket place. U.S companies are no longer
the unrivaled stars of the business world, but Sony, Honda, Bayer and Royal
Dutch Shell.
They further submit that:
Even small fums that do not operate on a global scale must make
important strategic decisions based on international considerations. Many
small companies export their goods. Many domestic frms assemble their
products on other countries. And organizations are under pressure to
improve their products in the face of intense competition fiom high quality
foreign producers. Firms today must ask themselves, "how can we be the
best in the world"?
Good Plan
Nwaochei (2001) gives the features of a good plan as consisting ofi
i) A survey of the current situation
ii) Proposals for improving the institutional fiarnework of economic
activity.
iii) A list of proposed government expenditure
iv) A Macroeconomic projection for the whole economy.
v) A review of government policies.
Management Functions
Traditionally, Management tasks are grouped into functions, made up of planning,
organizing, directing, coordinating and controlling.
Henri Fayol (1949) describes five functions of Management and prescribed 14
principles as the pivot of effectiveness which include Division of labour,
authority, discipline, unity of command, unity of direction, subordination of the
individual interest to general interest, remuneration, centralization, scalar chain
(line of authority), order, equity, stability of tenure of personnel, initiative and
esprit de corps .The five functions, according to Fayol, consist of the following:
Planning- A plan is a course of action set out by management to enable it achieve
its goals and objectives. A plan need not be made except where accompanied by
an implementation strategy, otherwise such a plan remains a mere intention.
Organising- with a plan, the managers now mobilizes, organizes and harnesses the
humat1 and material resources needed for the implementation of the plan. The
Manager also allocates the resources and delegates authority as appropriate.
Directing- This role is essentially an interactive function and this is done through
maintaining good con~munication with the staff including assisting them where
possible. e
Coordinating- The Manager coordinates very varied and diverse functions to
ensure efficiency and effectiveness. This is particularly so when realized that the
performance of organisational activities is somewhat atomistic in nature, given
that different and several units work simultaneously and independently towards
the same goal.
Controlling- The gestation period (otheiwise described as the interval period)
between planning and implementation on the one hand, and accomplishment of
the organizations objective, on the other hand, allows for continuous monitoring
and evaluation of performance, policies and procedures against set standards.
This allows for analysis of deviations and correction of mistakes.
Effective and Good Management
Mintzberg (19805) argues that as a result of the complexity within the internal
and external environment of organizatioils, effective management is increasingly
occupying attention. The dynamic society must task its management to anticipate
changes and their impact, while also taking appropriate actions against such
changes.
Roger (1991) identifies thc factors o r planning, pcrlbrmance-based rnanagemcnt,
delegation, motivation, tcamwork and innovation as required qualities that make
for an etyective and rcsult oriented Matlager.
Scotter (2000:85) submits that leadership and Management are two
complcmcntary systems rcquircd for succc:ss in toclay's cnvironmcnt. 1,cadcrship
strives to cope with change and has assumed increased importance in recent ycars,
given thc competitiveness and volatility, which [hc busincss world has assumcd.
Managemcnt on the other hand, copes with complexity and for which, its
practices and procedures are for most part, responses to the emergencc of large
and complex organizations. Scotter advises a blcnd of the two concepts i.e. a
combination of strong leadership and strong management and to "use each other b
to balance each other".
Imaga (2001:166-168) argues that any nation that is unable to effectively and
efliciently manage its economy including the conversion of its resources into
goods and services to boost Gross national Product (GNP) and enhance its
standard of' living, is as bad as not having the resources. He paints a
disappointing and sad position over Nigeria's situation relative to other
"resourceless" countries such as Japan and South Korea. He identifies the
problem to be "the critical factor of managing efictively".
Ayagi (2001) opines that efficiency and effectiveness remain indispensable
factors in the success of any organisation or institution, whatever the level of
resources - physical, human or iinancial. He citcs the many examples of failed
Nigerian Organisations such as the Nigerian National shipping Line (NNSL) and
the Nigerian Airways Limited. The former, which had several ships by 1979, has
since gone under, while the latter, which also had over thirty airplanes by 1979
and was on the route of many overseas countries, including high domestic
operations, hardly has a plane today. He traces their problems to bad
management.
Imaga also describes the elcinents of' good managcmcnt to include the scicntilic
investigation 01' lhcls, co~lliliuous pl~~li~ii~ig, dclcg~~lio~i 01' L I L I ~ ~ I O I ~ ~ 1111~1
responsibility, and pcriodic rcvicws tow;~r.ds ud,j~ius~n~cnl. Also, management skills
that engender favourable results and outcomes include:
a) The ability of management to detect business trends and
opportunities.
b) Ability to take sound decisions.
c) Ability to plan and schedule actions
d) Teamwork knowledge.
e) Ability to admit mistakes where appropriate
f ) Ability to adopt an adjustment mechanism.
Japanese Management Philosophy
Japan's growth into an industrial giant and power today, is a function of its management
philosophy which Ouchi (1972:80) believes is based on ,an approach of equalitarianism,
trust, openness, teamwork, cornrnitnzent, common objectives and consultative decision -
making. Ouchi, as a renowned exponent of the Japanese management approach,
propounded his theory 'Z' which is a deliberate attempt to build on the theory 'Y' effort
of Douglas McGregor. According to him, large and complex organizations, are human
systems, which can only be productive, based on tlzc quality of genuine humanism
injected into them. The 'Z' organizational culture thrives on the three major pillars of
trust, subtlety and intimacy. The work culture of the Japanese relies on the fact that the
involved workers are the reason for increased productivity. The employee is encouraged
to see his mission as a contribution to organizational goals.
Hinkelman (1994:l) presents Japan as an extremely disadvantaged nation, which at the
conclusion of the pacific war in 1945, was already an economy in ruins, and disarray.
However, since the late 1940's, Japan has built a dominant, modern and internally
I I I I Owl~i , ;IS :I I I . ~ I I O W I I ~ ~ C X J ) O I I C I I ( ol' ( ( I ( * . J ~ I ~ ) : I I ~ L w I I I I I I I I I ~ ~ L ' I I I C I I I I I I ) I ) I ' O I I ( ' ~ ,
~)rolwun(lcd his tl~cory '7,' which is :i tlc*lihCr:~~c altcnipt IO h~rild o n fhc thcory 'Y' cllhrl
01' Lhuglas McCrcgor. According Lo him, hrgc and co~~~plc r ; 01-gankolior~s, arc I~u~nan
systems, which can only bc produclivc, based 011 lllc qualily 0 1 ' gcniriw Ilu111:111ist11
injcctcd into them. 'l'hc '%' organizational culturc thrivcs on thc thrcc major pillars o f
trust, subtlety and intimacy. 'I'hc work culturc of' thc .I;~lx~nesc rclics on thc fhct that tllc
involved workers are the reason for increased productivity. The employee is encouraged
to see his mission us a contribution to organizational goals.
I-Iinkelman (1994: 1) presents Japan as an extremely disadvantaged nation, which at the
conclusion of the pacific war in 1945, was already an cconomy in ruins, and disarray.
However, since the late 1940's, Japan has built a dominant, modern and interpally
oriented economy, which is based on the features of product innovation, high quality
pl-oduction, advanced services and increasing domestic consumption. Today, within a few
decades, Japan has transformed itself to a large economic power.
Contingcncy and Situational Managcrnent
Koontz. O'Donnell and Weihrich (1980:18) argue against one best way to manage
situations and circumstances. No one expects a medical practitioner to administer
"penicillin" to all patients irrespective of their ailments, cven as engineers would not be
expected to design automobiles as airplanes. "In the same way, effective management is
always contingency or situational management".
Visionary Managcmen t
Abolo (1998:20) presents vision as a mental picture of the future, which is perceived as
bctter and more attractive than the current state.
Ihzie (2001) recomn~cilds a continuous rcinvcnting of' vision to make the posscssion of
vision complete. This is because tinle is not static just as vision is not cast in a concrete.
It must be flexible enough to accommodate environn~ental adjustments. While
"invention" remains a preserve of the visioner, "reinvention" is the product of
contribution from enlployees, partners or stockholtlers.
Covey (1989:88-89) interprets proactivity as meaning more than the mere taking of
initiative, and disagrees with its meaning as being merely pushy, aggressive but that it is
"changing fiom the inside out, to be difyerent.. ." and hcing smart, value driven, reading
rcality and knowing what is needed".
Imaga (200 1 : 15 l), reasoning within similar thinking, dclines innovative entrcprencurial
management as "the process of organizing, managing, and assuming the risks of business
with as much preparedness as flexibility enough to deal with opportunities and threats".
IIe submits that such innovative ability has the potential of affecting and altering the
socio-economic position of an individual, company, industry or economy.
Rural Communities in Nigeria
Meaning
The word 'rural" comes liom the Lati11 word "ruralis" which means a location of
open land that is typified by simplicity, lacking complication and sophistication
and used for agricultural and pastoral purposes. (Webster's Third International
Dictionary: 1990).
1 Iayami (1 980:27) believes that any cl'fctivc dcsign of rural development
strategy rcquires the understanding of the villagc-community organization and
institution, which governs the use of resources Ibr production and exchange in
the rural sector. He emphasizes that the "village" is the basic unit of life in Asia
and that villagc com~nunities in dcvcloping counlrics arc to a Iargc cxtcnt, sclfr
coi~taincd and subsistcncc-oriented, even though Ishikawa (1975) disagrecs that
lhcrc is no villagc ofpure subsistcncc in cxistcncc
Carvcr (1924: 14) sccs rural economy as " l i ~ i t branch of the science of
statesn~anship which deals with agriculture, othcr rural enterprises and rural life
as factors in Nation building.. ." Onc striking liiclor of this definition is that it
presents agriculture fiom a pivot position, evcn as he refers to it as the victua.lling
nerve center of rural landscape.
Otitie (1990:5) believes that, what is refcrrcd to as "rural" is not the same in all
societies or countries, and also, proceeds to distinguish between the case of
Amcrica and Europe on the one hand, and Nigeria, on the other hand. To the
former, population maybe a critical factor sincc industrialization and standard of
living are uniform whereas to the latter, li~ctors of cultural, social and
psychological dimensions arc more important.
Ohtunbosun (1975:5) says the word "rural" could be the subject of economnic,
sociological, ethnic, racial and other considerations. However, the concept of
"ruralness" in Nigeria is a composition of man), peculiarities from various rural
occupations. Nigeria could thus be grouped into rural entities and each, with a
basic occupation such as farming, fishing and hcrding. As a result, the Nigerian
rural sector is heterogeneous despite cornmon occupations such as trading. It is
nevertheless honlogenous, giving regard to each rural entity.
Olayide et a1 (1975:284) sce the featurcs of [r;iditional rural communities as
including dcpcndcncc o n tlic non- rti~xl sccto~. tlicir i~ialility to undcrst:~nd,
control and influence much of the outside world.
Anthropologists and Sociologists have now generally accepted that rural
occupations consist of two main sectors - the agricultural and non-agricultural,
and this is very relevant and appropriate to the case of Nigeria. The agricultural
occupation involvcs cropping and animal l~sbandry. The non-agricultural
occupation consists of three broad types, namely; the self employed - crafishen,
shopkeepers, traders and industrialists including government or other employees.
Otite (I 990:19) diagnoses five categories of rural Nigerians fiom the rnake~lp of
agricultural and non-agricultural workers. They consist of those who have never
ventured out fiom their localities, rural lo rural migrations, the rural based but
who commute daily and periodically between rural and urban areas, the urban
based, but derive livelihood from rural occupations and the white collar workers
in government and private enterprises but who go in and out of the rural system.
Another feature of the Nigerian Rural agricult~~ral worker according to Otite
(1978) is that his income is not commensurate with his arduous production tasks
and only just meets his modest expenditures. 'l'hough he may not lack what to
eat, the profits realized fiom the sale of small surpluses will just be insufficient to
mcet up household expenses, particularly wherc this includes school fees. His
financial position has sufiered deterioration. with inflation. The rural agricultural
worker therefore hardly makes wealth from his produce.
Olcigbo (1969) is also of the view that the avcrage Nigerian has increased his
demand for non-agricultural, imported commodities, thus aggravating the
"margi~~ali~~lion" syntlro~~w ol' Ox rural l im~ci 411cc- Il~c ~nitltllcnlc~l i d ~ w n l
capilalists (operating from the urban ccntcrs) conwnlc what should ordinarily be
the farmer's and cites the example of' how, many urban dwellers throng the rural
markets to purchase food and crops a1 comparalivcly low priccs, only lo go and
sell them at high prices for profit. This situation has today thrust on the Nigerian
rural agricultural worker a low status and a kcling orinferiority.
'I'ht: rural-urban dilrercntial in personality and life style is explained by the
relative absence of amenities and services in thc rural areas. The rural areas are
featured by poor infrastructure of especially roads, inadequate medical services
and hospitals, generally deficient educational Iicilities, absence of pipe borne
water and poor transportation. Otite bclicvcs thal @
In spite of their lack of technology and poor physical
conditions, the rural Nigerian Societies produce and supply food
and raw materials to their urban counterparts; Through
migration, they supply human capital, all of which help to
suslain the national economy. Nigeria's rural also provides
secure enclaves in times of crises and prcserve the indigenous
cultures and social organization of the over 250 ethnic groups.
Otite (1990:21) is also of the opinion that no part of contemporary Nigeria is
isolated and that every rural territory is an inex~ricable part of one country since
even the remotest part is reached from the central level in order to improve
standard of living and development. The rural areas and people are therefore not
stagnant since they experience changes and development in various forms.
Taylor and Jones (1 964), believe that rural Nigerians are mainly agriculturists
compared to the urbanized segment of the population which is engaged in
occupations such as manufacturing, mechanical and commercial and within what
could be referred to as a man made environment. They maintain that high density
of the population and rurality arc ncgativcly col.rcli~lctl wllilc urb:u~ily o l d high
~)opulalio~l Ilclcrogc~lcily arc positively corrcl;~lcd, ; I I ~ as such. tllc rwal
population is less differentiated and stratitied than [he urban population.
I.'urtllcrmorc, they arc of tl~c view I hat 1 l ~ c incitlc-11cc of migration from the rural
arcas is niorc to thc urban area, in t l - ~ Ilol)c Ii)r Octtcr cco~lo~llic I'Orti111cs i ~ ~ l t l
adventures.
At a general level, Nigerian rural Communities are characterized by illiteracy.
The Second National Development Plan (1 970-75) presents 75% of rural Nigeria
as illitcratcs, with only about 10 O/o literate in 1ioni;in or Arabic script.
b
Rural Comnlunitics are also noted in their direct relation to land. Nigeria has a
land space of over 923,773 Sq.Km, and with land traditionally vested in the
lineage or community, it is clear that a greater percentage of rural Nigerians are
spread over a greater percentage of the land, particularly when remembered that
the urban centers are more densely populated.
Olatunbosun presents Nigeria's rural sector as economically backward, with the
gap between it and the urban sector ever widcning. The rural people have been
unaffected by development efforts. Nigeria's dominant features of poverty,
unemployment and inequality in income and social amenities are mainly those of
the rural population. He m h e r submits that the rural population in Nigeria
possessed fairly complex social organization before the colonial era, which they
used in defending themselves successfully in tinles of war. Olatunbosun, hrther
con~ments :
The rural people engage in trade with other
communities selling their impressive and
indigenously distinctive works of art, craft and
handicrafts. Over 80% of the rural people engaged
The rural food crops of Nigcriii includc Ihc root crops of the South, thc
grain crops of the North and thc two o~crlapping crops (i.e. root crops,
with subsidiary crops and culinary crops) of the middle belt. The root
crops are mainly Yam, Cassava and Cocoyam with maize, rice and beans
as subsidiaries. Minor crops normally available in small quantities, for
culinary purposes include spices, leaf plants, Pumpkins, Melons
Calabashes, Okra, Soya beans and oil seeds. The Northern grain economy
is characterized by guinea Corn, Millcts :lnd Groundnuts. Others are Rice,
Acha and Tanlba.
Aside from food crops, there are cash crops produced under peasant
cultivation such as oil palin products of' palm oil and palm Kernel which
supports the rural economy of Eastern Nigeria, Cocoa and Kolanuts fiom
the Western Nigerian rural economy and (;roundnut, Cotton, Reniseed and
Soya beans fiom the Northern rural economy.
Livestock farming of domesticated animals, particularly from Northerri
part of Nigeria forins an important part ol'the rural economy of Nigeria,
with the main cattlemen being the Fulani hcrdsmen.
Fishing is both a full time and off-season occupation to some rural Nigerians. It is
full time to those living in the coastal areas and around inland rivers and lakes.
Large-scale fishing is undertaken along coastal waters with the sea fishermen
being the Ibiobios, Andonis, Ijaw, Ibos and Yorubas. Fishing in the Kainji lake
and Lake Chad has contributed much to the economy of the country.
Olatunbosun believes that the non-agricultural sector of the rural Nigerian
econolny, particularly local crafts and small scalc industries is rclativcly (by
African standards) advanced, citing the examples of the textiles and clothing
industry, metal work, pottery, dycing, calabash and leather working. He argues
that the contribution of rural communities to thc revenues of past regional and
state governments in the form of cxport taxes o n primary produce, produce salcs
and purchase taxes on same produce including trading surpluses of marketing
boards is significant. Other sources of income include personal tax revenJes by
rural comn~unities and contribution to rcgionnl or State shares of import and
cxcise duties. Diejaomaoh (1972) confirms that rural communities contributed
morc than 50% of revenues of state governn~ents by 1972.
Rural Econorny and Development
Nigeria's Rural Sector is considered to be quitc significant, given its population
and workforce, including contribution to the Gross Domestic Product (GDP). In
200 1, Nigeria launched three strategies for Rural Development namely, the
national policy on Rural Developmnent, the Rural Development Sector Strategy for
Nigeria and an Agricultural and Rural Development Consultative group.
Government had declared then that the transformation of the rural sector remained
the backbone of development strategy given that over seventy percent of the
citizenry live in the rural areas.
The three strategies represent positive
impression, direction and guidance to
programnles of government on rural
Other countries have also always accordccl priority status to the issue 01'
rural development, givcn its vital ~iature. ('ollsidcr thc following positions
by some of Africa's past Icaders, according to Chambers (198 1):
a) Kenneth Kaunda, president of thc Republic of Zambia, while
introducing the second national development plan 1972- 1976:
"For us, developing the rural areas is a matter of life and death.. ."
b) Seretse mama, president of the republic of Botswana, introducingthe
national development plan 1970- 1975 :
The greatest challenge ahcad of us is undoubtedly
that of rural development. The transformation of
rural communitics everywhcrc presents an
intractable problem ... yct if ' (hc majority of
Botswana arc to benefit fi.0111 thc dramatic increase
in the pace of development which has taken place
since independence, this problem must be solved.
c) Mwalimu Julius K. Nyererc, president of the united republic of
Tanzania, introducing the Tanzania second five year plan, 1969- 1974:
This decision to give top priority to rural development does
not only affect what is done in the rural areas; it also has
implications for every other aspect of the development
plan.
d) Also, the Republic of Kenya, Development Plan 1970 - 1974
The key strategy of this plan is to direct an
increasing sharc ol' the total rcsourccs
available to the nation towards thc nrr;~l arcas.
Singh (1 971) maintains that thc rural scctor is a subset of' two basic and
interrelated phases, namely, a rural society and a rural economy, just as
Otite and Okali (1990:2 1) sce rural dcvelopment as the "increasing
structural differentiation of rural societies with increasing opportunities for
more productive occupations and for highct- standards of living".
Managenlent of Activities of Rural Cornrnunities/Types of R U ~
Economies in Nigeria.
Economic activity in the rural areas is centred directly or indirectly on
land exploitation and principally built around farming, poultry, animal
husbandry, fishing, forestry, food processing and cottage industry.
(Olatunbosun 1975: 10).
Obichukwu (2003) suggests seven major subsectors within the wider
agricultural sector to include the upstream, processing, manufacturing,
storage and packaging, marketing, distributive and inputs.
Olayide e-t a1 (1975:15-22) classiijl seven rural economies on the basis of
the predominant primary activities engaged in by the majority of the
dwellers and which include, farming, fishing, hunting, lumbering, pastoral,
gathering or collecting and craft communities.
'I'his is the oldest kind of rural economy ad is lbund all over tile globc.
I11 developing countries, firining rangcs li-om the man with tlic digging
stick plus matchet and hoc to the partly nlodcrnized small tractor mixed
Ilrming. Within the Ihrming c o ~ n ~ ~ i u r l i ~ ~ , 1lic1'e is usually a three-lhlil
depe~ldency pattern which includzs dcpcndence on the unpredictable
wealher, the thin sheet of soil that covcrs the landscape and thc biological
rhythm including the caprices of plant and animal life.
A typical Nigerian Rural Farmer is usually a small holder, planting areas
of between 1.5 - 2 hectares and often divided into small and scattered
plots. The farmers will norinally engage in cultivation that is enough to
satis@ their needs with some surplus that could be sold, or exchanged or
even given to friends and dependants.
Fishing Communities.
'Thcse arc groups who since ancient days, relied on water resources for
much of their livelihnod, given their proximity to sea, lagoons, lakes and
big rivers. Comnlunities abound in Imny rural areas, which depend
primarily on commercial iishing. A ~ y i c a l example is the Christian
Fishing conmunity in Aiyetoro, Nigeria. Olajide et a1 are of the view tlut
such comtnunities have hardly been ablc 10 extract bye products &om fish
in the form of fish oil, fisllmeal etc. As a result, " considerable wastes are
involved in the crude processing and preservation methods that are
designed to preparc the catch for the ma:-ket."
Fishing to some rural Nigerians is 110th a full time and off-season
occupation. 'The former is practised hy those in the coastal areas and
Pastoral Communities:
l'hcsc consist of groups of no~nadic stock raising peoples. I'asloral
communities usually tend cattle, or shecp or goats or a combination of
these. In some cases, pastoralists could be semi-nomadic or sedentary
ranchers. The completely nomadic groups practice transhumance, which
is thc seasonal movemenl of man and stock bctween various grazing
grounds according to a seasonal rhythm in search of water and pasture
throughout the ycar. The main ethnic groups who arc rcnowned and
skilled pastoralists in Nigeria are the Fulani's, the Kanuris and the Shuwa
Arabs in the North. Of these, the real cattlen~en of rural Nigeria are the
Fulani7s.
Craft Communities:
Rural crafts include enterprises such as pottery, basketry, smithery,
carving, tarmery. calabash-work, mat-making, brass metal casting,
weaving, dyeing, etc as cnti products of rural life. In many developing
countries, rural communities have acquired specialization in some types of
crafts either on the basis of the abundance of some local resources or
created inherited skills.
Local crafts of particularly the textiles and clothing industry, metal work,
pottery, dyeing, calabash and leather working within the Nigerian rural
cconomy have continued to undergo rclinement and development. For
instance, the dyekg industry is widely entrenched in Northern and
Western parts of Nigeria. Furtherrnorc. brass workers are found in Bida
and ICano whereas wood working and pscparation of leather goods are
found mainly withi11 tlic f f;wm and Yor[ilx~s. Wood working artistry and
blacksmithing arc prcdomina~lt activities of the Awka people of Eastern
Nigcria.
Hunting Communities:
Hunting as a search for food has bccn one of man's earliest means of
subsistence and has persisted in nlany primitive and rural communities. In
such con~munities, adcquatc supply of game largely dcpcnds on suitable
environment for wild herbivorous and skillcd hunters.
Unlike the few exclusive hunting tribes in Afiica such as the Bushmen jn
Namibia, the pygmies of Zaire, thc Massai of East Africa, there are
hunting groups and Communities in virtuaily every rural area of Nigeria.
Hunting is a full time occupation to only a few rural Nigerians while the
greater percentage engage in hunting as a part time activity when fxrning
is less involving or during periods of dancing festivals that will demand
nxat supply.
Lumbering Communities:
The logging industry, essentially involves felling of the trees, cutting them
into. logs (bucking), pulling or hauling the logs (skidding) to assembly
points (landings).
I,urnbering communities have not h e n particularly popular and
pronounced in Nigeria, thus resulting to a per capita low wood
consumption index. Consequently, the logging communities in Nigeria,
unlike that of a country like Canada, have perpetually remained
undeveloped.
Olatunbosun submits that rural people hardly benefit from the products of
the forest for reasons of lack of capital for necessary investment.
Gnthcriug or Collecting Camniu~ritics
This is a modern h r m of primitive fruit gathering occupation of the 'early
man' and typifies a peasant economy. In West Afiica, most peasant
farmers find ready market for their crops of cocoa, rubber, coconut,
orchards, palm oil, date palms, palm kerncls as in Nigeria, Ghana, Liberia,
Ivory Coast etc. The pcasant communitics involved are better referred to
as "modern collectors" rather than farmers. b
Olajide et a1 argue that the modern "collectors" are threatened by the
problems of capital, scale expansion, replanting, new planting,
rehabilitation of new holdings and thc pricing policies of governmental
agencies involved in the purchase and marlding ofthe commodities.
'The above economies as enumerated will always represent the defining base for
rural business organisations.
Rursl Communities and Busincss 1)evelopmcnt
Industrialisation to rural communities, mean the operation of an industrial
concern, of a small scale, cottage type within their local setting. The range of
rural industries as listed in Otite and Okaii (1990:443) include Baking,
Blaclts~nithing, Boat making, brcwing, Brick milking, Carpentry, Wood carving,
Dyeing, Electrical work. furniture making. gold Smithing, Grain milling,
h i t t ing , Leatherworks, Motor vehicle repairing, Pottery, Printing, Rubber
processing, Saw r d i n g , Shoemaking, Tailoring, Watch repairing, Weaving,
Welding etc.
'I'he l)cp;xrln~ent of Rural I)cvclopl~~cnt, 1:cdcral Minislry 01' Agriculture a11d
Rural Dcvclupmcnl (2001) classifies ~ilri11 inccilltc gcncrating cntcrpriscs inlo
eight (8) types namely, Cottage Agro-based Indr~stries, Mineral-based industries,
n-ictal-bascd industries, Sports recreation anti Culturc, Waste recycling, Arts and
Cralts, Vocational and 'I'radcs and r<nginccring :~ml 'i'cclu~ology. (scc nppcnclix
'13').
Rural underdevelopment in the communities is underscored by the celebrated
problem of mass migration and exodus into the urban areas which grow into
comparatively economically unmanageable s i x ~e i th the consequence of surplus
labour a i d therefore, unernploynlcnt, wl~ereas thc rural opposites remain victims
of labour shortage and diminishing productivity, particularly, in agricdltural
activities.
'I'he rural communities have remained the primary producers of Raw material and
h o d ibr the urban dweller. 'The task of all stake holders including government,
sl-lould includc:
a j The location of' modern cn~ploymcnt capacities in rural areas.
b> The per capita cost of creating the jobs should be low enough
to pernlit large nurnbcr of jobs and with simple production
technologies.
Production must be based on local raw materials to suit local needs
and markets.
Oshohi (2000) believes that a sustainable indus~rial process must be grounded in
the culture of the population and such a process must i'ocus on the use of locally
invented technology and to use such technology lor the production of the needs
and wants of the population as necessary for survival. Such survival must be
predicated on their traditional food, shelter and clotl~ing. Indeed, survival of an
IPural Businesses and Corl tribution to 1)evelopnnen t
In troductioii
Akeredolu Ale (1995 eds.) maintains that rural non-farm activities provide about
one-fifth or more of rural employment in developing countries, including
Nigeria. The activities include manufacturing, trade and services. The gural
Small Scale industry of handicrafts play a domil~mt role. They also contribute
signific~itly to rural houseliold income. The ex;~nqAes of places like Japan attests
to this.
Robock (1 952: 143) dcfines rural industries as:
those ~nanufacturing enterprises which possess locational
advantage when sited proximatr: to a;:ricultural raw materials,
forestry raw matttcrials, fishery raw materials, other natural
resources and/or local government area markets.
Many studies have linked rural industrializatio~i to the enhancement 01 family
income, creation of rural enlployment and partic-ularly for rural women who have
in many developing countries, been saddled wit11 the task of family maintenance
and support. Gallin (1984), ui her paper on "IZural industrialization and Chinese
women: A case study from Taiwan", examined how women facilitated Taiwan's
comparative advantage in the world economy and concluded that women in
Taiwan subsidise development thro~kgh their mai~\tenance efforts in the family.
l'akuechi (1982: 1 ) describes how, in Japan, thc "urban-type small and medium
industries" became a mdjor productive sector oi' labour-intensive, medium, spa11
and mini-scale enterprises, having extended opcutions into the villages for the
sake of capitalkin2 o n surplus agricultural 1abo111. The shell button industry, thus
took root as a unique fimn of decentralization. As the urban city developed, land
rent, wges, and other costs rosc steadily and the manufacturers began to
cxrserience other severe operational difficulties until they expanded through
n-eloi.~ltion to the rural arcas. "They took their ~ o o t there, and created a wave of
rural industrialization."
lJkwu, i r ~ Nwosu E.J (1 995ed.), sees industrialization as critical to the
dcvzlopment strategy of poor co~mtries. Asidc fiom it's traditional functions of
increasing nntioilal income, i~~.proveincnt of stability of foreign exchange
cmhg:;, provision of gninfui employment and ckupansion of market for local raw
:mterials. it is :111 esscntial cataiyst for "self reliance" and "self- sustaining
relevant dewlopment".
Chuta and Sethwaman (1 984) assert that most developing countries have a sizable
rural non farm sector, especially traditional r u r d industries, but wonder at thc
rchtiw neglect of t!iis sector in development plms. They estimate that nlral non-
farm activities such as manufacturing trade and services account for about one
Abimiku and Anzahu (2001) sce rural arcas as ll~ose parts of a socicty that are
unable to experience good quality of life as a result of the differential in the
distribution of amenities between them and urban areas. They are neglected areas
due to their rudimentary and inei'fiiciient mode of pr-oduction.
C)basa~!jo and Mabogunje (1 991) also believe tli:r( rural areas are defined by their
depleted workforce, B
their rudimentary and inefficient nlode of production their
general lack of basic infiastructwc and social amenities ...
the paucity of processing fixtoric.~. markets, banks, storage
depots and machine repair shops.. . for theses reasons, rural
areas are norn-]ally unable to har111-s~ their abundant natural
resources.
Approaches to Rural Business Development iti lt l Industrialisation
Chuta and Sethura~~ian (1 984: 144-1 49) have ici,:!~tified three approaches to rural
industrialization to inciudc:
a. problem oriented approach, which is designed to deal with specific
bottlenecks or constraints at the enterprise level.
b. sectoral approach aimed at promoting tlw rural sector as a whole.
Iiobock classilics live types of' rur;tl I ~ I I S ~ I I C S S ~ - : lo i~lcli~ilc ~ I C S O I I ~ C C Ioc;~tc~i
industries, cxtrnctivc ilduslrics, urban pcriplicr! industries, rural niarkct-town
Industries and Traditional primary induslrics.
Strategies For Rural Businesses in Nigeria
Iliekoronye (1998:9-10) maintains that Nigeria's Lbconomy Iargely remains one of-
subsistence agriculture, with about eighty per cult of the population depending on
it, even when it contributes only about thirty pcr cent to national incomd He
laments the inability to generate substantial income that can support satisfactory
standard of living through the resources bcing exploited from oil, plantation crops
and forest products. As a solution, he prescribes a surge of interest in
entrepreneurial activities within the agro-food qCdem. Further more, the country
rnust inlprove traditional technologies while adop!ing new ones in order to reduce
post harvest losscs and to increase valuc-adtlcd to agricultural produce, as
according to him, in the years ahead, issues t h ~ t will engage economic growth
ilgcnda and that will guarantee better life hi the rural masses in the next
lnillennium will include acceleratilig urbanization, the need for greater rural
tx~ployn-ient and aspirations for highcr incol~~cs, easy to prepare diets and
decenlralized ecoi~o~nic activity and emphasis on slnall to medium scale food
processing technology.
Ahi~niku and Anzaku suggest the followir~g'stral~-.gics for achieving rural business
devclopincnt in Nigeria.
I. Government, to deliberately promote thc small scale industrial Sub-sector
through provision of infrastructural facilit ics to rural areas.
. . . 111. ::,,rmation of cooperative Societ ics in rw : I I arcas li>r sounil rnanagcn~cnl of
the srnall scalc industries.
iv. Providing appropriatc training, education, guidance and support by
relevant governmental agencies and the private sector on management of
loans, since rural Nigerians remain the "saving grace of the nation". This
also includes effective monitoring and control procedure.
v. Allocation of substantial funds through loanable funds to the rural sbctor
instead of importers of finished goods and absentee industrialists.
vi. The restricting of specific inclustrie:; to ri.lral areas.
Akeredolu (1995 cd.) sees rural industrialisation as the hub of effective
national intlustrialisutim, which providci lbr massive participation by all
sectors of the nation and the harnessing of the varied raw materials in
Nigeria. An integrated rural dcvclopmcnt policy ibr Nigeria should
contain policies and strategy for rural iiidii..trialisatio~i.
Olatunbosun argues that in spite of the sc\crai handicaps that attend to the
Nigerian rural fhrmer, he had until rec.cntly, continued to increase his
production of export crops, only becausc. he has no better option. On the
whole, the rural sector has been progre>iively eroded by export-oriented
activities which exploited the farmt:rs without ploughing anything back
into the same sector, especially whei(: the colonialists maintaiied a
strategy of devcloprnent which only emphasized promotion of primary
exports and seeing Nigeria's develop~i~ent only in terms of being
supplementary to the stable expansion of r llc metropolitan economy.
Ande (1998:242-244) makes a case lor a vigorous implcmcrilation of Kurd
Industrialization programme with the attendant xlvantagcs of even dcvclopmcnt
of the country and rcduction in cost ofproductio~l as a result of proximity to raw
material sources. Ande belicves that thc ru~,il areas are rcnowncd lbr the
production of agricultural commodities, farm-baxd raw materials or direct food
ago-industrial development and could be operarcd on the basis of a small-scale
industry. Ande lists the following, as benclits of rural industries to rural
conimunities. b
a. The creation of gainfi.11 employ men^.
b. Conservation of foreign exchangc through the provision of basic
food needs.
c. Backward integration advantages lo urban industries since they are
more adaptable to the use of local raw materials.
d. Training base for nmnpower and industrial development.
e. Provides rapid and self-reliant industrial growth.
f. Flexibility in operation and easy adjustment to changing needs,
thus arresting the fears of obsolcscence in equipment.
Interestingly, Ande mentions other not-ofhi-thought of areas of benefit to
include:
i. Maintenance of family unit - especially where couples live apart for the
better part of times due to work in dilkrent cities. The possibility of
encouraging social problems is high in such situations but which rural
industrialization could arrest.
11. Maintenance of Culture - Rural urbai drill. carrics with it the unfortunate
factor of cultural pollution md stain wlljcl~ has the extended implication of
children adopting fbrcign cultures which may not fit our background.
... 111. Tapping of rural wisdom - thc quict aid natural cnvironmcnt o f rural
landscape assists in the articulation of naturc and therefore good for
agricultural development. Abandoning rural industrialization is like the
Biblical saying that "the poor man's "wisdom is despised and lis words
not heard" (Ecclesiastes 9: 1 6).
Olayide et a1 (1975) argues that the only type of rural industrialization that
has succeeded, is the agro industries i.c the one based essentially on
agriculture within the context of crops, livestock, forestry, and fishery.
Olayide et a1 lists the roles of rural industries in contributing to
development process as follows:
iv. Transition to modern economy - rural industries encourage rapid
transition to a more monetised and modernized economy through many
direct and indirect relationships with primary production. Such
relationships include decongesting the urban cities, production of food and
fibres - a prime necessity for the developent process, creation of market
for farm produce and utilization of ~~nemployed and underemployed
labour.
v. Increasing employment - the most basic role of rural industrialization is
the need to significantly solve the cnil~loyment problem in rural areas.
Besides, they ease the absence of non-agricultural employment, which
induces rural-urban migration.
VI.
vii.
. . . Vlll.
l llliciwcy i l l [IsiIgc 01' rc.sollrcScs I I I I . ~ I I i~id~~slr iw, 01. [ l i ~ S I ~ ~ : I ~ I I I I N ~
medium scale types, help in the optimal utilization of scarce resources.
The efficiency arises fiom economies in the use of power, water sources
and labour. This way, Samers can work in industry and also in
agriculture.
Promotion of' regional balance - rural industries help in the geographic
decentralization of industry. They also bring industries closer to rural
populace thus promoting healthy econonlic and social changes. Besides,
rural industrialization invites infrastructural facilities to the rural landscape
thus preventing it fiom being turned to ghost villages and aging farm
population, which has always been a vector for rural-urban migration. e
Conlplementary - rural industries maintain balance between large and
small-scale production units. The smaller industrial units serve as feeders
to the few big industries and this is of immense benefit to the industrial
and economic growth of any nation, just as it enhances the promotion of
"intermediatc technology" particularly for agricultural products'
processing plants.
Obstacles To Rural Business 1)evelopment
Many studies have identified governments' ncglect of agriculture as one key
obstacle to rural Businesses. Bello Ajayi, (Technical Manager, Raw Materials of
Guinness Nig. PLC) decries what he calls "lip service" which successive
Administration in Nigeria have been paying to Agriculture even when agricultural
development was fundamental to industrial growth. Audu Igie (Plant Manager,
Okomu Oil Palm PLC) in a similar vein, laments the neglect of the agricultural
sector, stressing that without a change, the natioll's industrialisation efforts will be
slow. ('The Guardian, June 5, 3003, P.41).
Akeredolu-Alc (1995 cd.) secs the problclns of rural Small Scale Rusinesscs as
infrastructural, lack of rural credit facilities, lack of nlodern technological inputs,
Inclcm.:nt policy cnvironmunt inadequate entrcprencurial setting and
n1an:lgcrlicI !L.
Alulco (1990) identifies thc main obstacles to thc rural small and mcdium scale
13usincsses as munagcrial, technical commercial ant1 tinnncial problcms.
'I'hc nlanagcinent problcms range from lack of' successor, poor ability of and
!imitcd education of the owncr manager whilc the, technical problems have to do
with limited access to modern production equip~ncnts and low level of technical
knowledge. Conrnlcrcial problems of the rural industralist concern linlitcd
cl~ances of market expansion and the absence oi' 3 stable and guaranteed market.
Financial problems mean limited ljquidity or lack of access to capital, and
indcbtcdness of his custo~ncrs.
In most countries of tropical Africa, four main problems of rural Businesses have
been identified, to include;
I.
11.
... 111.
iv.
The relatively low absolute importance of the modern industrial sector in
spite of high growth rates.
LOW value-added of a large numbcr of industries.
'I'hc heavy dependence of foreign capital and qualified manpower fiom
Overseas and
The tendcncy of spatial concentration of industrial activity in limited
towns.
Within the fia~ncworl< o f thc nhovc problcm~~. Ilwc are still ~nqjor lilctors
i~npcding rapid dcvc.lolmcnl ol' rr~sal I ~ I I S I I ~ L - S S C : ~ \ v i t l l i ~ l tlcvclolhg cor~~ltrics :I:;
li) Ilo~vx:
i>
i i)
iii)
i v)
v)
v i)
Economic irnviability and vested inlerests \vhich make rural industrics
"dcild c11ds" ;IS soon as they arc set up .
Monetary wastage as a result ofwrongly located and improperly
planned rural indwtries.
Scarcity of investnient capital.
Acute shortage of' foreign exchange.
Unavailable power and othcr infi.astructiual ii~cilities.
Poor transport, Mo torable roads and railwn y networks and their extremely
expensive accompaniments, which have contributed to making rural areas
of devcloping countries inacccssible "is i,inds" and thus, a disincentive to
industrializatio~i
Chuta and Sethuraman (1984) maintain that developing countries have
always emphasized modern and large industries, notably in the urban
areas, which encourage the popular, but ~nisleading impression that rural
industries arc insignificant or non-existent. Thcy identify Nigeria as one
country where rural industries 11;uclly !~xturc in National Development
plans, even though therc is a general emphasis on sinall enterprises.
Existing plans and policies for the promolion of small-scale industries are
only relevant to thc urban industries and unsuitable as they even penalize
the rural handicrafts and cottage industrics even where they dominate the
small-scale sector.
Williams (1981 :8) dcscribcs how many rural cr& wctc displaced by
~nanulacturcd imports, citing rural Mausa land where rural - based long
distance trade declined as a result of' the activities of l'oreiyn companies
and their urban Nigerian clients.
Onc of thc grcatcst obstacles to rural business dcvcloprnent has been the
relatively under developed state of our agriculture. According to Raw
Materials Updatc Journal, January, 2002, 1'. 1 3- 1 5, Nigeria imports food
and other agricultural inputs to the tune of about $3.0 billion while about
$400m worth of fruit juice is imported into the country with all sorts of
dubious names. This is in spite of the fact that Nigeria has 18 agricultural
research institutes, yet thc contribution of agriculture to the econody is
not more than 5%. Farmers require knowledge in productive techniques.
If other countries can harvest 20000kg of fish per volume of water body,
why is a Nigerian farmer harvesting only 3kg of fish per the same
volume? Nigerian farmers colllect only 200 litres of milk per lactation
from a dairy cow yet a farmer in another country collects 8000 litres per
cow.
Worz (1 985: 103-104) summarises Ihe hampering factors for productivity
development in Nigerian agriculture as linked to, among others, the severe
limitations in rural infiastructure, which is the basis and precondition of all
economic and social life in rural areas.
Rural Transportation
The potentials of business organisations in rural areas will be better
served with a more enhanced rural transportation agenda. Urasa (1990)
describes the central concept of transport as
" the movement of people and goods by any conceivable means".
Wit11 such a l>road conccptllali~;~lio~~, Irckliing and hc:d-loading h a w bccomc prominent
modes of transport in the rural community, especially fbr females.
Olawoye (2002:4-6) in a report on Gcndcr and Transport initiative (GRTI) made findings
on thc social cluractcristics ol' I - i d dwcllcrs wit11 i~nplica~ior~s Ihr transport conditions as
folbws:
Transport related decisions just like most household decisions is male dominated.
Several significant facilities were absent in some communities, even as the
conditions of others wcrc inadcquatc. b
Tht: roads and public transportation system mere generally poor or just fkir.
Transport-related needs were adjudged the overall highest development priority
llnvironmcntal considerations of degradation, such as flooding and erosion were
found to be significant in ascertaining the llcvel and type of transport constraints.
The location of rural communities and distances to other villages, towns and cities
af'eects the degree to which rural communities take advantage of social and
economic opportunities.
Seasonal differences in activities were found e.g at harvest time, there is greater
transport demand for specific crops to the homes and also to the market.
In general, both males and females use more than one transport. There is heavy
dependcnce on trekking and head loading while the use of buscs was the most
highly preferred mode o f transport for majority of rural dwellers.
i) Sakty ol' thc dill 'crc~~~ ~notlcs ol' Lra~lsporl i r~cldi l~g ~l~olor-cyclcs, tlo~lkcys,
c;lnocs and trekking is n maior soilrcc o f concern but the rural conlmunitics liavc
little or no alternative.
j> The rural communities proffer suggestions from two stand points, namely
govcrnrnent sources arid con~munal clforts, in solving transport - related
constraints.
Og~ullana (1972) identifies two migration patterns of the rural population of Nigeria
namely movement within rural ;mas and movements bctwecn rural and urban areas. The
former is made mostly on foot and by bicycle along Soot paths and narrow roads. The
poor transport system impacts very adverscly on the transportation of rural products
thereby resulting into n~rvketing inefiiciencics while reducing rural income.
Olatunbosun mentions waterway as one form of transport that is of immense value to
rural communities, with this, thcy carry on their indigenous trading activities, including
export and import. He nevertheless foresees competition for these mode of transport,
given the construction of morc rural roads and increase in vehicular traffic, rivcrs as
waterways are however in use in many places where there is no alternative.
Rural Industrialisation and the factor of poverty
McNamara (1978) defined absolute povcrty as a condition of life so characteriscd by
malnutrition, illiteracy, disease. squalid surroundings, high infant mortality, and low life
expectancy as to be bcneatli any reasonable definition of decency.
'I'hl: 2001 United Nations Development Progranune (UNDP) report reveals that Nigeria is
the 131h poorest nation in the world with over 70% of its households classified as poor.
The Gnugu State poverty report (1997:s) says the level of poverty in Nigeria has
rernaincd high with some 65.6% of Nigerians estimated to be below the poverty line in
1 FIG. With n population cstiniatc of 102.3niillion, I ~ I L ~ I T wcrc ;)I Icasl 67.1111. poor
people in 1996 compared to 18.41~1 in 1980.
Iiurnl poverty had niovcd fuom 29.3% i l l I OX0 lo 00.8" ;I ill I000 just us urbal~ poverty
also rosc li-om 17.6% in 1980 to 58.2% in 1006. 'rlic r-cport lilrtlicr says that the corc
poor spent 75% of their total cxpe~idilure o n hod, wliilc rhc modcrntcly poor houscliolds
spent a litllc Icss, i.c. 73%.
Anakpej (2001) traces mass poverty in Nigeria to a wcah industrial base, low industrial
capacity utilization, dependence on imports at the expenses of local manufacturers,
neglect of agriculture and small enterprises, decayed infrastructure and absence of
technological development. b
The objective of the Federal Governments Poverty Alleviation Programme (PAP) now
National Poverty Eradication Programme (NAPEP) is the setting in motion of an
effective economic empowerment of the people in the urban, sub-urban and rural
comrnunities aimed at an-esting the mass poverty of the pcople.
Studies reveal that previous programmes by government aimed at poverty alleviation
included the Directorate of Foods, Roads and Rural Infrastructure (DFRRI), Better Life
for Rural Women, and the family support programme. 'I'he end result of all these have
been disrnal failures as a result of haphazard, non focused and blurred implementation
processcs. (Otu 2000).
M~xanya and Okwuobi (2002) assert that Nigeria has been receiving grants toward
povtxty alleviation such as the $2.5 million grant UNTIP in 2000 even as the current
administration may have committed not less tllan $43 5 billion to executing various
poverty alleviation Programmes. They however, believe that the nation would be better
OK concentrating on fanning to produce its own food than the mere receipt of grants and
loans. This is because in spite of the grants, not less than two third of the populations is
poor, with the country depending on imported food to feed its citizenry.
Adi~ioyi-Ojo (200 1) maintains I l ~ r t propcr tlcvclopmcr~l ol'agricultwc remains thc key to
thc transformation of Nigcria's rural areas and yet the same agriculture is poverty
strickcn. Governmcnt, in ordcr to rcducc povcrty ai~iicd at improving living standards
must crcate an enabling cnviron~lient through cllbrts S L I C I I as creating jobs and wealth at
the rural level and the cst;rblishmcnt ol' processing industries. Government must
dclibcrately work at injecting l i l i : into thc rural areas.
The role of small scale busincsscs in rural Devclopn~cn t
The role of small and medium cnterpriscs, particularly \! ithin an age of globalisation has
increasingly become topical. 'I'his is because globalisation affects the competitivenegs of
those enterprises, which are hsccd to contend with cheap and substandard products.
President of World Association of Small and Mcdiunl Enterprises (WASME), calling
attention to this state, comnlented:
We hear arguments for and against globalisation ... but we hear very little about the
impact of globalisation on small, isolatcd SMEs" (Finallcia1 Standard, August, 2, 2004,
1'20).
Akeredolu-Ale (1995) maintains that rural Small Scale industries have received only Iittle
attention as far as thc expericncc of the Third World cti~intries are concerned. Instead,
focus was shifted to capital intensive technologies, thinking this would lead to industrial
developi~icnt and economic growth. The net result was the by pass of the masses (the
Small Scale industries in the rural areas). Consequentl:. the small scale industries have
been identified as catalysts for industrial devcIoptnent.
Akeredolu-Ale lists the advantages of Small Scale Businwses to be:
1. Stimulation of indigenous cntrcpreneurship
11. '1'ra.nsformation of tradit ional industries
... 111. Creation of c~nploymcrll
iv. Enhancement of dispersal of'industrics
v. Diversification of industries
vi. Stcmming of rural-urban migration.
Ilc identifies the Small Scale i~lclustry as a rr~ral dcvclop~llcnl ciltalyst since it contains all
thc cleincnts that make for a hcalthy dcvelopn~cnt of an integrated economy namely the
generation of ernploymcnt, integration of economic space, difhsion of modern
technology, exploitation of regional comparative advan~~tge, development of innovative
entrepreneurship and the pron~otion of development equity.
Some protagonists of industrial development, alongside dcvcloplnent economists b v e
continuously advocated for modest industrial opera1 ions in developing countries.
Spcciilically, they havc argued for cottagc industries, w llich havc as thcir characteristic
feature and orientation, product ion at home.
Chuta and Sethuraman (1984:56) believe that cmphasis on small-scale industry projects
arc lopsidedly on the supply side rather domcstic and foreign sales promotion
arrangements amongst others. '1 hcy frowned at the urb,,ii-based and urban-styled nature
ot' the small scale industry programmes, bt'licving thal whcre this is not arrested, the
small-scale industry promotional effort will always fall short of a rural industrialization
strategy.
N~voacha in Nwosu (1985ed.: 1 !37) opines that the naturt. of small-scale industries such as
low rate of capitalization, low capacity 'md capability t o meet specific local demand and
thc absent or inadequate technology of production ha5 made the sector an ideal and
worthwhile sector for rural industrialsation. Sambo("002:IO) however, believes that
multinational Corporations may swallow smaller co~porations through mergers and
acquisitions, all as a result of the limitless opportunities o i'globalisation.
l'his chapter has attempted to rcview relevant literature o n the effects of globalisation on
the business prospects of rural communities in Nigeria. The review studied some of
co~icepts that gcncrally govcrn International tradc sucli as thc detcrminants and en'ects
and the factors of specialisation and protectionism. While Gabriel (1999) believes that
inequitable exchange became pronounced when European Traders introduced deceit,
Oyelabi (1979) attributes thc growth of the manufacturing sector from the period after
independence to protectionism. Culbertson (1 986) who argued against free trade,
subscribes to "a realistic tradc policy" that recognizes (he peculiarities of each country.
'l'he ovcrnll tradc relationship between Nigeria and other countries appears to &veal
Nigeria as a net importer of most of its commodities and a disadvantaged member of the
world community, with adverse effects on its rural industrialization.
'l'he world Trade Organisat ion, its background struct 11re and functions were reviewed
including its provisions and the General Agrcemenl on Trade and Tariffs (GATT).
Developments in the WTO were covered such as the various happenings that reflect the
positions of the developedlrich countries and the tlevelopinglpoor countries. The
implications of WTO on industrial development were \a-iously presented such as Udeala
(1 999)' Nwuche (2002)'and Oguoka (1 999). They si~ggcst variously that the WTO will
only meall a subjugation of the industrial potentials ol the developing Nations, to which
Nigeria belongs. However, Bello (2002) and Ebi (2000) see benefits of Nigeria's
men~bership of the world body, though they agree on the need for some fine tuning of the
arrangements. h d (1 998) and Ajagu (2002) subscribe to sunilar opinions.
'l'rade lil~eralization and glot)alisation were generally reviewed including its implications,
and specifically on labour and employment and ap-iculture. The Nigeria Labour
Congress and Otobo (2002) belicve that the net impact is that ofjob losses. Specifically,
Otobo me~ltions other side ef'ects as increase in pobcrty profile, mergers, acquisitions,
bankruptcies technological changes etc. Madeley and Solagral (2001) criticize the
harmful ell'ccts of the W'I'O 011 Agriculture. Olhcrs lil\(. Nigeria's l'residc~~t Oluscgun
Obasan.jo, (2001), Schuftan (2002), Mazuri (2001), Arowolo (2002) Obadan (2002),
Ayua (2002) also variously crilicizcd tllc W'1'0 lbr its 1cg11livc cll'ccts 011 clcvclopirig
countries and Nigeria, though, also suggcsling o r I modilicd approach in
ilnplement a t' lon.
Overall, globalisation is seen to possess overbearing effect on in terms of output, demand,
price, imports, subsidy depletion of foreign reservcs. This has implications for
management of Businesses at the rural level.
Business development in Nigeria was revicwed, beginning with its history which
revealed a terrain of potentials since independence in 1960 but which had always p e n
obstructed by multifaceted impediments such that by the last decade assets to the tune of
about N500 billion have been wasted while job losses are on the increase and industrial
capacity utilistion have continued to nose dive. Today the industrial terrain has been on a
steady decline. The general pso blcms of business wesc surn~narized to include, amongst
others, weakened consumer purchasing power, infras~ructuse decay, unavailability of
inputs such as energy, unstablc govcrnmcnt polices, ficcor ol' dumping, ncglec( of small
scale enterprises, multiple taxes and levies and therefore, low capacity utilization
resulting into a high cost of doing business. Of note, is Onyemelukwes (1984) citing of
inef3ii:ctive integration of thc urban and rural sectors, \\hich hnvc grave implications for
the rural busumses and their potentials. The effects ol' unrestricted imports adds to the
illclement industrial environmcnt.
The concept and application of management was revicwed highlighting the subheads of
Management, Globalisation and Management, Good plan, Management functions,
EiFective and good management amongst others.
'The eKect of Globalisation and Trade liberalization o ~ i Nigeria's businesses was looked
at Shafefiddin (1996), Owolabi (1 95)8), Okigbo (1998) and Manufacturers warned on the
lack of a cautious approach to implementation of globalisation, indicating that
isol ;~l ionis~~~ may 1101 :ilso IIC 1)csl x~lidolc, jusl ;IS i l 111;1y 1101 1w I I I C ~ c ~ I I ~ c Y ! ~ . I'ro111olio11
of Small Scalc industries, cxport, increased inflow of tbrcign direct invcstmcnt and
research and development.
I<ural Businesses as a concept was also rcvicwcd as industrics with potentials but also
sulfkring ncglcct. Ukwu submits that incluslsialisi~tio~i i s critical to the dcvclopnicnt
focus of poor countries whilc Obasanjo and Mabogunjc (1991) describc rural industries
by their poor mode of production and poor infiastructure including the paucity o r
psocesshg industries amongst others. Andc (1998) and Olayide ct a1 (1952) dif'fcrcntly
describe the contributions of rural industries. Some of the factors listed include creation
of gainhl employment, encouraging transition to modern employment, eficiency in
usage of resources, pronmtion of regiorml bnlancz, provision of self reliant and rapid 6
growth, backward integration advantages to urban industries and flexibilityleasy
adaptability. However, there arc obstacles threatening these contributions such as
government neglect, imports limitations in infrastructure, poor transport, low value -
added of a large number of industries and undue emphasis on modern and large
industries. Aluko (1 990), Chuta and Sethuraman (1 %4), Williams (1 98 1) and Worz
(1985) wrote variously 011 the ribovc obstacles.
The contributions of small scale industries (which h r m the bulk of rural industries) to
rural development were highlighted by Akeredolu-Ale (1995), Chuta and Sethuraman
( 1 984) and Nwosu (1985).
The literature review generally, revealed that the problems of globalisation as defined by
the style and manner of Nigeria's entry into the VvTO is widely adjudged as a failure and
mismanagement of a vital issue of governance. Government bureaucrats and technocrats
aljke had failcd to enforce good plans, policies and effective Management. Furthermore,
the handling of industrialisation gci~erally and rural jndustrialisation, in particular, are
:~dditional problem areas that call to question govermnent's management of this subject.
Nwachukwu (1988) no wonder sees nxinagement as one important human activity that
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Otobo, D. (2002). "Varsity Don Kicks against Globalisation". Business_Tirnes, June, 1016, 2002.
Otu, bJ (2000). Poverty Alleviation Programme a~id Micro-lending. The ;yzrdian, !;cpten?ber, 20, 2000.
Owolabi, E.. (1998).,-C;lobalisation, Libcrr~lis~~tion and thc Risk of marginalisation of' Nigeria. Central I31ii1k of Nigeria Iksearch Dcrwrhnent seminar - -- - - paper . N o d February 3, 1 998.
Oyclabi, 5.14 (1579). J&ifSs, lhn2cstic priccs. Iiff'ectivc protection and 'h strrictrrre of Forcipr! ---11 Trade. NISElC 1979.
I'asamba, hi., (1999). "G1oba;isntion with a I-Iuman face". The Guardian, December, 8.1599.
Presner, Lewis. (1 99 1 )., The International Buincss Dictionary and Reference. John Wiley & Sons Inc., New York.
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b
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RESEARCH METHODOLOGY
3.0 This study seeks to examine thc implications of Globalisation on the Management
of Businesses in the Rural Communities of Nigeria. This is with a view to
assessing the current state of Rural businesses and enterprises, thereby providing a
general fiamework into their operations.
Research Design B
Research design represents the basic plan for data collection, measurement and
analysis of data. Based on the statement of problem and objectives of this study,
a combination of survey research and available secondary data were used to cover
thc businesses in the rural communities.
Data was collected from both prinlary and secondary sources. The primary
sources of data was through the instrunlentality of questionnaire adininistration
and personal interviews.
Questionnaire were administered to Managers and Operators of rural businesses.
The questionnaire helped to determine the effects of globalisation on their
management operations across personnel, marketing, production and technical
areas, thus assessing the general performance of the firms under study.
Respondents to the questionnaire were anonymous, to allow for objectivity in
responses.
Primary sources.
Prinlary data was collected from the Managcrs and Operators of thc
various rural Businesses from the six Statcs of Platcau, Benue, Nasarawa,
Niger, Kogi and Kwara.
Secondary Sourccs.
Secondary Data was collected from the following organizations.
Agricultural and Rural Management Training Institute, Ilorin. B
Federal Oflice of Statistics (FOS)
- Central Bank of Nigeria (CBN)
- Federal Ministry of Agriculture and Rural Development, Abuja
- Federal Ministry of Commerce, Abuja
Manufacturers Association of Nigeria, Lagos
Raw Materials Research and Devclopment Council, Abuja
Population of the Study
The population of this study, which by definition is the totality of
observations with which we are concerned, irrespective of its being
finite or infinite (Walpole 1974: 121) included the Managers of all
the operational rural businesses across the six States of Plateau,
Benue, Nasarawa, Niger, Kwara and Kogi.
The total number of rural tirnls (covered by the research definition)
as available in the records of the States' Ministries of Commerce
and Industries is 284. However, a good number of them are
suspected to have closed down due to a number of reasons,
principal 01' which may hc poor ~~ianagcnic~it slylcs :rnd attitudes
ii~clutli~ig [llc iliclclilc~~t c ~ ~ v i r o n n i c ~ l l ~llidcr whic.11 intlirslrics
generally operate. Similarly, a Sew ones may also have been
established.
The population included the opcrulors or Managers ol'thc lirrns. A
total of 284 respondcnts were drawn fiom the management of these
firms.
Sample
Our study population is finite, consisting of Managers in all the rural
businesses operating in the states. However, it was impossible to b e
the entire population. The Researcher therefore had to choose a
sample. samplc was thus taken from the entire population to enable
conclusions to be drawn on the basis of the samplc results.
Sample size determination for Managers
Given that the population of Managcrs in the busincsses studied
was finite, the sample size was determined statistically, using the
formula bclow:
n = N
m e ) ' where n = Sanlple size
N = Population size
e = Tolerable error (.05)
Therefore, n = -- 284
1 + 284(0.05)*
- - 166.08
166 Managers thus constituted the sample for this study.
The Heads, including at least one other Manager of the Businesses
under study made up the initial group of rcspondents as follows:
Table 9: nialtc- up of the sampling population
No. of Rural No. of Respondents (Managerial)
Plateau 74 4 6
Niger 44 26 Kogi 29 16
Kwara I 28 15 Total 284 166
Instrumentation
The major rescarch instrument for data generation in this study was a
structured questionnaire. The mode of distribution was through personal
delivery which ensured a satisfactory and high return rate of questionnaire
by the respondents.
Comprehensive questionnaire were issued to the heads of the respective
rural businesses.
Data collected through the above instruments were adjudged sufficient for
this research.
A pilot study was undertaken before finally embarking on the actual
survey in Benuc State, which is iunong the population of study but was not
selected as part of thc samplc. ?'his is borne out of the need to avoid bias
that may result through administering the qucstionnairc twice to same
respondents.
Based on empirical data collected from 4 relevant institutions generally
acknowledged to be custodians of information on rural communities, it
was found that the method enlployed guaranteed and protected validity
and reliability. The institutions are: b
I . Institute of Agriculturnl Research (IAR), ABU, Zaria
2. Federal Ministry of Agriculture and Rural development, Abuja
3. Agricultural and Rural Management Training Institute, Ilorin
4 International Institute for Tropical Agriculture (IITA) Ibadan.
Copies of the dral't questionnaire were sent to the respondents of the rural
businesses chosen for the pilot study. The pre-testing was conducted on a
sample size of 12 which is assessed as adequate in providing information
required to clarify the research objectives, formulate objectives and also,
in line with the statement of the problem.
The comments by the respondents were incorporated into the h a 1
instrument and sent back to then1 for completion on receipt of the final
instrument. Scores were tallied and correlated with the initial scores to
ascertain the instrument's construct validity.
The pilot study thus enabled the rcsearchcr to test the validity and
reliability of the questionnaire and also ascertained the style and format of
question constructions i.c. how simplc or dillicull llicy wcrc, csj,ocially :ls
to whether intcrprctcrs wcre required.
The survey instrument was subjected to content and face validity
techniques by engaging at least 2 seasoned management experts whose
criticisms and corrcctions were incorporated into thc l i d instr~~mcnt.
Data Analyses
Collected data were statistically analysed using percentages, tables, graphs
etc. In addition, the student t-test, Chi-squarc, rcgrcssion analysis and
correlation Analysis were used.
b
The student t-test is used in Hypothesis 1 to test the dependent variablc of
rural output against .the independent variable of global output. According
to Ikeagwu (1998: 15 I), the independent samples t-test procedure
compares means for two groups of cases. Ideally, for this test, the subjects
should be randomly assigned to two groups, so that any difference in
response is due to the treatment (or lack of treatment) and not to other
factors.
Hypothesis No.2 is tested with the t-test. The variables used in measuring
n~anagerial capability (planninglbudgeting, meetings and checks and
control) represent the independent variable, while productivity
represented by turnover is the dependent variable. The t-test is a test
statistic which for suficiently large sample sizes, is approximately
normally distributed. Often, it is the ratio of an estimate to its standard
error.
The Chi square ( X 2 ) test statistic is used to test Hypothesis No.;
nlanagement of rural businesses, represented by personnel, engineering,
production and sales is the independent variable while the turnover of the
Hypothcsis No.4 is testcd using correlation and rcgrcssion analysis.
Foreign exchange is the independent variable, whereas the turnover of the
rural enterprises is the dependent variable.
In a negative coeficient, therc exists an inverse relationship while a
positive coefficient indicates a direct relationship.
Furthermore, coellicient 0 = no relationship, coefficient <0.3 = p o p
relationship, coefficient of 0.4 - 0.6 = moderate relationship.
Furthermore, coefticient > 0.6 = strong relationship while coeflicient of 1
is an indication of perfect relationship.
The hypotheses were determined based on the results of the analyses.
Conclusions and recommendations were also made subsequently.
References
Ikeagwu, E.K (1 998). Groundwork of Rgearch methods and Procedures.
Institute for Developing Studies, UNEC, Enugu.
Walpole, R. A (1974). Introduction to Statistics. Second edition.
Macrnillan Publishing Co., inc.
4.0 ANALYSIS AND I'l~15S12N'I'A'I'ION 0 1 ; DATA
On the basis of the methodology described in chapter three, data was collected
£ion1 the 166 Rural Businesses involved in this study of the impact of
globalisation on the Management of Businesses in the Rural Communities of
Nigeria.
b
'The data generated from this study was prcsentcd and analysed by both computer
and manual methods. The Hypotheses were tested at 0.05 level of significance.
The Research questions and test of hypotheses served as guidcs to the results
obtained.
Analysis of Data
The data generated for this study was cntirely empirical and will bc: presented
here to provide information on the research topic. The primary objective of this
study was presented in chapter one as the examination of the current status of
rural Businesses in Nigeria within the context of globalisation. To achieve thc
aim of the study therefore, a general and broad analysis style, bordering on the use
of qualitative information obtaincd 6-0111 the respondents as shown in chapter
three is employed. This will highlight variables that impact on the management
of the rural businesses, given the factor of globalisation. This will further provide
a means o f evaluation for the four hypothcscs of this study.
Qucstioririairc Atlnhistralion itnd Nctu~-rl Ih lc
Wc prcsc~il lhc r c s p o ~ l s c - I.:I~I: o I ' 1 I x q i l c s l i o ~ l l ~ ; ~ i l I: ; ~ I I I I I I I ~ I C I r:d lo 1 1 1 ~ I C : ; [ ) O I I ~ C I ~ ( S .
A to1:11 of.284 copies ol' tl~c c l ~ ~ i ~ s t i o ~ w i ~ i r c \vcsch : ~ ( l n ) i ~ ~ i s ! c . r c . i l lo lhc M i ~ ~ ~ i r ~ : c r ~ of'
the rural businesses as shown in Table 4.1.
'Table 10: Questionnaire Administration itntl Return Rittc
Nasarawa 4 1 22 73.33
Kogi 16 76.19 Niger 44 2 6 81.25 Total 284 166
Of the 284 questionnaires adn~inistered, only 166 were returned, which also
represents the current number of active and fimctional enterprises. Of this
number, no defects were recorded, such that would be suflicient enough to
invalidate any complctcd questionnaire, L ~ L E giving a rcsponse rate of 80.20%.
The high response rate is attributable to thc fact of ef'i'ectivc and personal follow -
up of the respondents and Research Assistants by the Rescarcher himself.
A breakdown of the distribution and rcturn pattern of the questionnaire by States
is shown in Tablc 1 1
Niger Total 166 -
Of the 166 Rural Businesses covered in this study, their breakdown and Distribution by States (within the North Ccntsal Gco-political Region) is as presented above in Table 1 1.
This is clearly shown in tlx figure below.
Fig. I: Showing Distribution of'liural Busincsscs by States
- - -- -- - - - - - - -
Distribution of Rural Businesses By States
Plateau Benue Kwara Nasarawa Kog~ N~ger L _ _- - - -- - - - - -
Distribution of'1irir;ll Businessus by Statccs irnd year of I<st;ablishment
Tablc 12 Sl~owing Distribution ol'Rura1 Dlminwses by States m d Year of Establish~neet
S(NIIW Cotti~ded fiolll I.1cld Survey
Year Range Before 1960 1960- 1970 1971- 1980 ----- i981- 1985 1986-
Plateau
2004 Total - .-- .. - 42
[Jnstated --. 4. Overall 4 6 'd'otal
" - . " ^ - L U . - S * . f f ff .----
7-
Benue
Of all the Businesses sampled, none was established bcfore Nigeria's Independence in
1960. Of the 141 businesses that indicated their year of establishment, only 3
representing 2.13% were established within the next decade of Nigeria's independence,
wlule only 16 representing 11.35% were set up between 1971 - 1980. 36 of the
Iju~sincsscs arc in the majority group representing 25.53% and belonged Lo the years of
1981 - 1990. However, 16 of them representing 1 1.35% are between 198 1 - 985, while
20, representing 14.18% came within the years of 1986 - 1990. This majority group
deserves some mention, especially for the fact that the 1981 - 1990 period represented
1
the period of the structural Ad.justmcnt I'rogrammc ol'tl~c Ihc~l 1:cclcral govcrrlillc111 which
may have impacted on the clbrts to localize wicl ilicligcriisc llic scltirig 111) 01' I~i~~i~icssc i ,
particularly at the rural Icvcl. 34 01' thc: 13usincsscs I'cll inlo lllc period I000 . 2000
rc~xc:;cnling 24.1 1%. 'l'llc I990 - 2004 pcriotl r;\ngc, illlo wliicl~ tlic ~ i c x t two groups of'
thc businesses fell by way of establishment, shows that close to 50% of thc businesses
were set up within the last decade or so. This only goes to show that an overwhelming
percentage of the rural businesses re~nain victims of high failure rates. This has been the
lot alf the businesses, as most businesses (worst still, at the rural levcl) hardly survived the
first live to tcn years of their establisllrnent. l'crhaps it should also be mentioned that the b
tinling represented the period aAcr Nigeria's cntry into the World 'I'radc Organisation,
which cfYcctivcly marked the rcal phase of globalisation for Nigeria.
Distribution and Sprc:~tl of Hural 13usincsscs Iiy 1t1tlusl1-y Clsssilic* r l I' 1011.
Table 13: Showing Industry/Product C1;~ssilic;ilion of Ruri11 Iiusi~~csscs, by States.
= - lnduslry ClassificntionIProduct Linc I S ' f A T E S
( Plalcau I Dcnuc I ~ w a r a ( Nasarawa 1 Kogi I Niger I Total- 1 1 TimbcrIPlanklSaw milling 1 7 I 1 5 1 - 1 9.41%
39 Kaolin/Tcrr.uzo mill 5 1 40 Solid Mineral 2 2 l . 3 5 C
41 Organic Fertilizer I 1 42 Bottled/packaged Watcr 4 4 2.70 - 43 Construction/BIacksmithing 1 1 2 44 Maize rnill (only) -- 2 -- 2 1'35 - 45 Maize/Sorghum/FccdMill 1 1
(Integrated) 46 FurnitureIWood work 2 2
'0.14 45 30.41 -3120.95 l8 12.16 1 . 4 22 14.86 -v
Total 143 -- Source: Compilcd liom.Ficld Survcy
(20.95%), Nigcr (14.86'%), Nasxawa (1 2. lo%), Kwura ( 10. Iil'X,), Iiogi (12.08) SMc is
the least industrialized, ol' tllc 40 i~ l t l t~s lry clilssilicl~~ io~i:;/l,r.oill~cl ca~cgol.ic,s. Most 01' I I I L *
rural busincsscs lbll illto the ccnenl blocks/huml hicks calcgory ( 1 3.5 1%) li)llo\vetl by
the 'I'imbcr/l'lanks/Saw h4illing (9.460/0), while ricc milling is ncxl, accounting for 8.78%.
The Bakery category and poultry/livestock accounted fbr 7.43% each while the provision
store/warehousing category followcd with 4.05%. GarriICassava processing closely
trailed with 3.38%. Others are reflected in the summary below:
7th
91h
1 2Ih
1 41h
22nd
~pilcd From Pic
I'oultryiLivcstock Provision Storcl Warehous-ing -- GarrilC.assava I'roccssing Kaol inITerraz~ Processing
Aluminum works Printing I'ress Bottlcd/Packagcd Walcr Bcnisced Milling Clay/Pottcry/Ccramics Processing Farm PrduulAgro I'rocessing Yam Millindl'rowssing Ma iz Milling (only) Solid Minerals Furniture/Woodwork Iron Consttudion/Blacksmil~i~~g Motor Sales/scrvicc Rubbcr Produdion
Maizc/Sor&um/Fecd milling (integrated) Organic Fertilizer Sugarcane Processing Palm Kcrncl processing Oranpc/l'ine applc/Juicc Processing Rubber production Elrcwing Iron-ore mining PaintsIresinlKaolin Wire CoilMails Sacks Manufacturing Agro Chemical Fcrtiliscr Produclion iron - charcoal Flour(Whcat) milling Iiooling Tilcs Cemcnt/Limestonc PapcrIPrinting PressIMachinc~y Laundry/Dry CleanindCloth making Oil Marketing Palm Oil Processing SoapIDetergcnt Production EthanoIlAlcohol DiscuitslCon fecTionery Cast IrordGraphitc
It is worth noting that the least category occupying the 22nd position is ~nade up of
25 industry groups of which there is only one of each across the G states. Of
concern, is the overwhelming presence in this least group of the businesses of
Integrated milling operations, Sugarcane processing, Palm kerncl processing,
Flour (wheat) milling, Palm oil processing and orangelpine applcljuice processing b
and brewing, all of which bclonged to thc agro-allied sector.
Distribution of Rural Businesses by Source of Raw Material
Tablc 15: Showing Distribution of Rural Businesses by Sa Material
Source: Field Data
From thc Report in Table 15, an ovcrwhehning number (83%) of the Rural
Businesses sourced their raw nlaterials locally within their immediate vicinity i.e.
in the same location with the businesses. 14.4% go farther away from their
immediate locality while only a mere 2.6% sourced their raw material from
Overseas.
F;wtors Influcncirlg Location of Rural 13usincsscs.
'I'ablc 16: Factors 111flucncing Rural 1311sincss location
Government encouragement Being my village, the only place available - - -- -- - - --
Close to source of raw material --
Close to mv market of finished iloodslservices
Fnclor
High cost of land in urban areas -- Inconveniences/disturba~lce of town li fi-
I( Others --- 4.34 11 I! Total I 161 I 100 11
r f5 3.72
No. Of Kcspondcnts
40
Source: Field data
Pcrccn tagc (%)
24.84
Table 16 indicates that majority (34.78%) of the businesses are located in the rural
t areas for reason of proximity to thcir source of raw material, while this is
followed by 24.84% who advanced the reason of high cost of land in the urban
arcas. 18.63% believe that their villages remain their only asset in terms of
location and therefore went for it naturally. 5.59% are located close to their
markets of finished products while 8.07% mentioned the factor of governnlent
encouragement. Only 3.72% felt that the incol~veniences/disturbance of town life
influenced their choice of rural location.
Factors Influencing Rural Business Location 5G
High cost of Town life Government My village Raw Closeness Othys land material to market
~
Locational Advantages for Rural Businesses.
Table 17: Showing Respondents opinion on locational Advantages.
List the main advantage that this location has on your business .- - I
Factor
-- Low cost of Production General location advantages Proximity to raw material
Accessibility to cheap labour Good weather
source Availability of water supply Availability of transport - Abundant market (fulished goods) Proximity to source of power
- Good road access -- 3.97 11
- 7 7 3 5
10
4.64 4.64
23.18
6.62
Cheap land -- Others 1 --/+I1 -- Total Source. Field data
151 100.00
' 1 ' 1 1 ~ opillio~l ol' I<ur;~l I ~ I I S ~ I ~ ~ S S C S as lo 1I1c loc;~[iolull : I ~ w I I I ~ ~ I & [ ~ ~ s 1 1 ~ ' j C I ! ~ O ' ~ I I I ~ *
spread over 12 Ileadings ils see11 i l l 'I'id)lc .I .O. Wl~ik I I I O : ; ~ oi. I I C lx~si~~iwc:;
(33.77%) cliosc thc Sactor ol'proxirnity lo raw lila(csi;~l, 33.18%) chosc tlic filctor
of abundant nmrkcr Tor tlwir finishcd gootls. 12.58% saw advantngc o ~ l y in thcir
accessibility to cheap labour. 1.32% mentioned low cost of production, 1.99%
ment.ioned general locational advantages, while 4.64% saw their advantage in the
factor of water supply, with another 4.6494, for availability of Transport. 6.62%
went for the factor of their closeness to power supply (rural electrification) and
another 1.99% chose the fixtor of good weather. Good access road was B
mentioned by 3.97% of the respondents, with 4.64% voting for cheap land. Other
factors of no particular heading were only chosen by 0.66% of the businesses.
he' above Table therefore Reinforces the Factor of Proximity to raw materials as
n major and topical issuc in Rural Busiiless decision fiumework.
What difEculties, do you mainly ex eric~ice ;IS ;I re~ul l of your l o c i ~ l i o ~ ~ ? Factor -- Frequency of 1 Percentage ('17
Raw Material Sourcinrr -- - - (Unstable) government policies 6 Lack of water Trans~ortation difficulties 12.59 Poor market/lack of sales -- Lack of power supply 41.96 Financial Constraints -- 6.99 Lack of eficientlskilled labour -- Inaccessible road network Others /--_ 6 4.20 , Total I 143 I 100.00 Source: Field data
Table 18 indicates that an overwhelming number of the rural businesses
mentioned 'lack of power supply' as their locational diffculty, followed by the
factor of transportation, which l2.5'->% n~entioned. 9.80% mentioned lack of
water. 6.99% mentioned financial constraints, while 6.29% believed that the lack
of efficient and skilled labour is their problem. 5.59% chose the factor of
inaccessible roads while, 4.20% went for government policies as their constraint,
1.4% chose raw material souring as their locational difficulty. Meanwhile,
another 4.20% went for other general factors.
Nature and 'I'ype of Custo~i~crs of I<ural I~usincsscs.
'I'itblc 19: Mitin Customers of' I<u1-i11 I3usi11csscs
Who arc your main cuuton~ers? Frequency Percentage -.
(%) 112 69.6 44 27.3 3 1.9
Agents (Export) I Total 161 b I I
Source: Field data
Table 19 indicates that individuals account for 69.6% of the customers of rural
businesses while middlerncn inakc up 29.3%. Govcrnmcntal patroilagc for the b
rural businesses is a mere I .9% while overseas agents for possibly, export
purposes, is also a mere 1.2%. The customer spread of the Rural Businesses
revealed an almost nil base for overseas (export). The findings here could also be
an indication of the high prevalence of retail tradc in the rural busincsscs.
Educational Qualifications of Managers of Rural Businesses
Table 20: Educational Qualifications of Managers of Rural Businesscs
Source: field data
Which is your highest educational qualification? Primary School Certiiicate WASCIGCEISSCE OND/NCE/Diploma HNDIB. SC MBA/M.SC/MA & Above Total
From Table 20 above, majority (3 1.93%) of the Managers, as operators, of the
Iiural Business have qualifications of the WASCIGCEISSCE (Secondary School)
category, while 27.1 1% possess the HND/B.Sc level qualifications. This is trailed
Frequency of mention
12 53 3 9 4 5 17 166
Pcrcentage ('10)
07.23 3 1.93 23.49 27.1 1 10.24 100
by the 0NI>/NC:ElDiplo111ii group. wllich ~ ~ C C O I I I I ~ S l i ) ~ 23.400/;1,. 'I'IIOSC 01'
qilaliiications of Mastcrs' Ilcg~.cc and above (MIM/M.Sc/MA) make up 10.24%,
whereas those with only primary school certificate as highest qualification, make
up 7.23%. One can thus deduce that about 60% of tlic Management of Iiural
Businesses possess educational qualifications that arc at least or cquivdcnt to
OND/NCE levels.
Fig. 3: Showing Educational Qualificatican of Managers of Rural Ihsinesses
Educational Qualification of Managers
M BAIM. ScIM Primary School
A & Above Certificate
WASCIGCEISSC E
3 3 "I"
Qualificaiio~~ of mention - - - .. --
I'rin~ary School Ccrtilicatc 5 0 WASCIGCEISSCE 62.65
Total - A 166 100 Jurcc: 1:1eld data
From Table 21, it is evident that 62.65% of' thc Junior Staf'f possess the
WASCIGCEISSCE (Secondary school), while 30.12% possess the Primary school 0
certificate. Those within the middle lcvel qualilications of OND/NCE/Diploma
category account for 6.63%, while only 1, representing 0.60% belonged to the
1-1NDlB.s~ category. No score was recorded against the Masters' degree and
above category. The Junior S t a r cadre is therifore populated by those with
mainly primary and secondary school education.
Educational Qualifications of Senior staff of Rural 13usinesses
Table 22: Educational Qualifications of senior staff
Source: Field data
Qualification
Primary School Certificate WASC/GCE/SSCE o-
OND/NCElDiploma I-IND/B.SC MBA/M.Sc/MA & Equivalent Total
Table 22 records that employees of the senior staf'f are n~ostly of the
WASCIGCEISSCE category (54.22%) trailed by those of the HND/B.Sc
Frequency of mention
16 90 -- 2 5 0 -- 8
166
Percentage ("/o) 9.64 54.22 01.20 ~
30.12 04.82 PO0
Location of customers of Rural Businesses.
Table 23: Showing the location of main customers of Rural Businesses
Where are your main located? (%)
- Same location with your Other Rural Areas State Capitallwithin the State -- 42 27.10 Other States in Nigeria 29 18.71 Overseas
I --t 5 3.23
Total 155 1 100 i
rw: Field data
Table 23 shows that, of the total rcsponscs, 36.13% have their main customers
located within thc same rural domain while 14.84% arc still rurally located but in
other vicinities. 27.10% are located in the State Capitals or within the State.
Other States in Nigeria account for 18.71%, while Oversea countries, as an
option, accounts for an insignificant 3.23%.
IYroductiun/Output of rural businesses (1995 - 2003)
Table 24: Showing production/outpui (tons) of I-ur-id business
Sourcc: I:icld Survcy
e Table 24 above shows the output (production) of the rural businesses studied for the years
1995 - 2003. It revealed a total output of 1,959,238,597.17 tons which also meant an
aggregate decline rate of 185.60% within these years.
1'15Sl' OF HYPOTHESIS W 0 . 1
Our first Hypothesis states:
Ho: There is no difirence in the ratc of change between rural output and global output.
1 : There is diiyerence in the rale of change betwcen rural output and global output.
'1.0 address this research Hypothesis, thc t-test statistical tool was used to measure the
dil'it-rence between global output changes and rural output changes within the period of
1995-2003.
- xl = Mean global output
- xl = Mean rural output
nl = Case no in global output
nz = Case no in rural output
s2 = Variance
-F- Sp - Pooled variance
(see Appendix 'D' for hll workings and calculations).
Test Decision Rule
Reject H, if t > tI5, oZ5 = 2.13 1 or if t 5 t 15,,02s = -2.1 3 1 otherwise do not re-ject 1-1,). a - 0.05; an = 0.05!2 = 0.075; df = 11 l + 112 -2
Figure 4: Two-tailed t-test at 0.05 significance level showing region of rejection.
Test Result
we therefore reject H , 'l'his implies that the rate of change in global output does
diflkr from rural output
Turnover of Kurd1 businesses (1 995 - 2003)
Table 25: Showing the Turnover of Rural Businesses and rate of change (1995- 2003)
Year Turnover (FF) "A Change 1995 643,187,7 12 1996 893.68 1.5 1 1 38.94
Total 10,427,91 0,107 224.99 Average 1 115,865,668 28.12
me: Field Survey
?'able 25 above shows the annual Turnover of the rural entcrprises against the
rcspcctive years of the period 1995 - 2003. The period reveals an average
turnover of N 1 15,865,668 and an average of.28.12 in pcrcentagc change.
Table 26: Showing Foreign Exch;liigc inpul/co~~sum~)Lion of liur;d Ilusi~~csscs and rate of change (1995 - 2003)
Source: Field Survey
'T'nble 26 above, shows the annual consumption rate of Foreign exchange against
the respective years of the period 1995 - 2003. The period reveals an averagc
consumption of N171,700,000 and an average of 16.77 in percentage change. It
is important to note that for the four year period of 1995 - 1998, therc was no
consumption recorded against the operation of the rural enterpriscs.
Sul~sitly clcmcnt cnjoycd by Rur;tl Ilosinesscs
Table 27: Showing Subsidy eletnent enjoycd by rural businesses and rate of' change (1995-2003)
2003 20 -33.33 Total 2,001,480 2,856,960.23
Source: Field Oala
Table 27 above shows the level of subsidy enjoycd by the rural firins against
respective years and for the pcriod 1995 - 2003. 'The table reveals an average sum
of 222,386.66 and an average of 35,7120.02 in percentage change. I t should bc
noted that the year 2000 created a major upset, otherwise the entire period was
one of continuous decline in the rate of change.
import l'rofilc of i<urrll i3usincuscs (lO95 - 2003)
Table 28: Showing the import content in rural 1)usinesses and n ~ t c of clwnge
Source: Field Data
'Sable 28 above shows the import content of rural business for the respective years
of 1995 - 2003. 'The avcrage for the period is $4 95,606,234.4 and an average of
2,047.62 in percentage change.
Table 29: Showing lnternatiolnal contact of Kurd Busincsscs.
I I r r , . u e l l c v of ;i~cAiiis
Publics/Agencies Total Percentage (%) .- I 3.60 1 19.46 1 76.94 100
.;ource. Field dala
Table 29 indicates that of the total responses for International ~ u ~ p t i e r s ,
only 4.58% had contacts "very regularly" while 11.45% made contacts
"once in a while". Interestingly, 83.97% had no contacts at all with
suppliers outside the shores of the country. As for International buyers, a
mere 3.94% is the portion for 'very regular' contacts, while 10.32% had a
"once in a while" contact. However, 85.71% of the total respondents for
that group had no contacts at all.
As for International Technicians, 3.85% belong to the "very regular"
category, while only 14.62% of thc respondents maintain contacts "once in
a while". 81.54% do not have any form of contact at all. Contact of the
rural businesses with other International Publics and agencies revealed
that 2.38% of the respondents maintain
36.3 I % have a "once in a while" contact. 6
at all.
very regular contacts, while
1.3 1 % do not have any contact
havc contact 'oncc in :I uhilc'. 70.9i11!4 do 1 1 0 1 have li,m of'corlli~l at all.
'T'his, again is an indication of tlic rclativc abscncc o f Tnlcr~iatio~~al/Ovcrsea
contacts in the scheme of Rural Businesses, which in essence means that the rural
enterprises are not taking advantagc of potentials that abound in the world
economy within an age and era of globalisation.
Competition in Rural Businesses. Table 30: Rcspondcnts' rating of Compctition in thcir Businesses
Do you expericrlcc c o n ~ t i t i o n in your business? kio little I Little -- 1 ~ n d c c i d e d % u c h -
Percentage (%) -- Source: Field data
Table 30 indicates that 80.12% of the respondents experienced 'much'
competition in their businesses while the remaining 19.88% experienced 'too
much' competition. Nonc of the businesses agreed to 'little' compctition, just as
none was 'undecided'.
Competition and lrnpact on Rural I3usinesscs
'I'ublc 31: Manitgers' asscssmcnt of the irnpsact of corr~pctitiori on their businesses.
11 Please rate the impact of competition / Frequency / Percentage
I1 on your business mention
Of I
11 Total 1 1 3 3 1 100
I
Source: Field data
Very weak 3 2.26 Wcak 8.27
Table 3 1 shows that most of thc Managers (52.63%) assessed the impact of
competition as mcrely strong while 27.82% assessed it as very strong, 8.27% see
competition as wcak and another 2.26% prefer to sec it as very wcak. 9.02% arc
undecided.
Strongly Competing Substitutes of Kural Busiricsses
Table 32: Respondents' opinion as to the presence of strongly competing substitutes.
-- -
Do your products have strongly competing substitutes that you know of!
Percentage (%) -- ,
1 56.63 - 1 43.37 1 100 ource FlclJ data
I~reauencv
'The 'Table above suggests that 56.63% of thc businesses agrced to the prcsence of
strongly competing substitutes as against 31% who were unaware of any. This
No 72
Total 166
appears to support thc record in 'l'ablc 3 1 wlicsc most ol' tllc busi~~csscs 1~1cd
competition as strong.
Nature of Product substitutes in Rural 13usi1icsses
Table 33: Respondents' opinion iis to the nalorc o1'protluct su1)stitulcs.
If yes (Table 32), state the Frequency Percentage nature of substitute
Substitutes of other rural 46.80 businesses/areas Substitutes o f 35.12 businesseslarea Oversea substitutes Total
I]
Eource: Field data
Of the respondents in Table 32 who agreed to the presence of strongly competing
substitutes in their businesses, only 18.08% considered them to be Oversea
substitutes, whereas a coinbincd total of 81.92% considered the substitutes to be
local ones, made up of 46.80% within the same band of rural businesses, while
35.12% were the urban located businesses.
Effcct of Oversea substitutes on liural Businesses.
Table 34 Respondents' rating of the effects of Overseas substitute products on the growth of their businesses.
If your answer in (Table 33) is "mostly Oversea substitutes", to what extent
--- do Oversea substitutes affect the growth of your business? 11 Too little / ~ i t v e d / Much I Too ( Total
Frequency 17 Percentage 5.8 8 5.8 8 5.88 100
Of the 18.08% (Table 33) who agreed that Oversea substitutes possessed strong
influence on their businesses, they were still asked to indicate whether Oversea
substitutes actually had any lir~kagc lo lllc growth ol'tllcis b~rsilwsscs. 'l';~Olc 34
indicates that 64.70% irlclicalcd '1ll11cll' wl~ilc 17.0S1K/;, irdica~ccl "l'oo ~llt~clr'.
5.88% answcred in each of thc catcgosics o f "l'oo little', '1,ittlc' and 'undccidcd',
respectivcly.
Major Constraints of Rural Businesses
'Fable 35: Showing main constraints of Iiuml Busincsscs
mention Infrastructure (Road, water, light 32.20
Lack of ca~i ta l Lack of good staff 9 -t 15
3.81 Unwillingness by personnel to 6.36 live in rural areas High cost of transport Lack of sales Total
- L
jurce: Field data
From Table 35, it is clear that 32.20% of the respondents being the majority,
subscribed to the problem of infrastructure while close to the same percentage
(30.08%) mentioned the factor of lack of capital. 16.10% chose the factor of high
transport costs while 11.44% said their main problem was lack of sales.
'I Jnwillingness by personnel to live in rural areas' accounted for 6.3696, whereas
only 3.81% felt lack of good staff was a major problem.
Fig. 5: Showing M;rjor Constrairrts of l i~iral Il~isincsscs
/ __ _ . . . .., _~ . . _ . . .. ..~... .. _ .--.-.
Major Constraints of Rural Businesses
0 infrastructure
Capital
13 Staffing
ffl Rural Locat~on
Ei Transport
0 Sales ,
Management fui~ction of Planning in liurirl Businesses
Table 36: Mar~agcrs' assessment of frequency of planning (Formal Planning/Budget ~ l a n s ) functions in their businesses.
Please ratc as to how you Frequency of perform the function of mention
f o r m a l e t plans Not reeularlv 8 5.2 Not very regularly 16 -I 9
10.3 Undecided 5.8
Sourcc: Field d a h
'I'able 36 indicates that most of the Managers (51.6%) performed formal
planninghudget functions regularly, with anothcr 27.1% doing it very regularly'.
Only 5.20% accepted not pcrfbrming the fimction regularly, with another 10.3%
accepting not performing the function 'very regularly'. However, 5.8% were
undecided.
Management Meetings as ii function in Rural Businesses.
Table 37: Managers' assessment as to the frequency of nianagcnicnt nicctings with supervisors and otlier Managers.
Not regularly -- Not very regularly - - 14
Please rate as to how you perform the function of rnecti~igs with supervisors/othcr Managers
Undecided Regularly
34
Frequency of
mention
Total --. 1 154 - Source: Field data
Percentage (%I)
Table 37 presents the result of Managers' assess~~~erlt as to the frequency of
meetings with supervisors and other Managers. M%jority of them (54.5%) rated
it as 'regularly', and another 22.1% rated i t as 'very regularly'. 6.5% accepted not
meeting regularly, while 9.1% in their own case, accepted not meeting very
regularly. 7.8% were virtually undecided.
Man;tgcri:ni C%ixks i ~ n d { ' o a ~ t I-oi i n 1<11r;bI il~isinc:,scs
Table 38: M:laagers' asscssrncnll ias to the frcqncncp of the pcrformilncc of checks and control.
11 g~erfarni the function of ] rnentiomn 1 Percentage ('A)
From 'I'ablt.: 38, 3.3% of tlic Managcrs do not perhrm thc Silnction of checks 'mi
control 'regulariy, 5.3% do not perform it vcry regularly whilc 51.7% pcrf'ormcd
it regularly and anothcs 36.4'% did il very regularly. 3.3% of the rcspondcnts
wcre undecided on their attitude to [hi:: function.
Fro111 t 1 ~ results in 'l'able 36, 373nd 38, it is clear in all thc cases that more than
80% of the Rural Ei~tcrpriscs engagcd in thc functional management
rcsponsibilitics of planning. checks (directil~g), including other assignments.
Our second Hypsthcsis states:
I : Poor managerial capability of rurd business does not account for their low productivity.
cxistccl any significm! ditl'crcncc in thc turnover o f thc various rurid enterprises
t bascd on the ficqucllcy with which thc rural entcrpriscs undcrlook thc various
mallagcmcnt funclionul activilica.
Mean of sarnplc 1
h4zm o f sample 2
S:lrriple 1
Snnlplc 3
Varinncc
f'oolcd Varia;rce
number of caxs
'l'able 39 Showing test nr1;11jsi~ S U I I I I I I ; ~ ~ ~ of' t11c ~ r ~ ; t r ~ a g r ~ ~ ~ c r ~ t f ~ r ~ ~ c t i o r ~ o f
---..------, ----
. . . . . . . . . . . - . . . . . BuclgetingllPlani~ing . . . .
statistid ~ o t Regularly (n,) Regularly (nz) .-.~ .. ~ .
n 9 5 4 .~ ~ ~.~ .
I mean 125421 3.778 54551 324.61 variance----- ---
t calculated -0.9850 t tabulated - -46.879
Sourcc: Analyscd rrom licld data (SIX irplxndix fi)r c;tlcul;~lion alrd f i r l l workings).
7 . I:igurc 6: 1 wo - tailed t-test at 0.05 signiiicancc lcvel showing region ol'rejection.
Test Statistics idolding Manaaern&Mcetiings ----
Mean of sample 'I
Mean of sample 2
Satnpie 1
Sarnple 2
Variance
Pc?oled Variance
number of cases
of managcmc~~nt naectings
Not - - -- Regularly - - -. - (nrlJI1 . Regularly - -- .- (n2) -
6 57 218128.3333 51 854972.86 1.60883 10I1
C*=!---..- 2.50047 lai"
. I
0 0000 -46 979 -
(KC appcndix h r a ~ i c ~ i l ; t l i o n arid litll \\,orking:;j.
Test Decision R ,
J3gurc 6 : Two - tailcd t-tcst at 0.05 sigr~ilicaiw lcvcl showing rcgio~i cfrcjection.
Since 1 cal (0.0000) t ttabulatccl (-.I(, 9:t,). 11, is thcrcforc rcjcctcd in f v o \ i r
of'II, This implies that poor managerial capability in tcrms of thc holding 0 1
mmagcmcnt mcctings affects tlhe produc~ivity of rural busiucuscs.
- _ . --- , 17-U--7-U--7-U--7-U--7-U--"7-U--7-U--."7-U--7-U--7-U--7-U--7-U--".-.*7-U--7-U--"7-U--..7-U-- - - Checks and Control
Statistic - I Not regularly -.-- . (nl) 11 - - Regularly (n2) n I 60
mean 1 1000000 49203507.72
acknowlctlged not unclcrtaking that 11-magc~ncnt functio~, tilt:
number is insignificant comparcd to 60 cnterpriscs that do undcl?ai.c
col~trolichccks. It c a ~ i hc s l id that rural busincs:;cs do sufTicicnrly
mdcrkkr: this rnanagcixcnt li~nction.
funclions. 'This implics t11;rt poor munagcrial capability o f rural busi~~csscs i~llkcts
thcir productivity, as as:icssed variously through the parameters of
budget/planl~i~:g. the holding of management nicetings and thc cr;l'urccrncnt o r
checks and control.
Ef'eet of Trade Illiberalisation on Personnel of Rural Busitresscs b
Table 42: Wlanagersq Assess~ncrlilt of the effect of Trade Liberalisatiorn on pensonnel
ess in lterxns of
Sout-cc: 1:icld dal;~
From table 42,, only 1 9 Managers of rural birsinesses chose 'personr~cl' as the
area, of impact. Of this nurnhcr, 26.32% rated the impact as 'I.it:le7, 3 1.58%
rated it as 'moderate7, while 42.10% ratcd i t 3s 'sewsc' .
T;mble 43: Ma~lagers' opinion s f the effect of 'l'mde Libcralisation on Engineering (sourcing of spitre parts).
--A
would you ratc the eflect of 'Trade
?-- - Source: I W d Data
111 Table 43, only 28 of the Manngcrs chosr: Ihginecring as the area o f impact. Of
this nurnber, 14.29% ratcd the impact as 'Little', while 35.71% r a l d it as severc.
However, the majority which represents 50% rated it as 'Moderate'.
impact of Trade Liberalsation on 1'1-oductio~a Managcmcrlt of Rural
'Fable 44: Managers' opinion of the e f i c t of Tmde Libcu.;disation on production Management.
busiwess in terms of Production?
Total i 76 - - - - - 1 ------=2"- loo _I/ Sollroo: i'icld l h l z
l n 'Table 44, 7.9% of the Managers who chose the subheading of production rated
the impact of Trade 1,iheralisation as 'TAtle', while 21.05%, rcgarded it as
ri~odcratc.. 71.05% howcvcr rated it as 'scvzre'.
Table 45: Kcspondcnts' opinion o t ~ the efTcct of 'Tradc 1,ibcralisittion ou the sourcing of raw ~rmatcrials.
#
Table 45 indicates that 20.30?4~ of the rural businesses strongly agreed to the
ef'ect of Trade liberalisation on the sourcing of their raw materials, while 40.6%
rncrely azrecd. On the other hand, 10.5% strongly disagreed wlde 1 8.2% merely
disagreed. 10.5% were undecided. A total of 28.7% disagrectl, with 60.9%
agreeing.
Impart of Trade Libcralisaticrn on s;tles of n~l-al busincsses.
busir~esv in tenns of Sales'! Little
Moderate 1 2.1 1 48.84 Severe - - - -- 44.19
,----, ------- Total . -- -- -- 100 ----- ----
b u ~ c e . F~eld data
In Table 46 Trade Liberalisation and its impact on sales was assessed by 43
Managers of the rural busi11c::;scs. 11 indicates that 6.07% ratcci :he impact as
'FES'I' OF I-IYPOTI-IES1S NO. 3
sought as to how trade libcralisation ai'kcted their busiiicsscs wilhir~ the
iimctio~ial areas of personnel, engineering, production and s:llcs.
b
,.. I hr: Chi- square iX2' tesi of indcpcr~dence as a statistical tool was ~ u e d to assess
\vIi~:t11(:r there exists any signilicant dillkrence in the turnover rrofilc of tlic
vuious rural enterprises based on the eft'ect of globalisatiot~.
Test Sfatisties
0 -. .- Observed ficqucncy
E Expectcd Fl qucncy
Test Analysis
'I'ablc 47 showing Observed frcyuency - 21s effcci of'rrade
effect of Trade liberalisation on your
-
- Personnel Enaineerina
.- Sales Total
I I I - Source: Field data
Table 48 showing Calculated expected frequency - as effect of Trade IJiberalisation on rural businesses
effect of trade liberalisation on your business?
Activity Area
Personnel - 6.5 10.4 Enaineerina 3.0 9.6 Production i " ' .- &3; 2 6 T j 7 ( b .- - --
Sales 14.8 23.6 43.0 Total 18.0 57.0 91.0 166.0
Sourw: Table 45
'I'able 49 showing test analysis (Chi-square c;~Icnl:ltions) of fhe cffcct of
Sourcc: Tables 45 and 46.
Test Result
Since the X 2 calculated = 21.2 which is outside the acceptance region of X2
tabulated = k14.449, we therefore reject H,, and accept 1-11. This implies that trade
liberalization has significant el'fcct 011 rural businesses' operation and
management. The areas mostly affected by trade liberalization in the rural
businesses are those of production and sales.
Impact of Global Imports on Ri~ral Rusinesses.
I'uble SO: Managers' opinion on the effect of Global imports on their business operations.
"-a- "I
My Business is directly fceling the imports (foreign products) - -- - of mention ( '%) Strongly Disagree - - Disagree 33.13 w --
Undecided
'Tciblc 50 indicates that 10.28%1 of the Rural husincsscs strongly tlis:~grccd tliiit
global Imports has any ctl'cct on tlicir business opcralions, while only 16.87%
merely disagreed. 1 2.65% strongly disagreed while 33.1 3% also merely
disagrccd. 18.07%) were undccidcd. O n the whole, a total of'45.78'%1 could be
said to have disagrecd, while 36.1 5% agreed.
Irnpact of Global subsidy on the operation of Rum1 Busir~csscs
Table 51: M;anagcrs' opinion as to the effect of G1oh:il s u l ~ i d y on thcir businesses.
--
The subsidy elemcnt in Frequency of Percentage (I%)
~nternationa~ uusincss is mention " 7 affecting my business Strondv Disacree
- t -.--A 3 4 . i T - 4 1
Disagree Undecided
' Agree 14
' Total L 143 100 Source. Field data
From Table 5 1 , it is evident that 34.3% of the Rural Businesses strongly
disagrecd to the cKcct of Cilobalisation (subsidy) on their businesses,
40.6% nierely disagreed, 3.5% strongly agreed, while 9.8% just agreed
and 1 I .9% were undecided.
-,
Foreign exch;\ngc chi~ngcs time to tilime affccts lnny busincss /;!L ~
Strongly Disagree 5 1 30.2 Disagree - ~ 41.3 . .
Undecided -.
Agree 2.8 Strongly Agree -- I 4 2.8 - .. . . .- .- --
In assessing the eKect of Trade 1,iberalisation on foreign exchange, Tabk 52
shows that 36.2% o r the rural businesses strongly tlisagrccd that Trade
1,iberalistion had any effect on fbreign exchange, with another 43.3% nicrcly
disagreeing. 2.8% strongly agreed, wliilc anotllcr 2.8% just agrcetl. !4.')% were
unclccided. On the whole, 79.5% disagrcctl wliilc only 5.6% agreed.
'TEST OF HYPOTHESIS N O . 4
Our Iburth Hypothesis states:
I : Foreign exchanges are not rclatcd lo turnovcr of rural busine:ises
: Forcign exchanges are related to turnovcr of rural businesses.
To address this research IIypothesis corrclationlregrcssion analysis a11d tcst 01'
significance is ernploycd as a statistical tool.
'I'cst Statistics
Correlation
-.
XY-= 10 1667.67 Y - 121.22 I d b
- ..~ -,--.,.--- ( s t : ~ appcndix 'D' for fdl workings ;tnd calculatior~:i).
1 - 0.1 '7
11.1 - I \ -- Chcflicient of' dctcrrnination = 0.172 = 0.0280
Gradient coefticiwi
nXXY - (z:X)(CYl 11(cx2) - (CX)
' J ' c3t ltusull
' I iic correl;~tion coeflicient conyutcd shows cc.xfficicnt value o f 0.2, which i s a poor
direct relationship bctwccn ratcs ofcl~angc in foreign cschangc and turnovcr fbr the rural
business.
Wi lcrc \iT - change in rural business turnover
X = change in foreign e>;cll:lngc
'I'his modei is not likely to be a godestimator o f rurai turnover due to the minimal
percentage (3%) proportion of the coefficient of determination ( R ~ ) by which tbreign
exchange cxplains the outcome of rural turnover.
I 'r'k' resaelt of the study thesebre shows that forctg~r cxchmge is not a good dependelit
,, rarttr neter %br rural turnover Rural businesses do aotddepend much on foreign exckange.
%cs implication is that rural entelpsises do not depend much on importation, either for
I
General Effect of Trade liberalization on RM " -+ *w % " s
b
'F'abile 54: Respondents opinion as to the gemem1 effect of Trade liberalization on
i r ~ d businesses.
Generally, to what extent does Trade Liberalisation affect your operations? I Too I Little / Undecided I Much 1 Tocr 1 Total I
- Frequency ~ + + - - l F - ~ - ~ + 3 - ~ ~ ~
'Fable 54 sought to determine in a summarized manner the effect of Trade
1,iberalisation on ruraP business operations A combined total of 72.89% rated as
mucMoo much, while a total of 21.08% rated it between littleltoo little. Only
6.03% were ui~decided.
CHAPTER FIVE
5 0 DISCUSSION OF RESULTS AND IMPLICATIONS
The following sub-headings will form thc basis the discussion of the results of the
findings in Chapter Four:
1. General information on rural busincsses and implications for globalisation:
a) year of establishment
b) industrylproduct classification
c) factors of location, advantages and difficulties
d) international contacts
e) ma-jor constraints
. . 11. Managerial capabilities and productivity
. * ~ 111. Globalisation and impact on management of Rural Businesses.
iv. Management implications of globalisation on rural Businesses
a. output
b. saleslforeign exchangc
General information on rural businesses and implications
years of establishment
The study revealed that the period bcrore Nigeria's independence, and up
to a decade after independence, only 3 businesses existed within the
country's rural communities. Speciiically. none was found to have been
in existence before 1960. This revelation explains the dearth of businesses
within this sector of the economy a d ;?el-haps, a proof to the de-
industrialisation syndrome that had pernaea'tbred the Nigerian fabric of
business development. Before independernee. the colonialists were only
interested in the production of' primary pr~dm:ts of agriculture, as against
the promotion of genuine laadustsia&iz:3ittc~n and business development.
11 was only aAea independence that Nigeria changed fiom the policy of
producing primary products to an import substitution policy. with the main
aim being, lo scale down &om over dependence on foreign trade and save
foreign exchange (Anyanwu et ali, B 99'7:4 1)
The businesses under study are within thc classification of small and
medium enterprises, which is !he hub and fulcrum of economic
development of any nation, given thcrr s~mplicity, flexibility, less capita%
intensity and d e m d . They are i h s supposed to bc found virtually in
most parts and regions of the couutry For a whole geo-political region
comprising 6 states to boast of hclow LOO existing and fiuncticbnal ..
buslnesscs (of the level studied) is to s:iy al~e Peast. inadequate, especially
in the 2 1'' century and within an cna of globalisation.
Most of the businesses were established w i t h the years of 1981 - 1990.
T11k period rhymed with the period of Structural Adjustment Programme
of the then Federal Covernmcnt which gave vent and impetus to the
localisation and indigenisation of bl~siaazsses. A case in point is the fact
that the emphasis on backward imegratkm scheme then, had compelled
many organisations to see up Farm rot- the supply of their vital and major
raw materials. Somehow the disc:;ontinuztion 09 this b r o g r m e has
negatively ai3ectcd the growth and establishment of home-grown
businesses, till date. This way, it will be near impossible h r Nigeria to
occupy a pride o place in today's world of globalisation, thus missing all
the privileges, opportunities and benefits that go with it.
b IndustrylProduct Classification of rural businesses
The foremost category of the businesses are the cement block1Brick
companies, while many of those in the ago-allied classification were
found to be in the least category. 11 vvould appear that the obsession of the
economy is with constrlnctitran projects, either o r personal
residential/accommodation needs or contract patronages fi-om government.
'This is possibly responsible for the ateaction for Block industries as
against what should have been a rcal interest in setting up of "productive" - businesses that will have a more spiraling and multiplier effect of growth
and development on the rest sT the society, such as agro-industrial
enterprises which have potentials "io process much of Nigeria's abundant
agricultural resources. Ht is wodh noting that businesses in integrated
milling, sugar cane processing, palm kerml processing flour milling, palm
oil processing, orangelpineapple juice processing, are among the least
ranked, of the businesses. Suck a situation can only mortgage Nigeria's
dream of an industrial and economic giant.
Locational Factors, advantages and difficulties
Of the many factors often touted as reasons and incentives for rural
busincss location, it is evidcnt .that proxin6ly to sources or raw lndtcrial
snainEy accounts for locationaI decision hrnework. This will probably
make up for the many enviromental inadequacies and uncertainties that
dot the business terrain. These include energy crisis, high transport costs,
bottlenecks and logistic problems, sociopolitical pro bbms etc. ~losely'
Bbllowing raw materials as a reason, is the high cost of land, coupled with
what appears to be a general recourse to i~adividuals' villages, possibly as
a result of lack of resources. These are indications and pointers to the
disinvestment climatc that pervade our mral communities.
In t e r n of locational advantages, it is instructive that the least of the
advantages is low cost of productnone This is indicative of the fact that . business in the rural cornunities still suRer from high cost of production.
This is a huge minus and disincentive to production and output within
today's globalised world. Competing with industries and businesses in the
international arena which have low production costs will be extremely
difiicicult. The main locational adwntage for the businesscs is s h o w to be
proximity to sources of raw m a t e d , This is in tandem and consonance
with the factors of business locatlora. The reasons of abundant market for
finished goods and accessibility to cheap labour in that order, are the next
reasons adduced. This is a testimony to the potentials of our rural
communities as the bastion and foundation for development, particularly
that the population lives predominantly in the same rural areas.
Locational difficulties for the businesses centred on three main problems,
all summed up under ini?astructural difticultics (power supply,
transportation and water supply). Infi-astructural prt~blems have been the b
bane of businesses in Nigeria for a long t h e now, and which has
consistently affected their capacity utilisation, The situation of the rural
communities is no doubt worse than their urbdn counterparts. Except
where genuine efforts are made to stem the tide of these identified
difficulties of location, Nigerian businesses at the rural level will continue
to be very weak players within the global business community. This is in
spite of the potentials the rural corrmaunities hold for Nigeria's future
growth and development. -
International Contact h r Rural Businesses
The international exposure of the rural enterprises is very poor, given the
fact that over 80% of the businesses do not enjoy or feel the impact of
either international customer patronage, international supplies of raw
materials or involvement in any other type of international activity. When
considered that customers of the mral businesses that are of overseas
origin are very minimal, including thc h ~ t of competition, which is also.
almost absent. orme can safely conclude that the link bctween the: rural
businesses and the outside world is sericjusly giackirmg and therefore not
responding to the current international dictates of trade and commerce..
Major Constraints of Rural
Many rural enterprises are confronted with a myriad of difficulties. These
constraints tend to widen the weak chain of the businesses towards b
effective International activity and therefore contribution. High on the list
of the constraints is infrastructure, which covers electricity power supply,
good road network and water. The infiastructural prob!ems, more than
any other factor, define the 'ruralness9 of' these enterprises. VBrhile the
location of the enterprises is celebra~cd by the advantages of cheap land,
cheap labour and most hdamenta%liy, the abundance of raw materials.
these locational b e n e k are most limes negated by the extremely low
Pevel of irifiastructural set up in thesc areas. .
The problem of Mastructure is trailed by lack of capital. Finance is a
serious drawback for m y rural enterprises. This probably informed the
steps taken by governelat in the past, some of which included the Family
Support Programme, Better Life f i~r Rural Women, Peoples bank of
Nigeria, the setting up of Comanurnity Ranks, encouragement by Central
of Nigeraa (CSN) h r the qctting &sp of rural Bark branches,
Agricultural Credit Guarantee Schemes. etc These programes have yet
to impact on these businesses. rdi dart., almost all the programs
enumerated above have all been jettisoned successively and at best,
remained moribund in implementation.
Transportation is also a major heading, as a constraint of the enterprises.
Difficulty in Rural transportation creatcs immobility, thus contributing to,
the static and stagnating profile of rural corrl~l~unities and therefore, their b
enterprises.
Other problems such as inability to attract quality staff, unwillingness of
staff to live in rural areas only add to the list of the constraints though, on
a smaller scale.
The potentials of the rural cornunities as found in farming. fishing
pasture, craft etc need to be properly harnessed and streamlined for
agriculture and industrialisation, but not with the overhang of the
constraints mentioned. To remain b sound International player, ma1
comnldties and their busjinesscs must he empowered infrastucturally and
otherwise, as the case with the developed nations. This way, a leveled
Playing field will have been created to enable the developed and
undeveloped, the rich and the poor, the nations of the North and South
(2003: 100) maintains that the LDG's laavc too many problems such as
debt and Yow coimodity prices and fo(s weak in inmfiastructwe and
capacity a0 develop industrial exports.
Managerid CapabiPities an roductivity of Rural Business
Quite unlike what obtains within the t e m n o f P I J I ~ businesses generally, thc
IVbmagers of these enterprises exhibit rcasonablc level of capability, at least from
the point of educational qualflication. Not less than 60% oi'thc Managers possess b
qualifications that are of the Pevel of srcikihry National Diploma (OJD) or its
equivalent m d above.
'I'he Managerial capacities of the Managcrs wcre also weighed fiom the
perspective of their attitudinal dispositiomslapproach to some basic managcmmt
functions and activities such as the holding of' hrrnal management meetlngs -
where it could be reasonably well-assunw:d that functions such as coordinating
organizing and directing are artl~tilatcd. undertaking 07' fimnal
planninglbudgeting activities, and the puttsng of cl~ecks and control. IVlr~jorjty or
the rural enterprises engaged in each of the aforementioned activities, which,
again is a testimony of a satisfactory level of managerial capability on the gart of
the management s f these enterprises.
It is also instructive to note that conducting test at 95% confidence level, our t test
(2-tailed) confirmed that poor managerial capability of rural enterprises is
accountable for their low productivity. This suggests that endogenous factors are
responsible for the dismal productivity profile of these enterprises, most times.
Afterall, Nigeria has always keen blessed with human resources in abundance.
The real challenge has always been the utilization of the same resources within
the correct environment, culture and conditions, to enable them convert the
external and environmental threats to advantage. This way, corporate objectives,
even at the rural levels will be achieved. b
Globalisation and Impact on Management of Rural Business
'l'hc impact of globalisation on managemenl was assessed through the prism of the
functional management areas of personnel management, engineering, production
technology/rnanagement, procurement of materials and sales/marketing . Across
the fimctional management areas listed, it was very clear that globalisation does
substahtially affect these businesses. -
Furthermore, testing all the hypotheses at 95% confidence level, described the
fact that generally, globalisation is a potent factor in the management of the
enterprises. The test analysis indicated that globalisation does significantly affect
the opcration of the rural enterprises. Globalisation, as the name indicates is a
worldwide phenomenon which has already led to the. "villagisation" of thc world
economy, leading to the internationalization of markets, goods and services.
'The rural enterprises are not aloof to the globalisation wave of the world and are
therefore active, not remote players on the world stage even as the same
businesses are supposed to be the drivers and propellers of economic
development. Where such a recognition fails, this may continue to stunt
development, and with very severe implications, which include the fact that the
enterprises will continue to depend on crude and locally developed technology b
and resources, devoid of 'international flavour'. For so long will Nigeria remain
at the lower rung of the ladder of International competition and dominance.
It must be mentioned that the businesses appear to be grappling with more basic
issues of survival before responding to the later issues of world events, thus
giving vent to the impression that rural businesses are still operating within the
bracket of local and national players.
- Management Implications of Globalisation on Rural Business
O U ~ D U ~
While the annual average rural output rate of change revealed a decrease of 23.2%
over the period 1995-2003, the global rate, is an increase of 3.3%. Our test
further revealed a significant difference in the output change between rural
business rates and the global rates. Rural businesses which should be in the
vanguard of economic and agricultural dcwuc>pmcnd are found to be progressively
dcclnnirrg in output, and is enough cause 104- steps lo he taken to halt and address
this worrisome trcnd, as new and prospective businevscs are even discouraged.
lit is no wonder therefore, that only 166 businesses ccdd be found to be functional
and barely thriving within the six states of this study. This is not unexpected,
given the picture on the larger scene of the wbm businesses. For instance, a
situation where a conglomerate like UAC Nigeria 19LC is not making any secret
.of divesting fiom manufacturing, in preference to distribution, ."as part of its
strdegy to focus more on its areas of core competencies", is sad enough. 'The
b report hrther quotes UAC Nigeria PI,C as pllaunning to h e s l in businesses with
high growth potentials and divest fiom those with low value addition. (Financial
Standard, May, 5 , 2003 P. B 7).
Our test results on change in rural output against change in global output, revealed
a difference between the two. For such a result to be obtained in an age of
gbbalisation definitely possesses huge implications for business development.
Given that our test revealed that the rate o i c h g e in global output does differ
significantly with that of rural output, management of rural firms must
imperatively> as a contemporary necessity, explore the opportunities, benefies and
privileges available in today's world of globalisation, in order to improve its
output rating, else Nigeria would continue to play the role of a late runner 01
global events.
7 7
il hat Nigeria's rural output rate has been on a decline irend. is enough to conclude
ahat Nigeria may not be (at Beast for its rwaE economy) a contributor to the global
output index and is therefore not a contributor or part of the global industrial or
trade matrix.
Sales and Foreign Exchange
Rural businesses are least influenced by Foreign Exchange level and changes.
81 is also revealed that the relationship betwecam 'I'urmver and foreign exchangc is
such that the relative change in the foreign exchange level (using 1995 as base
year) is 12 1 % on the average, while l i r the same period the average change in !he
turnover of the rural enterprises is 91%. This shows that the rate of change in
foreign exchange is higher than turnover. Id is also clear that the factors that
influence turnover are not directly associated with foreign exchange.
Given that the level of contact with the htemationa% arena by bcrsu~esses in rural
communities is low, it could be concluded that the businesses do not depend on
foreign raw materials, overseas spare parts, foreign productiodtechnology and - foreign manpower. This therefore implies that the businesses will not directly be
influenced by foreign exchange. Rural busirmses have also demonstrated the fact
that in content and output, they project an insignificant relationship with global
money market trend.
Bn conducting this study on the impact 0 4 ' globalisation on the management of
businesses in the rural communities of W~gerisn, s e z lindings and subsequent
discussion of the results and implications aJw th.is chapter have in a general sense.
presented the rural businesses as a lot that are not immune to the general
drawbacks of business development in Nigeria. While the bigger, and mainly
urban located businesses continue to be victims of low capacity utilization, owing
eo a myriad of constraints, thc rural counterparts are found to have similar traits.
This cuts across similar constraints, whrch hey also experience, such as
hfiastructural inadequacies and locational di ficulties, which have genehlly
tended to discourage investment in this areas.
In terms of managerial capability, the businesses cxlaibit satisfactory Bevels of
attainment, especially when weighed from the point of view of their educational
qualifications and attitude to management fitnctions and activities. However, the
factor of managerial capability is seen to be responsible for their low productivity.
. Globalisation was seen to possess overbearing impact on rural businesses from
[he perspcctives of output, subsidy and ibreign exchange changes. 'This therefore
has very telling iinplications, given dhad genuine national development must
commence at the level of the resources and potentials of businesses at the
grassroot community level. The grimness of the situation is better reasoned, when
understood that the lack of responsiveness of the rural businesses to global
dictates is as a result of the decadent nature ofthe crrvironrnent sf the busir~esses
and not merely that they posses satisfactory levels of business performance or
viability.
The overall implication of this study is the reflec:ion it has for Nigeria as a
developing nation and its role in participalinq) m d fcx1~rhg international trade and
development, particularly when placed in thc throes of the m r e superior and
developed economies of the world
This probably explains the preponderance of opinion among the developing and
poorer world for a redefinition and review o f the terms, conditions and agreement
of the world Trade Organisation (WTO) to h o u r them. For instance Shogbon
(2004) believes that it is utterly htile, attempting to oppose globalisation
"because it is here to stayy'. According to her, what Nigeria needed to do was to
redesign public polices in order to rnaximHze the potentials of the concept.
ith Nigeria's rural enterprises beset with many constraints and inadequacies, a
competing effectively in the internationd arena may remain a tall dream and
nightmare.
References
Anyanwu, J.C et a1 (1997). The structure of the Nigerian economy (1960 - 1997). Joanee Educational Publishers, Onitsha P.41.
Financial Standard, 5 May, 2003 P. 17 why UACN is divesting fiqm Manufacturing.
Khor, Martin. (2003). Globalisation and the South: Some Critical Issues. Spectrum Books Limited, lbadan. P. 100.
Shogbon, J.A. (2004). "Structural l'ransfimnation: Imperative for Nigeria's Economic Development in a Globalised World". l o th Inaugural Lecture delivered at the Lacros State Polytechnic (LASPOTECH) October, 1 3,2004.
CHAPTER SIX
6.0 SUMMARY, RECOMMENDATIONS AND CONCLUSION
Summary
The Nigerian economy, like every other economy has been undergoing many
changes, particularly within the last two decades, resulting fiom the factors of its
nrnno-product status, neglect of the rural econon~y, arbitrary and ambitious
industrialization programmes and widespread rnisnmnagement. This state of b
affairs had thrust on the nation the challenge of uplifting business organizations
within the rural communities.
Rural Communities, have for long, been mere producers of primary food products
and raw materials, particularly for urban dwellers and urban businesses. A proper
attention towards rural businesses will thus stem the prevalent de-population and
depression including their negative effects. Indeed, development should begin
from businesses at the grassroot community level, given their superior advantages
in economy, abundant resources and potentials which will easily translate into the
gains of job and wealth creation, stem rural depopulation through rural-urban
migration, attract foreign exchange earnings, miligate poverty and uplift living
standards.
Nigcria however joined the World Trade Organisation (W7'0) in 1995, which
ordinarily should have enabled her to 'internationalise' her many resources. This
new status meant a wholesale adoption of its provjsions for globalisation and
Trade 1,iberalisation. The new mcrnbership status however, opened the country to
a floodgate of challenges, particularly within the perspective of Trade
Liberalisation which included the risk of stunting the development and
management of business organisations at the rural level.
61'he researcher, thus moderately attempted to fill the existing vaccum for proper
b management of rural Companies in an era of globalisation. Consequently, it
became very necessary to investigate the impact of globalisation on the
management of Businesses in the rural comnunities of Nigeria. The study
generally aimed at examining the status of' rural businesses. given the challenges
of a global era. In doing this, the research attempted to provide answers that will
address the lack of reliable data and statistics in this crucial Sector of the
economy. As at the time of this study, no major and systematic research had been
found to focus on businesses at the rural community level. Furthermore, the . research is in the interest of national development and economic growth, and will
serve the basis of rural cornerstone for genuine industrial development. This is in
view of its relevance and place in labour, raw materials and other surplus
resources. The research is therefore quite relevant and significant to the national
interest.
Theoretically, the study examined the contemporary sub-ject of globahsation and
trade Liberalisation, within the prism of internationnl trade and specialization in
thc world Trade Organisation and business dcvehpment and is viewed from the
perspective of the developed, undeveloped nations, and Afiica. The twin concept
was also seen fi-om the level of its implications on global output, subsidy, imports,
sales and foreign exchange and management. Other subheadings reviewed
include rural communities and the concept of management.
h e major problems which formed the research questions for the study are
B iternised as follows:
a) What is the impact of global output on rural business'?
b) $Pow adequate is the Managerial capabilities of operators of Rural
Businesses, and what is the bearing on productivity?
c) How hnpactfd is globalisation, expressed throu.gh Trade Liberalisation,
on the Management of Rural Businesses?
d) What is the relationship betwecn the sales profile of rural businesses and
foreign exchange? .
To provide answers to these research questions, the study was divided into six
chapters, including this chapter of the work. In chapter one, the background to
the study, the major problem, sub-problems, objective, significance of the study,
including the hypotheses were provided.
The objectives are:
a) to study t he relationship butwccn rural busincsscs and global out l)ul.
t ) to exanline thc IVIanagcrial capacity ofbusincsscs in rural areas exchange.
c) to determine the relationship between globalisation ard thc n~anagclncnt
of rural businesses..
d) to assess the relationship bctwcen the sales prolilc ofrural er~tcrpriscs a d foreign
Four major hypotheses guided thc study, as follows:
1.
. . 11.
... 111.
iv.
Change in global output does not differ Ffil changc in rural output.
Poor Managerial capability of rural business does not affect the #
productivity of rural cntcrprises.
Trade Liberalisation has no significant effect on the operation and
management of rural businesses.
Foreign exchanges arc not related to turnover of rural businesses.
In chapter two, relcvant litcr'ature were revicwed which included a review of
contemporary dcvclopments within the WTO. The researcher was accessible to
the opinions of a widc range of authors on globalisation and trade liberalization,
thus enabling the twin concept to be seen fi-om the standpoint of cfTect and impact
on business organizations at the rural co~n~nunity level. The following
subheadings constituted amongst others, the broad headings of thc literature
review, namely:
a) macro-management of International Trade world Trade Organisaiton
b) planning and org;~riizing globalisation and 'I'raclc I ,rbc.r;ilisal io11
including its implications on global output salcs/hrcign cxcha~~gc,
subsidy imports, human resources and Agriculturc.
c) Government and the managcment of Trade Libclalisalion in
Nigeria
d) Business dcvelopmcrlt in Nigcria.
c> 'I'hc cll'ccl of globalisation and 'I'radc I,ihcralisatio~~ o n Nigeria's
businesses.
f) The concept and applicatiorl of management.
g) Rural communities in Nigcria.
h) 'The role of small scale busixiesscs in rural dcvclopnicnt.
Chapter three discussed research methodology which comprised the
research design, the study population, sanlple and sample size
determination, instrumentation, validity and reliability of instrument and
data analyses. 'l'hc target population for this study comprised the 166
Managers or the fhctional and active businesses in the rural co~nrnunities
of the six states of Plateau, Benuc, Nasarawa, Kogi, Kwara and Niger
States.
Both inferential and descriptive statistics were used in analyzing the
generated data. In addition, the statistical tools of student t-test, Chi-
In Chapter Four, thc data wcrc prcsc~llcd a d ~ I I I I I ~ ~ S ~ . 'I'l~c I ~ y l ~ l l ~ ~ ~ c s
wcrc all tested.
Chapter Five treated discussion of results and implication. 'The findings
indicated that the mean global annual output rate was 3.3% between 1995
- 2003, while the mean rural output rate of change was a decrease of
23.2% w i t h the same period. Rural businesses wcre also found to be b
least influenced by foreign exchange level and changes. Furthernlore, the
operators ofthe rural enterprises were found to possess reasonable levels
of Managerial capabilities, at least fioin the perspective of educational
qualifications. However, weighed from the point of their attitudinal
dispositions and approach to some basic n~anagemcnt functions and
activities, our hypothesized findings revealed that they possessed poor
managerial capability, which invariably atkcted thcir procirlctivity. Trade
Liberalisation was also seen to havc significant cflcct and impact within
the hnctional managenlent areas of Personnel management, engineering,
production and saledmarketing, particularly, production and sales.
'I'hcsc findings pose a nunlbcr o l' wide ranging i~~~plic:~liorls ~lal~lcly:
I. thc need fix the a new blue print, slr~1tegy i l ~ l ( l ti.il~llcworli lbr
management of rural business organisations bc iq all cmerging
distinct class.
. . 11. The need to consciously develop and drive the international
competitiveness of our firms in the rural communities through a
multi-sectoral approach.
... 111. The need to task abundant and quality hu~nan resource materials
who are managers to advantage as proactivc inputs,~through
appropriate trainings.
iv. The need to reexamine and redefine our membership of the global
body - World Trade Organisation (WTO) given its significant
effect on management of a vital sector such as rural business.
fiecornmendation
'l'he recommendations are based on the findings of the study, both in specific and general
t crrns.
Firstly, on the finding that global output rate and rural output rates were going 111 opposite
directions, with the rural output rates decreasing at a rate of over 20%, it is recommended
that government should as a matter of deliberate policy, revamp the business fir~ns in the
rural community areas. This should be done, not necessarily through direct investments,
but by creating the conducive environment laced with appropriate incentives to
c~~cou~.;~l:c thc participation of the private sector, fbrcign investors and corporate
organisations. Furthermore, govcrnmenl, tlirougli its Small and Mcdiunl Ilnlcrpriscs
Development Agency of Nigeria (SMEDAN) which serves as 11 vanguaril Sol- rural
industsialhtion, should perform thc duty of linking enterprises to external sources, cithcr
for finance, tcchnology or technical skills.
Secondly, for the finding that the Turnover profile of the iural enterprises are least
influenced by foreign exchange levels and changes, government should endeavour to tilt
the focus of the enterprises unto the international arena for reasons of contemporary
compliance, technological relevance and update and therefore, marketing
competitiveness. This could be better done through relevant agencies like the Nigeria
Export promotion council. Also, government should set up a specific export agency,
targeted to the rural enterprises, given their peculiar constraints and challenges.
Managers of the rural enterprises, though eminently qualified from the standpoint of
educational attainment, do not exhibit sufficient and satisfactory performance in regard to
the undertaking of management activities. 'This led to the finding that poor managerial
capability affected productivity. It is thus recommended that a resource: development
progranl should be developed both from the point of curriculum and structure to assist in
developing specially groomed, proactive and well trained resource pool for our
enterprises in the rural areas. The curricula of our training institutions, agric colleges,
and institutes for professional development should also be of interest here.
As Ibr the hurt11 specific findi~\g t h d ' I ' I N I c l ,iI)cr~~lim~ioi\ signi~ic;~~\lly i ~ ~ ~ p ~ l c d on IIW
managcmcnt of enterprises in the rural co~i~n~iinily arcas, it is rmx~n~~ncndcd that all
stakeholders 111 business devclopnwnt such as govcrnmcnt and its many agencies, private
sector, industrialists, Chambers of conimercc, Manufixturcrs A ~ ~ o ~ i i l t i ~ n ~ , and thc
Organised Private sector, should now reassess businesses at the rural community level
from a ncw perspective of globally rated businesses, rather than a local focus. This will
then include overall environmental global conlpliance, new capital needs and
requirement, feasibility studies uutlook, new manufacturing and technological outlook
and challenges etc. b
There is also the finding that most of the enterprise do not subscribe to feeling the direct
impact of imports and subsidy elements on their businesses. It is thus recommended that
the rural business sector should continuously be upgraded and strengthened in order to
attain a leveled ground, within reasonable period which would enhance the nation's quest
for greatness.
01.1 a general level, it is recommended as follows;
i> A development plan targeted at businesses 111 the rural areas should be worked out
for at least 10 years during which time many of the constraints and limitations in
the rural communities would have lxen reasonably well addressed. Such an effort
should be a tripartite arrangement between government, the organized Private
Sector and overseas agents.
iii) Agro-allied businesses, including other manufacturing firms in rilral arcas slmilld
be singled out both before and after the suggested period of development plan
above. This way, their operations would have been subsidised, ready to compete
fairly well with their ovcrseas peers.
iv) Government must continue to monitor, supervise and enforcc the import regime
of the cowltry very regularly. In addition, she should ban the importation of some
products such as frozen 'Turkey, frozen Chicken, bottled water, rich, fi-uit juice etc
for which there is proven enough local substitutes. The example of a country,
such as India, which is also a member of the World Trade Organisation should
suffice here.
India has over 700 items under restriction and allows into its economy only goods that have no identifiable local substitutes. (Financial Standard, August, 19, 2002, P.35).
v) Government should provide adequate market protection for small and medium
scale enterprises, a class into which most of the rural firms fall. This is because
this class of businesses are iacing stiff competition froin forcign counterparts
which produce under extremely advantageous conditions.
vi) Government should patronize the products of'thc rural cnlc-t.pr.iscs, to scrvc
as a morale booster and cncouragcnxnt to tlwn. G o v c r r ~ l ~ ~ c ~ ~ t , should do
more than inerc appeals to buy '.Made in Nigcria' goods and proJuc;ts,
especially when considered that
a lot of the keyboards used in c l ~ c h e s and othcr
places in Nigeria currently are products of SMEs in
developed countries . . . when some SMEs in Japan
built thesc keyboards, the government made it
b compulsory for all public schools to purchase them
for use in music lessons.. . manufdcturers were able
to add more innovations that have made the
keyboards to produce nlellitluent notes, before t l ~ y
were shipped to Nigeria (Financial Standard, 1 9th
August, 2002, P.35 interview with Akin Aluko)
vii) Government should urgently review its terms and conditions of
membership of the World Trade Organisation to suit its peculiar
economic, business and industrial needs, particularly as it affects its rural
business sector. To do otherwise is to tacitly encourage the extension of a
neo-colonial agenda of dependence and subjugation that will only serve to
mortgage our national ethos and aspirations in favour of the developed
world.
I11 Intcr-nzitionai politics, sc!lli~~tc~-est and s c l l ' d c [ c r ~ ~ ~ i ~ ~ i l [ i o ~ ~ S ~ I I I ~ ~ I ~ carclil~al poi~lls
that g d e every nation. No sanc country throws its borclcrs wide o p c ~ ~ any longer
regardless tlut globalisation is about a bordcrlcss cco~lorlly. I l~is is in li~lc wit11
Kohlcr7s assertion that:
From my perspective, globalisation is neither good nor bad.
I t all depends on what we n1ak.c of it - i.e. the cxtellt to
which we are able to exploit its opportunities and thc same
time limit its risks. What wc need is a better globalisation . ..
Globalisation must be shaped politically. (The Nigeria b
Standard, April 2, 2004, IZ.9).
Conclusion
'1'11:: study c~amined thc prolnle~ns of global output and its effect on rural business,
inchling other international dimcl~sions srlcll as forcign exchangc as they affected the
t.urnovcr of rural enterprises. It also determined the n~anagerial capacity and capability of
the businesses, including the relationship bztween globalisation and ~nanagcnlent of rural
tmsi~~csses. 'She results indicate that glolmlisation did not posscss any overbearing impact
01; rural output and rural tumo\~er. Trade 1,iberaiisation however, substantially impacted
substantially on the nlanagement of these enterprises even as t l~c low productivity of the
cntcrprises was traced to poor managerial capabilities.
'I'he implications of thesc findings irlclucle the need for a new perspective approach to
rural business organisations in order to pursue thcir international co~npetitiveness. Others
NcrxJ for further NesearcI~
'I'lwc is u compelling need to evaluate the management of business organisations at the
grassroo1 level of' other states in lhe country.
There is also the need to tilt research frorn the oftcn saturated axis of urbn~dlargc business
organiz:itions, if genuine and balanced attention must be accorded matters of corporate
Managcrs of Corporate organizations, management scientists and otlicr scholars alike
should rise to the ciiallengc of nwrc researches into various dimensional ePccts of
globiili~~tlon. Lo stzm thc dean11 of lilernture and knowledge currently coim-ron place.
b'inally, munagement experts and public servicc bureaucrats should detcrniine and
rework the current terms, provisions and treaty of the World Trade Organisation along
the liws of' h ture relevance to Nigeria's developmental aspirations as a developing
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APPENDICES
I ,is! of Rural Income Generating Enterprises.
COTTAGE INDUSTRIES
I . Agro-based Industries
Gencral Cereal-based Industries Legume-based Industries Industries based on other Fibres Fruit and Vegetable-based Industries Oil-Seed based Industries Cassava-based Industries Tree Crops and Forest Product-based Industries Coconut-based Industries Medicinal Herb Industries Palm Products-based Industries Rubber-based industries Saw-dust based Industries lndustries based on Tree Crops and Forest Products Industries based on other Crops and Intermediate semi-processed materials Industries based on Water hyacinth Livestock Products-based Industries
2. Minerall-based Industries
e Clay-based Industries e Coaj-based Industries e Laterite-based industries e Limestone-based industries e Salts industry e Sand-based Industries e Stone-based Industries
3. . Metal-based Industries
o Aluminium-based Industries a Brass-based Industries e Bronze-based Industries e Tin-basedIndustries
4 Rural Jndustries For Sports, Recreation Culture ETC.
@ Rural Industries for producing Sports and Recreational Facilities e Rural Industries for Producing Tourism and Tourism Related Activities
5. Waste Recycling ' Paper-based Recycling Activities
Plant and A n i d Wastes Household Wastes
e Plastic Waste Recycling o Metal Scraps
6, Arts and Crafts Carving
Feather and Fibre Gaits Glass Works Jewellery
e Metal Works e Textile Works
Vocational Enterprises and Trades Agro-based Trade
e Building Trade Mechanical and Related Trades
I. Textile-Related Trade e Tourism, Hotel and Catering Trades e Vocational Trades B Miscellaneous Trades
8. Engineering And Technology Popularization o Traditional and Indigenous
e Technologies Foundries and Forgeries
o Equipment Manufacture e Water Equipment e Rural Housing Equipment
Agricukural Produce Processing Equipment Equipment for Foundry Works
o Wood Working Equipment e Road Making Equipment o Rural Transportation Equipment
Source: Department of'Rurul Ueveloprnent, !+ederuI Ministry of Agriculture and Rural U~wloprnent, December, 200 1.
APPENDIX C
3 BD S t r ~ c t u r e \h 1 0 Members may parlicipate in all council, cornmillee.;, ctc. cxccpt Appellate Hody, Ihpule
i[lcrrrcrrt parrcls. lexliles Monitoring Hody, and plurilateral commi~tees
Ministerial Conferences
-.
General Council
I
I
Of Intellectual
Committees on I
1 kgicinal h d e Agreements * :alance of Payments : Market Access :catrtct~ons I Agriculture Specific Comm~tments I
, rudge(, Finance and : Sanitary and Phqtosanitary \ dm~nislration : Measures
: Technical Barriers to rrade li'urking parties on : Subsidies and Accession : Countervailing Measures
Working groups on I he Relationship between l rade and Investment I hc Interaction between lradc and Competition Policy transparency in . r;overnment Procurement I'rade, Debt and Finance I radc and Transfer of . Icchnology
2
Anti-Dumping Practices Customs Valuation Rules of Origin Import Licensing Trade-Related Investment Measures Safeguards
Textiles Monitoring Body
: Working on : State-Trading Enterprises
I
Committee of Participants on the Expansion of Trade in information l'echnology Products
Reporting to General Council (or a Subsidiary)
Working parties om Domestic Regulation GA'I'S Rules I
Pluritaterals Commitlee on Trade in Civil
I Aircrafl Committee on Government Procurement
I . Council for Trade in Services Special Session Negotiating Group on Market
Reporting lo Dispute Senlement Body
Plurilateral Committees inform the General Council of their activities although these agreements are not signed by all WTO Members
= - -. = m. .. This Committee informs the Council for Trade in Goods of its activities although not cvery WTO Member is a participant to this Committee
- - Bodies established by the Tradc Negotiations Committee
Access Negotiating Group on Rulcs Committee on Trade and Rnvironmcnf Special Session Council for TRIPS, Special Session Dispute Settlemcnl Body, Special Session Committee on Agriculture, Special Session Committee on Trade and Development, Special Session
The General Council also meets as the Trade Policy Review Body and Dispute Settlement Body
TEST OF HYPOTHESIS NO.1
Our 12irst I-lypothesis states:
I lo: 'There is no difference in thc rate of change between rural output and global output.
1 : There is difference in the rate of change between rural output and global output.
To address this research Hypothesis, the t-test statistical tool was used to measure the
difference between global output changes and rural output changes within the period of
1 995-2003. b
Test. Statistics
Where
Mean global output Mean rural output Case no in global output Case no in rural output Variance
S" = Pooled variance
Test Decision Rule
Reject H,, if t ? t[5,.025 = 2.1 3 1 or if t < t15,.025 = -2.1 3 I otherwise do not reject H,. a = 0.05; an = 0.05/2 = 0.025; df = n, + n2- 2
Test Analvsis
'Table showing test analysis between global output changes and rural output changes.
II % Change in % Change in Rural Output Global Out~u t
analysis summary between global output changes and rural output changes
Source: Table 24 and CBN Annual Report and Statement of Account 1995 - 2003 (p.59-62).
Test Result
Sincc thc 1 calculated value - -3.34 which is less than the t tabulated value = -2.1 3 1. wc
therefore reject H,, This implies that the rate of changc in global output does differ from
rural output.
TEST OF HYPOTHESIS N0.2
Our Second Hypothesis states:
I : Poor managerial capability of rural busincss does not account for their low productivity.
HI: Poor managerial capability of rural business does account for their low productivity.
To analysc this Hypothesis, the opinion of rural business Managers, as to how often they
performed some basic management functions of Formal Planning/Budgeting, Conduct of
formal management meetings and institutionalization of checks/control, were sought.
'These opinions were analysed vis-a-vis the level of turnover of the enterprises. The t-test 0
analysis as a statistical tool was used to measure whether or not there existed any
significant difference in the turnover of the various rural enterprises based on the
frequency with which the rural enterprises undertook the various management functional
activities.
Test Statistics - BudgetinglPlanninp:
Mean of sample 1
Mean of sample 2 Sample 1 Sample 2 Variance Pooled Variance number of cases
Test Analysis
Table Showing test analysis summary of the management function of budgetinglplanning in relation to turnover.
(nl-1) s2 +(n2- 1)'S2 (nl -l)+(n2-1)
Test Decision Rule
Reject Ho if t 2 t(61.0.025) = + 46.979; otherwise reject.
Result --
Since t cai (-0.9850) > t tabulated (-46.979), H, is therefore rejected in favour of Hi This implies that poor managerial capability in terms BudgetingIPlanning affects the productivity of rural businesses.
Jest Statistics - Holdinq of Management Meetings - -
t z
-\/ SL,( 'I n 1 + ' / n2) here P = bl- 1)S2 + (nz- - 1) S'
nl + n2-2
Where -
X 1 - - Mean of sample 1
--- - 2 - Mean of sample 2
nl - - Sample 1
n2 - - Sample 2 s2 - - Variance s2p = Pooled Variance r! - - number of cases
Table showing test analysis of the management activity of meetings in relation to turnover
Holding of management meetings
Not Regular
220033.3333 51 854972.86
2.50047~0'~
t calculated 0.0000 -
t tabulated -46.979 - - - X I - x 7
WiF-1)
Test Decision Rule
Reject Ho if t 2 t((jl.~ 025) = t 46.()7()); otherwise reject.
Result
Since t cal (0.0000) > t tabulated -46.979), H, is therefore rejected in favour s Hi, This implies that poor managerial capability in terms of the holding of management meetings affects the productivity of rural businesses.
Test Statistics - Checks and Control
1 Checks and Control
49203507.72
Sourcc: Analysed from field data
Since the variable on check and control had onby one enterprise that acknowledged not
undertaking that management rumtion, the nermber i s insignificant compared to 60
::mteq>rises that do undertake cuntrollchecks. 1: cam hc said that rural businesses do
sufficiently undertake this rnawagernent function.
*f ie malyses in Hypothesis 2 show that t calculated = -0.9850 for budgetinglplanning and f. = -0.0000 for holding of management meetings. The two statistics are greater than - 46.979. Therefore H, is rejected in all the management fmctions. This implies that poor managerial capability of rural businesses affects their productivity, as assessed variously through the parameters of budgetlplanning, the Holding of Management Meetings and &he enforcement of Checks and Control.
b
TEST OF HYPOTHESIS N0.3
Our Third Hypothesis states
)Yo: Trade liberalization has no significant effect on the management of rural businesses 1%: I'rade liberalization has a significant effect on the management of rural businesses
7'0 analysis t h s Hypothesis, the opinions of the aural managers were sought as to how globalisation affected their businesses within the functional areas of Personnel, Rkgineering, Production ad Sales.
The X 2 test of independence as a statistical tool was used to assess whether there exists any sig~~iiicant difference in the turnover profile of the various rural enterprises based on the effect of globalisatioon.
Test Statistics
Where O - - Observed frequency
E - - Computer Expected Frequency
Test Decision Rule
Reject Ho if X2 > 14.49 or if X2 5 - 14.49 otherwise do not reject H,
Test Analysis .
Table showing Observed frequency - as effect of Trade Liberalisation on rural businesses
Table showing Calculated expected frequency -- as effect of Trade Liberaliisatinn on rural businesses
Activity Area -- -
Personnel Engineering 3.0 9.6 15.3 28.0
-- Production 8.2 26.1 417 - 76.0 Sales 4.7 14.8 23.6 43 0 Total 18.0 57.0 91.0 166.0
Table showing test analysis (Chi-square calculations) of the effect of Trade Liberalisation on rural businesses
I1 o E o - E ( 0 - E ) ~ I ( 0 - E~ IE
Test Result. &
Since the X2 cal = 21.2 which is outside the critical region of X2 tabulated = 414.449, we
therefore reject H, and accept HI. This implies that trade liberalization has significant
effect on rural businesses' operation and management. The areas mostly affected by the
effects of trade liberalization in the rural business settings are those of production and
sales.
TEST OF HYPOTHESIS NO. 4
fAu= Fourth Hypothesis states:
!lo: Foreign exchanges are not relatcd to turnover of rural businesses.
HI: Foreign exchanges are related to Turnover ofsuraI businesses
To address his research Hypothesis correlationiregession analysis and test of significance is employed as a statistical tool.
Test Statistics
egression
Correlation
Negative coefficient (-) = There exist a11 inverse relationship between the rates of change in Rural and -
Global Outputs.
Positive coefficient (+) There exist a direct relationship between the rates of change in Rural and Global
Outputs.
Coefficient 0 - - No relationship Coefficient <0.3 - - Poor relationship Coefficient 0.4 - 0.6 = Moderate relationship Coefficient >0.6 - - Strong relationship Coefficient 1 - Perfect relationship
Table showing test analysis between change i m foreign exchange and change in Turnover of rural businesses
Year 1995 1996
2003 - 159.66 44.65 25491.3156 1993.6225 7128.81 9 Sum ----- - 1091.01 820.21 I36501 .0567 1 13940.7547 101667.6518 Wean 121.2233333 91.13444444
Test analysis between change in foreign exchange and change in urno over-of rural businesses
1 x 2 - Coefficient of determination = 0.1 72 = 0.0289
egression
Where Y - - Turnover of rural enterprises X - - Rate of change in foreign exchange a - - Intercept
b - - Gradient coefficient
Test Result
The correlation coefficient computed shows coefficient value of 0.2, which is a poor direct relationship between rates of change in foreign exchange and turnover for the rural business.
From the analysis, the regression analysis model estimator for rural turnover given the value of foreign exchange rate is defined by the formula
Y - - 2607.72 - 20.76 X M e r e
'Y' = change in rural business turnover X = change in foreign exchange
'his model is not likely to be a gctd,estimator of rural turnover due to the minimal
percentage (3%) proportion of the coefficient of determination (R') by which foreign
exchange explains the outcome of rural turn over. This implies that the model did not
include other factor(s) that have direct impact on business turnover. The result of the
study therefore shows that foreign exchange is not a good dependent parameter for rural
turnover. Rural businesses do not depend much on foreign exchange. The implication is
that rural enterprises do not depend much on importation, either for their operations,
production facilities or raw material.
APPENDm YEy
Changes In Work? Output And Prices (Per cent) .
( icrmany
1 rancc
Italy
I lnited king don^
C'anada
Othcr Advanced Bconornies
Ihro Area
Newly Industrializd Asian Countries
I'IPANSI I'ION COUNTRIES
C cnlral and Iiastern Europe
Russia
P)EVEI ,OPING COUNTRIES
Hy IPcgiori
Aftica
Asia
Middle I%.% & Europe
Western Hemisphere
Oil Exporting Developing Countries
Non-Oil Exporting Developing Countries
China
PRICES
Smlrce. World Itcnnon~il: (hrtlook (IMF), September, 2002 (CBN Arlrlual Reporl & Slatnnwl of A X ~ I I I I ~ S fix the Ycar Ended 71 '' December, 2002)
NPlPEmm YIPd DEPT. OF MANAGEMENT, UNIVERSITY OF NIGERIA, ENUGU CAMPUS.
Dear Sidmadam, I am a Post- graduate student of the above institution conducting a research on RURAL BIJSINESSES and the potentials they hold in the development of Nigeria.
Kindly help us fil l this questionnaire carefully. Ht is only for the purpose of this research. We emphasise that the study is NOT for the purpose of tax or any other government reason. Information supplied here shall be used only for the reason declared,
We thank you immensely for your time and attention.
I . Name of Business (Optional) ..........................................................
. . 2. Manager's Position:. ...................................................................
3. Ycar of Establishment: ................................................................. b
4. Which Raw Material(s) do you use? ...................... .. ........................
5. Please tick the appropriate answer.
Where do you source your raw materials fiom?
a. Here (this immediate vicinity/environrnent)
b. Other distant location
c. Oversea source
6. Which product(s)/servicc(s) do you produce? ..................................
7. M a t factor (s) inRuenccd your siting of business in this location? (please tick
the correct option(s) as below: .
a. High cost of land in urban areas
b. Inconveniences/disturbances of town life
c. Encouraged by government
d. Being my village, it is the only place 1 have
e. Close to source oSRaw material
E Close to my market of fiished goods/services
..................................................................... g. Any other reason
1
MPEmIR "]I""
8" Tick (4) the main advantage that this location has on your business
Low cost of Production
I General Location Advantages
I1 Proximity to raw material source
11 Availability of water supply
It- Availability o S Transport
lr ~bundant market (finished goods)
I Proximity to source of power - t -----
Accessibility to cheap labour -7- Good weather
Good access road
Cheap land
9. What difficulties do you mainly experience as a result of your location?
Raw material sourcing - - -. -- .-
Unstable government polices
Lack of water
Transportation difficulties
Poor marketllack of sales I Financial constraints -7
Lack of efficientlskilled labour
Inaccessible road network
Others -T
MPErn)QY "liu""
Who are your main customers? (Please tick one)
U Individuals - for private use/cons~ptic~n 0 Middlemen - bbr resale 0 Government n Agents for exports
Which is your highest educational qualification'?
In terms of highest educational qualifications, where do majority of your employees fall? (Please tick the appropriate)
Junior StaE
0 0 0 O 0 l'r~ Sch Cerl WASCIGCEJSSCE OND/NCEIDIP I IND/B.SC' MRAIM.SVIMA & Above
b
Senior StaWManagers
l ' r~ Sch Cerl WASCIGCPISSCE OND/NCE/DIP tlNlYtl SC' M13Nh4 SCIMA & Above
M e r e are your main customers located?
Same location with this business i.e. here Other rural areas
0 State Capitallwithin the State 0 Other States in Nigeria
Overseas
B 4. What is your current average turnover (sales) per month(s)?--------------------------
15. What is the current average price of a unit of your product(s)?------------------------
16. Kindly provide the following information against the period indicated.
business (if any) -- I + + I Average price of finished products (N)/Unit I
Production Level/vol. (tons)
Sales (86)
Foreign exchange rate used, if any ($)
Subsidy enjoyed (S) if any - --
Vol./price of imported elements used in your
1996
..
1995 2003 20U2 2001 2000 I998 1999 1997
APlP1EMi))lK '1; ' Please tick (4 )the appropriate box, in rehtvon to your contacts.
Nd atall-l Very regularly C911ce in s while
P 8. To what extent do you experience competition in your business'? .
Please rate the impact of competition on your business'?
A --
I3
C
1)
Strong Strong llndecided Weah Wcab
Do your products have strongly competing substitutcs that you know of?
- -. - .
International Suppliers
International Customers
International Technicians
Other International Pubtics or Agencies
I
If yes, state the nature of substitutes
a. Mainly locally produced substitutes in rural industrieslarea b. [7 Mainly bcally produced substitutes in the urban industrieslarea c. Mostly Oversea substitutes
-
If your answer above is (c), to what extent, do Overseas substitutes aEect the growth of your business?
---
Please tick main problems you experiencc hn your business?
[7 Infrastructure - roadwaterllight etc.
Lack of capital
[7 lack of good staff
[7 Personnel unwilling to Eve here - rural arca
High cost of transport
Lack of sales
'94. Pleast: rate how you perform the functions below
k>rmel Meeting with Supervisors1
Regularly Others Managers
Putting checks/ Control Fl TI
4>uestiuns 25 - 29
Choose the appropriate area where you most feel the impact of'Trade Liberalisation and :xtc the impact under any of the 3 headings:
- -- -- Question
35
26
-
27
Variables
Trade Liberalisation is affecting me in the area of personnellemployees ie. StaE movement (to and from the business)
Trade Liberalisation is affecting me Engineering-wise, such as the Sourcing of spare parts for plantslmachinery
Trade Liberalisation is aect ing me in the area of production processesltechnology 1.e (Newlemerging production processes affect my busincss)
Trade Liberation is affecting my sales of my fiished product(s) Queslions 29 -- 32 pleose answer each of' [he questions by ticking the appropriate headings.
Trade Liberalisation is affecting me in the area of sourcing of raw materials. My business is directly feeling the impact of imports (Foreign Products) The subsidy element in international business (which makes imported products cheaper) is affecting my business. The level of Foreign exchange and its changes, ti-om time to time, affects this business.
I
Strongly j Disagree I (Jnducided
Generally, to what extent does Trade Liberalisation aflect your operations?
LIST OF BUSINESSES AND LOCATPONS
Pl,KI%AU S FA I l$
8. NASSARAWA STATE
NIGER STATE
18 19 20. 21. 22.
- 23. 24. 25. 26 27 28. 29. 30. 31
' 32
Mokwa Ranch Ltd. Fortune Ranch &Abattoir Ltd Afri Poultry Farm Afri-Furniture and Industry Nig. Lfd. Hin Alum Enterprises (Nig) Safara Motel Up Hill Guest Inn Farca Guest Inn Home Cham Paints PLC Shukra Wire & Nails Production Co. Donas AJuminum w Taimako Pharmacy Wadata Bologi Clinic .-
Hanson Guest Inn UMA De Plaza Restaurant
--
Suleja Sgeja
B~da
-
310 Appendix
1 2 3 4 5
6 7 8 9
10
11 12 13 14 15
16 17 18 19 20
2 1 22 23 24 25
26 27 28 29 inf.
Table A.5" Critical Vnlucs ol' tllc I Distribi~lio I I
* Table A S is taken from Table 1V of R. A. Fisher: Statistical Melhods for Research Workers, published by Oliver Sr Boyd Ltd., Edinburgh, by permission of the author and publishers.
Appendix 311
Table A.6"
Critical Values of the Chi-square Distribution
* Abriclgcd from 'I';~blc 8 o f fliottrctr.i/;tr 'lirh1c.v f i r Stoti.\ .tici~~~.s, Vol. I , by permission of E. S. Pcarson and I he Biometrika Trustces.
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