Evaluating The Growth Challenges Of Indigenous Companies In Nigeria

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Evaluating The Growth Challenges Of Indigenous Companies In Nigeria

Abstract

The study evaluates the growth challenges of indigenous companies in Nigeria, This study was undertaken majorly to identify the growth challenges being faced by indigenous firms in Nigeria. Specific objectives of the study are: To render possible solutions to the challenges for use by the indigenous company managers in Nigeria, To examine the contributions of some government establishments and the activities of their officers in terms of investment, capital formation and cost control.

Concerning methodology for this study, Data for this study was collected from the respondents through the use of questionnaires. Other information was collected from text books, journals and other secondary sources of data.The research design used for this study was the descriptive research design.The researcher discarded other alternatives such as the causal and explanatory research designs, because accurate findings and data analysis may not be achieved.

Various analytical tools and software such as pie charts, bar charts, tables, and Statistical Package for Social Science (SPSS) software were used in analyzing data for this study.

Data collected were analyzed using frequencies and percentages. The population for this study is employees of Ibom Power Plant, IkotAbasi. The population figure for the study was 40 respondents, comprising of management staff, middle line managers and junior staff of the company from various departments such as operations, finance, administration etc. Since the population for the study was not large, and data could be collected from all the respondents, the researcher adopted the census sampling technique to successfully complete the study. All 40 respondents were used for this study.

Findings from this study revealed that indigenous companies are either discriminated against or cannot access funds at the credit market.

The study will help pin point the various growth challenges of indigenous companies in Nigeria as well as solutions to these challenge

Table of Contents

  • Title Page
  • Approval Page
  • Declaration
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of Contents

Chapter One

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of General Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Definition of Terms

Chapter Two

Review of Related Literature

  • 2.1 Introduction
  • 2.2 Brief on the Emergence of Indigenous Companies in Nigeria
  • 2.3 Challenges of Indigenous Companies in Nigeria
  • 2.4 The Role of the Government in Promoting the Growth of Indigenous Companies in Nigeria
  • 2.5 Current Initiatives for Improving the Enabling Environment of Indigenous Companies.
  • 2.6 Impact of Indigenous Companies on Economic Development in Nigeria
  • 2.7 Theoretical Framework
  • 2.3 Theoretical Bases for the Study
  • 2.9 Chapter Summary

Chapter Three

Research Methodology

  • 3.1 Introduction
  • 3.2 Research Design
  • 3.3 Area of the Study
  • 3.4 Population of Study
  • 3.5 Sample Size and Sampling Techniques
  • 3.6 Instrument for Data Collection
  • 3.7 Validity of the Instrument
  • 3.8 Reliability of the Instrument
  • 3.9 Method of Data Collection
  • 3.10 Method of Data Analysis

Chapter Four

Data Presentation and Analysis

  • 4.0 Introduction
  • 4.1 Data Presentation and Analysis
  • 4.2 Characteristics of the Respondents
  • 4.3 Data Analysis
  • 4.4 Testing Hypothesis
  • 4.5 Summary of Findings
  • 4.6 Discussion of Findings

Chapter Five

Summary, Conclusion and Recommendation

  • 5.0 Introduction
  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendations
  • References
  • Appendix

Chapter One

Introduction

1.1 Background of the Study

One of the major economic backwardness of the most third world countries like Nigeria is the over prolonged sojourn of private foreign divestment in them. The predatory exploitative orientation and activities of foreign monopoly capital, it inherent tendency to resist and hamper local industrialization and to perpetuate merchant capitalism and its determination and deliberate efforts to retard the growth of endogamous entrepreneurship all this have heavily influenced Nigeria economic history for well over a century.

This foreign dominance of commercial activities in Nigeria was made possible by restrictive practices employed by the established merchant firms. It is important to note that commercial banking is a major source of credit (capital) was solely owned and controlled by foreign elements. Their policies were made towards satisfying the needs of foreign enterprise, indigenous entrepreneurs merely subjected on the crumbs that fell on the gable.

(Ezeigwe .J. O) Nigerian government in the 1950s operated mainly an open door policy which attempted to live foreign investors into the country.

After the civil war, experiences showed that the issue of indigenous participation in the Nigerian economy once can be re-opened. The dubious role played by foreign investors at various stages of the civil war and the acute shortage of essential commodities at the same period and the spirally inflationary trend that followed post war reconstruction and rehabilitation programs had contributed to inform the government that there was the necessity to allow the indigenes of Nigeria and government a hand in deciding their economic fortune. The government was further persuaded by radical agitation of the politician s and the masses to do something about their economic difficulties.

With these pressures and economic difficulties mounting higher and higher, the government decided to whittle down foreign dominance of the economy on 23rd February 1972, the military government promulgated the Nigeria enterprise promotion Decree No. 4 of 1977 popularly known as the indigenization decree the following were the objectives.

  1. To create opportunity for our people
  2. To raise the proportion of indigenous firms and ownership of the productive sectors of the economy.
  3. To maximize local retention of profit
  4. To involve more Nigerians in the management and decision making process of business enterprises. All in an effort to enhance indigenous growth of Nigeria firms.

1.2 Statement of Problem

A number of problems have been identified as being responsible for the backwardness and retardation in the general growth of Nigeria indigenous firms the persistent set back in the growth of the indigenous firms have been assumed to center on the followings: Inadequacy of capital, poor technological manpower deficiency, mass illiteracy, management incapability and marketing in competency (National and internationally) etc there are many more that form the cove problems of the growth of our indigenous firms.

It is the intention of the researcher therefore to take a critical examination of the internal and external factors affecting the growth of our indigenous firms.

There is a general contention that the rate of growth of our indigenous firms, especially since the pushing aside of the aliens, has been slow. This statement in the growth of indigenous firms in Nigeria, problems and prospects will be investigated and possible recommendation given as to the solutions.

1.3 Objectives of the Study

The main aim of the study is to evaluate the challenges associated with the growth rate of indigenous companies in Nigeria.

The specific objectives of the study are:

  1. To identify the growth challenges being faced by indigenous firms in Nigeria.
  2. To render possible solutions to the challenges for use by the indigenous company managers in Nigeria.
  3. To examine the contributions of some government establishments and the activities of their officers in terms of investment, capital formation and cost control.

1.4 Research Questions

  1. What are the growth challenges faced by indigenous companies in Nigeria?
  2. How can the growth challenges facing indigenous companies in Nigeria be properly addressed?
  3. What contributions have government establishments made towards the growth of indigenous companies in Nigeria?

1.5 Statement of Hypotheses

Hypothesis 1
  • Ho: Lack of sufficient capital and poor financial management does not hinder the growth of indigenous firms in Nigerian.
  • Hi: Lack of sufficient capital and poor financial management hinders the growth of indigenous firms in Nigeria.
Hypothesis 2
  • Ho: Marketing of products is not a major problem facing indigenous firms in Nigeria.
  • Hi: Marketing a product is a major problem facing indigenous firms in Nigeria.

1.6 Significance of the Study

The study will help pin point the various growth challenges of indigenous companies in Nigeria as well as solutions to these challenges. Findings and recommendations from the study will enable company managers and the government to rally together and develop better policies that will encourage our Nigerian owned companies to grow. The study will also bring out strategies and techniques that can be adopted by indigenous companies in Nigeria to beat foreign owned firms and survive competition.

1.7 Scope and Limitation of the Study

The study is limited to the growth challenges of indigenous companies in Nigeria, using Ibom Power Plant, IkotAbasi as a case study. Findings and recommendations from the study may not be used to generalize all indigenous companies in Nigeria as the researcher could not reach out to more indigenous companies in Nigeria due to time and financial constraints.

The only limitation faced by the researcher in the course of carrying out this study was the delay in getting data from the various respondents. Most respondents were reluctant in filling questionnaires administered to them due to their busy schedules and nature of their work. The researcher found it difficult to collect responses from the various respondents, and this almost hampered the success of this study.

1.8 Definition Of Terms

Monopoly:

Means the sole right to trade on a particular goods or services.

Capital:

This means wealth or property that can be placed to produce more wealth.

Investors:

It means group of persons or organizations that invest a business venture.

Economics:

The production principles and distribution of goods and services and the development of wealth.

Inflationary:

This means the persistent and continuous rise in prices and wages caused by increase in money supply and demand for goods and resulting in a fall in the value of money.

Firms:

Means business company or an organization.

Merchant:

Person involve in trade or commerce.

Sectors:

That parts or branch of a particular area of activity especially of a country’s economy.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Summary of Findings

After a thorough research on the challenges facing indigenous companies in Nigeria, the researcher came up with the following challenges:

(a) Financial Problems

According to the responses of the respondents, the researcher discovered that in Nigeria most Indigenous companies are folding up or lack competitiveness because they lack the much require financial capacity to prosecute their manufacturing concern. Most of these enterprises cannot access loan on a long and short term basis.
A similar finding was also revealed in a World Bank report in 2001, it was reported that almost 50 percent of micro, 39 and 37percent of the small and medium scale firm are financially constrained in Nigeria as oppose to 25 percent of the very large firm. (World Bank, 2001).The implication of this shows that indigenous companies are either discriminated against or cannot access funds at the credit market.

(b) Lack of Infrastructural Facilities

The performance of Indigenous companies has also been hindered by the lack of infrastructural facilities. Inadequate facilities like power supply, telecommunication, access road network and water supply constitutes one of the major constraints challenging Indigenous companies in Nigeria. A World Bank study in 1989 estimated that “the cost of providing infrastructural facilities by Indigenous companies in the absence of those facilities is estimated to be about 15-20percent of the cost of cost of establishing manufacturing enterprises in Nigeria”. Omolola (2008:15) contends that the percentage has since increase to 30-35percent of the cost of establishing manufacturing concern in Nigeria. Of the infrastructural problem, the problem of power has best the most critical of the infrastructural problem.

(c) Government Un-favourable Fiscal Policy and Policy Inconsistencies

The inability of government to execute favorable fiscal policies and policies Inconsistencies has undermined the capacity of indigenous companies. As Njoku (2002) identifies, inconsistencies in government policies is a major problem affecting indigenous companies. Ogujuiba (2004) also factored in the problem to inappropriate time or delay in budget implementation as factor constraining investment and trade decision. In most cases the process of approving budget at the legislative level is usually delay due to executive and legislative face-off most time and even when the budget is approved the executive Implementation of such is also very slow due to administrative bottlenecks. Thus, delaying investment decision of small and medium scale enterprises, particularly on tariff and taxes measures in their trade decisions. Factors such as this have made investment environment to be unpredictable and uncertain for indigenous companies.

(d) Marketing Problem of Small Business Enterprises

According to the study, one of major marketing problems facing indigenous in Nigeria is lack of understanding and the application of marking concept. In a study conducted by Ogwo (1991), this was conspicuously exposed. Most Nigerian small business owners equate ‘marketing’ to ‘selling’ and this is reflected in their various dysfunctional business behaviors against customer satisfaction and good business orientation.

5.2 Conclusion

Initially, in the statement of problem, we made mention of the problems at stake of which formed the basis of our writing “ the growth of indigenous firms problems and prospects however, from the research so far conducted the following conclusion was drawn that these problem was centered on the following the economic level of the nation financial inadequacy, low technological still, and mismanagement, inexperienced and unprofessional owner managers dictate for the management officers etc.

Others were caused through insensitivity, corruption, wasteful use of resources, ethnicity cause a lot of problems into the growth of indigenous forms. All these problems caused general economic set back poverty with very low standard of which, economic drainage through capital and profit repatriation by foreign investors, import dependence and lack of personal initiatives by citizens.

Finally, the abundance raw material, increased awareness and the consciousness ownership of indigenous industrial investment infrastructures, increasing demand for home made goods, ban of some imported goods made few among number incentives and prospects open the growth of our indigenous firms which leads to the determination of their own economic welfare.

5.3 Recommendations

Based on the data collected and the findings the researcher then recommends that:

  1. There should be long-term industrial polices renewable after about 10 years to enable entrepreneurs maximize the potentials of the economic environment.
  2. Banks should grant sufficient loan to our indigenous entrepreneurs and greater percentage of the loan granted should go to manufacturing sector and these loans when granted should be properly monitored.
  3. That the activated of our financial institutions should be reviewed with urgency.
  4. That the management of our forms source be in the hands of trained personnel, i.e. those that are specialist in that field.
  5. Government should through the agricultural development bank liberalize the grandly of loans to farmers at reduced interest rate because they produce some of raw material for our firms use.
  6. Government should go into clearer agreements with the multi nationals and foreign merchants on training of personnel to take over after some years of investment.
  7. That with the present strives for private more efforts towards small-scale industries.

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