The Influence Of Multinational Companies In The Economic Development Of Nigeria (A Case Study Of Guinness Nigeria Plc Benin City)

Project and Seminar Material for Economics

The Influence Of Multinational Companies In The Economic Development Of Nigeria (A Case Study Of Guinness Nigeria Plc Benin City)


Abstract


The main focus of this research work is to examine the influence of multinational companies in the economic development of Nigeria. MNC’s are agent of development in the sense that they constitute the source of capital investment, employment for the people, technological transfer etc. However, many detest their existence because they are agents of exploitation of the people they came to develop.

In this regard, the objectives of this work is to ascertain the extent of involvement of multinational companies in the economic development of Nigeria using indices like employment provision, transfer of technology and to determine the political, socio-economic implications of their existence in Nigeria. All these were discussed in the chapter one.

In chapter two, related literatures were reviewed. The literature encompasses of people’s view on the activities of multinational corporations.

Chapter three consists of research design and methodology. The source of data used were primary and secondary sources. The primary sources include the use of oral interview and questionnaire while newspapers, journal, textbooks, symposia where sources of secondary sources.

In chapter four, the information collected were presented and analysed and the hypothesis were equally tested in which it was discovered that the MNC’s are not interested in Nigeria economic development but are interested exploiting the Nigeria’s economy.

In chapter five, the recommendation made, is that Nigeria should develop her own indigenous technology that will aid her in her search for economic development.


Chapter One


Introduction

1.1 Background of the Study

In third world countries most people associated multinational companies with non-colonialism. While the Euro-American nations described multinationals as the engine of growth in the underdeveloped countries. These two opposing views about multinationals will help to examine what multinational corporations are all about.
To define multinational company Walshi L.S. made us to understand that a multinational company produces and sell at both home and abroad. In fact, the essence of multinational is international production. It involves a corporation in the establishment of subsidiaries. From the foregoing, it become clear that there are several approaches in defining a multinational company.

Approach 1: This approach tries the definition by emphasizing structural criteria such as the number of countries in which a firm is doing business, ownership from many nations, composition of the top management being nationals etc. Another school of though in this approach defines it through stressing performance characteristics such as absolute control, relative earnings of shares, sales, assets, employees committed to foreign operation etc.

Approach 11: Different schools of though in this approach address the issue by suggesting an evolutionary process of international to multinational, transitional and supranational organization, which can be diagrammed as follows:

International: An organization is classified as international when the organization engages in foreign business but has made no direct investment.

Multinational: A multinational organization is one that allocates resources without regard to national frontiers. However, the organization is naturally based in terms of ownership and top management.

Transnational: This is a multinational organization managed and owned by persons of different nationalities.

Supranational: This is a transnational firm that is legally denationalized by becoming incorporated through an international agency.

Some of these multinational companies are General Motors, Guinness Nig. Ltd, Nigerian Breweries, Oil Companies, Nigeria Bottling Company, Beecham, M & B, UAC, and a host of others. These above mentioned corporations have their headquarters in the United States of America and Europe with huge capital and assets based and technical skills extended to their respective countries where their branches are located.

The local branches are mere subsidiaries and are located mainly in under developed countries of the world. The impact of these multinational have contributed to the improvement of the economics of such countries where they have their subsidiaries. These corporations are believed to be facilitating the transfer of technology to the less developed countries, Nigeria in particular. Ake (1981) is of the view that “the multinational scarcely have the appropriate technology to transfer” while Offions (1980) admits that they are capable of contributing to development. He however argues that their malpractices wiped away any contributions that they have made. This is why we say in “management that the multinationals blessings in disguised.

Guinness Nigeria Plc is a brewery company with many branches nationwide and its headquarter office situated in Lagos. The company have a staff strength of over 15,000 workers and a large number of casual workers. They manufacture Guinness Stout, Harp Beer, Guinness Malta, and the rest of others. According to a research made to the company the major aim of Guinness is to impart knowledge to Nigerians, technology transfers and skill development that Nigerians can set up their own brewery industries to manufacture their own brands of beer. Above all, Guinness have contributed health wise by establishing an eye clinic in Anambra state with (250,000) and handed over to the Anambra State Government.

In addition to these contributions Guinness have helped in no small measure in solving the problem of unemployment by employing workers in their various disciplines.

In summary, it has become very clear that multinationals have something useful to contribute to developing economy going by their contributions earlier discussed. The nature and quality of these contributions will be ascertained as this study unfold.


1.2 Statement of the Problem

This study is therefore aimed at identifying problems that might hinders the efficiency and effectiveness of Guinness Plc. In performing the stated aims in Nigeria with the view to suggest strategies by which they can be enhanced to become useful to Nigerians.


1.3 Purpose of the Study

The aims of this is to:

  1. Investigate the role of multinational corporations Guinness Nigeria Plc in the development of the country.
  2. Highlights ways Nigeria could maximize the benefits from the multinational corporations and minimize their negative and anti-development objectives.

1.4 Significance of the Study

Since 45 years after political independence, Nigeria still remains a mono product export economy exporting only raw materials and crude oil.

Since Guinness Plc’s aim is to develop the country, how far has it achieved this aim?

How many people acquired the technological skills which its claims to transfer to Nigerians. This study will expose to the policy makers and economic planners both at private and publics sectors the negative and positive effects of the company’s activities.

It will also help the government to re-structure there relationship with multinational corporations.


1.5 Scope and Limitations of the Study

This study will generalize the role played by the different multination companies but will focus attention on Guinness Nigeria Plc to enable the research have accurate and careful examination of the study.

This study will also go a long way to highlight the parts played by multinational companies by studying how they are financed, how they make their profits and how the profits utilized the extent they have transferred their technological skills to the host country.

Finally, how they have helped in solving unemployment and other social responsibilities problems in Nigeria.
Some of the limitations that may have affected the results of this study are described below:

  1. The results of this study may not be generalized since it is only one of the corporations that was studies out of the whole lot in Nigeria. However, a global qualification is not necessarily the best approach to this study since much of the data will always remain hidden.
  2. The researcher had problems in obtaining relevant data. The company did not give enough data and relevant information and there is no appends Nigeria body of laws that compels them to do so.
  3. The researcher had to combine full time academic study with the research work and this slowed down the pace of work.

1.6 Research Question

  1. To what extent does Guinness Plc helps in the development of Nigeria?
  2. To what extent does Guinness transfers their technological skill to Nigerians?
  3. How has Guinness help in creating job opportunity in Nigeria?
  4. What constraints will hinder Guinness in their contributions to the economic development of Nigeria?
  5. To what extent does the company attract government assistance?
  6. To what extent does Guinness Plc re-invest their profit in Nigerian Economy rather than repatriating it abroad?

1.7 Definition of Terms

1. Multinational National Enterprises (MNE)

This is a cross border national business organisation or aggregate of organization that are aggregate of organization that are characterized mainly by the disposal of their managerial ability among several nations.

2. LDC’s

Less developed countries of the world.

3. Trans-National Company

This is a multinational organization managed and owned by person of different nationalities.

4. Supernatural

This is a transnational firm that is legally denationalized by firm that is legally denationalized by becoming incorporated through an international agency.

5. Parent Company

A company, which owns and control foreign direct investment.

6. Head Office

The central organization of the firm as posed to the foreign subsidiaries.

7. Foreign Subsidiary

This is the corporate form, which represents the foreign direct investment..

8. International Division

This is the part of the head office with a foreign geographical responsibility.

9. International Management

The used of executive from any country operating away from their own.


Chapter Five


Findings, Conclusion and Recommendation

5.1 Summary and Findings

In this study, the analysis of the investment pattern of the multinational companies shows clearly that the activities of these firms are concentrated in the mining extractive and destructive sectors of the economy with little or nothing in terms of the development of capital-intensive industries.

The study discovered that there is little or no control over the activities of the MNCS in Nigeria. This was evident from the fact forceful policy measures have not been adopted to pull down the power to regulate the MNCS. Thus, because Nigeria lack the power to regulate the MNCS, the capital generated from the natural resources in Nigeria is not used to develop local factories nor to use to develop local economy.

For instance, in 1988, GUINNESS made a profit of N111,035 million and out of this it paid only N42,363 million as tax, half of the rest was repatriated to the home countries as profits.

The study also revealed that MNCS operating in Nigeria have political and socio-economic consequences. On the economic scene, the study indicate that the MNCS have no lasting solution to our economic problems like unemployment, balance of payment, hunger and poverty, transfer of technology problem and development of indigenous firms. Instead the MNCS worsen the problem the more.


5.2 Conclusion

This study is a coherent and painstaking approach in high lightening and realistically appraising the peculiar issues, perspective and political- socio-economic crisis management vis-à-vis the frightening realistic of class struggle, neo-colonialism, and imperialism which have been leveled against the western capitalist- the multinational corporations.

It is of interest to note that the aims and objectives of the MNCS and the Nigeria’s development are mutually exclusive and contradictory. It is no possible to reconcile the interest of the MNCS with the needs and aspiration of Nigeria. Hence the goals of the two groups cannot be realized.

To this end, to say that MNCS will aid Nigeria in her economic development is tantamount to a fallacious syllogism. This is embedded in the fact that, the interests of the two groups are moving along parallel lines. While the Nigerian leaders are planning on how to make to Nigerian economy self reliant, the foreign firms on the other hand are busy planning on how to consolidate their domination of the Nigerian economy. This is vividly manifested by the fact that the foreign firms engage in subversive activities whenever their interests are threatened in Nigeria.


5.3 Recommendation

Base on the above observations, this study therefore recommends as follows:

  1. Proper policy check by the federal government on the activities of the MNCS with respect to profit repatriation.
  2. All contracts awarded by the government should be done in our local currency and not in foreign exchange.
  3. Government should use effective machinery in implementing tax policies with respect to MNCS. Also government should award punitive punishment on the Nigeria tax officers who collide with MNCS to defraud the government.
  4. The government should also put up and implement a well articulated employment policy and specifically assign roles to the MNC’s with respect to employment creation.
  5. Above all, the government should not depend on the present dependence on the fortune of the petroleum sector instead, they should embark on the diversification of our natural resources to other sectors like the agricultural sector, development of Agro Allied industries and to a diametrical revitalization of the sector in general. The researcher will therefore end this write-up by saying that economic development according to Walter Rodney is “the capacity of the members of a given society to deal with its environment” Nigeria can only develop economically and otherwise by devicing local means of extracting the resources of its natural environment”.
  6. Finally, if a development model is to have any positive meaning to Nigerians emphasis must centered on genuine transfer to technology, curbing unemployment problem, as well as solving the country balance of payment problem.

5.4 The Political and Economic Implication of the Study

In writing about the political dynamics of economic dependence as it affects the interest of the two main competitors of the African ruling class, namely the African masses, and international capitalism.

Claude Ake (1979) said that for the masses, it would seems that dependence is seriously determined to their objective interests. For one thing, dependence is the basis of underdevelopment of which they are victims.

While Samir Amin (1974) and Thomas Szentes (1971) pointed out that the dependence of African is the root of the disarticulation of African economics, the reduction of unequal exchange between the economy of African and her counterparts.

In the light of the above statement, the laudable objectives of the Nigerians fourth (4th) development plan will be difficult to achieve if the multinational corporations are allowed to dominate every sector of the economy.

Since a country can be said to be truly independent, virtually all the sectors of the economy are dominated by foreigners, the domineering role of the multinational corporations should be a source of worry to every right thinking Nigerian. It therefore requires the urgent attention of the government, which seeks to improve its economy and the standard of living of its citizens instead of depending on the multinationals.


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