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University of Nigeria Research Publications
UGBOR, Benedict Chikezie
Aut
hor
PG/MBA/91/10713
Title
The Impact of Deregulation on Foreign Investment & Industrialization in Nigeria
Facu
lty
Business Administration
Dep
artm
ent
Banking and Finance
Dat
e
December, 1992
Sign
atur
e
THE IMPACT OF DERECUL4TION ON FBRE3[GN
INVESTMWT AND INDUSTRIALIZATION
IN NICEXIA .
DEPARTMENT OF BANKING AND FINANCR
UNIVERSITY OF' N I G E R I A ,
ElWCU CAMPUS
THE IMPACT OF Dk23EGULATION ON M ) R S G N
INVESTHERIT AND INDUSTRIALIZATION
IN NIGERIA
ABSTRACT
A c o u n t r y e x p e r i e n c e s a good l e v e l of f o r e i g n
i n v c s t r n e r , t cind i n d u s t r i a l i z a t i o n when she h a s a g o o d p o l i c y
e n v i r o n m e n t f o r t h a t . I n N i g e r i a t o d a y , t h e c u r r e n t p o l i c y
e n v i r o n m e n t centres o n d e r e g u l a t o r y measures. ' T h i s research
thert:fore, i s u n d e r t a k e n t o assess t h e effect o f d e r e g u l a t i o n
o n foreign i n v e s t m e n t a n d i n d u s t r i a l i z a t i o n i n N i g e r i a . I I
T h i s w i l l e n a b l e u s t 'he more t o a s c e r t a i n w h e t h e r o r noC t h e
p o l i c y mc~tsure s h o u l d be r e s o r t e d t o c o n t i n u o u s l y a s a
tolerable d e v i c e f o r e c o n o m i c g r o w t h i n t h e c o u n t r y .
I n t h i s v e i n w e expect to u n d e r s t a n d better t h e o b j e c t i v e s , of d e r e g u l a t i o n in terms of foreign i n v e s t m e n t and i n d u s t r i -
a l i z a t i o n ; the measures a d o p t e d t.o i c h i e v c t h e s e o b j e c t i v e s ,
a n d the e x t e n t to w h i c h these o b j e c t i v e s h a v e b e e n rea l ised. I To ach ieve o u r aim, t h e research m e t h o d o l o g y adopted
is t h e use of t h e p r i m a r y a n d s e c o n d a r y d a t a . T h r o u q h t h e
p r i m x y m e t h o d , i n f o r m a t i o n were col lected b y o r a l i n t e r v i e w s , I
a d m i n i s t e r i n g q u e s t i o n n a i r e s and a t t c n d i n q r e l e v a n t s e m i n a r s . I
W i t h regards to t h e s e c o n d a r y m e t h o d , we c o n s u l t e d a n n u a l
reports of many o r g a n i z a t i o n s , f i n a n c i a l r e v i e w s , s t a t i s t i ca l
b u l l e t i n e s , j o u r n a l s , m a g a z i n e s a n d n u m e r o u s f o r e i g n a n d
l o c a l t e x t b o o k s bearing o n t h e t o p i c . I
I The r e s u l t of the s t u d y s h o w e d t h a t d e r e q u l a t i o n i n
t h e h a n k i n q i n d u s t r y y i e l d e d a positive effect b u t t h i s
positive effect is s e r i o u s l y b e i n g c o u n t e r e d b y t h e a d v e r s e
v i i .
p e r c c : ; , t Z ~ ~ 1 1 c ) f e c o n o m i c management or p o l i c y m e a s u r e s
( g i v u n Illgcrj. an e n v i r o n m e n t ) r a t h e r t h a n f r e q u e n t l y
jumping f'rorri one p o l i c y to a n o t h e r w h i c h sanetimes a r e
T I I L . . - . ~ : , ~ . ~ i . i : t ~ t dmong t h e m s e i v e s . uie s h o u l d bt-. mom select lve
jn our clioicc! s f f o r e i g n i n v e s t m e n t r e q u i r e m e n t . /ill
th?--e o r l d :Iclny m o r e \ d i l l restore t h e c o n f i d e n c e of f o r e i g n
i n v e s t o r s ,md to an d p p r e c i ~ b l c d=gree i n c r e a s e the l e v e l
of .;i~.:,~~,'ir! ~l i : : d t i o n i n t h o c o u n t r y .
Wflation k t e in Niet+rfa h t w e a m 9889 and 39938 b t Fsreiga Private Capital Inflew aad the Nm%sQ/OfG Dollar and Nabar/Bmaw%r Sterlimg hfr$ t a r Phs perfods 1986-i9)88. %ud~.s of W k r in Nigeria Batweun 1979 awB 9999.
Mean and bvimtiaa of h n k cr.dit Bstwc~sla 1987 - 1992+
Contiagenay Table on the General Iwrpaet a t Dcwegulatim.
I n tbr mmntvy*
cwrttribarted fa ~ n " fsrdaa82rtaMstatloa ar c grOlltth,
.it r i a l be dropfwd end a brttrar pogicj marrrrcs ssught.
If, ar, t W hwd, i t h a b m p~Ltjififwff Q O P T ~ F ~ htfng
OF la# WCg t EM*, tm f t dU bb. awp~t*
by all g a d thinking oftfmwm. Ths work wili not lm
mhawetiva fin itmlf - tt all @@sat@ s;rc rcaira
~as%ur(5bPa,& OWI t k Wpi.~.
t b governa@nt pleyed a lesdhp; rule &a Botb eastrol and I provision of fund ~ince th4 pSrat8 mwtm b o k suf t io ie~t
I
capital. i
Pmpl , I
f o r appropriate P W L ~ tr in f isaal , mmetwy*
rats p&ilsl?+a- davalogsd cmtr ie 1 liks the Norah I
I I I
dwegulatwy weasume t a their e u ~ a m i u prabt I
I
w i t n m ~ e d utlefactory nmlt in atabi l i ty and reasmabl. ~
wide aaepr* blw, wa Identify thono wear of d e + p h t i e n
An e x a h ~ g o rafe @~uIcl be defined + i * h o ~ ar the
In tbis vein, tha excrhange rate d.r.lgldirtloa i n Nigarir war
2970 mad 1972. I'hlr nut war believad not t o be mlvlng
fareign e x ~ h m g a prob1.r l a tha aomtry hence the
dawgulation of t b foraign +nehrngta. Foreign wuWmga
deregulation uar focuroed on two major areao narelyr the
detareb'tllixsatlon of the f o r r i m emhang* rrtca an8 tha methad of
aaaarr t o foreign exahmga- Both arm6 are eoaoooda td in
eaeh rtepo of. the excahpurgo clersplatlon.
f i r r t atop at foraign axohange deregulation war
th, 8eo:oad U a r Foraim kuhange Market (SFPI) of S t h
Septombar 19W t o t a t July 1987 (the firrt timr r w a i p
exahan@@ u r k a t belng an extermion of tho Ijratam o t ' rd r in i t t ra t iva ly dwarrined ax@&mgo rat. before a9th
8.ptamb.r 1806). SFlPl warn evolvod ar a rmal l r t lc rrlcet
determin8U axebaago r r ta t o reducs dmumd fo r for+igm
8xehernga t o avd lab la supply and so radma praarure on the
k l anoe of Pa-t (BOP). Tha saoand r tep a t foreign
axahango daregalation war the Foreign Excheurga h r k a t (Fa)
whirah took affec t tram 2nd 3uly 3987 and lsated till January
t98% P'EW waa a merger of the f i r a t and amand tiar marlcata.
SYSl/FlBl had two ragmmts namely: ths offf@ial/tho bidding
re6aiono whhh ulr operated by ths Caatral Bsurk a t Nigeria
(CW) end the autonamas w k e t whwe privataly rawcrad
foralgn axrzhange war trad+d. The th i rd otep a t deregula t ln~
the fweign oxehmga wao the asrglag of the autanomoor
aurrlret wit& FEP1 t o br@ase the Intar-bank Foreign Bahmge
MerklaS (IIPePI) whicrb laeted betvaen Jenwwy t989 and 4th
M a h 1992, l[FlEbl U'U8 m 8 M t t.0 StWp out the rnWgWlc@ 0f
qmltipla exehagae rates which distorts the csaonomio syatm.
Alao tha Bureau ds Change was introduoed i n August 1989 t o
among other8 ~ocord legal recugnltion to mall foreign
sxchrmge dealora, provids h.ee acadbrr to foreign mahang6 by
m u l l werr with relative eonvsnieaae and to +nhmae the
level of adeqbcy of lnfomat9sn on foreign oxchange flow
i n the eaononn;p. Only prWntely sourosd fund@ o m be traded
i n the btrramx. The fourth and latarat s t e p i n the foreign
exUhanffo dofeftulation wa& the 19192 March 3, foroign ctxchnnge 0
l ibe~~ i l&etXon, 'fhim total 1iberall;cstlon was necesmitated
by rapr aalpr~mctloabs observed under FiSl banks explaitod 1 ha
priority al lowtion of foreign oxchmge t o thm t o the
dotriagsnt o f the economy. Under the MBrch S Eloatatian, the
praetlae a i foreign exchange allooation to the banks on
preddtwminud quotas was discontinued. The aarket bsactme
purely an intwbank market in which the CBN 18 one of the
participants fro* to buy and as11 foreign exchange a t tha
rate freely deteI%tin@d by all. authorised dealerr. In thir
mmwr ths GElN fnilummelo t b exahan~r rats by open w k e t
($1) D+romalrtfon ;Ln the &nklw 3ecrtor
Traditionally, the barMae indtmtry l o the m a t rogalatr
ia my e0onmy. Thir i r beecapre of i t8 prorineat and renr i t i l
r o l e in a aauntry'm f i n m a i a l ryatem, The upate of bank
ro tp la t ion i n Wigorla rangor froa the Banking Ordinance of
1952 t o th. BaurkIn8 Act o? 1BW -dad frcm t h o t o tire.
With &peals1 refereno8 t o tho banking law8 ar fhey affoot
i n t o m a t rate, the CIM 0mtr018 fntecor t rsfer on deporitm
and Imcling a a t i v i t i e r , There war a l r o a r a a t a r r l a l lauet lon
of banking oredit$ t o givm pr~ferentlal trecatalmt t o awrtain
a c t t v i t i e r aaaordlrd pr lor&ty rtatum such as a ~ i a u 1 t t h . r and
i n d u t r y . N e v ~ t h e l a s r a8 the need f o r dr t rqplat ion wp8
bring apBa4%redl, t h w s w a r a rronr~iotm move towartla a more
laarkat-orfmted 8yrtem i n the banking fntlwtrg, Psrtiatularly
i n t987 a l l the ooatrolr on i n t e r e r t rates m e rnoved r o
tha t banks aould be f r e e to eberrg~e srarkrt r a t e r of intaroat
end prrl rrt#rpcl&itiv8 in te rea t rate. t o t h e l r dqmaitorrr.
Anothr ampacat of dw6gulatian i n the bankiug relotor wao the,
l ib@ra l i sa t ion of bank liaonrfng. Thir provided llapetur t o
f roe entry Into artd exit f r ~ m the bultimg burinem, Again t b
ab rop t i on o f the W a l Banking Sehsoo (RB18) l r a l r o m
sIommt of do ray l a t i on i n tha banking rptm. Bank8 by th i r
t~ bank8 i n t he mdluzjcolltmnt of s w t o r r l mix ae cwidan~a of
further c loreg~lr t ion la th+ banking rector. Smh f l + x i b i l i t y
a i ~ d at inareasing the dircrrution of bank8 i n their wedit
oparation i 8 w i t h raapsat t o t h e rationsrlf&ation of oradi t
d is t r ibut ion aaong seatar8 of the wanmy, betwan indigmnoua
and foreign borrower# and betwewn mall and large ac r la
borrovarr,
(iii) Ubwa l i ea t i on b r r n &ve&m
The i n ~ t i t u t i o n of the Nigalrim k t e r p r i r e a Prmotion
k t of 4972 f o r re#t ruotwing the orpership puttern qf
borinosaa8 i n tbe a o ~ t r y i n favow at Nigarildlta although
war ~l l$ lded i n 1977 t o redwe the liirt of rohedula of
rwterprirer ex~lrr8iv*lp rererved for Nigarianr wae ob@orved
t o be militating agafnrt foreign pr iva te eap i t a l inflowr
i n t o tbe omt try. Con8equently, dwegulatory Blctamrsr m r a
undertaken t o all# far a grmmter f o r r i m particripation in
dma8t ia invartmmt partiaalmrliy whorm rucrh invwtmentr e m
f o r t a r t b d m l o p t of indiganoar e x p e t i r e aaQ tha
difflurion of a w tashnaliogy. Suoh aaearwea lnaluda a l l w i n g
foreignera t o hold 80$( equity i n large rcele alprfcrultural
venturerr; 1iberrnliri;na~ o f tha raquirllrrsent for regla ter ing
new induotr ia l ea te rp r ima and g r a ~ t i n g of locational
approval by -king the l a d w t r i s l develogsaent and oo-ordimti
colarrittae (IDCC) ths o m t r a l point f o r a l l nacerawy permit8
and approval8 far Eoroi@n lnvartotmr cather than going
and dividmd repa t r i a t ion through improved and loma umborrma
pfacrrodur+; granting of rpsc ia l inaow robeto end other
uoncerriona t o entroprm(18n-r who inver t i n o ~ o n o m i ~ a l l y
d i radnntaged-arms4 and the debt aonvwrion option wanted
our fomign dsbtws. ~ t h r r m o r e , war+ the rubrequmt
(NED) 1977. One of tima0 amondmmtr i r the elloving o f b
only on. lnrtoad of the throe lirtr of rrcrheduled ~ n t e ~ p ~ l r e r
exalu8fvc)ly ~ . r e r v o d for Nlgorians. Tho other l a that
outorprfaes. FsroLgners are o q u r l l ~ welaow t o invort i n
the acshedtrled m t w p r i r o r w i th a miniarum a a p i t a l i m t i o a of
W 8 0 m i l l i o n exempt i n benkiag, lnrtrranooil h t r a lowa
prospeatr and m i n i n g burlnearer (IridwtrlaL Policy of
Nigaria 19888 a0). A l l thore ~ r r o Intended f o r an improved
focelgn -pita1 inflow inta t he uoun tv f o r an onhrmaed
fndur t r i a l expandon i n tho ooontrp
( i v ) p a d o Uberrli-
Tbe oxchange aontral act rnmttaned under foreign
exchange dorqa l a t i on above m a baekod np with asveral
t rade ro8triaticmr ranging frm Lmpeaitian of Amport Lioenrin
high Import tariffs, t o d e m d f o r advanue import depoeit
mil m t r i g h t prohibilion of aertafn import i f + l a ~ . As experte,
i n tha wonmni~ parlaace eronristsntly advocated fo r deregula-
t ion i n Nigeria, trade i ib r r s l i ea t fon waa embarked upon to
ootmtu' the adverrs ef f sa t of the above r w t r i c t t v e goliciee.
In the rain the l i b r r a l i m t f o n @xerciae involved the abo l i t io~
of 1 t end aport Licmsing and oxaha~ge ~ m t r o l on a l l
currant transaction8 and the reduction of the prohibitad
imp~rt itmn frm 74 t o 46. A ~ l l n , Nlgarfaa reaidmat8
were no .longer required t o rurronder their fareign exahmago B
ectmSne;rr t o th4 CBN oxaept that they woul& b v e t o ropat r ia te
8uoh oamirqgiato the ~ o u ~ t r y and if nelterlcu*$ keep them i n
t h e i r dmieLttary aeeooats on whish t h y aan draw traaly f o r
lnvimtasnt or ether businerr purpomS. Furthemaro, with
regard8 t o the high illpet t a r r i i r , prodwars and oonawewr
d t h the enaotmmt of the audtmr CLgd & d # o Twiff oonoolida
Doare, were provi&+d w i t h a longer t ima hbriaan fo r making th
dtmirlon. Governarent Bave equally been cult ivat ing sad
improving b i b t s r a l trade links w i t h othw oountrfaa ell i n
the Lntsretst of Inorwasin6 fnduretrtal dsvelogmmtl
ths rsheduled prMuao Prom Panrws for ra ls either i n the I
lacel a? forsign rket.. Wlth the ebVmt of deregulation ~
hawever, the board$ m e abolishad la 19fM. This abolition
croupled with thore deregulatory gPtmerrcrs; as mtioned in
( i) and (iv) above i r hoped to bring wbolt improwed p r i m
incentiver and so incream agriaultwa1 pro&rcers4 aoqwtlti%
and eon8eqtrmtly booat food production*
aapital t o a region or regions andor a paliticcral authority
biffmcent &om that ruling tbe eountry in whlah the m o i )
of capital rerideo. Fordgp lnveatnant same i n the fams
of rhort t o m trade and finnnoe crdlts; long term credits
at fixsd gnterest granted by private invemtara and invastmen
emapmier or by publac bodies lnaludin~ the govemwontt
fnvartamt In fordgn wtsrpr3ses tbrough the purabae of
chafer; the crntsblishamt or aaquZsftion of plants abroad
t o reme as foreign branabma af darnertic snterprlse or t o
functloa am an indepaadeat burineaa on foreign soil. E a ~ h
for@ of foreign Investment is determined by the duration of I
~*dltor-debtor relations; the use mad@ of tha capi ta l
received and indirectly alro the ability of the debtor t o
repay h h obligation. Other determinants are the e f fec t 1
a#' forei(ka i01mtrsat or+ ~ a t h r r rather w ar+ more rrgao8rn.d
with laytng a . p o d lawrkgm~nd t o r .a rrdtaulrcote rrrer~lrmaf
o f the effsot d a givm monmis pof iarg (d.rr)tul.fiem) on
build up oapital equipgant rlwa.~,via read#, ~ s i l w r r y r ,
faetorlea ate. without ~DBw( IPU"d8hip a8 tw might &eve
t o face i f they aolsrmmod thore t-88 &om t&Ir owtl
uaald.8 r e s o ~ w r (ChsrmWr by#&op.rbia blr;lro V, 1OSS: 791)
v o r a l p Ssw+staaaat injimtr a great dyrUldm~ into M cb6onorp
so It nreowagrrr mmprfition isr e f f i o i e n ~ y rrang lsorl
u 0 1 ~ ~ 1 n 1 e r snb tb aspatriate tisr8. In an export a~imafed
ec3oaomfr, i t g#erre++ S@mll]~a lu@bnng@ W o r e pmflt csau be
~qmwlateb ttaw ralri#qg fho Hlrll*rr&oa m f pvrmf gucobZn urd
wurtrnrt w m a c ( ~ * . ~ a p . o t . PUMP a o ~ t ~ i a ~ ~W~~UUUIIV ~ need robrt~~tfr& ?~%id;n bf~tl l t l t ap WUWO fhrW I
in4tmtrial I I
a w l a s bf aypitml i~tvertmmt) vhich thrs natian r?eae9lsd and *
that th+ way to aurPeet d t war t a inaweare +-t and Invert-
w n t abroad *%* befare that t b a war rtcrgped rim a@ a
foreign invertrsrent helps to tncraare af f la lmey end a moro
eZflcisnt elleeation of rrnouraer at a world aoala,
A l l the rrae foralgn invertmsnt 38 not all rorer. Tho
of their prodmtr In latar years In payment of iatarabt
and umortiaatian. kata rroaa form8 of fosoign dnvertwnt
Snrolra farrlgn e ~ f r o l a$ the cwfwprtma r a t up with tho
the b.n+fit&ag ~WufPy'r autmsap. Bolrr raoltimtionalm
ao will be diaeueeed i n subaeatjon 2 . 4 d below A8 the
aaaeleration of idprtrial development in the aauntry. tbm
of fbe crruaictl alamentrp in the attainment of this abJwtive
A 8 the attrauting of foreign ~apital inflow into the
Befare t h e 1ibaralia;rtion exeroi8e, many gov8raaent
i a r t i t u t i ona and progralaoasa ware urually ertablinbed with
tha intent ion ~f fac i l i t s l t ing tho inflow af more foreign
invesfment i n t o the produative 6eetcrr and an th+ othrur. band
plroteotlag the a a t i v l t i a r of the local pr iva te inve8tarr.
Thi8 warlapping jur i rd ia t ion and in6aneirtacraf.r 01 the
invartnt,sat a a t l v i t l o s i n t he country. Xn dmrt th8 invert-
noakr to the extent that proapaartiva f o r d m f n v o 8 t ~ h m r a
J, A * , i$@f),
The r t r u a t m e of for+ign gr tva ta invortmant Sn Nigwla
is d8nominatad i n gorapanant, euonomtc rec tors and region or
aountry of origin. nil, .cogponent aompr1oea of unre~t i t ted
foreign l i a b f l i t t a a . The saoamio aeatarr involve rinirqg
fo re r t ry and f i rhe r id8 ; t rmopor t and aomuniaatlonr ;
building and c?sonrtruotion; trading and bu8in+rr rervicam;
Ktngdm, Unitrd Stat. of luerica+ b t u n Wop. (wccledlag . * Unit ad Kin&m) and other unagaaitied ueuntrior . Seuraer o f
Kingdm play dumlnaat ralo i a foraign invartmnt i n Nigeria
going to be prw6aupied with a thmroitieal and rtat is t ioal
tbe prarontation and analyrlr o f data i n abspter 4.
N i g ~ i a , a daveloping country ia striving towards
indurtriel deveiopamt and we w a n t t o oee the extent t o
whish t h i r b r been ac&ieved under soonomicr policier
dmoeiaated i n Uwe~ulatary mearureo. In an effort to
sddrasaing thio matter, i t &r become exgadtent +o look
into the concept or induatrfalieation as wail a8 its
atratsgier particularly i n Nigeria. In tbie eectiou, we
ahall thmrafora define indurtrialisation and oxmine i t 8
rtruoyore and r trategieu i n Nigeria.
national eacyulopadia of aaeial rcience 1969s 232 d@fPned
Zndustrialiaation from an scanomfc paint of view ar the
syotem of grobucthn that has arisen from tha rteady
developmtnt, study and uee of ecientif ic hawledge, The
procsba o f iaduetrialia~tibn nccording t o the cbasberr
encyclopedia volume nI, 1859: 322 $8 raflactea in the
shift &way from ogrioulture vhiah tends t o occupy a
prohfrsssfvely arn~ller prapoFtian of the working population. #
Page .C;heilu, 1090:6 araw induntrialisation ar a way of
VutUQme of change in gon%sal d ~ m n d and m r a result, of
epuaial dooire t o foeter developaont. Far the pw"pQSe of
th ia work ws shal l refer t o fndustrializatfon as a way of
ieing economSc l i f e or matsrfal wolfare through
teoturioat ~Clvmose~ent attainod by Specialization and uee of driven
mcchmtoal, ohemicsal and pawar-, ,, as well 88 orgemim-
tionax and i n t e l h c t u a l aids for the purpose of reduaing
real aost of prodacing $0688 nad uervteea in porauit of a
higbr 8t;andasd of l i v ing whiah i a a symbol af ecronolaic
development
GaWrally, the aanditf on nocenwry for indur t,rlalisa-
tion include avallahlo lahaup force, aarksttu f o r finlahed
production, adeels8 t o raw l a ~ t e r i n l a (whathsr a t hmrs or
twough foreign trade) ( a eowoe of iav+itg+nt fmdr
(whether f'rom tho wealth and mvingr of tha prPvaCe rootor,
from the aceumuhtiona of the publ ic reator or f r ~ abroad)
and finally awems t o tochology. Thg OhaJrasterirtiur of
induatrialiration fneludo population growth, urbanisation,
htarnatlonal trado, growth ia Pndurtrieo en8 Snarmaring
standard of c?duoaiiol;. Thie then bring6 to mind the
quertion of how an economy can be termed indnutrialired.
Acqording t o Ilugh@e IS., W78 t 1-27 an indwtr la i i s ed
economy i a one wher~ the rbero of pa nu fa at wing i n oonulodi ty
prodwtion is above 6% having Bowevw made allowad far
the ctrmmstaaces a f individual ~ourrtrim. Sotaliffe R. B.,
1071: 251126 on the other W d aftsr reco@iising the
1imitaSiantd of guaging w&st is esrmtially a quslitattvr
ahage in eaonomfc structure 5y quantitative ar i t er ia
alone, eaw tho neaaws sf an iudnatrfalised ownomy a8 one
with the fo&lowiagt
( a ) at learnt 3096 of the total population amployad in the
- indur trial owtor.
Chsnary 9.t ~ 1 , 1986: 36Ifran1 their own point of view atatad
that R measure of nswly induatrialfaed o@untry is manufactw
hnving cited high inoome e l a e t i e i t y ; tradeable and aubstitut
goods; productivity gain& tiwough reallo~ationoof remurces
sad spoc ia l i eat ion; and a saurcs of t e 6 b k d 0 g ~ @ d change
as four cbracterirt ica of manufs~turing. According t o
t o 0% her uectora irus attained strwtural tranaf ormd%Wm
wit11 rogards t o gctting Lndwtrialiaed since, the ro c a l l e d
rbvolopad countrioa arc ai; 307.$ average. JJage, howeyer,
pointed out that Cironsry naglectod ths period ~f mmufac-
Ii:nitlstir>n t o his viow. Page asserted that a Uountry
w i t h a shor'tar history of m u f a e t u r i n g u y have somo
gical ohungs may be cunrulativr! aud tlrerefure work in
o p p ~ w direction. Thue lCllbo e t a1 i n Clronery (198Gr 190)
found between 1933 aod 2'373 a m . i U inverse reJratA~n betwaen
tire i n i t i a l share of mar~ufaciuring' i n GDY ~ I A J tire rate of
in thmtr ia l i~a t lon although the raamyle used included
oountr'lteai rencidng fndwtrla l country status vis-a-vf e
South Korea, Taiwan, Singapore and othara. In o w
explanatjotl so fer, it ie like wc ara dosaSlfng from the
tikente of diecua8ian ant? veering i n t o u d o t a i l e d and
comparative anhlysir s f manufacturing as a measure of I
ladwtrialiaatioo. As maah am t h i r might be o h r e t o befng
uerreat it f r not unintentfomL Tha a i r i r t o ju r t i fy the
ride taken by t h i r work In txwquently ratering t o nssnufsa-
tur ing ar a major Pndax of i adur t r i a l i sa t ion under o w
prsrsnta t ion and anarlyrir o f data*
2e4.2
Traditionally, i ndmt r l a l i a a t i on rtrntlrgier om bo
viewed Prom two baaie pwrpewiv r s namelyt tbr, laward-
orlentad and outward-orimntsd r t ra tegiea. An itlward- b
oriented atrategg X 8 onr i n whieh i n d u r f r i a l i naen t ivs r are
blared i n favow of productfan f o r the d m r t i a avar the
export u r k e t * I n th lo ry8f am, p w t e ~ t ion for boa. .ad@
goodo, btr.@f inport oantral an% ltuenuiag are r e l a t i ve ly
high and wtde, Althouesgh dir+ot incant ive for exporct m y
bo provided thsss l o a b i r t i ne t bias sgainrt owpart and
ertrhuage rate i r 85gnifioaatly orlrrvallued. The idaa behind
Inward oriented rtratlrgy i r t o allow a a t i a n l ~ l fimr learn
nsw product and prooesr t+ohaolog5ea rlowly wltl~out th.
frmart of internat ional aorapatifion reduoing their prof i t and
depriuring the eountry areate ahanore8 of u t i l i d n g &om1
labaur. By axtantion, the inwarddwicsatad atrat- war
8briaf %mod fapart h b r t i t u t i m Imdurt~&sf i sa t ion (IU)
rtrataw (CRrgnna Re N., 1BWN 71). Adtbu*r#afr t o thlr poliay
l i k e the inflnaatial United Hatioar &amnia Cammiraian f o r
40
Lafin Aaariaa mvimged Pour rtrgsr bar it. The i d r r t
stam aoncentratar on the grsduatian of bariu awwdurabls
uonruner good8 rueh a8 textihr, faodutaff m d p b r r ~ ~ a u t i -
uals. In the raaond ate&# aps~ialia~tion rhould be in more
oamplsx probuots known as @onsumer durable8 l i k e aookera,
radior , te levir ion and motm vehi slrsl In t h r t h i ~ d
intemadiato inUurtri+r rhould Be groasated to produae
national rupply asmponents rucb ar r t aa l , p ~ t r o u M m i ~ ~ l r ,
alcraainiua ewe Tba f i n a l rtapys rhould devolop doaw$tia
technology through aapi tnl gadr, fndurtry r@&ponsible fo r b
man\afarrtwing acaobinrry and plantr . The outward-ori.atr& r t ra tsgy also earled t h e sxport
orientad indorltrlsalisstion i r p m a i n whiah inUu8trial
polioislr do aot Biswimlmte betwsen preduction tor the
dossrtic w k e t end @-art nor batwwn p u r 0 b ~ 8 1 f o r 4am.@t&a
gocrdr and foreign g ~ o b TZH ~ i m o f tMrr rtrafegy ie t o give
t o prttiaigcurrtr i n a given aaonomy a rsaoonable degree
of f r s s d o a i n v i m o f attaining international rrtandard i n
the i r apurat ion#. hdw tho outward-orisat ed strategy,
direct oontrol and vXgoroue lioenring ar"rauig.Pontr ara
e i ther non-exirtmt o r v e ~ y low i n the @ens@ fbsf my
dtsfnoeutive t o export re rn l t i ag from import barzItarr are
more or bear aourrter-balanuad by export inooativos,
4 1
W e , a market exchullara rats irr morintalLaed 80 that thr
effsotfve exabngs Patar for iaportablrb and exportabler
ars ~oughlg equal..
I n Nfgsria, t he major i n d u r t r i a l i e e t i s n rtratsgy r lnca
1960 and probably wti l 1985 &ad been the import oubrtl tuflon
strategy, By it the uotntry intended t o ei iminate over-
dependence 0.n forafgn oanrmr goodo m d evsntually beqsm
aelf r s l i a n t , L t i n be1iav.d tbat t h i r r t r a t r g y led t o t h a
cmargsnce of protaated mtwprirrr ( ineluding avo-indurtrisr
which ware based on su tu ra l tacrtor 4mUowmsntr) with t h e re8ul
that their produatr m e not anly poor i n qua l i ty bdt 9160
very srpmnsive when soaparea t o t he i r irport@d/f~r~lgn
counterparts. T W O wao than a dr ive towotrdr an outward
or e ~ p o r t d r i a n t ~ d indu8tria1izdtian btrat.(lty Be i r being
pursued aadar the darepltrlation wcersiea. I n t h i s ragwd*
an tadtartrial pollay Ma been designed by the Plinfi$ry of
Iadurtries. Thr pollay is a regulatory do@wont or rather
a lagfirlative guide t o Invertore with rcaspsot t o indugt r ia l
davelopmmt etratagian and inaentives. Its prime objmt ive
i e t s necelerata thq p&@s of inbuatrial develaptnent by
iml~>rovSng tho investment alimatr In Nigerian Eaonomy. With
such an irnpravment it i r hoped t h a t tha indurtrinl a m t o r
w i l l be ~lctivnted lesding t o graater ~~nglaqtr~ent oppor tml t i ea
increfiaed expar t of manufatatwed gowii, 8hpersal of I
industrias, improved teahf~ologicak kills and oclpabilitiesd,
Snweassd lwal content of iadu8trfal output, high fareijjp I
capital inflow arnd inarrmarrd private reator gactleipan$r
In the mmnfaafuring wetor. So far t h aebievnentr
Central Bdnk of' N
mlonadiu of Sooial hienee Val. 6 edited by ghrin P. A. ' Wlt~ta ta~ 1931.
the Varf@tg af app~uatkm to
n m w @ h t %a& 8ttleatAffa a e s t W ir r b am+
adepWd lrts tLfr n w & . Xa alltZ
sthm Eaotbsr we t 4 ~ ) k i n t a c m ~ i d u f a k i ~ n the C O ~ C @ M X & M ~ I
I
ESw
ea~plc Par a gfven univw8e ir I
Z w hypalkbm~i+ Itv n#rr a
s.6.rrd &ID tbe epee$ 8 to ensure that they are amenable to statistical tools. I
This design include the deliberate repetition of one
cperstisss iLa Wth iamsrr sf tM ~ ~ Q z Y ~ s I I . . ~ ~ , iJ[t &am
Zajp.tgr ~SWH*. -2- ISIC4mC. t o far*%#@&
wlirlrr lgr8tn. Ira 4M+ r*wQ
from 1986
2b firs pkmq ths imrweaae is %& sf'
amam mt bo at +W&6ffy a. s t
t s i a
aft* tbu Qwss5maSisar ef
1 *B rtmmslry t b paaitivg aPPwt a2 q
dwr-btf on in Wdssrfan econmy, MagekoQurreaS Felix
raferrd So the rigmtfte
Wore 6 t h ~ ~ o t h w t aSrae darqp.la%ian,
d a m @%a. tabs. Itb+ 849 wU1 lp-v*
V&th tim gvf- as f ~ p , f t $8 16t4@1%bl+ fa
a* tar pofat ehst tka @tq$lwof riner,
-1 ~ & J w ~ M o @ wry QT aSaah%in 444 Ipr,
w+wt~a - o e r 4 m ( X e -0.74807 1.15358
-3L19495 C U.tPa44
Tu get tbe be, bi and b2 m . a t t i p l y the inveru
% l s ~ ~ l r . o ~ i p 8 t a t o f the ~QUJP f.h0 r rrjtt l
by m*?e*
Bath
Q h t
st;Qm) t h e * $48 acr
tu play & b f tBIa
Th8 test 8tntiaatia~ ts; t -
QIOl#rsu(tJiw M Lotcr tbf
in-
&ypatharlr XI. But thia paraitivcs sffeat 18 d e m i l d by the
adverrr laplioation of the Sor+ign rxehange doreylation
*id& r+ralt+d mainly in the, devaluation of the Nigerian
crwrenlrry. Thir i r why dergPt@ all the huge amount of
loan givsn @at by bmLr lor grodnotfon as $horn in Table 4(d:
erasot allow fhom apprruieto tho importear+ af &rqpletion
dear not amitor tho autivitior tbf approved fnvo8torr by
t h e m 8uoh Ohat raw dhpaaier have auaaorsfully obtained
approval withomt an anthontto addreem or carrying oat thoam
btlslnerros fa^ whi~h they were lfaenrod, Again tho b r e h 8,
1992 f loatst ion of the f6reign exchamgo ha. not div@lt.d the
foroign oxahksago traneaation of i a r high u ~ r t ebat 18 I
vantian at gavamrrsnt i n t ~ P P W w41l erala help i a &&u&atkjas
tho prlmr of tho f orotgn cb%sbmbga .I mat gonpcanfar 4 1 5
8~rqplatory moaawes planned are yet t o irs executed. For
inatmoo the aapital mrkot dwegulation and full trade
4, Sine. dtirqpalation, there 16 l o r a of aoniidenoo i n tho
oountr~r smwlcnocrr cclpttal f1Sght. ThSr f s rubrtaatfatcad B
by the r w u l t s iram the W e t of bypstherir Z. The trend i n
grrrtrr psitaor sffsot tima megrtivr affmt, i t abgglf
be mmrslidated while tsrrign owahaags dsrqgulatim *ah
dareala t h e gains of th8 B n k i a g saetw dwsgtalation be
abor$8h%do %0 foreign ex&amgs dmqpilatisn ie causing
asre harm to Mgarian saoDomy than gtwd. Thr b n t ~ a f . I
rr)rreashie @out and quality o t w cs~ntrier utl l kook for
ew gmQ8 and by aa w ohall b v e enma$h b-4 t o I I
indswfriakise the m a . NigerPanr w f l f not b+ rsrema I
gsnt. %qwl te tba fall ha o i l re I
thta w l t y .I ' 8 , Hfguia'a beps for %adatrtrializtafrisa
80 tM% thd
gmrie~ls-wt wSl1 be t o n rsamnable uxWat r e l i w r d of ifr
mawatboa cmtrol ast l rs~ @ad s lot of
aflsvscd t o tit& fnterpley at' mrkat S ~ C B . . Tk~tla %be
the ~ O P D ~ S . ~ is in~apacitated mbou1d not Be meauragod t o I
a l b r a i t h J * ) , bivara i ty , Pro..
I
I
Kotler Philip, , Prutic.-Hall I.@. W K
M i l l Stuart John, Umivwei t ifonia, 194& 5
*- b
Mllb+r C. and Runpm~ A. J . , n l'b?r&Xlm b8aderfe
Qwiatop&w WIG h e (the mitiah R l @ ~U&ULIWSP fo M i g ~ S a ) i n mn irrtrr~viw with A&#bs&llm mmk et a& on Hew #ig+srie ahauld attract bscrip iweotorr ptrblirrbed fn hm&y hardlam 23r6 Awg8a.t 1992, ppo 2 B 3.
h i o r , J o C,, (Olfios~ CBll bad O f t i - or) i n a p e r m irtuview at the Cllrtrai 8 ~ k l'Anrrbu 8mra +or en W r d Nm. 1992.
"X n mi MU rtm1.rat in the b~at.traent of b a k i n g aad .piname, Usrlv.s*sity o t iQi-fa Carpus. In parttc l folfllmmt of the regah-amt jar the . v u d of tha Ibatrm of Buriasim Adaiallrfrrtitm is bmkbng an8 Ptnasrce, 1 r *fatag a pmjmt titled the Zepaat of hrogwlatim etr 1Perafgn Iava&mant +md Xsduatrialirrtian am Mlqaria.
6 . W h s t are t h e n-ber o f a- fareign oaapanira fbbaf b.r. ~ e & ~ t e m d In NIgerla riaate bv@gwlatiml
9, Pleare give ue any otbar %nfsra&tion you derr arowmwy for tho a d e q ~ t s onmplsrtian of t h i r work.
2, Da y'ou thhk that Q%regulatton r o far ha# had on effect w lwei@ fnvsatmnt and iadumtridimtion in d g e ~ i a ? I.. w N o /7
4, On tket aver s whet tr t h e poof t i an of Nigwlan %oaomy partftrulnrly the ia$aimtriaX atsetor slaae d*r+gulationt (8) detariosalfng (b) Stagnant
/7 t7
(a) ImpravIn~ at a better rat* 0
6. Yhould the eatire deregulatuq r Pmt d!z7 8 dereguletoPy trrerelse bs .wag w contis\teb
t a t i
8. Please give m g atbr aecarruy ilaPorrolt&oar you tUnk t be neceoaary for the mcaeaoful %ompletigo
of tMlr vaster
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