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University of Nigeria Research Publications
NWANIKE, Damian Ezenwa
Aut
hor
PG/M.Sc/96/23310
Title
Multinational Corporations and Underdevelopment in Nigeria : A case Study of Guinness Breweries Limited
(1987-1990)
Facu
lty
Social Science
Dep
artm
ent
Political Science
Dat
e
May, 1998
Sign
atur
e
This wmk medd mt h ~ v a been p a a d b l e without
m a Rely, malstancs and &vice of a number of
t h i n mrk.
i am rslsa brreply . ~ y t e f u l to some m r 7 h r a ~f
~cedmaic ~ t n I f , utm have 8md 8s my ineplrelibn f r o m
lg";;t131)8, when I f - a t got ndariaeinn ta a t d y A * t h i u
~ ! n i r w r i c l t p HN7, fnmfs (1 .ra) i L ~ i m fl+ XkcrJimW - Clsrkc. C r , #.. A * :umFie, L r , Cgban Xnyan~ and
Frof* f:. ';no11 (tmritua).
1 ~ S s a rmrsua F e a t a?precistiun ta the enzire
s t ~ f 4 of' nnmli ,'aikltw d l x a r y , L'aiversi ty of ' : i~cr ia ,
!:su!-Aa and :.utional L l r r a r y of . i p r i a , Lndepwdance
Laycrr:t, . F h l t ~ l .
Guimrw, lika b t r ; ~ r ! ' t i L W n ~ t i o n a l ~ s in :lir,eria
pr~'Wna2a ta h n good coqflrete mnqafs, must
cri'tiad nmcibibns af becthe , the Miit g;overrulmt
aconunkc ~ L l c i c s m a mde not s t ~ t e 8 , hut ttwae
no-ntake ecturs. ,'marding to soma m a l y n t s on
palLtics1 P ~ a m a y , the rise af t h e ;4ultinntionml
Carmratians rmrtatnts t-P cmtral mscm-ecomale
w e n t of the post mr1d W R T ~ , t+c~rum it
~ l o b d a e d tscbndafl, nroduc tdon, invt8tmmt md
marketing.
T h i ~ h a m m s B e us to look lmmrd and to rear:~)rulsw
thw eo e a l l d development, ar i t sfrcc-t i~igecia and
ofhtrr p a r t s of J';Crica.
plower structure of a d v m c ~ d CounW.les. It operatea
in ciffermt forms, taken t~rether c o n a t l t u t ~
Cobcn I'anlel, In - n t v l w of African FoUt i ea l -- % o n ~ , has a eiff~rent v i m from t.he abort *-
. reconsldtration of the r d a a of t h e I'ultlnetbonal
Cor-oratlonu in M t l o n a l d~velapeent, Xt w i l l a l m
take i n t o eoasldcratlan t h e fact, w h ~ t h ~ r the
W l t i n a t i o n a l Cortor~t ions 18 p n extentlan of
world-wide issue in recent t h e , b t h in -HwIr
TrmmatLoml activities in recent time has shifted
from what the host @ v e m c n t neerleo to what the
a r e V ~ C Y C ~ and evaluated different ly dependirrg on the
qprnach afl-opted. and the social - and political
background of the observer,
Africa: S t r a te,qies, p ~ l i c i e s - e~Qrop;rames a f t e r the
L a p p s ~ l d k T r i e d to make x d i s t i n c t i o n between
d i s t o r t i o n of t r a d i t h n a l ecot:aqr Ly the
critically looked i n to ' with a view of knowhe
actual-ly I t s p o s 3 t . t ~ ~ contribution at t h a t level.
P r t ~ t l f l e t 5 W7e i rpact of o i l revenucn on i+-oriaBa
econaaic c r l s i e , .a hltatorically t m c d ?.ha poaitiun
u i o i l rrcrcto~ i n the economy aZ the romtry ,
?c n o t ~ a t h s t o i l revewe hen had a phmmmenal grawth
from 2958, when it formed a h u t 1;; of ths Count ryma
to ta l F W r t m to hccrmine; tnr griaery powth sector 4P
the ecmemy and th+ largest mvmuc earner fop the
C m n m fPm the 197OW@,
Par+ seeantly then+ unudymt8 havr a ~ s c r 8 t d
that thc nrtkm z t ~ t + a h*vm beorra pmrlerr8
i n th+ f m e of them f iant corpamtiana, w ) w r 8
abXLity te mrr capital f'ra+ly serorm nationnl
burdarirrr hrs sede it ~ 1 1 hi+ I q m s n i b l u to
e m m l t)l+lr
Atmrding to thssr authorr, Pultinationml
Corpnratiana havm bmn s c a ~ a l d th+ ~ p n t ~ of
drwlepncnt snd nqvnllg condwmsrl by thr-
aapcnents as wmpns of cq-loitntirrn, 7 t l t th t w o
~chuolr a v m r t h a t thm Pultlnm t lwnal Co~cmmtionm
e m bm rcp&mi a8 tbe mnt w t t n t npcntn o f
Innowrltioa ruthlmsr e ~ t ~ t a r s o f cost, w i l l i n g
hlLRb88W OI reMUTC+br
Put #om+ p e p b h a w mns to thm extent, t& argue
t h a t capftml muld ba brmued more cheaply Rnd
P M ~ w a t i m bu8ht wparatrrlyl and ttmt tha higher
r r tums earned by f o r l a p autmidflrrirs refl+ct
explr~itation, mt of the country, but ai thm
opportmAtlrm which the firrr thumarhwi dfsanwr
and, m m m t r ,
orean3.rat;ions with branchae An m a n y prt8 of the world.
Corporations and it i r against t h i s background t h a t
t h i s work 1s contending, in t h i s b y p a t h c s i ~ t h s t
Guinnmss Frmwariae Limited! has mt been e catalyat t o
ccanQuic devmlopmsnt in Nigcris.
th. following qu@etions a t the and o f which rc would be C
in which we have a r w d that W t l . n a t i o m l Corporations
and therefore Wlmess Breweries Limited has been o b s t a c h ~
t o the econamlc development of third vuru states in
general srnd Nigeria in particular:
To what. extant has Guhmess Brewericm Limited
mn-tributsd t o the Economie Developuent of
Nigeria from 1907 - 19901 W m t was t h e Ouinness Brewerierr Limited
eaatribution t.owards the technological
developmmt of Nigerf a?
In w h a t afea of Nigeria" National economy
has Guime68 Breweries Llmlted out l ived athm
lUtin&ionaI Corporatlana during the period
02 study'?
What of the Guinness Breweries
Liaitedts profit were reinvested into
Nigeria economy during the period of atudy?
22. Ambie He A,, Influence of the HultdnstEonal
Carparations on the Management of
pubiic Enterprises in Nigeria,
African Development, Y d , 8 Mo 2
23. Cohen u,C & D d e l J;(&) Multinational
24. Ann Seidman etel(ed), 2 l st Century Af'rica - Towarda a New V i n i o n af
Self- auslainrrble Bevalapment,
Before any headway could be made, it is imporkant
t o define tha concept of our study. The eaneepta me
Mult;LnationaP Corporatiom and the Nigeria
Undcrdevehqmmt, w i t h Gulnnesa Breweriesi as our focal
point.
3 ~ t a & e of CapitaPiam, it is pertbent ta note that the
concept ha8 as many tlefinltisna an the mtbrs on the
f i e l d . And so our definition would n a t b s exactly
what others have said but would take a hinge f rom these.
A Company in sa id t o be MuI$inatimel Carparation
when shmes of the company m e omad by a f e w people
in m e Country md whom Menufactwing and sahs me
Pretgnented into many part ia l subsidiary operating
Corpomtion aa a mean8 to humoniss the conflicting
drives of modern l a m to echfevc a havpy union of t b
6 F h a l l y , Pabsrl. k3.lpin. Harry V ~ a d b 1 1 , 7
; rvin ~hst&, ' ~ o t m ~ c s n ~ e r . drilned Pultlnatlonal
Corporrtiunn as a dra1,pnatian of any Corporrrtion ;in
which t h 8 own+rahlp, manapmmt, probwtlun end
rrerkst:lng axtmd aver u?rvcrd natiomP J ~riadictims,
These rlefinltiana have m e thing in caman, that I s
t a rai+srnts the exiat~ncm of perrnt corspmhs
in dewrlbped countrima, whilo th+ ~ubnicUari+a ere
scatter& acrors thm ~ l a b s , C u r gns8 study which is
Guinssa : rcwrrtrr f s an+ n i thane sctopua, w i t h l t a
Psudqua:*ttrs in Lutlin, ' I n i tm i I:iapdtm,
~ l p r ~ r t f r o m 'hat, w 8 -nrr #lab uc+n Heatem smeisl
aci+ncm schlarship an ;"bird rmrld Coun-txliea, ss cgsnt
of Vulfjnationals, It cts helped to rrrinforcwl the
ds-s*nr\w ee, inculcates nn Inferiority eomlax L t
alm mclken taa will of TMrd %rlQ and f,l.erlm
p ~ l n h t3 Wks t h s b own dmstimy into the ir rrwn hsnda,
and thmrrby rmnds~ing t?ma more readUy for 8xploit8tion.
tectmlragy waa a e m as a neutral b u t v i ta l l q u t
Ink) the procesP of 7roducti~n and accumulation
which hnd ta be trmsfemed whale sale, and in
of income, tafte, dfatributivs system end productLon
relations wNch in its undiluted farm may be
usui tab l le to the development a s p i r ~ t i o n of poor
country like Nigeria,
A study of the process of technology emmfer
in international brewery industry seems to confirm
the :Later, going by the pol i t ica l cconomi8t view
of the phemrn@mnr
wsmant a m cuwmi tmmX o f thr masses, which in my
w a s f e only paasib1.a within the C r m m r k of
even intsrferlng in damc8tia politics, Today
MultJnatianalQ wars Rsarud and disliked rather
than reverse bsoauss of their ecommfc md
pol i t i ca l powara,
citizms can, nat be taught overnight in s k i l l s
neecanary t o pertickpate memirigfully md cffectioely
In acrrnomic and pol i t i c s of their Country,
Ilr reiterated that good govsmmcs m a t be
isrproired, baaed an thm pr imip le s of accountability, leadtr-
ehip franspwency in th+ use of public funds. A bowt '
in thrr d b l l i a a t i o n of domestic resource, is therefore
there after he was postmi t o Cuirmaaa sierra-hone
and mbaequently Nigeria in 1966, He was l a t e r
appo Lnted as the Director of the Campany in 1973.
and Overaeaa. He was part of the cclmtruction and
s k i l l s nmmrsunry for the e f b f clent mrnnln~ a? thr
bumin*rm and thm dwalupmmt a f mnn~er ia l expmtlss
It i r even more disturbing and agonising, when one
Cuinncus company, being part and parcel of
I<uJ.t.Lnatltanal Cwparazion are thus the moai; modern
o r g a n i s a t i u n a l ~tructures end b e s t edapted to The on
any ppoUticd and smial chenga t h a t could suddmnly
thrrrtm t h s l r ac t i v i t im in H i $ g l ' h ,
aaae a m + collecting it back with ths ether hend,
Thay hhvc c a u a d a l n t of fEnmncZa1 havoc td t h i a
m y am country, m y trigeria is e m m madm up of
con?riiuticm from all emmSrl+s, ulmra E t ham
~ u b i % $ d i ~ r i e a .
3tLnnr.a brewery Int;srnational l i n k s up
pro.Uts, without me;& t o t b feeling of anyon+
~ o u w x - y elrrsdy eaurht in tha ccammic mb. 7
The problem of the outflow
which is an awect of undardeoelapment of local
economy, is furthermore, much greater than is
suggested by looking a t the declared profits
statement, since prof i te can &, ahiftcd to m y
section of an i n t q p t e d operation by pricing
good€ and servicea trnded between differant
sectJ.ons and br'mohes in a certain way, through,
for ~xaarplc s a l e s of subsidiary, making l i t t l e or
no p r o f i t . In additinn, in flating the book
valuca of asaets allaws what is earned t o appear
asdent, Far this reamn, therefore the capital
trannfer f'unctlans 09 Guinness need careful
serud;;lny, if my assessment of their net effect is
to bt? made,
The surplus profits rcpatriatd by this
company is clearly l e f t o u t in th8 statement of
accamt, thus it becomes w r y d i i f k u l t to
acutrr~tely account for the exact mount repatriated
by f~is company after taxation.
k 3 a t the a h v i tnklm land tha cnleuletian
rugf;sets im FhaT a nignificmz pmtr o f t h l e
casgsny@s profit warn r8inveatgd in Niguria,
Tha table also ahrrwn t h n t ebs W i ~ s r l a n publie
controls a Lot o f mhnma An the camany,
Lu.E r a w notwl mrlhr, t h i s i a not the r x m t
rhrr~m and thr t m m m w r a , Altho~lt9l the fimws era
not P ~ I ~ I Z ~ ~ L ~ , t?wra I s am @mb t thmt ths h f h t f a n
cost of r a w matm-A&ls 8IId equipamt, Culnneas SJigrria
L h l t . s " , t i l l rrpatrintrr e lot at i t s earnlrygs t o
f a r l m n camtr imam
hauarr, t rmmat iond C O . P ~ ~ I - in, t h m hading
dtvelmprd h m t r i a s . This ha. urrvad t~ . rttrngthrn
tb i ~ f l u r n c e o f dmcisionr radm hy prirntm bodha
on m?Xd ~ C D ~ O R I C activity snd t o t h a t mxtant to
Urit the ufPcctivmnetaa of govamwntsl poUcy
d + c i a b h m t tha p+riph*ry.
Thr cffmct of mvirom8nta l elmaurn do not atup a t
mticaml bront i r rs , The Wdnnln& 02 amnm layarm,
t h r wean houau rffecs and marhr pol lut~an ere all
part#, of d t i n a t l m a S n c t i v i t ~ e s in Nigsrh.
The Cuapin~ of timar c)pamimla in Xha m a s t 1-a
of Ni gmim have a ~ p r a m t e d rnvironmmtal
deterioration muen nm defare8tmtlan, mtrr
d s p ~ d r t i o n mnd a i r podlution.
The bare far e n a t i a n ~ dcvalopwnt must tm it8
arid the improvemsnt of' the social and ecenomic w a l l
b d n e of the people,
natlan an3 mrl4 ~t 3arqe. A t all tbu levels,
and tkraugh msna v n r o ~ r l e t a t o t ' l sm. D M ~ ~ W mrlt..
hr ntle ta in f l u e m d ~ r l a i a n s end d a a doin in
actually kaon on a-ansferlng technology, it
t y t b fact t t st 1:achobgy dams nut act
a0 a neutral force, 1.t has ealtur8, i t h e a value,
i t Cevclngs within a given environment t o m l v s
rathr turn aut t o eat.rFavete thm gmbluas it m a
m r m t to solve, yet l2w &ov*rnmcnt d4s&+ much
as b d g m of prsatigc. 75
And in ordar to prevcat Zaakqe of' thcr i s
tecturolagy, Guinnasn r ig id ly eontrulld and
c r a t m l l a d t h e i r rnaemch in t h e i r Heodquartm-s. 16
The ~tsuetural distortbm of the ccammy of lligeria
managers t o ~snsratm heremsing prof ita for thla
In its rslatlansh.i,p with its h d m r goverrosmt
#
It i s in ths f i r s t instance a condult by which, thm
I4igeria. Though this puwr is clearly l i m i t e d and
and @xncrienco within the compuny, w U l m Nlpprimla
within the corspmy rspr+aant curtain fqmrtant
55up in t b eclmtry, soaw ere no appointed mainly
for poUtAca1 reaums. X t is nut ampriming for
mart of then+ corapania~ seraable t o f i e l d in the
reputed nrn, as tbir directare and thsas e m
rcmdily found apongrt ex-wmy off ieara , ambamsadora,
ministrrm and, influential t r a d ~ t i m d rulerr, wha
h a m emugh lnflurncea and c~rmectienr witPlkn
thm @rrannmt.
C u h m m ~ s apwat;ions, likm true ralatkonshib
rmng nations afoar from social Darwidsrr of no
peYW&IWn~ e n e m l ~ s b u t permanent i n t ~ r e s t.
Although the polit ical InX luexe o! t i le
carparatian on publie mmtra im widely ruvrecietud,
itn poLitieal nature an e syutem of prlvate
~csrrmwont is not. 3t is e a v t o see it aa en
economic institution, na a complex of legal r igh t s
and duties an6 even aa a sbciaJ. system, 2
mrprulatiaa. lLnd t o go bnck nir fin-tharr, S-U~
Hmbb8rg oner stttacl that thm w+Lments of thmur
giant cmprtUona +!n wlQ& G sln@s b d y ubdl
f t a doainont ch:srac~r .h$ icn arm scommical and
paifttlrllm. Ha ~ n t fmttrrrr t o weak o f t k
inffsalti8e rrf disamcrar from wkdch g o r ~ r m s a t e
might wffer md tb p e a t n u b o r #f corpamtimsg
which are as wit w+r+ many Xb~raer CC-n we8lUia
i n t.!m bCtml~ DJ a peator, like mrns in the entrail
o f E mn*, Pbr, iMmed, C O ~ P O ~ E ~ ~ Q B O wwe hnsar
conmmweslth diatirrguSsh+d m a h v k t h a n , only fn
that t h y era nemalLy le6a absoluta tit;uLr
doUniba thur the st~tm.3
Put th ratmlity ~f lmprbliar goes fa r
beyond, .Ulw imediatr l ~ t a r a 8 t of this or fhnt
inv+m+srr, thb mdmrlyir- pwpusm i a sathi& Ime
%w kmiw a6 E U G ~ a& F O B B ~ ~ ~ Q afl *,1# ~ 1 ' 1 6 . OpaR
for trda md inmabmnt 'By those glmt a d . t i n . t l ~ I h d
corp.3;ratims where %!a?. ;Ira ~ 3 m p t . L n g l n f m ~ g t
berwqen bu5naaa ~ r & ~ l s a f l a w 02 diZsrmt
~ o u n ~ h s ~ the of each fi0v-t policy 18 t o
krrp ea mxkn8hg its furlmgn innumn~a.
A fin cannot operate in sn cnvironmnzt
aent omrsrmr in woct eessa, Fxpra~rintlm of
so smny m I 3 , U n n m n+ rrdrr stirtan pt cinhrrmd crut
of Higarf r c s brcbrr, They wr+ ekle ta dm t h i a dum
t o Shrrr sir+ ruril intlumcc o f buAmmm end %hr
rmmwarl mmmt n+ m n ~ y R% t h e i r &tnporal, .t,gmin, th+
dapca fit axprrtieu, knawlsdp rnd ~ w t w a l ~~1
. t h s t c'nerrrmsrclmlr thaw C I J I Y ~ R ~ A ~ R , fmM@kra
nbraJ.utrr?.y pvrr*1m#n* r w f j ' i c f f r m ~y"~~a ' ,n . rz .b~p,
not only m a eanaciow, drlitnratm paUay, but
thin ethnic group i r l i k d y t o bs the main
rrrm ba able to consolidrrtc and improve i t s position. 5
perfact document, poorly written, uneorn and in
plncrs highly m e a l i s t i e infact, it i s mt evrn
s t r u ~ ecrsmaic plan, f i r a t of all, it I a U s a+t
out c h a r priorities artd tiaetablms, i t tend8 to
for research progrlmeea, which %a t h f i r a t port a r
c8Ll in my L r M u s t r i d l take off. Thm world nankma
TrmsnatJ.anal access to and , utiU.zatlon
of domeatic resources, capabilltie s and actors
take place in severe1 different ways.
Diplomatic channels may be circumvented or
supplemented either by co-opting powerful collaborators
or by purchasing krmzwledge and expertise,
Alternatively, we& actors may indirectly influenct
the policy making o.f the strohg by mali t ion
formation 01- grass-mot mbiliaation, exp3oitating
mutual interest8 or ideological md ethni~ tits,
There ere marry approache8 used by these
multinatianal esorporetlons, i n its approach to
issues in developing cauntries and they a r t t
1. Accsas to pawer Approach
2. me Technscratla Approach
3. The CaaZltion-building Approaeh
4. The 'Grase-~oots Mobiliaation Approach.
Nigeria had her f i rst development plan
rrvleted with sl@#ms and high sounding r h ~ % o r & e ~
orr the rnsation of the ideal society and economy,
B u t this vas generally short in strategi6 p l m -
en8 enunciation of conmete formats for the
a t t a h e n t of the stated goala. The second
national p lan 1970-1W5, worried about the n + d
t o create @a R T I ~ egaltte~im mciotyfl , it
teU& z5~u-t reducing IncguaWl!lea in interpersonal
hi icatfana of unbalanced growth resulting from
~ n d with tias ths insdequacy of tna eryaten
While one may not quarrel u2th t h a t strategy,
we csn not be comfortable rsth the virtually
ehmduta confidence and reliance +aced on the
f rkfusion of external fund, ttchnolbgy and
but steady LmplentatPon of a cruahin~ dependency
envirorzasnt, but an intc: ratscl pmceaa that
lnvolvma t k r a b i l i t y of e nation t o generat8 i:a
own manulectwing processem ky R sy~ternatie
paait ion in brewery industry end i t s provision of
social smenkties to the meraps, ths govarnmmt ~hould
try t o appeal to rhea to uperetm in ccrnfarm.lty with
connection with the mntral capitalism ruaahs an
abstaelem far devdapnant of the former, smcendly,
isolLcy, ,john a i h y ; I ! on inc;
i -+w 'dork, 1975,
;: .::, , I'- n m r a d I%iLtin~ tioml
Oorporat;ii?nn. 'She r o l i t i c a l
1,commy of f oFfeh*m L irect
invratmtnt. "mmllBnn .Wt.lishera;
Landon, 1975.
and palrdcal Treatrcnt from
39. .~midmul ~ n n * (+dl 2 l a t Cmtury -fries, Towardm a
l a w vision to self-mstrfnablm
Ucvalopmmt, African ForU Prmsm
Xnc, Trmton Sw Jersey 1992.
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