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.

4.7 The CoLhborrtkon of Nigerian Conrprador

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

Tuner Terlaa, in her article , Multknatlanal

i n d in what seem as a further resewch for

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

and ndthim than their h a t govsrnmsnt~~

Thsw aapscta have euccaedm3 in creating fern,

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,

X t hfIr to b& drripa+d to r8cur r what the pmpP+

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

It i a thrtfam denlrabla that, An order to ba

s h h to romlatm maliatic pollciem far mhanaing

v*rItrblm prnacma for all our probl-s,

v d u m md practices en3 invalve Institutions

Letvrlopwnt i n thlm mntsxt in an@ SJI which the

errtain directions o f both cu7itur.l and

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

i ~ l l o w a that, the t m l n drain can a h a b vier

boracl to dis trac t ian csitl-ur with routine

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

The - SUmt.. ?-evolution in ~ f r l ca,

Debt, peve&pmont end L o m a c y . Zed P o ~ k 8 Ltd.

Julius ~honvberr(md) ,The Pol i t ical Economy OR

Co&onfalim and underdevelopment

imperialist penstrrtion of Slgsria, it in in

nm-coloniallirn ham bren s aa;jar factor contributing

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

invrstrbh surplus t o =ma-national mrporatr

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.

wh(cch war wm mnd mr+ frequently esrrfmd out

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

6 . Fantu Chcry,

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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