Abstract
The main focus of this research work is to examine the impact of multinational corporations on
indigenous industries in Nigeria and 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 critical of their existence, they are agents
of “exploitation”. In this regard, the objective of this work is to ascertain the extent of
involvement of multinational corporations 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 and also to examine their impact on indigenous
industries , in which we will be focusing on key areas of the economy . The materials gathered
will be presented and analysed to ascertain if the MNC?s operations and activities in Nigeria has
an impact on the indigenous industries in Ni
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Multinational corporations are those powerful mega conglomerates that came into being in
Nigeria after the abolition of slave trade. They became more prominent during the heydays
colonialism and have even dominated the Nigerian economy after her independence. In his
contributions towards the emergence of Multinational Corporation in Africa, Rodney (1972),
reasoned that: “after the abolition of the slave trade. The European countries needed a market
for surplus products and place to access cheap raw material and labour, Africa thus became the
obvious destination”.
Consequently, today, Multinational corporations like the United African Company (UAC),
Paterson and Zachonis (pz), Lever Brother, Coca-Cola Company, Mobil oil, Shell B P, Total
Elfina, Schlumberger, to mention but few adorn the landscape of the Nigerian economy. On the
strength of these corporations Okereke and Ekpe (2002), submit that: “these corporations are
powerful conglomerates whose resources base are so formidable to the point of weakening and
challenge and competition from indigenous entrepreneur. They straddle their host economies
like colossus and their domination is hardly challenged”.
These multinational corporations are very rich in all ramifications because of the profit they
make in Nigeria. For instance, Nigeria is one of the largest producers of oil the world which
accounts for over 80% of her income. Since this sector of the economy is effectively
controlled by Multinational corporations, who make enormous profit from the industry, one
expects that they should spearhead the developmental process of Nigerian. But unfortunately, the
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reverse has been the case. Most multinational companies have been fingered on several
occasions playing active roles in the under development of Nigeria. The Halliburton scandal of
bribery and tax evasion and the Siemens bribery scandal are example of Multinational
Corporations consciously under developing Nigeria. However, certain scholars hold a contrary
view to this position.
This paper therefore aims at espousing critically, the contributions of Multinational corporations
towards the development of Nigeria and its impact on the indigenous industries.
1.2 STATEMENT OF PROBLEM
Multinational companies like United Africa Company, PZ, Unilever, Mobil, Shell, EIF Oil
Companies, etc, exists everywhere in Nigeria. Because of their formidable resources base, they
dominate the economy, straddle the indigenous entrepreneur and in the process create a
monopoly and accumulate unimaginable profits. Then question may now arise: How much is
their contributions to the socio-economic cum political development of our country given their
enormous, economic resources. According to Mansbach (1976), Multinational Corporations
create and sustain a clientele (domestic elite) whose attention is far from the benefit of the host
countries. Rather, they are content with the status quo and their primary energies focused on the
foreign firms abroad.
Also according to Okereke and Ekpe:“rather than re-invest their profits in the economy of the
host countries, in to generate other economic activities and hence expand the economy, the
Multinational corporations repatriate profits to their home countries in what is often referred to
as capital-Flight” (2004:112).
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They equally contend that the domination of the economy of underdeveloped countries like
Nigeria by multinational corporations, hinder the development of an independent nation
bourgeoisie capable of internally generated and initiated development, thus retarding in these
societies.
In the oil sector which is the economic mainstay in Nigeria, the multinational corporation
perpetrate heinous activities, especially in the Niger-Delta region, such as environmental
degradation without adequate compensation, gas flaring which destroys wildlife, seafood?s and
farmland and discriminatory employment and remuneration policies.
Socially, the activities of multinational corporations have led to an increase in anti-social
activities like drug – abuses, prostitution, kidnapping and murder, (Cole 2009).
On the effect of these kidnappings on the socio-economic development of Nigeria, Ajaero
submits that Nigeria lost N2.456 trillion in 2006, N 2.69 trillion in 2007 and N2.97 trillion in
2008 through attacks on oil installations resulting in shutdowns and spillages (New swatch
4.5:2oo9).
Equally, Nigeria has lost billions of Naira to foreign countries through act perpetrate by multinational companies such tax evasion, bribery (Halliburton case) under-declaration of profit, overin voicing, smuggling, racketeering, etc (Ibeanu 2009).
The question now is, what contributions have these multinational corporations made towards the
developments of Nigeria? If the negative contributions outweigh the positive ones, what can be
done to redress the imbalance? Also what has the government of Nigeria done either by
legislation or other means to act against the all the allegations levied against these
multinationals? These and many more questions will be answered in the course of paper.
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1.3 OBJECTIVE OF STUDY
This study seeks to examine the activities of MNCs in Nigeria, because there have been
allegations against these MNCs on whether their intentions of investing in foreign land is good
or not, so the major aims of these work in relation to Nigeria are as follows:
• To examine the activities of major multinational corporations in Nigeria, and the main
focus will be on: Shell BP, UAC, UBA Bank
• To examine the impact of multinational corporations on the development of Nigeria using
indices like bribery and corruption, tax evasion, employment policy transfer of
technology etc.
• To examine the socio-economic and political implications of their existence in Nigeria.
1.4 RESEARCH QUESTION
The following research questions were made and answered for the purpose of the study and they
are:
• What are the various roles these multinational corporations have played in Nigeria, since
entering into the country as a business entity?
• To what extent has multinational corporations impacted on the development of Nigeria.
• What are the socio-economic and political implications of the existence of multinational
corporations in Nigeria?
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1.5 SIGNIFICANCE OF STUDY
• The Nigerian economy has remained under-developed quite unlike that of the Asian
Tigers like India, Indonesia, and Malaysia whose economics were worse-off than that of
Nigeria few years ago. This has happened inspite of the oil-producing status of the
Nigeria recognized worldwide and largely controlled by Multinational corporations. This
study will help espouse the contributions of these conglomerates to her
development/under-development.
• Recently, there has been embarrassing revelations of tax evasion, smuggling, bribery, etc,
involving Multinational Corporations. This paper will reveal the economic effects of such
scandalous activities on the Nigeria economic development.
• The final recommendations will add to the growing literature on the Nigeria
development and encourage further research.
1.6 SCOPE OF THE STUDY
This research work will focus its attention on the activities of MNCs in Nigeria in relation to
their impact on it?s on the development/underdevelopment of Nigeria and its economy at large.
The scope of the issues that will be examined is limited to the overall objectives of the research.
The causes, effect and solutions to any anomalies shall be comprehensively addressed. However
the time coverage for this research work is 1960 to 2015.
1.7 METHODOLOGY
Qualitative methodology will be employed for the purpose of this study in which the use of
secondary data will also be employed for the purpose of this study.
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1.8 LIMITATIONS
FINANCE: Lack of sufficient funds to execute the research project will be a hindrance for the
successful execution of this research work because, quantitative methodology was supposed to
be used to gather data for this research work, but because of the high cost transportation involved
in traveling to places like Abuja and the Niger-Delta region of Nigeria to administer
questionnaires and conduct interviews to experts in the field relating to this particular work,
funding has made it impossible for me to embark on such
1.9 ORGANISATION OF THE STUDY
This research work is structured as a five chapter work, such that the general introduction is
covered by chapter one, chapter two is meant for literature review, chapter three for research
methodology, chapter four is devoted to data presentation and analysis while chapter five is
meant for conclusions, recommendations and suggestion for further studies.
1.10 DEFINITION OF TERMS
MULTINATIONAL CORPORATIONS: An enterprise operating in several countries but
managed from one (home) country. Generally, any company or group that derives a quarter of its
revenue from operations outside of its home country is considered a multinational corporation.
multinational corporation (MNC), also called transnational corporation, any corporation that
is registered and operates in more than one country at a time. Generally the corporation has its
headquarters in one country and operates wholly or partially owned subsidiaries in other
countries. Its subsidiaries report to the corporation?s central headquarters.
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CONGLOMERATE: A corporation formed by the combination of of several smaller
corporations whose activities are unrelated to the corporation?s primary activity.
INDIGENOUS: Chiefly of living things born or engendered in, native to a land or region,
especially before an intrusion
INDUSTRY: Businesses of the same type, considered as a whole or uncountable economic
businesses that produce goods as opposed to services or the sector of the economy consisting of
large scale enterprises