CHAPTER ONE
INTRODUCTION
1.1
Background
of the Study
The history of big enterprises and industrial
revolution started with persons whose imaginative ventures into business gave
rise to the present day technology. It dated back to the olden days, when
people engaged in farming, herding, crafts etc and commodities were traded
mainly on barter and later on precious metals. In the colonial era, the tempo
of business then was set and controlled by the colonial government. Prominent
European firms that were highly integrated and dominated commercial and
merchandising activities in Nigeria were John Holt, Paterson, Zochoris,
Leventis, Leverbrothers, PZ, Campaignie Francaise du L’Afrique Occidentale
(CFAO,) the Royal Niger now United African Company (UAC), Societe Commerciale
de L’ Ouest Africain (SCOA) etc. Some of these Companies grew so large that
few, if any of the economic decisions could be wisely initiated and instituted
in Nigeria without soliciting and obtaining their co-operation. Apart from
trading, colonialism also accounted for the development of quasi-technical
business and semi-skilled labour in Nigeria. About this time, many of the
Nigerian entrepreneurs were still gasping for breath.
They did not benefit much from the liberal attitude
of the government because they lacked political persuasiveness resulting from
their lack of political power, low status, lack of cohesion and also
because the coming of
independence created an insatiable demand for trained and qualified nationals.
Thus, there was a limit to their ability to pressurize the government into
favourable action or to threaten non co-operation in the attainment of national
priorities. Their impact was insignificant and as a result, in the
administrative bureaucracy of the colonial government (the civil service, public
sector utilities established by them e.g Public Works Dept [PWD], Post and
Telegraph [P&T], Railway, Electricity Corporation and other multinational
Organization) Nigerian workers served as the cronies of the white colonial
masters as messengers, clerks, semi-skilled technicians and craftsmen. Some of
these workers later established micro scale business in line with their trade.
From 1950’s, Nigeria began to make an unprecedented
effort to encourage economic growth and development. National consciousness was
at its peak. In 1952, the pioneer industries ordinance was introduced. It gave
certificates of recognition to specified industries and exempted them from
paying taxation for two years. In the same year, the income tax ordinance was
passed which allowed companies accelerated amortization. In 1957 and 1958, the
government gave import relief taxation to foreign companies and liberalized the
granting of pioneer certificate, thus making the offer more attractive. In
1959, the Nigerian Industrial Development Bank (NIDB) was established to assist
entrepreneurs engage in business. In 1960, political independence was granted
and Nigeria witnessed an
expansion in business.
The indigenization exercise started in 1972 with the introduction of the
Nigerians enterprises promotion Decree or the indigenization Act of 1972 with
the major objective of encouraging indigenous participation in ownership and
management of business. Maost of the Nigerian businessmen who were apprenticed
and agents of the “Colonial Lords” blossomed into large-scale entrepreneurs.
This Act also compelled some foreign organizations to share the ownership of
their business with Nigerian. The indigenization Act of 1977 known as the
Nigerian’s Enterprise Promotion’s Act specified the equity participation of
Nigerians in those companies which are broken into three categories (100% for
schedule 1, 60% for schedule II, 40% for schedule III). By virtue of this
indigenization exercise, Nigerians dramatically displaced the expatriates in
ownership, management and control of the business organization in Nigeria. On
the whole, a little over 700 alien dominated companies are expected to comply
with this decree (Bus Times, Vol. 3, No. 41 July 25, 1978 P.I). By this
exercise also Nigerians in one fell swoop, became owners of large business and
started conducting business activities at national and global levels.
What constitute a small scale business differ in
terms of quantitative, qualitative, technological or labour intensive methods.
The Nigeria Bank for Commerce and industries define small scale business as an
indigenous firm or company having assets, inclusive of working capital but
excluding land or land worth, not above
N750, 000, and a paid
employment not exceeding fifty persons at a time. The Nigerian Enterprises
Promotion Decree defines it as one capable of having assets more than N750,000
and a paid employment of more than 50 persons provided that its output is small
to the prevalent size of plant, technology and labour. CBN defines it as firm
or company whose annual turnover ranges between N250,000 to N500,000 while SAP
defines it as having N150,000 to N500,000 as minimum and maximum capital level.
According to the Minister for Industry, Kola Jamodu
(2001), entrepreneurship in Nigeria accounted for over 95% of non-oil
productive activities outside Agriculture. Some of the government efforts
towards their development include financial, fiscal, export incentives and
technical assistance. These government policies will lead to the growth in
entrepreneurship and also create and distribute the economic wealth of Nigeria
thereby fostering national growth and development. Also to ensure continued
stay in business, there is the need for corporate appraisals from time to time.
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