Nationalization and Indigenization
This is a deliberate policy by which government takes over the control and ownership of private enterprises due to economic, political, social, or strategic reasons. Nationalization is the process by which the government takes over the ownership and management of an industry from private control by bringing it under its exclusive control.
Reasons for Nationalization
1. For Strategic Reasons: Government can take over the ownership and control of an enterprise for strategic reasons like security, defense, and political consideration.
2. To Prevent Exploitation: Nationalization of enterprises can take place in order to prevent monopolistic exploitation of the citizens.
3. Political Reason: Break in diplomatic relations between two countries can necessitate nationalization. Political differences can encourage retaliatory measures being taken by two countries against each other.
4. To avoid foreign dominance of the economy.
5. Need for large Capital: For an industry to perform effectively and efficiently, it may need large capital which can only be provided by the government.
6. To prevent wasteful competition.
7. To provide uninterrupted services.
Advantages of Nationalization
The advantages of nationalization are;
- It helps to check exploitation
- It ensures steady supply of service
- It determines wasteful competition
- It encourages efficient use of resources
- It ensures equitable distribution of resources
- It eliminates monopoly
- It helps for planning purposes
- It provides employment opportunities
Disadvantages of Nationalization
The disadvantages of nationalization are;
- It prevents private initiatives
- There is low productivity and inefficiency
- Consumers can be exploited
- There is corruption and mismanagement
- Excessive control may hinder development
- Resources can be misallocated
This is the transfer of ownership and control of business enterprises from the foreigners to the indigenes. It is a policy designed to ensure greater participation of indigenes in the ownership, control, and management of business enterprises.
Advantages of Indigenization
Advantages of indigenization are:;
- It ensures indigenous participation
- There is development of local technology
- It leads to the acceleration of industrial development
- It reduces foreign control of the economy
- It ensures self-reliance
- It provides employment opportunity
- It improves standard of living
Disadvantages of Indigenisation
Disadvantages of indigenization are;
- It discourages foreign investment
- It can lead to capital flight
- It can lead to disharmony between countries
- Rich people can hijack the economy.
1. Define the term Commercialization.
2. State five advantages for commercialization.
3. Explain the advantages and five Disadvantages of commercialization.