ECONOMIC REFORM PROGRAMS

Table of Contents

 

 

WEEK SIX

ECONOMIC REFORM PROGRAMS

CONTENT

  • Consolidation of financial institution
  • Privatization and Commercialization
  • EFCC and ICPC
  • NAFDAC
  • SON

 

Before June 2004, there were 89 banks in Nigeria with 3,382 branches network.  The banking sector was characterized with structural and operational weaknesses such as:

  1. Low capital base: Dominance of a few banks.
  2. Insolvency and illiquidity
  3. Over dependence on public sector deposit and foreign exchange trading.
  4. Poor asset quality.
  5. Weak corporate governance – A system with low depositor confidence
  6. Banks that could not effectively support the real sector of the economy at 24% of GDP, compared to Africa average of 78% and 272% for developed countries.

Professor Charles Soludo led Central Bank, reduce the banks to 25 with a capital base of N25 billion. This led to mergers and acquisitions in the banking industries.

 

The aim of re-capitalization of banks includes:

  1. To ensure a strong financial base.
  2. To increase deposits’ confidence in banks.
  3. To enhance liquidity and solvency of the banks.
  4. To increase loan to real sectors.
  5. To encourage banks to practice real retail banking instead of depending on public sectors fund.

 

EVALUATION

Objectives

  1. How many banks were in Nigeria before June 2004? A) 25 B) 89 C) 272 D) 3,382
  2. What were some of the weaknesses of the banking sector in Nigeria before June 2004? A) High capital base and strong corporate governance B) Strong asset quality and high depositor confidence C) Low capital base and poor asset quality D) High loan to real sectors and weak corporate governance
  3. What was the level of dependence on public sector deposit and foreign exchange trading in the Nigerian banking sector before June 2004? A) Low B) High C) Moderate D) Non-existent
  4. Who led the Central Bank of Nigeria in the re-capitalization of banks before June 2004? A) Professor Charles Soludo B) Professor John Doe C) Professor Jane Smith D) Professor Peter Parker
  5. How many banks remained after the re-capitalization exercise before June 2004? A) 89 B) 25 C) 272 D) 3,382
  6. What was the required capital base for banks after the re-capitalization exercise before June 2004? A) N25 billion B) N50 billion C) N100 billion D) N200 billion
  7. What was the main aim of re-capitalization of banks in Nigeria before June 2004? A) To encourage dependence on public sector funding B) To decrease depositor confidence in banks C) To reduce liquidity and solvency of banks D) To ensure strong financial base
  8. How did the re-capitalization exercise before June 2004 aim to enhance the liquidity and solvency of banks? A) By reducing their capital base B) By increasing their dependence on foreign exchange trading C) By increasing their deposits’ confidence D) By encouraging their loan to real sectors
  9. What was the level of support provided by Nigerian banks to the real sector of the economy before June 2004? A) 24% of GDP B) 78% of GDP C) 272% of GDP D) Non-existent
  10. What was the objective of encouraging Nigerian banks to practice real retail banking instead of depending on public sector funding before June 2004? A) To increase liquidity and solvency of banks B) To decrease deposits’ confidence in banks C) To reduce dependence on foreign exchange trading D) To increase loan to real

Theory

  1. Outline four aims of re-capitalization of banks.
  2. Discuss Charles Soludo’s effort to increase the capital base of Banks.

 

INDIGENIZATION; NATIONALIZATION; COMMERCIALIZATION AND PRIVATIZATION POLICY

INDIGENIZATION

Indigenization may be defined as a process through which the government through the used of law increase the level of participation of citizens (indigenes) of a country in the ownership and management of business enterprises and the industrial sectors of the country’s economy. 

 

The objective of the indigenization policy is to give Nigerians increased involvement in her ownership , control and management of business enterprise that were formerly dominated by foreigners in the country. The fulcrum of the policy was the Nigerian. Enterprises Promotion Decree (1972) 

 

The NEPD (1977) grouped businesses under three categories 

  1. The first group consists of businesses reserved exclusively for Nigerians (i.e. 100% reserved for Nigerians) e.g. manufacturing of blocks, candles etc
  2. The second group consist of businesses which can be undertaken by foreigners so long as Nigerians hold or have not less than 60 per cent participating shares eg banking, insurance, construction, mining, beer brewing 
  3. The third group consist of businesses which are open to foreign investments provided Nigerians hold not less than 40 per cent participating shares eg textile, tobacco and drug manufacturing hotels, synthetic resins, distilling etc. 

The NEPD (1992) was revised in 1977 

 

OBJECTIVES OF THE INDIGENIZATION POLICY

  1. To promote and encourage the participation of indigenes of the country actively and effectively in the industrial sector of their economy
  2. To reduce foreign control of the country’s economy 
  3. To promote industrialization through the use of indigenous technology 
  4. To reduce the country dependency on foreigners 
  5. Creation of employment opportunities for indigenes 
  6. To encourage local retention of profits made 
  7. To avoid neo-colonialism and imperialism 
  8. To improve the income and standard of living of the people 
  9. To ensure economic stability in the country 

 

EVALUATION QUESTIONS

Objectives 

  1. What is the definition of indigenization? A) A process through which foreign investors dominate a country’s economy. B) A process through which a country’s citizens participate more in the ownership and management of business enterprises. C) A process through which a country’s citizens are excluded from participating in the ownership and management of business enterprises. D) A process through which a country’s citizens are forced to sell their business enterprises to foreigners.
  2. What was the fulcrum of the indigenization policy in Nigeria? A) The Nigerian Business Promotion Decree (1977) B) The Nigerian Business Promotion Decree (1992) C) The Nigerian Enterprises Promotion Decree (1972) D) The Nigerian Enterprises Promotion Decree (1984)
  3. How many groups were businesses grouped under in the NEPD (1977)? A) One group B) Two groups C) Three groups D) Four groups
  4. What is the first group of businesses reserved exclusively for Nigerians in the NEPD (1977)? A) Banking and insurance B) Construction and mining C) Manufacturing of blocks and candles D) Textile, tobacco, and drug manufacturing
  5. In the NEPD (1977), which group of businesses can be undertaken by foreigners as long as Nigerians hold or have not less than 60 per cent participating shares? A) First group B) Second group C) Third group D) All groups
  6. What was the objective of revising the NEPD in 1992? A) To promote and encourage foreign control of the country’s economy B) To reduce the participation of indigenes in the industrial sector of their economy C) To promote industrialization through the use of foreign technology D) To update and improve the objectives of the indigenization policy
  7. What is the objective of the indigenization policy in Nigeria? A) To reduce local retention of profits made B) To increase foreign control of the country’s economy C) To promote and encourage the participation of indigenes in the industrial sector of their economy D) To ensure neo-colonialism and imperialism
  8. How does the indigenization policy promote industrialization? A) Through the use of foreign technology B) Through the use of indigenous technology C) Through the exclusion of foreigners from participating in the country’s economy D) Through the promotion of foreign control of the country’s economy
  9. What is the objective of reducing foreign control of the country’s economy through the indigenization policy? A) To reduce the dependency of the country on foreigners B) To encourage neo-colonialism and imperialism C) To promote foreign investment in the country’s economy D) To decrease local participation in the country’s economy
  10. What is the ultimate objective of the indigenization policy in Nigeria? A) To reduce the income and standard of living of the people B) To ensure economic instability in the country C) To create employment opportunities for indigenes D) To promote foreign control of the country’s economy

Theory

  1. Define Indigenization.
  2. State five objectives of indigenization policy.

ECONOMICS FIRST TERM EXAMINATION SS 3

Advantage / Importance of Indigenization

  1. Increase in participation of indigenes in the economy 
  2. Reduction of foreign control of an economy 
  3. Encouragement of local retention of profits 
  4. Promotion of Industrialization 
  5. Creation of employment opportunities 
  6. Enhancement of self-reliance i.e. reduction in dependency 
  7. Improvement in standard of living 
  8. Economic stability is enhanced 

 

Disadvantages of Indigenization Policy

  1. Discouragement of Foreign investors 
  2. Concentration of wealth in the hands of few indigenes 
  3. It widens the gap between the rich and the poor 
  4. It may lead to economic instability 
  5. It may result in retaliation by the foreign countries involved 
  6. It may lead to political instability 

 

PROBLEMS OF INDIGENIZATION IN NIGERIA

  1. Shortage of Capital: The indigenes do not have enough capital to take over the business 
  2. Lack of technical and managerial skills 
  3. Reduction of Foreign investments 
  4. Widespread incidence of fronting i.e. collusion between indigenes and foreigners who uses the indigenes as cover to perpetuate their continuing ownership of the businesses 
  5. Mismanagement of the business taken over by indigenes 

 

EVALUATION

  1. What are the problems of indigenization in Nigeria.
  2. State five disadvantages of indigenization in Nigeria.

 

NATIONALIZATION

This may be defined as the taking over by the government of privately owned businesses. 

It involves the transfer of ownership of privately owned business enterprises to the government for economic, social and political reasons. 

Such industries taken over by the government are known as nationalized industries and the individual owners of the affected businesses are paid compensation by the government. 

 

Reasons why government nationalize industries

  1. To prevent the exploitation of the consumer 
  2. To ensure state security and for political considerations. 
  3. To provide employment for the citizens 
  4. To generate revenue that will be used for development 
  5. To ensure fair and equitable distribution of social and economic amenities 
  6. To break private monopoly power 
  7. To provide the large capital required to establish or run some business especially where private interests cannot raises such capital.

 

EVALUATION

  1. Define Nationalization.
  2. Highlight four reasons the government nationalize some industries in the economy.

 

Advantages of Nationalization

  1. It eliminates wasteful competition 
  2. It enables the government to provide essential goods and services to consumers at a affordable prices 
  3. It is used by the government to protect the consumer i.e. to prevent the exploitation of consumers 
  4. It promotes steady supply of goods and services 
  5. It leads to the elimination of monopoly by private businessmen 
  6. It [provides employment opportunities 
  7. It enhances government control of the economy 

 

Disadvantages of Nationalization

  1. It destroys private initiatives 
  2. It promotes state monopoly  
  3. Nationalized businesses become inefficient 
  4. Corruption and embezzlement of funds is rampant among nationalized industries 
  5. Bureaucracy and political interference in the nationalized businesses 

 

COMMERCIALIZATION AND PRIVATIZATION

Commercialization is a process whereby state owned enterprises are restructured (re-organized) and run with the primary aim of turning them into profit making entities. The policy makes it possible for state owned enterprises to explore all avenue of making profit. 

 

Privatization is the process whereby ownership and control of businesses, companies, industries or corporations are transferred from government (public sector) to private individual’s i.e. private sector.

Advantages of commercialization and privatization or the objectives of the government’s privatization policy 

  1. It promotes efficiency in the business that are commercialized or privatized 
  2. Government generates a lot of revenue during the implementation of the policies 
  3. It leads to competition and innovation as well as improvement in the quality of goods and services 
  4. There is a great reduction in the level of public expenditure one enterprises that are not viable 
  5. It deepens or widens the capital market 
  6. It gives the consumers an increase range of choice 

 

Disadvantages of commercialization and privatization

  1. It leads to uneven distribution of income 
  2. It leads to increases in prices 
  3. It leads to mass retrenchment of workers 
  4. Both commercialization and privatization fuel inflation
  5. It leads to reduction or lowering of the standard of living of the citizen 
  6. It may result in strikes, protests and public unrest 
  7. The privatization process may not be transparent – allowing a few rich people to take over choice government businesses 

 

EVALUATION QUESTION

  1. Define the term commercialization.
  2. Why does the government privatize some businesses?

WEEKEND ASSIGNMENT

  1. Which of the following is an advantage of indigenization? A. Checking exploitation by citizens B. Business risks are shared C. Fosters self-reliance D. Leads to monopoly of power 
  2. The act of bringing a privately owned business under exclusive state ownership and control is referred to as A.  commercialization B. indigenization C. nationalization D. privatization 
  3. Which of the following is not a reason for nationalizing an industry? A. monopoly B. strategy C. inflation D.  security 
  4. Abuse of monopoly power by industrialists could lead to A.  privatization B. commercialization C. nationalization D. indigenization 
  5. The transfer of ownership of a business from the government of a country to private individuals is known as A. privatization B. indigenization C.  nationalization D.  commercialization 

 

THEORY

  1. Define the term privatization.
  2. State two objectives of commercialization. 

 

READING ASSIGNMENT

Amplified and simplified Economics for SSS by Femi Alonge Page252 – 254.

 

ECONOMIC AND FINANCIAL CRIME COMMISSION

The commission was established in 2003 to investigate financial crimes such as advanced free fraud and money laundering. The agency has its head office in Abuja.

ROLES OF EFCC

  1. Sanitization of banks
  2. Aggressive investigation and prosecution of cases of past evasion.
  3. Fighting cybercrime and advanced free fraud using smart technology.
  4. Initiating legislative intervention in key areas that will aid anticorruption fight.

 

INDEPENDENT CORRUPT PRACTICE COMMISION

As provided in section 3(3) of the act 2000, the commission consist of the chairman and twelve members. Two of whom represents each of the six geopolitical zones of the country. 

 

ROLES OF ICPC

  1. To receive and investigate complaints from members of the public on allegations on corrupt practices.
  2. To examine the practices system and procedures of public bodies.
  3. To instruct, advise, and assist any officer, agency or parastatal on ways by which fraud or corruption may be eliminated.
  4. To advise heads of public bodies of any change in practice with the effective discharge with the duties of public bodies.
  5. To reduce incidents of bribery.
  6. To educate the public on and against bribery, corruption and related offences.

Evaluation

  1. When was the Economic and Financial Crimes Commission established? A) 2000 B) 2003 C) 2005 D) 2008
  2. What is the primary focus of the EFCC? A) Investigating financial crimes such as advanced fee fraud and money laundering B) Investigating violent crimes such as murder and armed robbery C) Investigating cyberbullying and online harassment D) Investigating political corruption
  3. Where is the head office of the EFCC located? A) Lagos B) Abuja C) Port Harcourt D) Kano
  4. What is the role of the EFCC in sanitizing banks? A) To investigate and prosecute cases of past evasion B) To fight cybercrime and advanced fee fraud using smart technology C) To initiate legislative intervention in key areas that will aid anti-corruption fight D) None of the above
  5. What is the primary objective of the ICPC? A) To investigate violent crimes B) To investigate financial crimes C) To investigate corrupt practices D) To investigate cyberbullying and online harassment
  6. How many members make up the ICPC? A) 6 B) 10 C) 12 D) 15
  7. What is the representation of the geopolitical zones in the ICPC? A) Two members each B) One member each C) Three members each D) Four members each
  8. What is the role of the ICPC in examining the practices system and procedures of public bodies? A) To receive and investigate complaints from members of the public on allegations of corrupt practices B) To instruct, advise, and assist any officer, agency, or parastatal on ways by which fraud or corruption may be eliminated C) To advise heads of public bodies of any change in practice with the effective discharge with the duties of public bodies D) None of the above
  9. What is the role of the ICPC in reducing incidents of bribery? A) To investigate and prosecute cases of past evasion B) To fight cybercrime and advanced fee fraud using smart technology C) To instruct, advise, and assist any officer, agency, or parastatal on ways by which fraud or corruption may be eliminated D) To educate the public on and against bribery, corruption, and related offenses
  10. What is the primary objective of the ICPC in educating the public on and against bribery, corruption, and related offenses? A) To increase incidents of bribery B) To reduce incidents of bribery C) To promote bribery and corruption D) To remain neutral on the issue of bribery and corruption

NATIONAL AGENCY FOR FOOD AND DRUG ADMINISTRATION AND CONTROL (NAFDAC)

The organization is headed by chairman who preside over a governing council appointed by the president on the recommendation of the minister of health.

 

ROLES OF NAFDAC

  1. Regulation and control of importation, exportation, manufacture, advertisement, distribution, sales and use of drugs, cosmetics, medical devices, bottled water and chemicals.
  2. Conducts appropriate tests and ensures complaints with standard specification designated and approved by the council for effective control of quality control.
  3. Undertake the registration of food, drugs, medical devices etc.
  4. Establish and maintain relevant laboratories in strategic areas of Nigeria.
  5. Undertake inspection of imported foods, drugs, cosmetics etc in order to establish a relevant quality assurance system.

 

STANDARD ORGANIZATION OF NIGERIA (SON)

The highest decision-making body of SON is the Nigeria Standard Council. The federal government, on the recommendation of the minister of industry appoints members of the council who are drawn from both public and private sectors hold office for a term of four years. The permanent secretary in the ministry of industry is the chairman.

 

STATUTORY FUNCTIONS OF SON

  1. To investigate the quality of facilities materials and products in Nigeria.
  2. To ensure reference standards for verification of measures and measuring instruments.
  3. To compile and inventory of products requiring standardization.
  4. To foster interest in recommendation and maintenance of acceptable standard by industry and general public.
  5. To undertake preparation and distribution of standard samples.
  6. To register and regulate standard marks and specifications.

 

EVALUATION

  1. What is the highest decision-making body of SON? A) Nigerian Industrial Council B) Nigerian Standard Council C) Nigerian Quality Council D) Nigerian Manufacturing Council
  2. How are members of the Nigerian Standard Council appointed? A) By the president of Nigeria B) By the minister of industry C) By the minister of finance D) By the minister of trade and investment
  3. How long is the term of office for members of the Nigerian Standard Council? A) 2 years B) 4 years C) 6 years D) 8 years
  4. Who is the chairman of the Nigerian Standard Council? A) The minister of industry B) The permanent secretary in the ministry of industry C) The president of Nigeria D) The director-general of SON
  5. What is the primary function of SON? A) To investigate the quality of facilities materials and products in Nigeria B) To investigate political corruption in Nigeria C) To investigate violent crimes in Nigeria D) To investigate cyberbullying and online harassment in Nigeria
  6. What is the role of SON in ensuring reference standards for verification of measures and measuring instruments? A) To investigate the quality of facilities materials and products in Nigeria B) To compile and inventory of products requiring standardization C) To register and regulate standard marks and specifications D) To undertake the preparation and distribution of standard samples
  7. What is the role of SON in fostering interest in the recommendation and maintenance of acceptable standards by industry and the general public? A) To investigate the quality of facilities materials and products in Nigeria B) To ensure reference standards for verification of measures and measuring instruments C) To undertake the preparation and distribution of standard samples D) None of the above
  8. What is the primary objective of SON in undertaking the preparation and distribution of standard samples? A) To investigate the quality of facilities materials and products in Nigeria B) To ensure reference standards for verification of measures and measuring instruments C) To foster interest in the recommendation and maintenance of acceptable standards by industry and the general public D) To provide reference materials for testing the quality of products
  9. What is the role of SON in registering and regulating standard marks and specifications? A) To investigate the quality of facilities materials and products in Nigeria B) To ensure reference standards for verification of measures and measuring instruments C) To undertake the preparation and distribution of standard samples D) To provide a means of identifying products that meet certain quality standards
  10. How does SON compile and inventory of products requiring standardization? A) By investigating the quality of facilities materials and products in Nigeria B) By ensuring reference standards for verification of measures and measuring instruments C) By registering and regulating standard marks and specifications D) By identifying products that do not meet certain quality standards
  1. State five effects of computer on Nigerian economy.
  2. Outline five problems that characterize Nigerian banking sector before recapitalization.

 

WEEKEND ASSIGNMENT

  1. Which of the following bodies carried out banks recapitalization in Nigeria.
  2. Federal office of statistics B. Stock Exchange C. Central Bank D. National Assembly
  3. ____ initiated banks recapitalization in Nigeria. A. Ahmed Sanusi B.  Professor Charles Saludo  C.  Joseph SanusiD.  IkpeEkong
  4. The minimum capital base of banks in Nigeria is _____
  5. 1 billion B. 2 billion   C. 4 billion           D. 25 billion
  6. The electronic machine that accept data and process it and present the information is____ A. computer B. microwave C. electric cooker D. television
  7. One positive effect of computer on the economy of the country is ____
  8. unemployment       B. cybercrime C. banking fraud   D. data management

THEORY

  1. Outline any five positive effects of computer on the economy of the country.
  2. In your opinion, has recapitalization of banks helped the economy of Nigeria

 

GENERAL EVALUATION

  1. 2013 SSCE QUESTION OBJECTIVE AND THEORY
  2. 2014 SSCE QUESTION OBJECTIVE AND THEORY
  3. 2015 SSCE QUESTION OBJECTIVE AND THEORY
  4. 2016 SSCE QUESTION OBJECTIVE AND THEORY
  5. 2017 SSCE QUESTION OBJECTIVE AND THEORY
  6. 2018 SSCE QUESTION OBJECTIVE AND THEORY