THE IMPACT OF MULTINATIONAL CORPORATIONS(FORIEGN DIRECT INVESTMENT) ON THE NIGERIAN ECONOMY

THE IMPACT OF MULTINATIONAL CORPORATIONS ON THE NIGERIAN ECONOMY

In order to seek the highest of return for capital, economists tend to favour the free flow of capital across national boarders.  It is against this backdrop that multinational companies seek investment in foreign countries with reasonable risk.  Nigeria is believed to be a high-risk market for investment because of factors such as bad governance, unstable macroeconomic policies, investment as a way out of Nigeria’s economic state of underdevelopment.

This paper tries to examine the extent to which Multi-National Corporations have contributed to the development of Nigeria. In the course of the research, it was revealed that Multi-National Corporations have actually contributed much to the Socio-economic cum  cultural under-development of  Nigeria through the instrumentality of tax evasion, capital flight, discriminatory employment and remuneration policies, refusal to live up to their social responsibilities, gas flaring and exacerbating the Niger- Delta problems , amongst other. Theories such as that of Neocolonialism, unequal exchange, under- development and dependency, were reviewed to lend credence to the ills of these corporations.  The study concluded that though there are few cases of development recorded by some corporations, more should be done by them to commensurate with their profits and therefore suggested several socioeconomic measures to compel the corporation to do more towards the development of Nigeria.

Multi –National 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 multi- national 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”.

MULTINATIONAL CORPORATIONS AND NIGERIAN DEVELOPMENT

For a more critical examination of this question, I shall attempt to look at it from the economic, social and political perspectives.

SURPLUS PROFIT AND TAX EVASION: The multi-National corporation sends bulk their profit to their countries through a process called capital-flight rather than re-invest same in the Nigerian economy, which will have opened up other economic ventures. This cannot augur well for the development of our economy. Multi-National Companies have blatantly refused to pay the same taxes obtainable in their parent country which are high and which would have contributed to the development of the Nigeria economy. Worst of all is the fact that most corporations consciously evade payment of taxes. Most under-declare their profit and over-invoice in order to avoid paying the proper taxes. 

EMPLOYMENT POLICY AND DISCRIMINATORY SALARY PAYMENT: These corporations are in the habit of bringing in largely their expatriate staff to work in Nigeria. When they do give a little quota to Nigerians, they mostly constitute the artisans who can hardly learn from them

Multi-National Corporations engage in discriminatory salary policies. Expatriates are highly paid while the Nigerians who may be better than the former are paid peanuts compared to the expatriates.
This cannot contribute to the development of Nigeria economically.

TECHNOLOGICAL TRANSFER: The Multi-National companies have consciously refused to transfer their technology to Nigeria. That is why we are still depending on them for technical know-how. Hence we are still tied to their apron strings.

ENVIRONMENTAL DEGRADATIONS :Corporations especially the oil companies operating in the Niger Delta Region blatantly degrades our environment, destroying our wildlife, farmlands, rivers, through gas flaring, spillages etc. Ibeanu (2009). The impacts of these activities on the socio-economic life of Nigerians are enormous. Needless to say, Millions of Naira have been lost due to this problem and they impinge on the economic development of Nigeria.

ECONOMIC LOSSES OCCASION BY THE NIGER-DELTA PROBLEMS: It has been estimated that Nigeria has lost over N10 billion due to the problems in the Niger-Delta Region (Newswatch 4:5:2009). It has been said time and again that the problems of Niger-Delta is caused primarily by these corporations. The loss impinges negatively on the Nigeria economy, hence its development.

SOCIAL PROMBLEMS : Prostitution and Drug Abuse: The multi-national companies have brought their Western culture to Nigeria. This culture has changed the social fabrics of our society. Where they operate, social vices like prostitution amongst the girls, sodomy amongst the boys, drug trafficking and abuse has been in the increase. This has led to increase cases of HIV/Aids hitherto almost non-existence in Nigeria.

KIDNAPPING AND ARM-ROBBERY: - Because of the hardships meted on the people of the Niger – Delta, with careless abandoned, the youths of the area have taken to kidnapping and arm-robbery, which has spread to other parts of the country and is constituting a social malaise. Malady, menace to Nigerian government. Recently the government coughed out over hundred billion naira to resettle militants.
Also, over one trillion Naira has been lost in Nigeria due to the activities of these militant in just 2010 alone. This money which could have been used for other developmental purposes in Nigeria are now loss due to the activities of these Corporation.

BRIBERY AND CORRUPTION: some Multi-National Companies like the Halliburton Company have been found guilty of corruptly enriching Nigerians through bribery and tax evasion. It is worthy of note that high profile Nigerians like President Obasanjo were mentioned in the saga. This is a wrong signal to the international Community and a minus for Nigerian image.

POSITIVE ADVANTAGES

RISE IN STANDARD OF LIVING: The Multi-National Corporation pay relatively high salaries to their workers compared to other sectors like the Civil Service. This extra income goes alone way to raise the standard of living of the workers and their dependants. The money collected contributes to Nigeria’s G.N.P.

SOCIAL RESPONSIBILITIES: some corporation’s consciously contribute to the development of Nigeria by living up to their social responsibility especially in their host communities. Though such effects are minimal compared to what they have gained, yet their contributions to the development of Nigeria by giving scholarship’s, providing water, electricity and shelter, etc, are commendable.

 CONTRIBUTION TO G.D.P: Corporations operating in Nigeria contribution though minimally to the economy of the country by paying taxes and fulfilling other economic obligations. However, most of them evade tax and under declare their profit to shortchange the country.

TECHNOLOGICAL TRANSFER: Few of the sincere Corporations train the Nigerian Nationals on the technical aspect of their jobs, especially, the oil companies. This could engender technological transfer in future.               

CONCLUSIONS AND POLICY RECOMMENDATIONS

This work employed field evidence and secondary date to critically examine the impact of Multi-National Corporations on the Socio-Political cum economic development of Nigeria. It reviewed various related theories and literature to explain the courses, causes and consequences of the existence of Corporations in Nigeria and their impact on the economy. It reviewed both the positive and negative impact of these corporations in the development of Nigeria.

POLICY RECOMMENDATIONS

The following policies are hereby recommended to policy makers and government, if it is desired that foreign investment contribute to the growth and development of Nigeria. The Nigerian government should encourage the inflows of foreign direct investment and contact policy institutions that can ensure the transparency of the operations of foreign companies within the economy. In evaluating foreign direct investment, the screening process should be simplified and improved upon. For example, export investment projects that consistently generate positive contribution to national income can be screened separately and swiftly, while projects in import competing industries should be screened separately.

Efforts should be made to engage in joint ventures that are beneficial to the economy. Joint ventures provide for a set of complementary or reciprocating matching undertakings, which may include a variety of packages ranging from providing the capital to technical cooperation. The government should intensify the policy to acquire, adopt, generate and use the acquired technology to develop its industrial sectors. Efforts should continue, this time with more vigor at ensuring consistency in policy objectives and instruments through a good implementation strategy as well as good sense of discipline, understanding and cooperation among the policy makers.

The following recommendations, though not exhaustive will help fastrack the socio-economic development of Nigeria.

·         Multi-National Corporations should be made to pay the same tax obtainable in their home countries. This will help shore up our coffers.

·         Any Multi-National Corporation found culpable and guilty of tax evasion should be sent packing from the country and the perpetrators and their Nigerian accomplices jailed.

·         Companies prospecting oil and gas should be made to adhere strictly to OPEC 8% gas glaring laws. Ibeanu (2009). A situation where over 80% of gas in flared in Nigeria is preposterous.

·         Oil companies operating in the Niger-Delta should be made to pay adequate compensation to the communities where oil is spilled. Where other environmentally degrading activities occasioned by these activities are proven, such companies must avail alternative means of livelihood to the farmers whose rives, farmlands, etc; are destroyed as a result of these activities.

·         Multi-National Corporations must be made to live up to their social responsibilities in the communities where they operate.

·         Discriminatory employment and remuneration policies must be abolished. There should be a legislation regulating the employment policies of these Corporations to benefit Nigerians.

·         The government should censor some of the imported cultures of European countries Visa their Multi-National Companies. People guilty of sodomy, bestiality, drug trafficking, etc; should be extradited.
The government must stop selling crude oil and start refining their oil to stem out capital flight.
A conscious policy of technological transfer by any company wishing to operate in Nigeria will help us become  independent

These and other recommendations will help engender socio-economic emancipation and development of Nigeria.

REFERENCES

Ibeanu O.O. (2009). Oil Violence: The Proliferation of Small arms in the  Niger-Delta. CLEEN

Newswatch (2009). “1000 People Perish in Niger-Delta Trillions of Naira Lost” Monday, January, 26

Rodney, W. (1972) How Europe under-development Africa. London: L’
Overture Publications.

Shiro Abass A.(2009) The Impact Of Foreign Direct Investments On The Nigerian Economy Department Of Finance  University Of Lagos