MULTINATIONAL CORPORATIONS IN NIGERIA: BLESSINGS OR CURSES

MULTINATIONAL CORPORATIONS IN NIGERIA: BLESSINGS OR CURSES

Introduction

According to Ajayi and Omolekan (2013), Multinational Corporations (MNCs) in Nigeria may be traced back to the colonial period. After the abolition of the slave trade, multinational companies entered Nigeria. MNCs rose to prominence during the heyday of colonialism and continue to dominate the Nigerian economy even after independence. After the abolition of the slave trade, a number of European nations needed a market for their goods and a base from which to exploit cheap labor and raw materials (Rodney, 1974).

In Nigeria, multinational corporations are dispersed across numerous platforms and production lines. This includes oil and gas, health and wellness, consumer goods, and communications. MNCs have an inescapable role in the modern level of competition in the global economy, particularly in a developing economy such as Nigeria (Kumar, 2015). They are renowned to having among of the highest-paid workforces in the country, as well as a very congenial work atmosphere and opportunities for professional advancement. MNCs are held by shareholders who expect annual profits in exchange for funding the firms’ production and operations (Ahiakpor, 2016). In order for multinational corporations (MNCs) to be able to pay such dividends, management recruit highly skilled personnel for low costs, purchase inexpensive materials, seek to produce in nations with low profit taxes, and sell in markets where they can generate significant profits (Ahiakpor, 2016).

According to political experts in emerging nations, multinational corporations should be viewed as both an economic and political power. Turner (2001) argues that MNC managers have the authority to shift and regulate capital, resulting in enormous layoffs. MNCs are charged with advancing the foreign policies of their home governments at the expense of host nations (Ugwu, 2010). Although some researchers have linked the presence of multinational corporations to the prosperity of their host countries, this is not the case in Nigeria. This paradoxical reality has frequently prompted violence in regions where big firms are headquartered (Obi & Rustad, 2011). Some global corporations operating in Nigeria offer bribes to circumvent domestic laws (Rawlings, 2007). From the foregoing, it can be adduced that underdevelopment in Nigeria is connected to its persistent dealings and uneven romance with international capitalism.

Conceptual Discourse

Multinational Corporations

Multinational corporations (MNCs) are companies with foreign subsidiaries that extend the firm’s marketing and manufacturing beyond the borders of a single nation. In other words, these companies are moved overseas with sufficient finance, marketing expertise, and technology to operate well in a foreign country (Morgan, 2005).

Globalization

Globalization refers to the process by which diverse societies and economies become more closely interconnected (Nilson, 2010). In a similar line, it is the spread of knowledge, technology, products, and jobs across national borders and cultures (Klopp, 2020). MNCs are agents of globalization because they play a crucial role in the circulation of money, technology, and ideas across varied regions of the world.

POSITIVE IMPACT OF MULTINATIONAL CORPORATIONS IN NIGERIA

Foreign Direct Investment

Foreign Direct Investment (FDI) is an investment made directly in a country by a multinational corporation with the purpose of enhancing their existing business infrastructure or purchasing raw materials and commodities. Capital flows from multinational corporations into underdeveloped nations such as Nigeria. On the financial account of the balance of payments, for instance, the investments required to construct factories in a country are categorized as capital flow. These investments contribute greatly to the growth and productivity of the economy. In other words, the capital influx helps to finance a current account deficit (Pettinger, 2019).

Employment Opportunities

It is essential to recognize that multinational firms are recognized with being major employers in their host nations. The earnings associated with these positions may not be excessive, but they are sufficient to support the personnel. Additionally, many individuals would rather work for large global corporations than, engage in farming or unpaid labor. MNCs are larger and more efficient than domestic enterprises and can play a crucial role in emerging countries’ entrepreneurial ecosystems (Bahar, 2015).

Corporate Social Obligation

Some multinational corporations intentionally contribute to the development of Nigeria by upholding their social responsibilities in their host areas. Their contributions to the development of Nigeria through scholarships, the provision of electricity, water, housing, and relief supplies are commendable, despite the fact that they are insignificant in comparison to the benefits they have received. Some multinationals have helped in developing local manpower by transferring of knowledge, experience, and technology, which are not obtainable locally (Dan-Jumbo & Etim, 2018). In the same way, MNCs help to diversify the economy and make it less dependent on primary products and agriculture, which often have unstable prices and supplies.

NEGATIVE IMPACT OF MULTINATIONAL CORPORATIONS IN NIGERIA

Corruption

Several multinational corporations, including Shell and Eni, have been charged of corruptly enhancing the wealth of individual Nigerians through bribery and tax fraud (Schwikowski, 2018). This strengthens the claim that Nigeria is fundamentally corrupt and damages the nation’s reputation abroad.

Repatriation of Profit

MNCs invest equally in emerging markets, but they often return their profits to their home nation. Therefore, the net capital inflows are lower than they might appear. Simply put, they don’t want to reinvest in the Nigerian economy. These corporations are more focused on accumulating profit at the expense of customers. Multinational corporations frequently hold a monopoly of power, allowing them to profit excessively through exploitation. Profit-maximizing MNCs are not benevolent and serve exclusively their interests (Irogbe, 2013). Some MNCs have more assets than their host countries’ national GDP, making them a threat. Essentially, MNCs are continuing the practices of industrialized countries during the colonial era, which involved exploiting less developed countries and sending the profits back to their home countries, improving those countries at the expense of the host countries (Chidozie, Lawal, & Ajayi, 2015).

Skilled Labor

MNCs are more likely to use highly skilled employees from their developed economies than from developing economies. This appears to be the general pattern while working on novel, technical tasks. In other words, the local labor does not get the best or highest paying positions. Multinationals frequently relocate their foreign employees to work in Nigeria. Some people also take part in unfair compensation practices. It is important to remember that foreigners get high salaries while Nigerians, who may be more skilled, are paid less. Few multinational firms teach Nigerian workers in the technical aspects of their occupation. This indicates the adoption of an ethnocentric approach for staff recruitment in which expatriates are given preferential consideration during the recruitment process. This is hostile to Nigeria’s’ economic growth and development (Eluka, Nduibuisi-Okolo, & Anekwe, 2016).

Monopoly

Domestic industries in Nigeria are harmed by MNCs’ current market dominance. For instance, it is claimed that large supermarkets tend to squeeze the corner businesses’ margins, leading to a decrease in diversity. similarly, MNCs drive domestic industries out of business by taking advantage of their enormous economies of scale. Budgets for MNCs in Nigeria are larger than those for indigenous industries. As a result, native industries are unable to successfully compete with international corporations, which only encourages reliance and causes people to seek only foreign goods. Some MNCs are the exclusive producers of certain commodities.

Environmental Degradation

MNC investments in developing countries focus on oil, diamonds, gold, rubber, uranium, etc. This extraction causes environmental problems. Air pollution, radiation, oil spills, and mining destroy natural landscapes. Multinationals, especially oil firms in the Niger Delta region, damage the environment through gas flaring and oil spillage. Oil spills hurt Nigeria’s economy and growth. These spills expose Niger Delta residents to toxins (Pelz & Bello, 2017).

RECOMMENDATIONS

First, it is pivotal that the Nigerian government must diversify its economy to reduce its reliance on international corporations by providing enough assistance to domestic companies that offer comparable goods and services. The government may also grant tax exemptions to domestic industries.

Accordingly, the government must meticulously investigate these firms’ operations to stop additional exploitation, even while favorable connections with them are promoted. The government must not delegate her national interest while dealing with these Corporations, and these Corporations must, in turn, exercise responsibility in their operations.

If a multinational company is caught avoiding taxes, it should be kicked out, and its Nigerian partners should go to jail. Also, oil companies should strictly follow the best practices for gas flaring around the world. When oil spills happen, oil companies should pay to fix the damage.

References

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