(a) Differentiate between Indigenisation and Nationalisation. (b) Give five advantages and three disadvantages of Indigenisation.

Answer Details

(a) Difference between Indigenisation and Nationalisation

Indigenisation is a government policy that transfers the ownership and control of certain businesses from foreigners to the citizens (indigenes) of a country. Ownership passes into private hands of nationals, as was done under the Nigerian Enterprises Promotion Decrees.

Nationalisation is the taking over of the ownership and control of privately owned businesses (whether foreign or local) by the government/state, so that they become public enterprises run by the state. The key difference is that indigenisation transfers ownership to private citizens, while nationalisation transfers ownership to the government.

(b) Advantages and disadvantages of Indigenisation

Five advantages:

1. It increases citizens' participation and ownership in the nation's economy.
2. It reduces the excessive control of the economy by foreigners and checks profit repatriation abroad.
3. It creates employment and managerial opportunities for nationals.
4. It encourages the growth of local entrepreneurship and indigenous skills.
5. It retains a larger share of profit and wealth within the country for national development.

Three disadvantages:

1. Shortage of local capital and skilled manpower may lead to poor management of the businesses.
2. It may discourage foreign investment and inflow of foreign capital and technology.
3. Ownership may fall into the hands of a few wealthy citizens, widening income inequality.