1

ANNUAL CONFERENCE

BOOK OF PROCEEDINGS

SCHOOL OF

MANAGEMENT AND

BUSINES STUDIES LAGOS STATE POLYTECHNIC, IKORODU, LAGOS

2016 INTERNATIONAL CONFERENCE

5TH

5TH

SCHOOL OF BUSINESS & MANAGEMENT STUDIES

PREFACE

This year's conference is tagged "Globalisation: The lessons Nigeria can learn from China's

success in a global market, presented by a scholar and public commentator, Dr. Austin Nweze

of the Pan Atlantic University, Lagos, Nigeria. The conference brought schorlars and

practitioners from different fields to examine one of the most topical issues in the recent time.

Globalisation is a broad concept with diverse meanings and applications. In business, it is used to

refer to the ability of business firms to set up production, research and development, marketing

and distribution of goods and services on a global business. In marketing, it describes the

capability of firms to sell uniform products around the world. In economics, it refers to the

openness, integration, interdependency and interconnectedness of the world economy. The

common slogan is "The technology has created a global village while communication has created

a global audience".

China, since it opened its border to foreign business in 1978, has dominated the global market. It

produces and exports over 3, 000 products to the world market. Due to its aggressive

international trade, China is currently the second largest economy in the world, displacing Japan

in the Triad region. There is no doubt that China's continuous incursion into the world market is

being facilitated by globalisation. China embarked on a number of reforms (social, economic,

legal and political) and upgraded its infrastructures to achieve the tremendous success it has

recorded in the global market.

As an increasing number of developing countries are reforming their economies to attract foreign

investments and increase their share of global trade and investment, Nigeria cannot afford to be

an onlooker. Nigeria has a lot to gain from China. Nigeria needs to upgrade its comatose

infrastructures and build new ones to make the country conducive for local and foreign

investments. It should carry out a total reform to remove all barriers to trade and investment

flows.

In this regard, the conference provides a platform for exchange of ideas, knowledge and

information on how our beleaguered country can increase its share of the global trade and

investment, drawing from the experience and success of China. Participants at the conference

will examine different aspects of globalisation. I hope the output of this conference, to be

published in the e-proceedings of the conference, will be helpful to the policymakers at all levels

of governments.

Suraju A. Aminu, PhD.

Conference Director

08098500270/08033489517

CONFERENCE

TECHNICAL PROGRAMME

23rd

May, 2016 Arrival, Registration and Opening Ceremony

Arrival and Registration>> 8.00am-9.00am

Procession>> 9.40am-10.00am

Opening Ceremony:

Opening Prayer: Mr. Ibraheem Akosile and Mr. Moses Akinkumi>>10.00am-0.15am

Introduction of Guest: Mr. Ojomo, B. O. >> 10.15am-10.40am

National Anthem and Laspotech Anthem >> 10.30am-10.40am

Welcome Address: Dr.Biyi Oyetade, Dean SM&BS>>10.40am-11.00am

Chairman‘s Opening Remarks:

Mr. Samuel O. Sogunro, Rector, Laspotech>>11.00am-11.25am

Keynote address:

Dr. Ola Olateju, Deputy Rector (Admin), Laspotech>>11.25-11.35am

Lead Paper Presentations>> 11.25am-11.55am

Citations of the Lead Paper Presenter: Mr. Kofoworola A. Olayinka

Announcement:

Dr. Suraju A. Aminu >>1.20pm-1.40pm

Vote of Thanks:

Mrs. Adeola Banjo, Chief Lecturer, Dept of Insurance>>1.40pm-1.50pm

Presentation of Gifts>>1.50pm-2.00pm

Photographs and Interlude>>2.00pm-2.30pm

General Rapporteur for the Conference :>> Mr. I. G. Omolumo

5th Annual SM&BS Conference Team

Chief Host & Conference Chairman MR. Samuel O. Sogunro, Rector, Lagos State Polytechnic

Legal Adviser Barrister O.O. Longe

Host Dr. Biyi Oyetade (Dean, SM&BS)

Chief Host Mr. Samuel O. Sogunro (Rector, Lagos State Polytechnic

Master of Ceremonies (MC) Mr. Ojomo, B. O

Chief Protocol Officer:

Mr. Olawore, P. O. MMMMMMMMMOOAC

Conference Editorial Team 1. Dr. Suraju A. Aminu - Chairman

2. Mr. Paul O. Olawore - Member

3. Mr. Ibraheem Akosile - Member

Technical Team Mr.Toyin Soyeju

Mr. Olayiwola Dauda

Welfare Mr Amuzat I. O.

Mr. Pearse, E. O.

Protocol & Control

Mr. Olawore, P. O. Mr. Ashogbon, M. B. A.

Mr. Ogunlami Kayode

Media & Publicity Olorunseun, E.

Members of the Seminar, Training and Conference (STC)

Committee

1. Dr. Aminu, S. A. Conference Chairman

2. Mr. Olawore, O. P. DeputyConference Chairman

3. Mr. Femi Hamzat Member

4. Mr. Olorunseun, A. Member

5. Mr. Pearse, E. O. Member

6. Mr. Ashogbon, M. B. A. Member

7. Mr. Anisere-Hameed, R. A. Member

8. Mr. Ogunlami Kayode Member

9. Mr. Soyeju Toyin Technical officer

10. Mr. Isola, O. B. Conference Secretary.

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PRESENTATION SCHEDULE FOR SM&BS 2016

CONFERENCE

Technical Session, Day 1 (23RD MAY, 2016) TIME: 3pm – 6pm

VENUE: Main Auditorium, Isolo Campus

DISCUSSANTS:

1. Mr. Awaiko, W. J. Chairperson

2. Dr. Bolarinwa, J. B. Member

3. Dr. Ogunyemi Wole Member

4. Mr. Olayinka, K. A. Member

5. Dr. Akintayo, A. O. Member

6. Mr. Olomiyete Wole Member

7. Dr. Asekun, W. A. Member

8. Mr. Olorunseun E. Secretary

S/N Names of Presenter Title of Paper

1. Oluyemi Adekanmbi &

Akeem O. Ajani

Utilizing computer-based test (CBT) for efficient conduct of

examination in Nigeria.

2. Mustapha B. A.

Ashogbon

Globalisation and sustainability of Islamic banking in Nigeria.

3.

Abubakar S. Orisankoko

& Islamiayat O. Adesola

Legal framework for Islamic financing and economic growth

across borders.

4. Samson I. Fasoro The impact of globalization on economic development of

Nigeria

5. Wahid K. Oduwole &

Olayemi S. Busari

Globalisation and global marketing: The effects on local

entrepreneurs.

6. Mrs. Mary O. Amori Impact of entrepreneurship education on the curriculum of

Nigerian Tertiary institutions on Nigerian students.

7. James O. Ademeso &

Yusuf O. Bako, PhD.

Impact of globalization on Nigerian economy.

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Technical Session, Day 2 (24TH MAY, 2016) TIME: 9am– 6pm

VENUE: Main Auditorium, Isolo Campus

Morning Session >>9.00am-1.30pm

Lunch Break >>1.30am-2.30pm

Afternoon Session>>2.30am-5.30pm

DISCUSSANTS:

1. Mr. Awaiko, W. J. Chairperson

2. Dr. Bolarinwa, J. B. Member

3. Mr. Olayinka, K. A. Member

4. Dr. Akintayo, A. O. Member

5. Mr. Alasiri, W. A. Member

6. Dr. Ajayi, Taiwo Member

7. Mr. Olomiyete Wole Member

8. Dr. Asekun, W. A. Member

9. Mr. Olorunseun E. Secretary

S/N Names of Presenter Title of Paper

1. Biliaminu O. Isola The hackers and computer security: The

implications for global competitiveness of

Nigerian firms.

2. Akeem O. Ajani &

Oluyemi Adekanmbi

Impact of wages and salaries management on

employees' commitment in small and medium

enterprises (SMEs).

3. Isaac O. Faseyeku Impact of globalisation on Nigerian economic

development

4. Isaac O. Faseyeku Effects of Globalization on Industrial Relations

Practices in Nigeria.

5. Olawale T. Oladunjoye, PhD & Engr.

Chris N. Igwe

Consumers‘ income and dynamics of

entrepreneurship development in Lagos and

Ogun State, Nigeria.

6. Victor A. Adeyeye Motivation and employees' performance in

business organization in Lagos: A review.

7. Moses K. Akinkumi &

Suraju O. Matanmi

Challenges and prospects of agricultural

marketing in a globalized market

8. Lawrence A. Fowowe The impact of globalization on banking services

in Nigeria.

9. Adeshina E. Odesanya, Adesegun F.

Adefolurin, Oluwaseun G. Balogun

and Ikechukwu K. Amadi.

Globalisation, competitiveness and developing

nations.

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10. Mutiu A. Basdmus Globalisation and the law: Lessons Nigeria can

learn from China.

11. Lawrence A. Fowowe The impact of globalisation on banking services

in Nigeria.

12. Samson I. Fasoro The effects of rising costs of imported foods and

food insecurity in Nigeria: The need for self-

reliance and poverty reduction.

13. Abel S. Adesanya Globalisation and management: Lessons from

China.

Technical Session, Day 3 (25TH MAY, 2016)

TIME: 9am– 6pm

VENUE: Main Auditorium, Isolo Campus Morning Session >> 9.00am-2.00pm

Discussants‟ Report: Omolumo I. G >>2.00pm-2.40pm

DISCUSSANTS:

1. Mr. Awaiko, W. J. Chairperson

2. Mr. Daisi, O. R. Member

3. Mr. Ilemobayo, A. S. Member

4. Dr. Rasaq Kareem Member

5. Mr. Olomiyete Wole Member

6. Dr. Asekun, W. A. Member

7. Mr. Olorunseun E. Secretary

S/N Names of Presenter Title of Paper

1. Dr. Suraju Abiodun Aminu Prospects of globalisation in attracting assembly plants in

Nigeria.

2. Ayodele I. Oyende The application of mathematical models to solving

business problems

3. AbdulRafiu O. Alashiri Globalisation and information and communication

technology (ICT).

4. AbdulRafiu O. Alashiri Globalisation and engineering.

5. Isaac O. Ladokun &

Paul O. Ajayi

The impact of globalizations on marketing performance of

business organisations in Nigeria.

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Closing Remarks: Dr. Suraju A. Aminu >>3.00pm-3.30pm

Vote of Thanksn: Sanyaolu, T. O. >>3.30pm-3.45pm

Closing Ceremony: Mr. Samuel O. Sogunro, Rector, Lagos State Polytechnic >>2.45pm-3.15Pm

ClosingPrayer: >>3.15PM

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TABLE OF CONTENTS

Welcome Address at the Opening Ceremony of the SM&BS 2016 5th Annual Conference

Dr. Biyi Oyetade >> 12

SM&BS 2016 5th

Annual International Conference Opening Remarks

Mr. Samuel O. Sogunro, Rector>> 14

SM&BS 2016 5th

Annual Conference: A Keynote Address

Dr Ola Olateju, Deputy Rector (Administration)>>18

Prospects of globalisation in attracting assembly plants in Nigeria

Suraju, Abiodun Aminu PhD>>22

Small and medium enterprises' participation in government procurement contracts

in Nigeria

Olusegun Paul Olawore, Kofoworola Abiodun Olayinka

& Moses Kunle Akinkunmi>>39

Impact of entrepreneurship curriculum on the quality of entrepreneurship education

Mary O. Amori>>59

Effects of globalisation on industrial relations practices in Nigeria

Isaac OludareFaseyiku >>73

The hackers and computer security: the implications for global competitiveness of

Nigerian firms

Biliamin Olanrewaju Isola>>91

Globalisation and competitiveness in developing nations

Emmanuel Odesanya Adesina, Festus Adesegun Adefolurin,

Gideon Oluwaseun Balogun, & Kenneth Ikechukwu Amadi >>109

Public e-procurement in Nigeria: A catalyst for socio-economic development

Ismail Adewale Alli >>119

Globalisation and tourist resort life cycle: A case of Osun-Oshogbo World Heritage site O. O. Metilelu &M.A. Jammal>>136

Nigerian banking sector reforms: Implications on deposit money banks‗operational

performance.

Adetutu Odekunle>>149

Globalization and information communication technology

Engr. Abdulrafiu Ollaitan Alashiri>>161

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Globalisation and sustainability of Islamic banking in Nigeria Mustapha Babatunde Ademola Ashogbon>>177

Globalization and engineering

Engr. Abdulrafiu Olaitan Alashiri>>194

Consumers‘ income and dynamics of entrepreneurship development in Lagos

and Ogun States, Nigeria

Olawale T. Oladunjoye, Ph.D&Engr. Chris N. Igwe>>206

Utilizing computer-based test (CBT) for efficient conduct of examination in Nigeria

Oluyemi Adekanmbi, Akeem Lanre Ajani, Abimbola Iyabode Alao>>211

Globalisation and International Treaty: China as a case study

Mutiu Adeyemi Badmus>>218

Impact of Globalization on Nigerian Economy

James Olufemi Ademeso, Yusuf Adebola Bako (PhD)>>237

Globalisation, international law and challenges of criminal jurisdiction

Emmanuel A. Adesina LLB, BL, LLM

& Oluwole E. Bamgbala LLB, BL, LLM>>247

The influence of information and communication technology (ICT) on marketing

of life assurance products in Nigeria

Wahid A. Alasiri>>257

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Welcome Address

at the Opening Ceremony of the SM&BS 2016 5th Annual Conference

by

Dr. Biyi Oyetade

Dean, School of Management and Business Studies

Lagos State Polytechnic, Ikorodu

I have the pleasure, for the second time, to welcome you all to the 5th annual SM&BS

Conference, 2016 edition. I make bold to say that SM&BS has redefined the concept of

conference in our Polytechnic of excellence by building and maintaining an academic culture of

hosting academia and practitioners on an annual basis, as is the tradition in many leading citadels

of learning. Other schools in the Polytechnic are riding on the back of the success the school has

recorded in this important academic area to organise conferences. Today, not less than five

conferences are held annually in the Polytechnic. However, our school, SM&BS remains a

pathfinder and trailblazer.

This year's conference examines globalisation, one of the most popular and controversial

issues around the world. Popular, because every country has embraced it to some degree and

controversial because of its negative effects on the economies of several developing countries.

For example, technology, a major driver of globalisation, has made it easier to launder money

around the globe. The cesspool of corruption in Nigeria is, no doubt, helped by advances in

technology.

This year's conference main theme is "Globalisation: Lessons Nigeria can learn from

China's success in a global market".

Globalisation is defined simply as a process whereby worldwide interconnections in

virtually every sphere of activity is growing (Held et al., 1999). These interconnections have

facilitated a greater movement of people, funds, trade and investment across the globe in search

of opportunities. For example, trade between countries across the globe has increased at the

annual average of 5.1% between 1990 and 2014 (Azevêdo, 2015), reaching $23.5 trillion as of

the end of 2013 (UNCTAD, 2015).

While developed countries such as the U.S., Europe and Japan have exploited the

opportunities provided by globalisation through increased trade and investment, only few

developing countries are major players in the new global economy. For example, the World

Bank's statistics showed that U.S. and many countries in Europe recorded a high FDI flow in

2014 (World Bank, 2016). U.S. had an FDI flow of over $131 billion compared to Nigeria's

paltry $4.7 billion in the same period.

China is one of the few developing economies benefiting tremendously from the wave of

globalisation. From little or no involvement in international business in the 1960s and the greater

part of 1970s, China has taken the world by storm, producing and exporting over 3, 000 products

across the globe and increasing its FDI flow. For example, China's FDI flow in 2014 was over

$289 billion and two times greater than that of U.S. (over $131 billion) for the same period

(World Bank, 2016). Due to its increased industrial activities in the global market, China became

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the second largest economy in the world in 2010 and may become the largest economy by 2025

(Zhao, 2016).

A number of factors are responsible for the China's remarkable success in the era of

globalisation. The most profound is the implementation of an open and reform policy, started in

1978. This has considerably increased productivity in the Chinese factories. Another important

factor is the introduction of market mechanism, modern technology and management learned

from the West. Also, China's over 1.3 billion population has been an unrivalled strength, which

combined with the modern technology, has boosted productivity in the country.

Furthermore, China has been successful as a global market with the establishment of

investment zones, free trade zones, high tech zones and export processing zones and provision of

tax incentives for operators in these zones. In addition, the contribution of the millions of

Chinese in diaspora to the economic growth and development of China has also strengthened its

global position. Finally, China's strong manufacturing base has given it a competitive advantage

over other countries. The country is a manufacturing hub for the entire global market, providing

job opportunities for its teeming population.

At this junction, it is pertinent to ask the question: Can Nigeria learn from China's

success? The answer is capital YES. Nigeria has the largest population in Africa and it is the

largest black nation in the world. With this population, Nigeria can emerge as 'China of Africa'

and position herself as a manufacturing hub to serve over one billion strong population in the

continent.

Like China, Nigeria should reform and liberalise its economy to make the country

conducive for foreign investment. Secondly, Nigeria will gain a lot in both regional and global

markets if it can make the existing moribund export processing zones functional borrowing from

the experience of China and establish free trade zones and investment zones in the country. With

the appropriate tax incentives, Nigeria will attract foreign as well as local investments for export

production.

Moreover, Nigeria can take a cue from China by encouraging its army of Nigerians in

diaspora to have a say in the affairs of the economy. Past governments had paid a lip service to

the involvement of Diasporas in the economy. Finally and very importantly, Nigeria should take

the issue of infrastructure upgrading and expansion very seriously. China achieved its current

success in the global market because of its massive investment in infrastructures of all types and

grades. Nigeria will remain a pariah for foreign investment unless it increases the quantity and

quality of its infrastructures.

As we listen to Dr. Nweze, the lead paper presenter and other scholars, it is my belief that

the deliberations in the next three days will be robust and fruitful and help our policymakers to

enunciate policies that will lead Nigeria occupy its rightful place in both the regional and global

markets and become the 'China of Africa'.

Once again, you are welcome to our school, the pacesetter and trailblazer and to our

Polytechnic, the Polytechnic of excellence. I wish you happy deliberations.

Thank you

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15

SM&BS 2016 5th

Annual International Conference

Opening Remarks

By

Mr. Samuel O. Sogunro, Rector

Lagos State Polytechnic, Ikorodu

Introduction

Ladies and gentlemen, I am greatly pleased to welcome you all to this year's School of

Management and Business Studies‘ Annual Academic Conference. Let me use this opportunity

to commend this school and the organisers of the conference for their hard work and their

consistency, it is the fifth straight time they are putting this annual conference together, this is

indeed worthy of emulation by other schools in the Polytechnic. it is my opinion that the theme

of the conference " Globalisation: Lessons to be learnt from China‘s success in global market‖ is

very apt at this time, the recent fall in the prices of crude in the International market and its

attendant consequences on our economy makes the theme appropriate at this time. Let me take

you a little down the memory lane, before oil discovery, Nigeria had been having a strategic

participation in the global market with diverse (Agricultural) products, consequently, Nigeria‘s

economy was fantastically good (apology to Cameron) because of this, the country was a

destination of choice to expatriates in different sectors like manufacturing, mining, education,

business, e.t.c, It was common to see foreigners making a living in Nigeria because naira was

almost having same value with the strongest currencies of the world like British pound and the

United States dollar, It was at this time that Southwestern Government built Cocoa house in

Ibadan, the first television station in Africa, The university of Ile Ife, now Obafemi Awolowo

University, e.t.c,. There were also giant strides made in the eastern and northern Nigeria mainly

through proceeds of trade in the global market, but then we hit the black gold and then the

trajectories of our lives as a nation changed. Then our participation in the market became

monolithic, there was a boom and then a doom. The value of Nigerian‘s currencies started nose-

diving.

In the middle of this sad experience in the 80s, we thought then that it would never happen again

if given another bright chance, I believe we did get another chance at diversifying our economy

in order to deepen our participation in global market, but it appears we bungled the chance again,

Since it seems that we have been unable to learn from our own past failures, perhaps we may

learn from the success of a country who chose to learn from its failure. Although Nigeria still

remains a big player as far as globalisation is concerned, being the largest economy in Africa,

with skilled manpower scattered through the breadth and length of the world, with some robust

volume of international trade, especially in the oil and gas sector, etc., This paper views her

participation in global market as not being strategic enough as it used to or ought to be (until

this time that the present administration is striving to diversify the economy), hence our present

economic crises. I am aware that many of you seated here have papers to present at this

academic conference to offer different perspectives on the theme, let me use the opportunity of

this welcome address to share some of my thoughts which has been largely informed by

scholarly research and personal experience, as my own modest contribution on the theme.

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China as a successful global market player

The emergent of China as an outstanding global player over the last three decades is one of the

most fascinating phenomenon to scholars and researchers in economics and other related

disciplines in the recent time. China‘s economy has become the largest growing economy in the

world since 1980. China became the largest foreign exchange reserves holder and exporter in the

world in 2007, 2009 and 2010, respectively. Moreover, in 2006, China‘s real GDP was 13 times

higher than in 1978. Because of China‘s aggressive drive in global market she was able to bring

down the number of people in absolute poverty from 250 million to 15 million in less than 30

years (Wen, 2008). Globalisation has also occurred in the critical sectors in China, such as in;

agriculture, manufacturing, telecommunication, technology, e t.c. I would spare you the boredom

of bombarding you here with more statistics on the success stories of China, but what I would

not fail to tell you briefly in this paper is where the country was coming from and the things they

did right to deepen their participation in the global market.

China and reforms

China of a few decades back was as a closed economy, she operated, an economy in which

market forces played virtually no roles, her approach to economic control was highly

bureaucratic and centralised. It may also interest you to know that China of over three decades

ago was in a position where it had virtually no foreign investment and a low-level of

international trade and exchange. (Tisdell, 2009), Then came a leader by the name Deng

Xiaoping who insisted that China must ‖ open up‖, He started working at removing

bureaucratic centralised management of the economy and eliminating political impediments to

achieving economic efficiency and development, particularly at lower levels (such as local

levels) of economic activity (The Research Department of Party Literature, 1991), many of

Xiampong‘s contemporary politicians were very uncomfortable with his reforms describing them

as too radical, but this leader was never deterred, He carried out the reforms with courage,

bravery and tenacity, fortunately, subsequent Chinese leaders followed in his footsteps and have

continued to develop and modify his bold approach at opening china up for globalisation.

Reforming and sustaining the gains of reforms is to my mind one lesson to take away from

China. If we wish to deepen our participation in the global economy, we must carry out reforms

where necessary.

China‟s policiesonAgriculture

China began her major economic reforms policy in agriculture because at that time it was ―the

foundation of the national economy‖. The country in the new policy allowed for the rule of law

in its dealings with relevant stakeholders in the sector, (this was hitherto nonexistent) she also

seek to ensure decentralization and resource ownership in undertaking the agricultural reforms.

These features were subsequently applied to the rest of the economy. More so, Deng Xiaoping

and his team ensured that economic incentives became incorporated into the economic system of

the country and economic responsibility was also emphasised. The propelling force in the new

economic policy was a reward system based on ―each according to his work‖ and not ―each

17

according to his need‖ that the country had been earlier known for. This policy brought

unprecedented growth in the Agric sector in the country and thus made it become self-sufficient

in food production and an exporter of food to other countries of the world. It is hoped that this

kind of breakthrough would be witnessed in Nigeria again as before if all stakeholders can make

agricultural sector more economically rewarding than it is presently. This to me is another

important lesson to take away from China.

China‟s approach to policy change under Dieng

A cursory look at the literature on the leadership of Dieng, who helped drive the reform that has

perpetually placed China on the global economy map shows that he was a man characterised by

realism and gradualism, It also showed a man who was willing to try and also learn by trial-and-

error. In institutionalising economic reforms, proposed new institutional structures were first

tried only in an identified region, locality or sector of the economy, thereafter, the result was

observed, and if it is found to work or succeed, it was then replicated more widely to other

regions or sectors of the economy, making adjustments where necessary. This is the policy

approach that China continues to use. The important lesson to draw from this approach to

effecting change is that certain institutional reform may require that we first get them tested in a

particular sector rather than forcing it on the generality all at the same time.. The benefit of the

approach is that if the reform goes awry as they sometimes do, its disastrous effect would be very

limited. Reforms can lead to desirable outcome, but the example from China shows that their

introduction was systematic, pragmatic and gradual in implementations. This to me is another

important lesson to take away from China.

Conclusion

Globalisation is a great economic concept and a welcome development in our world, It

has somewhat helped achieved an all-inclusive world, whereby countries and their citizens

interconnect and interrelate for economic activities, it has helped industrialization and

employment, thereby lifting millions of people around the world from extreme poverty. It has

brought about rapid growth in the world economy. Benefits of globalization is indeed huge for

the countries who wish to leverage on it, but I must add that globalization has also brought with

it other challenges such as over-reliance on foreign goods, foreign exchange crises (like it is

presently experienced in Nigeria), illegal immigration, widening of economic inequalities among

nations and citizens of the world. The list is endless. I look forward to another academic

conference here in the nearest future that would address issues arising from globalisation.

Once again, I welcome you all and I wish you a happy deliberation at the conference.

Thank you for your time.

Reference

The Research Department of Party Literature, Central Committee of the Communist Party of

China (1991) Major Documents of the People‘s Republic of China – Selected Important

Documents since the Third Plenary Session of the Eleventh Central Committee of the

Communist Party of China (December 1978 and November 1989). Foreign Languages

Press, Beijing.

18

Tisdell, C. (2009). China‘s economic performance and transition in relation to globalization:

From isolation to center-stage. Pp. 201-232 in Dipak Basu (ed.) Advances in

Development Economics. World Scientific, Singapore, Hackensack, NJ and London.

Wen, J.J. (2005). Can globalisation save SOEs in China? Pp. 388-401 in C. Tisdell (ed.)

Globalisation and World Economic Policies. Serials Publications, New Delhi, India.

19

SM&BS 2016 5th

Annual Conference

A Keynote Address

By

Dr Ola Olateju, Deputy Rector (Administration)

Lagos State Polytechnic, Ikorodu,

Globalisation

Globalisation remains one of the most debated concepts in the 21st Century. However in

the collective view of Smith, Baylis and Owens (2008), it represents the process of increasing

interconnectedness between societies such that events in one part of the world have effects on

peoples and societies far away. It is not a new phenomenon in the history of man but it became

prominent at the end of the Cold War and with the dominance of neo-liberalism in the world

politics. With the emergence of the New World Order, liberal and neo-liberal intellectuals like

Fukuyama, became occupied with theoretical justification for the supremacy of liberal ideas over

all other competing ideologies. Fukuyama asserts in ―The End of History?‖ (1989) that:

.....the triumph of the West, of the Western idea, is evident

first of all in the total exhaustion of viable systematic

alternatives to Western liberalism... What we may be

witnessing is not just the end of the Cold War, or the

passing of a particular period of post-war history, but the

end of history as such (Fukuyama, 1989: 1)

For Fukuyama, the collapse of the Soviet Union and the subsequent emergence of the

USA as the sole global power with neo-liberal economic ideology as the dominant ideology,

have proved liberal democratic states, such as the United States, representing a kind of

ideological terminus toward which all states were evolving and at which all states would

eventually arrive. Contributing to this assumption of rebirth of history, Samuel Huntington saw

the events as the beginning of a new phase of global history in which the fundamental conflicts

will not be between nation-states, but rather between civilizations (Huntington, 1993). It is

within this neo-liberal context that globalisation assumes its post-cold War form to represent the

unfettered movement of finance and capital manifesting in the growth of capitalism and

modernisation. The salient point in globalisation is the of concentration of wealth, power and

control over production and communication in the hands of the few technologically advanced

economies leaving the less developed economies as potential markets for the developed

economies. Globalisation in the process of capital accumulation, accentuated the marginalisation

of the wide majority of the people from any productive activity and subsequently created not

only reserve army of adults and children but ‗disposable population of street children‘ (Marcos,

1997) and ‗totally unemployed human wreckages‘ (Bercher and Costello, 1994). The process of

globalisation has no doubt generated sharp ‗polarisation, inequalities and inequities with ruinous

effect on the livelihoods, environment and ecology of the planet‘ (Brecher and Costello, 1994;

Korten, 1995) especially in a less developed economy as Nigeria.

20

China and the Globalisation process

The essence of using China in this illustration is to juxtapose China‘s economic growth

with Nigeria, show its global impact, and the consequences for the improvement of the social

conditions of Chinese. The Chinese choice reinforces the assumption of speconomy1 that every

country is specific and therefore no country can or should mechanically copy another. The

Chinese political leaders led by its economic reformer Deng Xiaoping stressed this uniqueness

fondly referred to as ‗Chinese characteristics‘ in the Chinese economic reform package. It was

this uniqueness that formed the pillar of the reform that was more of backward integration and

state-led. Deng Xiaoping asserts that ‗to accomplish modernization of a Chinese type, we must

proceed from China‘s special characteristics.‘ (Deng, 1979), therefore China must ‗blaze a path

of our own‘ (Deng, 1985). This view was later reinforced by Justin Yifu Lin, Chinese Chief

Economist and Senior Vice President of the World Bank. He argues:

‗...we can never be too careful when it comes to the

application of a foreign theory, because with different

preconditions, no matter how trivial they seem, the result

can be very different‘ (Lin, 2012: 66)

China‘s ‗reform and opening up‘ process under Deng Xiaoping was, of course,

formulated in a modified Marxist economic framework. Deng Xiaoping's economic reforms of

the 1980s were regarded as a ―re-instatement of economics in China‖ (Lin, 1981). It includes a

critique of Soviet economic policy which Deng Xiaoping opined to be an error of confusing the

‗advanced‘ stage of socialism/communism, in which the regulation of the economy is ‗for need‘,

hence not market regulated. Deng felt otherwise by expressing that market regulation must

accompany the stages of development in socialism, during which the transition from capitalism

to an advanced socialist economy takes place (ibid).

The final formulation arrived at was that China‘s was a ‗socialist market economy with

‗Chinese characteristics‘. This is a model that gives the state ownership of the large state firms

while the citizens own small ones with support from the state. This is a form of socialised

agreement between the two partners working towards the same goal of expanding the productive

base of the state for the overall benefits of all. In practical terms, such model accommodates the

modification of a centrally planned economy to develop a socialist market economy where the

state controls certain key macroeconomic parameters. In terms of ownership it is guided by

‗Zhuada Fangxiao‘ – state maintaining large state firms and releasing small ones to the non-

state/private sector (John Ross, 2012). With this arrangement, China became less vulnerable to

the mobile investment funds because the Chinese state‘s control of the capitals and less

dependence on the foreign investments.

1speconomy model provides the state with the opportunity to direct the usage of the capital more in the domestic

investments than reliance on the Foreign Direct Investments. (see Olateju O A (2012) 'The Truth of Economic and

Political Disorders in Africa and Steps for Rectification‖,in: Jed Chandlier (ed.)Telling the Truth, Swansea: Arts and

Humanities, Swansea University, Vol.3 (Summer Issue)

21

It is within this context that China became the ―Rising Power‖ or the ―Emerging Giant‖.

This situation has helped China in the reshaping of its national and global destinies. It is worthy

to note that, there is a gradual shift in power away from ―traditional‖ powers – the U.S, Europe

and Japan – towards the BRICS, i.e., – Brasil, Russia, India, China and South Africa. It is also of

interest to know that the accession of China to the World Trade Organization (WTO) in 2001

marked one of the most important steps of the Chinese governments towards deepening the

integration of the Chinese economy and there with going more deeply into the globalisation

agenda. Apt to say, this situation led to the rise of China as a major economic power within a

span of three decades or thereabout which to a large extent is often described by analysts as one

of the greatest economic success stories in modern times. From 1979, when economic reform

began – to 2014, China‘s real gross domestic product (GDP) grew at an average annual rate of

nearly 10%. Interestingly, the World Bank estimates that from 1981 to 2010, 679 million people

in China were raised out of extreme poverty. The implication of this is that China has emerged as

a major global economic power among the BRICS.

Currently, China is the largest economy (on a purchasing power parity basis)

manufacturer, merchandise exporter and importer, and holder of foreign exchange reserves. The

country rapid economic growth has led to a substantial increase in bilateral commercial ties with

the US. According to the U.S trade data, total trade between China and the U.S grew from $5

billion in 1980 to $592 billion in 2014. Supposedly, China is the US second trading partner, and

it is the third largest export market, also it is largest source of imports. Many U.S. companies

have extensive operations in China in order to sell their products in the booming Chinese market

and to take advantage of lower cost labor for export oriented manufacturing.

At this juncture, it is important to raise a fundamental question! The question is - what

factors informed China‘s success in the global market? One major explanation for China‘s

success lies at the heart of the knowledge, skills and abilities of its leaders to adopt the Chinese

characteristics to develop an autochthonous economic philosophy that would insulate China from

the dominant grip of neo-liberal economic agenda. It is sufficient to say categorically that, Africa

has had long-term relationship engagement with China. While in the past, this engagement was

aid-driven, today it is more economic-driven and underpinned by trade and investment. China

has developed strategic ties with African countries for strong economic cooperation based on

non-interference in domestic affairs and mutual benefits or win-win cooperation. China ―go out‖

policy of the late 1990s, the establishment of the Forum on China-Africa Cooperation (FOCAC)

in 2000, and the release of white paper on China‘s Africa policy in 2006 demonstrates China‘s

interest in Africa.

With China‟s success in the global market, what lessons can Nigeria learn?

Since the attainment of independence in 1960, Nigeria, (amidst enormous potentials of

natural and human resources) is still grappling with the development crisis. This is because; the

most of the post-independence leaders lack the knowledge, skills and capacities to define the

Nigerian characteristics that could have guided the country against the rapacious effects of

dependent economy. In spite of the huge sum of well over US$300 billion that the Nigerian state

has earned from oil export, poverty level of ordinary Nigerians worsened (Oseni et al, 2012).

There is a great gulf between Nigeria and Nigerians. This is perhaps a reflection of the state

building and democratisations processes in Nigeria along the model of Organisation for

22

Economic Co-operation and Development states (OECD) without consideration for the local

grains of the Nigerian traditional societies. The state-building and democratisation processes

with an OECD blue print has only succeeded in transforming the country into a terrain of,

explosive conflicts between ethnic groups, despotic leaders, market-dominant minorities and

illiberal democracy. The relationship between political-economic backwardness and the process

of its transformation from colonial to independence are inextricably bound up with the

complications inherent in the free market liberal democracy exported to its traditional societies

that are fundamentally different from the OECD states. This error is a fact that undermined

Nigeria's economic growth and development.

For Nigeria to become a key player in the global market, there is need for a clear-cut

autochthonous economic philosophy just as the Chinese leaders did to formulate and drive the

nation's economic policies. This could only be achieved through leaders with abundance

knowledge, skills and capacities to identify Nigeria's peculiarities that will firstly transform

Nigeria into a self-sufficient nation in food production, essential materials and services, security

and social infrastructures. Closing the wide gap between the Nigerian state and Nigerians is an

essential lesson that the Nigerian leaders need to emulate from their Chinese counterparts. In

addition, rectification of the nations faltering federalism could not be ignored in any attempt at

making Nigeria a strong state and key global player. This rectification will put the Nigerian state

in a good stead to promote culture of political integration that will enable Nigerians (amidst

diverse cultural background) to have a fair sense of nationalism and genuine nation building.

Conclusion

In conclusion, the argument of this key note is that Nigeria will continue to be dogged by

economic backwardness as long as it retains the status of ‗neo-trading outposts‘ with no effort to

reconfigure the state and ensure the equitable distribution of resources in a way that will tilt the

economy towards high level of domestic investment. The emphasis being stressed here is that

every country is specific and therefore no country can or should mechanically copy another.

Nigeria like China, needs to blaze its own path in the direction flowered by its indigenous grains.

Thank you

23

Prospects of globalisation in attracting assembly plants into Nigeria

By

Suraju Abiodun Aminu, PhD.

asabiod2001@yahoo.com

Department of Marketing, Lagos State Polytechnic, Ikorodu

Abstract

Nigeria is largely an import-dependent nation. One of the consequences of this is

continuous and free fall of the value of naira, resulting in general price increases of products and

imposing hardships on the generality of the masses. The paper examined the prospects of

globalisation in attracting assembly plants and transforming Nigeria into a producing nation by

reviewing extant literature. The review indicated that globalisation has led many developing

countries including Nigeria to liberalise their economies and open their borders for increased

trade and investment flows. In the light of this, the paper argued that Nigeria can take advantage

of the willingness of global investors to locate businesses in investment friendly and high return

markets to attract assembly plants in the country. The location of assembly plants in the country

will facilitate local production of products that are currently being imported and will provide jobs

for Nigerians, diversify the economy, reduce the pressure on naira and position Nigeria as a hub

to serve the African export market. It was concluded that with the appropriate incentives, Nigeria

can attract assembly plants to produce for local and African markets. The paper highlighted

relevant policy implications.

Keywords: Assembly plants, foreign direct investment, globalisation, Nigeria and prospects

24

Introduction

Globalisation referred to greater openness in the international economy, an integration of

markets on a global basis, and a movement towards a borderless world (Intriligator, 2003).

Following the end of the Second Word War, the world witnessed greater integration in the two

areas of trade and investment, facilitated by reduced costs of transportation and communication

and declining government barriers (Frankel, 2000). Ever since, the wave of globalisation has

continued unabated, with many countries, companies, groups and individuals seeking to make

the most gains from one of the world's greatest phenomena.

In the current globalised environment, many countries, including developing countries,

are seeking greater prosperity and wealth for their people by encouraging increased participation

of foreign firms in their domestic economies. These countries are formulating outward-oriented

trade and investment policies to attract foreign direct investments (FDIs), which include

manufacturing plants and assembly plants. While manufacturing plants, otherwise known as

wholly-owned subsidiaries, involve getting into foreign markets and setting up factories where

goods are produced for customers within and outside the markets, assembly operations involve

moving completely knocked down (CKD) components to foreign markets and assemble them

into finished products for sale within and outside the markets.

FDI and trade are important components of development (Mohammed & Ekundayo,

2014). While both trade and FDI growth in developing countries is impressive, FDI growth rate

in developing countries was 3.5 percent of their GDP, less than 10 percent of the developed

countries' GDP (Penalver, 2002). The recent World Bank's statistics showed that while FDI flow

is growing in developed countries, many developing countries are attracting fewer FDI (World

Bank, 2016). Therefore, there is the need by developing countries to attract more FDI to achieve

economic growth and development.

Until recently, FDI in Nigeria increased considrably, reaching its peak, $8.8 billion in

2011 from a paltry level of $587, 882, 971 in 1990 (World Bank, 2013a). However, FDI inflow

declined from $8.8 billion in 2011 to a low level of $4.7 billion in 2014 (World Bank, 2016). The

2014 level is less than FDI flows in Egypt, $4.8 billion; Iraq, $4.8 billion; Republic of Congo,

$5.5 billion; South Africa, $5.7 billion; Argentina, $6.1 billion; Malaysia, $10.6 billion; and

Brazil, $96.9 billion in the same period (World Bank, 2016). This suggests that Nigeria is not

attracting as much FDI as smaller countries within and outside Africa.

While a large number of FDIs in Nigeria are manufacturing plants, producing products

from the scratch, few others are assembly plants, assembling components into finished products.

The assembly plants are largely in the automotive industry facilitated, recently, by the revival of

the National Automotive Policy (NAP) in 2013 (National Automotive Council, NAC, 2013) by

the Jonathan Administration. The Federal Executive Council (FEC) approved the automotive

policy to end the importation of cars; revive the petrochemical, metal/steel and tyre industries;

and create job opportunities in the country (Aganga, 2013 cited in Nigerian Bulletin, 2013).

Aganga noted that car importation is next to machinery in terms of foreign exchange outlay,

gulping $4.2 billion in 2010 and $3.4 billion in 2012.

Similarly, importation of other consumer durable products such as electronics and

appliances, cameras, airconditioners, computers, tablets and mobile handsets are

25

also very high, gulping high foreign exchange and resulting in depletion of the country's foreign

reserves and erosion of the value of naira. Presently, the exchange value of naira to one dollar in

the black market is over N350 as against one naira to one dollar in 1980s. Though, the official

exchange rate is N197 to one dollar, getting dollars at this rate is a daunting task. Nigeria has no

reason to be in this deplorable situation as globalisation has considerably increased trade and FDI

flows across the world. For example, trade between countries across the globe has surged at the

annual average of 5.1% between 1990 and 2014 (Azevêdo, 2015), reaching $23.5 trillions as at

the end of 2013 (United Nation Conference on Trade and Development, UNCTAD, 2015). In

particular, World Bank's (2016) statistics showed that Ghana, a small country of about 25 million

people has consistently attracted increasing but modest FDIs from $3.2 billion in 2011 to $3.4

billion in 2014.

It is, therefore, important that Nigeria reverses the ugly trend of growing import

dependency and makes pragmatic and patriotic efforts to attract more assembly plants in the

country. Investors, across the globe, are looking for an opportunity to invest in markets that offer

huge potentials and high returns, and the Nigeria huge population provides an economy of scale

and a justification for substantial investment in the country. A recent study noted that Nigeria's

large market size and resource abundancy makes the country attractive for FDIs (Aminu, Salau,

& Pearse, 2013). The paper examines the potential of globalisation in attracting assembly plants

in Nigeria. While there is a deluge of research in Nigeria on globalisation, there is none, to the

best of the knowledge of the researcher that has examined the prospects of globalisation in

attracting assembly plants in the country. This paper fills the gap in the literature and it is the

first to examine how Nigeria can attract more FDI through an assembly mode of entry in a

globalized market.

Following the introduction, the paper presents perspectives on globalisation, reviews the

concept of assembly operations, examines the prospects of globalisation in attracting assembly

plants and finally concludes.

Perspectives on globalisation

Globalisation is one of the world's greatest phenomena, which has attracted the attention

of scholars, researchers, governments, politicians, international firms and a host of other

stakeholders. As a result, there are many conceptualisations of and perspectives on globalisation.

The conceptualisation in this paper focuses on openness, integration and

interconnectedness of the world economies (Chaffey, 2002; Hill, 2003; Intriligator, 2003;

Ohmae, 1995) and removal of barriers to trade flows (Ohmae, 1995). International trade and

cross-border investment flows are central to the integration (World Bank, 2014). According to

Ohmae, globalisation is simply the absence of borders and barriers to trade. Globalisation

referred to the move towards international trading in a single global marketplace and also

blurring between social and cultural differences between countries (Chaffey, 2002). It described

the greater openness in the international economy, an integration of markets on a global basis,

and a movement towards a borderless world (Intriligator, 2003). It is the shift towards a more

integrated and interdependent world economy (Hill, 2003).

The emphasis of these definitions is the same, i.e. the tendency of the world market

emerging as one large, interdependent market with greater access to investors. With

26

globalisation, countries are liberalising their economies by removing all forms of hindrances to

trade and investment flows and are being more receptive to foreign investments. Indeed, the

interconnectedness of the global economies and removal of barriers to trade and investment has

led to the emergence of a global village and a global audience.

A number of forces are facilitating globalisation. The major forces are technology,

economic liberalisation, and declining communication and transportation costs (Chaffey, 2002;

Frankel, 2000; Friedman, 1999; Levitt, 1983; Ohmae, 2005; World Bank, 2014). For example,

Chaffey like Levitt described technology as a major force integrating the world and blurring

boundaries. Friedman pointed to cheap, widely available telecommunications as helping to

remove all barriers to international competition. Countries are removing all encumbrances to

production, trade and investment by pursuing economic liberalisation (Frankel, 2000; Ohmae,

1995).

Globalisation is both beneficial and detrimental to countries. In terms of benefits,

globalisation increases the access of countries and firms to larger and multiple markets and

provides technological spillovers to countries and firm that actively engage in international trade

(World Bank, 2014). It provides firms with great opportunities to conduct their business in

foreign markets (Terpstra & Sarathy, 1994). It allows firms to locate production and R&D

facilities in low-cost countries where products can be produced more efficiently (Doole & Lowe,

1999) and inefficiencies avoided (Czinkota & Ronkainen, 2007). It has significantly increased

global wealth and reduced global poverty (Globalisation 101, n.d.). For example, China's

participation in the global market has lifted over 500 million Chinese from abject poverty (Zhao,

2016). The World Bank (2014) noted that there is empirical evidence that showed that

globalisation "has significantly boosted economic growth in East Asian economies such as Hong

Kong (China), the Republic of Korea, and Singapore" (p. 66).

Globalisation is detrimental to both developed and developing countries. "Multinational

companies are normally the vehicles for FDI and are central to the current globalisation

processes" (Singh, 2005, p. 1). Relocation of production facilities by multinationals to low wage

foreign countries has led to loss of jobs in many developed countries (Globalisation 101, n.d.).

As far as developing countries are concerned, the strong competitive power of multinational

companies usually forces less competitive local firms in many developing countries out of

market (World Bank, 2014). Also, multinationals are accused of exploiting workers in

developing countries by paying wages that are significantly below the levels in their home

countries (Harrison, 2012). This claim of exploitation of workers by multinationals in the host

countries is not supported by existing empirical evidence (Nunnenkamp, 2002) .

Overview of assembly mode of entering international markets

Before we examine the concept of assembly operation, it is pertinent to briefly examine

the concept of market entry mode. Market entry mode referred to a suitable way companies

choose to enter foreign markets for the purpose of conducting businesses and exploiting their

unique advantages (Root, 1994). It "is the general way the company plans to enter a new country

market" (Mühlbacher, Leihs, & Dahringer, 2006, p. 409). These definitions imply that

international firms must evaluate the alternative modes and choose the best one that would help

them maximise the opportunities in the overseas markets. It is concluded that the primary

27

consideration and the most critical issue in an international market entry strategy is the selection

of an appropriate entry mode (Okusaga & Aminu, 2012).

Literature has identified a wide range of entry mode employed by companies of varying

types and sizes (Albaum, Duerr, & Strandskov, 2005; Buckley, 1995; Doole & Lowe, 1999;

Joshi, 2005; Mühlbacher et al., 2006; Root, 1994). These include exporting, licensing,

franchising, joint ventures (JVs), strategic alliances (SAs), contract manufacturing, management

contract, assembly operations and manufacturing. According to Buckley (1995), each of these

alternative entry strategies is associated with different degree of control, resource commitment

and profitability. The current global economy demands that international firms assess the

alternative entry modes in the light of existing risk and the suitability of the foreign country's

business environment (Harrison, 2011) and entry decision taken in the new globalised

environment (Okusaga & Aminu, 2012). The foregoing indicates that assembly is one of the

ways international firms choose to enter foreign markets.

Assembly operation involves a manufacturing firm exporting components or parts to

foreign countries, which are put together to become the complete product (Albaum et al., 2005).

Assembly plants involve the "final stages of production process" (Shafaeddin, 2002, p. 8). It

"usually involves small-scale operations, its assembled products are usually destined only for the

home market" (Paliwoda, 1993, p. 164). Today, an increasing number of assembly plants are

selling their outputs in overseas markets (Ambe & Badenhorst-Weiss, 2010; Hansen, 2003;

International Trade Administration, 2016; Mortimore, 2000 ). In this paper, assembly operation

is defined as involving the shipment of completely knocked down (CKD) components to foreign

markets and assembling them into finished products for sale within and outside the markets.

Assembly is classified as an equity mode or an investment mode because it involves

direct investment in overseas facilities (Joshi, 2005; Paliwoda, 1993). Assembly operations are

highly labour-intensive, providing jobs for domestic workers (Palmer, 2003; Shafaeddin, 2002).

Assembly plants are usually established in Export Processing Zones (EPZ) in developing

countries to take advantage of incentives provided by governments and produce largely for

exports (Globalisation 101, n.d.; Hansen, 2003; Mortimore, 2000) and to increase the

profitability of international firms (Hansen, 2003). Many countries that attracted assembly plants

regarded the introduction of local assembly plants as the first step in the development of

domestic industry (Humphrey & Memedovic, 2003).

Due to a number of reasons, assembly, as an international market entry strategy, is

becoming increasingly attractive to multinationals and other categories of firms engaging in

international marketing. These reasons include: to avoid the high shipping costs and high import

tariffs, to exploit the advantage of low wages in foreign markets (Doole & Lowe, 1999; Joshi,

2005; Paliwoda, 1993) and to create jobs and earn foreign exchange (Hansen, 2003). An

assembly mode enables firms "to move plant from country to country in order to take advantage

of lower wage costs and government incentives" (Doole & Lowe, 1999, p. 337). Mexico attracs

assembly facilities to provide employment and generate foreign exchange (Hansen, 2003). As a

result, the number of countries, especially in developing countries, attracting assembly plants is

growing (Humphrey & Memedovic, 2003). They are seeking to maximise the benefits of

globalisation.

28

Assembly mode of entry is associated with certain problems. Assembly operations

usually begin with the transfer of simple technologies to the host countries with a tendency to

relocate to low-cost countries as wages increase in the host countries (Humphrey & Memedovic,

2003; UNCTAD, 1999). For example, due to the rising wages in China, some global electronics

companies are shifting production to the neighbouring country, Vietnam (Greene, 2015; Nesbit,

2016). Also, some authors have argued that foreign affiliates of multinationals such as assembly

plants concentrate low-value added operations in host countries resulting in the employment of

low-skilled workers and low productivity (Doms & Jensen, 1998). It is not in the economic

interest of the assemblers "to invest in the creation of the high level skills that would make

complex techniques viable" (UNCTAD, 1999, p. 36).

Prospects of globalisation in attracting assembly plants

Studies have suggested that globalisation has opened the floodgates of the global market

to investors by increasing market access (Doole & Lowe, 1999; World Bank, 2014) and

providing greater opportunities for firms to operate in overseas markets (Terpstra & Sarathy,

1994). There is no doubt that Nigeria can benefit from the relocation of production facilities by

multinationals to the country to assemble consumer durable products such as automobile,

electronics, appliances, cameras, airconditioners, computers, tablets and mobile handsets and

capital goods such as plant and equipment, the importation which is currently high. This will

considerably reduce importation of these goods. This section examines the efforts of two

countries: Mexico and Vietnam, in attracting assembly facilities and the lessons Nigeria can

learn from the success they have achieved.

Mexico attracts auto assembly plants

Mexico has a track record of successful trade and investment reforms (Palmer, 2003). It provides

incentives such as 100% foreign business ownership; competitive corporate and other taxes; and

simple procedures for incorporating new businesses (PriceWaterhouseCooper, PwC, 2015). It

reforms its law to promote Maquiladoras, in-bond facilities in the Northern part of the country

and it provides preferential duties for items that would be used in producing for exports in the

country (Delloite, 2014). The reforms have attracted foreign investment and promoted

manufacturing exports in the country (Delloite, 2014; Palmer, 2003). For example, many

countries still prefer to locate assembly plants in Mexico despite increasing competition from

China and India (Delloite, 2014). Mexico has attracted assembly plants largely in its

Maquiladoras, where vehicles are assembled for the U.S. and other markets (Hansen, 2003). The

industry is export-oriented with many automotive clusters in the country (Trani, 2010),

accounting for about 32% of the country's exports (Pro Mexico, 2015). The leading global

automakers - Toyota, Honda, Nissan, GM, Chrysler/Fiat and BMW - have plants in the country

(Trani, 2010).

Mexico was ranked the 7th top automobile manufacturing country in the world in 2014 by

Asociaciôn Mexicana de la Industria Automotriz (AMIA) (cited in Automotive Meetings, 2016)

from 10th position in 2010 (Trani, 2010) and the ranking may improve to 5th position (Pro

Mexico, 2015). The industry recorded a total output of three million vehicles in 2014, accounted

for 6% of the GDP and 18% of manufacturing output (AMIA, 2014). From 2013 to date,

investors have announced new investments of $23.2 billion in the sector (Pro Mexico, 2015).

29

Recently, Ford announced a plan to invest $1.6 billion in a new assembly facility in the country

(Krisher, 2016). The industry provides over 66, 000 jobs (Pro Mexico, 2015).

30

Vietnam attracts electronic, appliance and phone assembly plants

Beside the automotive industry, electronic, appliance, computer and phone industries also

use assembly plants as a mode of entering overseas markets. As a result, developing countries

are attracting manufacturers in these industries to establish assembly plants in their countries.

Vietnam is one developing country doing this with success. For example, Vietnam's electronics

sector achieved an impressive growth level of 78% in the last four years and became the top

exporter in the country (Nesbit, 2016). The motivating factors are Vietnam's investment friendly

policies, lower wages and other advantages (Greene, 2015; Nesbit, 2016). Two South Korean

companies: Samsung and LG are shifting production from China to Vietnam. An online source

pointed out that Vietnam has been targeted as a new investment destination by two leading South

Korean's firms: LG and Samsung with prospects for significant investment (What Hi-Fi, 2015).

Therefore, Vietnam has emerged a hub for the assembly and exporting of low-cost electronics,

appliances and phones (British Broadcasting Corporation, BBC, 2014). International Trade

Centre (2015) estimated that Vietnam exported $38 billion worth of devices and components in

2014 (cited in Greene, 2015).

Bloomberg (2013) reported that Samsung Electronics Co. has been attracted to shift

production of phones to Vietnam due to the country's lower wage, which is one-third of China's

wage. The company started a $2 billion assembly plant in Vietnam in 2012, where on

completion, about 40% of phones that genenate the bulk of operating profits for the company

will be produced. The shift is to enable the company reduce costs and protect margins

(Bloomberg, 2013; NDTV, 2014). The plant commenced production in March 2014 (BBC,

2014). Samsung Display Co. Ltd., a subsidiary of Samsung also announced the setting up of a $1

billion display module assembly plant in the country for the same reason of lower wages

(NDTV, 2014). NDTV stated that the plant would supply low cost display components to the

parent company.

Furthermore, Samsung, in 2014, announced another plan to build a $1 billion smartphone

assembly plant in Vietnam. The company, in addition to the low cost labour in the country,

would also take advantage of a four-year tax break Vietnam's government promised to provide

for the company. Also, if the company keeps faith with the provisions of the agreement, it would

sign with the government and it would also pay half of the normal corporate tax for a period of

nine years (BBC, 2014). Expectedly, the Samsung's investments in the country have translated

into a huge employment benefit for the workers in Vietnam. For example, Yonhap News Agency

(2014) estimated that Samsung has invested about $11 billion to date in Vietnam (cited in BBC,

2014), generating employment for about 16, 000 workers in its plant in the country (Samsung,

2014 cited in BBC 2014) or for 24, 000 workers (What Wi-Fi, 2013). Samsung controls 10% of

Vietnam's exports (Tech in Asia, 2013).

Like Samsung, LG is also relocating production and setting up assembly plants in

Vietnam. LG currently has an assembly plant in the country where it produces television sets,

refrigerators, air conditioners and washing machines. The company plans to invest $300 million

in a new facility to produce mobile phones for both local and export markets (What Wi-Fi,

2015). The company is also motivated by the increasing labour costs in China, lower wages,

skilled labour and enstensive tax holidays in Vietnam (What Wi-Fi, 2013). With the completion

of the assembly plant at its Haiphong Campus, a Port city in northern Vietnam, LG Electronics

31

commenced production in March, 2015 (LG Newsroom, 2015). Recently, LG Display Group

announced an investment plan of $1.5 billion to establish a factory screen in Hai Phong in

Vietnam to supply its parent company. This follows an earlier investment of $1.5 billion in Hai

Phong (Nesbitt, 2016).

Attracting assembly plants in Nigeria

In spite of the attractiveness of assembly plants as a source of investment in developing

countries (Bloomerg, 2013; Greene, 2015; Humphrey & Memedovic, 2003; Nesbit, 2016),

Nigeria has done little to attract assembly plants in the automotive industry and nothing in other

consumer durable product industries. This is in spite of its huge population estimated to be over

177 million (Internet World Statistics, 2015), large market size and resource abundancy (Aminu

et al., 2013). A study in Portugal found that market size, trade openness and population have

positive impacts on FDI flows in the country (Leitåo, 2012). Volkswagen and General Motors set

up assembly facilities in Brazil to take advantage of the country's market size and opportunities

(Harrison, 2011).

In the past, between 1975 and 1983, Nigeria was home to six assembly plants. The

facilities included Peugeot Automobile of Nigeria (PAN) in Kaduna, Volkswagen of Nigeria

(VON) in Lagos, Anambra Motor Manufacturing Company (ANAMCO) in Enugu, STEYR

Nigeria Limited in Bauchi, National Truck Manufacturer (NTM) in Kano and Fiat Leyland

Nigeria in Ibadan (Oigigbe, George, & Owoyemi, 2012). Unfortunately, two of these plants

came under receivership and the other four were marginal as at the end of 1990 (Olowo, 1991

cited in Paliwoda, 1993). As at the end of 2010, four had closed down (Awoyemi, 2012) and by

2012, none of the assembly plants is operating (Oigiagbe et al., 2012). The problems of capacity

under utilisation, low output, higher prices, high and indiscriminate issuance of import licenses

for the importation of finished models of some cars and low local content input bedevilled the

assembly plants (Paliwoda, 1993).

Due to the high importation of vehicles, especially fairly used vehicles, which gulped

$4.2 billion in 2010 and $3.4 billion in 2012 (Aganga, 2013 cited in Nigerian Bulletin, 2013) and

the negative environmental impact of used vehicles (Jaja, 2010), the Jonathan Administration, in

2013 renewed the efforts to attract automobile assembly plants in Nigeria to produce

automobiles and end the importation of automobiles in the country by developing NAP (NAC,

2013). According to Samuel (2014), 300, 000 of the 400, 000 vehicles imported in Nigeria in

2012 were fairly used (cited in Bisiriyu, 2014). Under the new policy, the Federal Government of

Nigeria (FGN) has licensed 35 automobile companies to assemble vehicles locally (Oga, 2016).

Some of them are: Toyota, Honda, General Appliance West Africa, Perfection Motors Company,

Richborn Nigeria and R. T. Briscoe Nigeria. Others are Nigeria-China Manufacturing Company,

Nigeria Sino Trucks, Coscharis Motors, DAG Motorcycles Industry Nigeria, Globe Motors

Nigeria, Century Auto-Assembly Nigeria and Concept Auto Centre (Premium Times, 2015).

According to Mamudu (2015), the renewed initiative of attracting automobile assembly

plants is hinged on the following incentives: a discounted duty of 35% for cars with two fully

built units; 20% for locally built commercial cars; 70% import duty on imported vehicles; duty-

free auto assembling equipment; a ban on auto smuggling; and a tax holiday for the plants (cited

in Udodiong, 2015). With these incentives, FGN hopes to increase the number of assembly

32

plants in the country to 80 by 2023 (Udodiong, 2015) from 48 plants currently (Premium Times,

2015).

Despite the incentives and government's optimism, the results have not been impressive.

For example, after almost four years the policy has taken off, only three of the licensed plants

have commenced operations in the country (Oga, 2016). These include: Nissan, Ford and BMW.

Experts claimed that there is no conducive environment for the implementation of the policy

(Oga, 2016). For the policy to be successful, the government needs to create an investor friendly

environment, the way it has been created in Brazil (Harrison, 2011), Vietnam (Humphrey &

Memedovic, 2003), China (Shafaeddin, 2002), South Africa (Ambe & Badenhorst-Weiss, 2010)

and Mexico (Palmer, 2003), where auto and electronics assembly plants have been successfully

attracted and contributing to the countries' economic development.

Many of these countries pay low wages and can assemble components and parts more

efficiently (Hansen, 2003; Shafaeddin, 2002). Wage bill in Nigeria is also low, comparative with

minimum wages in these countries. The minimum wage in Nigeria is N18, 000 ($90) per month;

$4.10 per day; it is $4.25 in Mexico (Littler, 2016); and $4.50 in Vietnam (Vietnam Briefing,

2015). Therefore, in terms low wage, Nigeria is a good destination for global companies that are

looking for low-wage countries to reduce costs and protect margins.

Though Nigeria's wage rate is very competitive, Nigeria requires more than low wage to

be competitive as a destination for assembly plants and other forms of foreign investments.

Nigeria should upgrade her existing infrastructures and provides new ones. There is consensus

that a reliable, efficient and well-maintained infrastructure is essential for FDI inflow into an

economy (Anyadike, 2012; Asiedu, 2002). These studies have indicated that the quantity and

quality of all kinds of infrastructure, including social, financial and marketing reduce the costs of

doing business, and as a result it is an important determinant of location decision of FDI.

Corruption has been the bane of Nigeria development and made the country a pariah for

investment. A recent study noted that managing the scourge of corruption hanging on the neck of

Nigeria can go a long way in increasing the confidence the multi-nationals have in the country

(Aminu et al., 2013). Another study observed that in the public debate, corruption is generally

portrayed as an important barrier to FDI, with a negative effect on the business environment

(Hakkala, Norba, & Svaleryd, 2008). The current anti-corruption fight of the Buhari

Administration is a step in the right direction and is capable of positively repositioning Nigeria

among the global investors.

Finally, it is important that Nigeria reforms its tax regime to make it conform to the best

international standards and attract investment of all kinds. For example, World Bank (2013b)

ranked Nigeria 155th in paying taxes. Most countries have introduced FDI-attraction incentives

(Ginevicius & Simelyt, 2011) by designing and reforming their tax policy to attract FDI (Lu &

Marco, 2010; Prakash & Rao, 2011). The fundamental objective of providing such incentives in

these countries is to create a business environment where investors are certain to reap the fruits

of their investments (Ginevicius & Simelyt, 2011). Lower tax rates in both Mexico and Vietnam

have been partly responsible for huge success these countries recorded in attracting assembly

plants.

33

A study suggested reduction of corporate tax from its current level of 25 percent to about

17.5 percent, introduction of tax holiday of five to 10 years and elimination of multiple taxation

to attract FDI into some industries, including automobile in Nigeria (Aminu et al., 2013).

Scholars are unanimous on the positive effect of tax reduction on the number of foreign

investments attracted. For example, a 1 percent cut in the effective tax rate would increase FDI

inflow by approximately 2 percent (Hines, 1999 cited in Kransdorff, 2010).

Conclusion

Developing countries like Nigeria need a large number of investments of all types to

provide employment, reduce poverty and achieve economic growth and development.

Fortunately, globalisation has provided greater opportunities for firms to operate in overseas

markets (Terpstra & Sarathy, 1994). However, Nigeria, unlike some developing countries, has

not exploited these opportunities to her advantage. Rather than attracting multi-national and

other companies to establish plants and produce for both local and foreign markets, undue

emphasis has been paid on importing. Presently, Nigeria imports virtually all goods, including

those that can either be manufactured or assembled locally. Sadly, Nigeria has been derided by

many, including President Muhammodu Buhari, as a country that cannot produce products like

toothpick and pencil.

Excessive imports have adverse effects on Nigeria and her people and should be

discouraged. The paper has argued that Nigeria, drawing from the experiences of Mexico, with

auto assembly plants and Vietnam with electronics, appliances and mobile phones, should attract

assembly plants for local production and exports. Both countries are low-wage countries and

provide investor-friendly policies and environments to motivate multi-nationals such as Samsung

and LG to shift plants to their countries. Nigeria is also a low-wage country like Mexico,

Vietnam and other countries that have attracted assembly plants. Unfortunately, Nigeria's

business environment is hostile to both domestic and foreign investors: poor and inadequate

infrastructures, high level of corruption and problems associated with paying taxes. It is,

therefore, concluded that Nigeria can attract assembly plants to produce consumer durable

products that are currently being imported, if it can reform her tax policy, provide massive and

high quality infrastructure and reduce the high level of corruption that has bedevilled it.

In the the light of the conclusion, policy makers are enjoined to formulate appropriate

policies that will lead to the upgrading and expansion of infrastructures across Nigeria; reform

her tax regime and step up the on-going anti-corruption fight to make the looted and recovered

money available for productive use in Nigeria and for the benefits of Nigerians. These would

make the country more attractive for all types of foreign investments. Singh (2005) provided two

reasons for the success of FDI in developing countries: These include attractiveness of

developing countries to foreign investors and the friendliness of the host-country's environment

to foreign investment effects such as overall investment, economic spill-overs and income

growth.

34

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39

Small and medium enterprises' participation in government procurement

contracts in Nigeria

By

Olusegun Paul Olawore (Doctoral Research Student)*

E-mail: olawore2007@yahoo.com

Department of Marketing, Lagos State Polytechnic, Ikorodu, Lagos State

Kofoworola Abiodun Olayinka (Doctoral Research Student)

E-mail: kofoolayinka@yahoo.com

Department of Marketing, Lagos State Polytechnic, Ikorodu, Lagos State

Moses Kunle Akinkunmi

E-mail: akinkunmimoses@yahoo.com

Department of Marketing, Lagos State Polytechnic, Ikorodu, Lagos State

* Lead & Corresponding Author

Abstract

The small and medium enterprises (SMEs) have been described as very

strategic and critical to Nigeria's economic growth. For many of the developed

economies we see today, they all have SMEs as support base of their big corporations

and governments' departments. But, here in Africa, this sector is often excluded from

public sector contracts because of administrative requirements for mandatory bidding

processes, their inadequate size or capacity to deliver despite the advantages that

accrue from their inclusion. This paper reviewed various governments policies' in

developed and developing countries aimed at increasing the participation of SMEs in

public procurement (PP) contracts and critically analysed the ways in which such

policy can be used to accelerate the growth of this sector in Nigeria. The chief source

of information for this write up was secondary method of data collection. It was

discovered that SMEs participation in public sector contracts in countries like USA,

EU, China, Japan, South Korea, Indonesia, India, South Africa and others, had been

used to stimulate and accelerate growth and development of this sector. In this

regard, it was recommended that governments in Nigeria should set aside certain

percentage of its contracts to SMEs as it is done in other climes. It is by this that the

growth of SMEs can be stimulated, thereby leading to growth and sustainable

economy for Nigeria.Policy implications and limitations of the study were also

highlighted.

Keywords: SMEs' participation, government procurement contracts and Nigeria.

40

1. Introduction

The Small and Medium Enterprises (SMEs) have been described as very strategic and

critical to the economy of any country, Nigeria inclusive (Yinka, 2016, as cited in Abe, 2016;

Abioye, 2016; Akodu, 2016; Ogbeide, 2016; Regha, 2016, as cited in Omoh, 2016), indicating

that a vibrant SME sector is one of the principal driving forces in the development of a market

economy (Awoyinfa, 2016; Kropp, Linsday, & Shoham, 2006; Levy, 1993; Osuji, 2016a;

Rebecca & Benjamin, 2009; Vanguard, 2016; Wolfenson, 2001). SMEs stimulate private

ownership and entrepreneurial skills are flexible and can adapt quickly to changing market

demand and supply situations, generate employment, sustain large-scale enterprises, help

diversify economic activity, and make a significant contribution to exports and trade and drive

economic growth (Dumo, 2016; Eyaa & Ntayi, 2010; Mandiyambira, 2013; Ogbeide, 2016;

Osuji, 2016a; Pierre-Henri, 2003; Vanguard, 2016). SMEs drive the Asian economy and are the

greatest employers of labour (Obajemu, 2016, as cited in Akinmurele, 2016b). Seventy five

percent of businesses in USA are SMEs and in China, 90% in the country fall into this category

(Edeh, 2016). SMEs are, no doubt, the engine of growth and development in many world

economies, including Nigeria (Ocheni, 2015; Osuji, 2016a; Nkuda, 2016), which explains the

extensive emphasis being placed on the sector in most countries (Osuji, 2016c).

Studies carried out in 2010 by the National Bureau of Statistics (NBS) and Small and

Medium Enterprises Development Agency (SMEDAN), have restated that SMEs are

contributing a lot to the growth of the Nigerian economy (Osuji, 2016a). The sector contributed

about 48% of our national gross domestic product (GDP), indicating a contribution of 48% to

total employment in the country (Regha, 2016, as cited in Omoh, 2016). Even in the developed

market economies, SMEs account for a large share in output and employment (Kidalov &

Snider, 2011; Osuji, 2016a).

In many countries, (developed and developing), intensive procurement makes the

government a major or dominant buyer of a wide range of goods and services (Nkonge, 2013). In

most EU member states, public procurements (PPs) are estimated at 10 to 15% of Gross National

Product (GNP), or 25 to 30% of public expenditure (Pierre-Henri, 2003). Similarly, the

equivalent of 20% of Latin America‘s GDP is spent by governments on procurement, and the

central government component of all government procurement amounts to about 35% in the

United States, 30% in Canada and 74% in Mexico, while procurement in East Asian countries is

estimated at anywhere from 20 to 40% (Pierre-Henri, 2003). For the Middle East and Africa, the

magnitude of central government purchases ranges from 9 to 13% of GDP (Trionfetti, 1997).

According to this scholar, African and Middle Eastern countries have small GDP, yet,

proportionally, they have larger government procurement than, for instance, European countries.

PP contracts in Nigeria, like other countries worldwide cover a wide range of supplies,

services and works required by governments (Federal, states and local), public organisations,

utilities and agencies. Whilst these contracts vary hugely in size, some are clearly within the

capabilities of SMEs. Extant research suggests there is an increasing awareness of the wider

effects of PP on the economy, business, the environment and society (Carter, 2004). Of

particular interest has been the role of SMEs in PP contract. SMEs are increasingly seen as an

important focus for policy makers as they are of fundamental importance to many economies

(Gupta, 2009; Nkuda, 2016; Sule, 2016). In the UK, small businesses account for over 99% of

41

the UK‘s 3.8 million businesses, 56% of employment and 52% of total UK turnover (Small

Business Service [SBS], 2004, as cited in Zheng, Walker, & Harland, 2006). The UK

government has been promoting increased PP sourcing from SMEs (Sykes & Price, 2005).

PP could have a greater impact on the local economy and social welfare of the people

(Bovis, 1997), through the promotion of SME and local sourcing. The benefits for public sector

organisations procuring from SMEs, also include innovation (Carter, Auskalnis, & Ketchum,

1999; Erridge, Fee, & Mcllroy, 1998).

Despite the significance of SMEs and an increasing awareness of the impact of procuring

from them, government agencies tend to place their orders in relatively large amounts at a time,

and often by selective tender, in order to take advantage of administrative efficiency, and

economies in procurement which often favour large corporations (Mandiyambira, 2013; Obanda,

n.d.; Pierre-Henri, 2003). Hence, government‘s procurement activities inevitably discriminate,

albeit unwittingly, against SMEs (Gupta, 2009; Obanda, n.d.; Preuss, 2011). SME growth and

development concerns have given rise to a fruitful area of research in SMEs participation in

public sector procurement all over the world. Various studies have examined the forces limiting

SME growth (Arbaugh & Sexton, 1996; Austin, 1988; Das, 1996; Hull, 1990; Petrakis, 1997).

Others have suggested creating more business-friendly environments through government

policies which have shown to be another influential factor on SME growth performance

(Ehinomen & Adeleke, 2012; Moses-Ashike, 2016; Oni & Daniya, 2012); PP policies for SME

(Kidalov & Snider, 2011); contribution of PP to entrepreneurship and small business policy

(Preuss, 2011). One major challenge to the growth and development of this sector is their

inability to access big market (marketing/sales) (Moses-Ashike, 2016) or linkage to big

Corporation (Osuji, 2016a) and by extension, governments markets (PP contracts) in Nigeria.

Nevertheless, searching through extant literature, the specific problem of the direct

participation of SMEs in PP in Africa, most especially Nigeria, has attracted little or no attention

when compared to developed and few developing countries. This present study fills this gap in

the literature, and in doing so makes important contributions to knowledge.

As an exploratory study, the comparative methodology we use in this paper relies mainly

on reviews of current SME policy documents (e.g., laws and regulations) in both developed and

emerging economies, supplemented as appropriate with literature on various national SME

approaches. Because we pursue description, we seek to stimulate further comparative analysis

that might make policy recommendations possible. Further, although we compare policies that

are representative of other countries' approaches, our intent is to provide a broad policy survey to

serve policy makers, practitioners and scholars of PP/supply chain management.

The rest of the paper is structured as follows: in section two, review of related literature is

undertaken; section three presents concluding remarks and recommendations.

2. Review of related literature

2.1 An overview of SMEs

42

The abbreviation "SME" occurs commonly in the European Union [EU] and in

international organisations such as the World Bank (WB), the United Nations [UN] and the

World Trade Organisation [WTO] (allbusiness.com, 2010, as cited in Oni & Daniya, 2012). The

term "small and medium businesses" or "SMBs" is predominantly used in the USA. While in

South Africa, the term ―SMME‖ is used for small, medium and micro-enterprises (Oni &

Daniya, 2012), and elsewhere in Africa and some Asian countries, MSME is used for micro,

small and medium enterprises (Aigboduwa & Oisamoje, 2013).

SMEs are firms or businesses arising as a result of entrepreneurial activities of

individuals. Several definitions and meanings of SMEs exist. This is due to their global diversity

and characteristics (Ocheni, 2015; Oshagbemi,1983; Owualah, 2000).There is no single criterion

for classifying business enterprises as either small or medium scale globally. Definitions of small

and medium scale enterprises vary according to context, author and country (Ayaggari, Beck, &

Demirgue-Kunt, 2003; International Labour Organisation, ILO, 2015). In most advanced

countries, SME is defined in terms of annual turnover and the number of paid employees

(Jahanshahi, Nawaser, Khaksar, & Kamalian, 2011), whereas in Japan, it is conceptualised by

type of industry, paid-up capital and number of employees (Aigboduwa & Oisamoje, 2013).

Extant studies generally, categorised SME sector into three: micro, small and medium

enterprises or businesses (Nkonge, 2013). The micro SMEs are the smallest among the three

categories (Nkonge, 2013). According to Darren, Swatman, and Lu (2009), SMEs are the

businesses that employ up to nine employees in UK while, in Australia they employ fewer than

five employees including non-employing businesses. The U.S. Census Bureau categorised micro

business as ―SOHO [meaning "Small Office- Home Office"], non-employee business [including

business with less than 5 employees] (Esuh & Adebayo, 2012). Therefore, micro-business should

be seen as the smallest type of SME that may employ fewer than nine employees or on the other

hand, may not have employees at all (Jahanshahi et al., 2011). The small businesses are

businesses bigger than the micro-businesses in terms of size, number of employees, structure,

capital investment and economic contributions.

In Nigeria, there have been different definitions of SMEs by different institutions. These

institutions include the Central Bank of Nigeria (CBN), the Small and Medium Industries Equity

Investment Scheme (SMIEIS), the Nigerian Institute for Social and Economic Research

(NISER), and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN),

among others (Muritala, Awolaja, & Bako, 2012). For instance, an SME has been defined by the

CBN as an outfit with a total capacity outlay (excluding land) of between N4 million and N500

million, and a staff strength between 10 and 100 employees (Akinmurele, 2016a). While SMIEIS

recognised an SME as any industry with a maximum asset base of N200 million, excluding land

and working capital, and with the number of staff employed by the enterprises not less than 10

and not more than 300 (Lawal & Ijaiya, 2007).

In essence, each economy needs to be able to define the micro-, small-, and medium–

sized enterprises in terms of values or parameters that are likely to help enhance the growth and

development of the sub-sector as a whole. Similarly, the regulatory environment must be such

that would complement the growth and development portfolio of the sector (Jahanshahi et al.,

2011).

43

Studies revealed that although about 90% of Nigerian businesses are SMEs (Edeh, 2016;

James, 2016; Osuji, 2016c), but the contribution of these ventures to the country's GDP is

relatively low when compared to SMEs in other countries like India, South Africa, Brazil,

Uganda, US, Europe, Canada, among many others (Adeloye, 2012; International Finance

Corporation, 2016, as cited in Sule, 2016). Presently, this sector contributes approximately 48%

of the country's GDP (Akinmurele, 2016a; Ekwujuru, 2013; Elebeke, 2012; Sule, 2016). SMEs

in the US contributes 80% in employment, Japan 80%, Western Europe 55% (Almogyed, 2003,

as cited in Akingunola, 2011), while in India 65.9 million people are in SME sector employment

(Jahanshahi et al., 2011). They are responsible for about 80% of jobs in Nigeria, and support

more households than any other enterprise group (Osuji, 2016c). Thus, survival and growth of

SMEs is critical to the county's economy.

There are about 37.07 million MSMEs in Nigeria presently (National Bureau of

Statistics, 2016, as cited in Sule, 2016), 36.9 million of them operate as micro ventures; 68,168

as small ventures while 4, 670 are medium enterprises. These ventures are the core drivers of the

Nigerian economy (Osuji, 2016b; Sule, 2016). Nigerian economy survives squarely on the

efforts of SMEs rather than those of large corporations (Osuji, 2016b). In Nigeria, SMEs are

represented in all sectors of the economy be it manufacturing, agriculture, trade and commerce,

shipping and maritime services, hairdressing, among others (Akodu, 2016; Nkuda, 2016), and

account for 70% of the country's industrial jobs (Woldie, Leighton, & Adesua,2008). Their

contribution to 2015 fiscal year was N44 trillion out of the N95 trillion GDP the nation produced

(Sule, 2016).

SMEs in Nigeria can be categorised into urban and rural enterprises, but in a more formal

way, they can be called organised and unorganised enterprises. The organised enterprises have

paid employees with registered offices, while the unorganised enterprises are mainly made up of

artisans who work in open spaces (Fabayo, 2009). According to this scholar, major activities

involved in this sector include soap and detergents, fabrics, textile and leather, blacksmith,

tinsmith, ceramic, clothing and tailoring, timber and winning, bricks and cement, food

processing, wood furniture, beverages, bakeries, electronic assembly, agro processing, chemical

based products and many more. Generally, these enterprises engage in the production of light

consumer goods that are primarily related to food and beverages, clothing, electrical parts,

automotive parts, manufacturing, leather products, soap and detergents, woodworks (Fabayo,

2009).

Governments all over the world focus attention and give support to SMEs because of

their potentials in job and wealth creation (Mandiyambira, 2013; Obanda, n.d.; Okpara &

Kabongo, 2009; Osuji, 2016a). According to Ehinomen and Adeleke (2012); Moses-Ashike

(2016); Osuji (2016a), SMEs occupy a place of pride in virtually every country because of the

significant roles they play in the development and growth of various economies (Osuji, 2016c).

They are aptly referred to as ―the engine of growth‖ and catalysts for socio-economic

transformation of any country (Akodu, 2016).

SMEs represent a veritable vehicle for the achievement of national economic objectives

of employment generation and poverty reduction at low investment cost as well as the

development of entrepreneurial capabilities including indigenous technology (Harris & Gibson,

44

2006; Muritala et al., 2012; Sauser, 2005). Other intrinsic benefits of vibrant SMEs include:

access to infrastructural facilities occasioned by the existence of such SMEs in their

surroundings, the stimulation of economic activities such as supply of various items and

distributive trades for items produced and or needed by the SMEs, stemming rural/urban

migration, enhancement of standard of living of the employees of the SMEs and their dependants

as well as those who are directly or indirectly associated with them (Ehinomen & Adeleke, 2012;

Moses-Ashike, 2016; Woldie et al., 2008).

In recognition of the enormous roles of SMEs in economic growth and development,

various measures and programmes have been designed and policies enunciated and executed by

past and present administrations to encourage the development of the sector and hence make

them more vibrant (Osuji, 2016a). These measures include fiscal incentives and protective fiscal

policies; creation of specialized financial institutions and funding schemes for the SMEs (Sule,

2016), favourable tariff structure, the SMIEIS funding scheme, selective exemption and

preferential treatment in excise duties; establishment of Export Processing Zones (EPZ),

selective reservation of items for exclusive manufacture in the SME subsector, government‘s full

weight and support for New Partnership for Africa's Development (NEPAD) and African

Growth and Opportunity Act (AGOA) activities and operations (Kadiri, 2012).

It has, however, been worrisome that despite the numbers of SMEs, governments'

incentives, policies, programmes and support aimed at revamping the SMEs, they have

performed below expectation relative to their counterparts elsewhere (Akodu, 2016; Oyelaran-

Oyeyinka, 2012). Previous studies have examined the forces limiting SME growth in Nigeria

(Aigboduwa & Oisamoje, 2013; Dawson, 2001, as cited in Heather & Banham, 2010; Ehinomen

& Adeleke, 2012; Moses-Ashike, 2016; Osuji 2016a; Philip, 2011).

A major characteristic of Nigerian SMEs relates to ownership structure or base, which

largely revolves around a key man or family. Hence, a preponderance of SMEs are either sole

proprietorships or partnerships. Even where the registration status is that of a limited liability

company, the true ownership structure is that of a one-man, family or partnership business

(Aigboduwa & Oisamoje, 2013).

Essentially, some scholars have argued that perhaps lack of access to large markets like

that of government and poor access to vital information on public sector procurement activities

by SMEs are part of the reasons why this sector is yet to make the desired impact when

compared to the performance of their counterpart in developed world and even some developing

nations like Brazil, China, India, Indonesia, South Africa, among others (Edler & Georghiou,

2007; Loader, 2007; Osuji, 2016a; Walker & Preuss, 2008).

The United Nations viewed PP as an ―overall process of acquiring goods, civil works and

services which includes all functions from the identification of needs, selection and solicitation

of sources, preparation and award of contract, and all phases of contract administration through

the end of a service's contract or the useful life of an asset‖ (United Nations Development

Programme [UNDP], 2007). PP as a function of government includes decisions about the

services that will be delivered to local authorities and the communities they serve (Hughes,

2005). It is utilised not only to secure goods and services required by public sector organizations

for their missions and to support services provided to taxpayers, it is also used to implement

45

national policies and to achieve social and other objectives (McCrudden, 2004;Schrouder, n.d.;

Thai, 2005).

For this paper, PP can be defined as the acquisition of works, supplies and services by

public bodies, whether under formal contract or not. It includes the purchase of routine supplies

or services to formal tendering and placing contracts for large infrastructural projects by a wide

and diverse range of contracting authorities.

Because of the magnitude of resources devoted to public sector procurement, it compels

much attention. Most nations spend about 20% of their GDP on PP (Callendar & Mathews,

2000; Carter & Grimm, 2001), while in developing countries, up to 50% is spent on PP

(Schiavo-Campo & Sundaram, 2000). Thus, this obviously makes governments all-over the

world the biggest buyers of goods and services in the market. The items involved in PP ranges

from simple goods or services such as clips or cleaning services to large commercial projects,

such as the development of infrastructure, including road, power stations, housing, airports, just

to mention a few (Kaspar & Puddephatt, 2012).

Governments can use PP to achieve policy objectives (Akenroye, 2013; Kaspar &

Puddephatt, 2012; Osuji, 2016b). According to McCrudden (2004), government participates in

the market as a purchaser and at the same time regulating it through the use of its purchasing

power to advance conceptions of social justice. Telgen (2006) contended that PP can be used for

policy delivery, which includes job creation and employment. Therefore, governments at various

levels in Nigeria can use PP contract to stimulate the growth of SMEs by allowing them access

to public contract award.

The various policies and programmes of government in Nigeria of direct and indirect

assistance to SMEs are largely based on output performances [supply driven] (Osuji, 2016a).

However, there is need to consider linkages between SMEs and governments' contracts or allow

them access to PP patronage (access to big or large market) so as to stimulate the growth and

development of this sector (Edler & Georghiou, 2007; Loader, 2007; Osuji, 2016b; Walker &

Preuss, 2008).

PP markets are large in most countries regardless of whether the country is industrialised,

developing or transitional (Shariff, Peou, & Ali, 2010). In many countries, government

procurement is decentralized between governments (Federal and State) Ministries, Departments

and Agencies (MDAs) and local governments (Pierre-Henri, 2003). According to Simbiri (2012),

as cited in Nkonge (2013) improving procurement process through enhancement of the

participation of SMEs in the PP market promotes competition, innovation and value for money

in the delivery of public services. SMEs can participate in public-sector procurement in one of

two ways. They can either directly contract with a public body (MDAs), or participate as a

subcontractor to a prime contractor (Pierre-Henri, 2003).

However, there are difficulties, as well as a general lack of resources for compiling records

and statistics on PP, in most developing economies, let alone on the value of contracts awarded to

SMEs (Ministry of Foreign Trade, 2002). Thus, this is a major draw-back in allowing SMEs

participate in PP contract in Nigeria. According to Akenroye (2013), the Nigerian PP system is

still in its early stages. Until 2007, there was no law regulating PP in Nigeria (Olawore & Busari,

2014). Currently there is no national policy on how to use PP to drive social outcomes; which

46

includes SMEs patronage (Akenroye, 2013). According to Akenroye, some government MDAs

might have considered social factors in their purchases at one time or another even when there

are no national policies on social procurement (SP) and therefore cannot assume that public

procurers have not been using socially related criteria for evaluation of bids in Nigeria (2013).

Additionally, there are many reasons why PP can be suitable in the addressing the growth and

sustainability of SMEs Nigerian context. Some of these reasons include addressing the problems

of unemployment and poverty in the country. PP has been seen as a tool to develop SMEs

(Akenroye, 2013).

There is evidence of the current levels of SME involvement in public sector

procurements in some advanced and emerging nations of the world. In the US and EU, policy-

makers have opted to promote SME participation in PP in ways that, while granting them

assistance and preference, carefully avoids creating losers in the non-SME sector (Kidalov &

Snider, 2011). According to these scholars, SME procurement preferences are expressed as

aspirations (for instance goals) rather than as requirements or quotas. Policy-makers thus support

SMEs, but not at the expense of harming large businesses. Public agencies may mandate, target,

or set aside procurement funds specifically for SME involvement like it is done in countries like

USA, Canada, India, South Africa, Malaysia, where procurement policies were defined explicitly

to favour SMEs in supply of certain items to government establishments (McCrudden, 2004;

Pierre-Henri, 2003).

Similarly, some emerging countries, notably Malaysia and South Africa, have used

government contracting powers to address social problems (McCrudden, 2004). In Malaysia,

about 30% of the annual value of works contracts were reserved for Malaysian bumiputera

contractors (World Trade Organisation, 1997). Likewise, in Ghana, public authorities are

required under section 37(2) of the Procurement Act, to spot opportunities for promoting SMEs

(Adjei, 2010, cited in Akenroye, 2013).Also, in Egypt a radical reform was initiated by the

government in conjunction with Canadian government on capacity building of SMEs in

accessing public contracts which led to the proportion of government contracts awarded to

SMEs, being capped at 10%, by the 2004 Small and Medium-Sized Enterprises Development

Law (Kaspar & Puddephatt, 2012).

Furthermore, preferential treatment of SMEs can be found in India‘s law, with policies

which protect and promote artisans and small-scale firms which includes, the reservation of a

large number of products for production by small-scale firms (Pierre-Henri, 2003). The small-

scale sector is also protected through compulsory purchase and price preferences on PP which,

requires that certain specified products be procured exclusively from small-scale firms and in

addition, if the price offered by the small scale firm is not more than 15% above the price offered

by a large corporate firm, the product has to be purchased from the small-scale sector (Pierre-

Henri, 2003).

Therefore, given the significant percentage of GDP awarded for PP, access to

government procurement in Nigeria can provide a powerful instrument for SME business policy.

Despite the fact that using procurement policies to help SMEs could be a complicated and costly

process, these costs should not preclude the fact that PP results in social gains and benefits to

both government (redistribution of wealth) as well as to SMEs (access to large market) which

can stimulate their growth and development(McCrudden, 2004; Pierre-Henri, 2003).

47

Consequently, governments at different levels needs to re-evaluate the costs and benefits of

setting procurement regulations and adopt procurement policies that facilitate SMEs access to PP

markets.

In the context of PP, there are various economic benefits if SMEs are allowed access to

governments' contracts/projects. According Carter et al., 1999; Erridge et al., 1998), greater

SME involvement in supplying the public sector will add value and promote greater innovation.

Because SMEs are often seen as a locus for innovation (Hoffman, Parejo, Bessant, & Perren,

1998; Smith & Hobbs, 2001, as cited in Zheng, Walker & Harland, 2006), and are able to adapt

and change quickly and tend to be closer to their customers (Obanda, n.d.).

In terms of social benefits, PP can have an impact on local economies and regional

regeneration by buying from SMEs and local sourcing (Obanda, n.d.). It is believed that SMEs

participation in PP can foster balanced regional growth and a decrease in disparities among

regions within a country (McCrudden, 2004; Pierre-Henri, 2003). This is a policy underlying

SME programmes in PP developed by the Indian Government (Ministry of Foreign Trade, 2002;

Walker, 2006).

From an SME perspective, some of the benefits of accessing PP include: better sales

volume and improved access to larger markets in many countries; As previously stated, PP

markets are significant in many countries, particularly in developing and transitional economies

in which SMEs remain in the emerging states of development (Shariff et al., 2010). SMEs can

acquire knowledge, information, skills, experience, technology, management skills and a host of

other knowledge-related inputs from participation in PP through technology transfer (Pierre-

Henri, 2003). Procurement programmes that assist SMEs may facilitate the provision of

information on SME capability to large businesses and may increase business opportunities for

SMEs (Ministry of Foreign Trade, 2002).

However, the following have been identified, in extant research, as constraints to SME

participation in public sector procurement market: limited knowledge about existence of

government tenders and tendering process, capacity issues, complex procurement processes,

demand for high technical qualification and certificate, large contract value, limited options in

interaction, limited time to submit tenders, regulations and restrictions, human resource

capabilities and technological capabilities, difficulties in obtaining finance from banks, among

others (Asian SME summit, 2009; Barrett & Rainnie, 2002; Cox, Chicksand, Ireland, & Day,

2001; Lee, 2001; Mandiyambira, 2013; Pierre-Henri, 2003).

For instance, in a study of 22 nations (Australia, Austria, Belgium, Canada, Denmark,

Germany, Italy, Korea, Mexico, Netherlands, Spain, Thailand, UK, USA...), using comparative

ranking for assessment of government policies, it was found that in countries where the share of

SMEs in PP is low or below the government targets, the main reasons for under achievement was

lack of proper encouragement by the government agencies in ensuring that the SMEs get

government contracts, poor follow-up mechanism to ensure the extent of SME participation in

government contracts, lack of good e-procurement system and non allowance for subcontracting

(Milagrow - IMT Center of Excellence, 2009). According to the study, Australia, Austria and

South Korea top the ranking, whereas Mexico and Thailand stand at the bottom.

3. Concluding remarks and recommendations.

48

This paper has reviewed existing literature on the participation of SMEs in public sector

procurement contracts. The literature reviewed showed there is an increased awareness of the

importance of SME involvement in public sector procurement. The support of government

procurement to SMEs islimited in developed and some emerging economies has positive effects

on this sector, However, there is relatively little or no information on the participation of SMEs

in public sector procurement in most African countries, notably Nigeria. Many governments do

not keep good statistics on overall PP, let alone on the value of contracts awarded to SMEs

(Akenroye, 2013). There are no policy statement and guideline on the expectation of

governments at federal, states and local levels on the participation of SMEs in public contracts in

the country.

Attention has also been drawn to the important contribution that public sector

procurement can make to support the growth of SMEs in many countries of the world. Since PP

in industrialized nations accounts for a significant share of GDP (Organisation for Economic Co-

operation & Development [OECD], 2000), it is imperative for developing countries like Nigeria,

to use this potential tool (PP contract) to assist the growth of SMEs.

PP systems are the bridge between public requirements and private-sector providers. As

the SME sector is the main provider of private economic activities in many developing countries,

an active procurement reform that increases their access to procurement markets is highly

desirable. Therefore, any improvement in the PP system can have a direct and beneficial effect

on the overall economic condition of the country.

Both academic and policy literature recognised the economic and social importance of

the SMEs, therefore, governments at various levels, including its agencies should encourage

SMEs participation in public sector procurement because of the benefits that goes with such

inclusion. Federal government specifically, should anchor its current economic diversification

efforts on a massive support for the SMEs as obtained in many developed countries (Regha,

2016, as cited in Abioye, 2016; Osuji, 2016b), and expectedly states and local governments, by

allocating certain percentage of government's contracts to this sector. It is therefore

recommended as follows:

Thirty percent reservation for SMEs in all governments' procurement contracts at federal,

states and local government levels should be enshrined in our constitution. e-Procurement

mechanisms should be adopted to enhance effectiveness and transparency of PP procedures.

Simplification of the tendering process and information dissemination on how SMEs can

access governments' contracts.Unbiased evaluation of proposals should be done using ICT tools.

Performance management system (monitoring) to evaluate SMEs' involvement in MDAs

procurement contracts. Payment cycle time should be reduced for the SMEs and the bidding fees

should be removed or reduced drastically.

The size of PP in Nigeria is huge and can provide a high potential for growth of SMEs. It

covers a wide range of supplies, services and works required by federal, states and specifically,

local government and public organisations. There is need for governments to create a level

playing field for SMEs to have access to, and the opportunity to win government contracts. We

49

must find avenues for our small industries to grow. That way, we can be sure of continuous

development of local expertise and promote economy diversification.

The study is limited by its review nature. This is due mainly to the non-availability of

data on government policy on SMEs' participation in public sector procurement, as well as data

base on previous government procurement and its effect on SMEs in Nigeria. Future researchers

should consider an empirical analysis of the effect of public sector procurement on the

performance of SMEs.

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57

Impact of entrepreneurship curriculum on the quality of

entrepreneurship education

By

Mary O. Amori

e-mail: amaryochuko@yahoo.com

Department of Business Administration & Management,

Federal Polytechnic, Ilaro, Ogun State, Nigeria

Abstract

Entrepreneurship education is a new invention into the curriculum of the Nigerian tertiary

institutions to mould students and prepare them for economic challenges after school, to be ―job

creators‖ rather than ―job seekers‖. Thus, the study attempts to analyse the extent to which

entrepreneurship education can reform students to become creative entrepreneurial, self-

employed and self-reliant individuals. In achieving this, questionnaires were distributed amidst

100 students of Federal Polytechnic, Ilaro, Ogun State. Data were analysed using statistical

packages for social sciences (SPSS). Conclusively, the study revealed that entrepreneurship

education can serve as an important means of empowering or developing the capacities of youth

in tertiary institutions and a medium through which employment opportunities can be generated

for these graduates and also for others. The study therefore drew government and other

stakeholders‘ attention such as the media, schools and investors to create an enabling

environment for Nigerian graduates to inculcate entrepreneurship culture, as well as ensuring

their access to finance, mentorship and other basic needs that would enhance their capacities to

achieve a successful career in entrepreneurship.

Keywords:Entrepreneurship education, curriculum, tertiary institutions and students.

58

1. Introduction

Today, no matter where you turn to, stories abound of the enormous social, economic and

educational benefits of entrepreneurship. As a result, entrepreneurship education programmes are

proliferating in higher institutions around the country. Entrepreneurship education plays a major

role in the reduction of unemployment in Nigeria. However, while most tertiary institutions have

initiated entrepreneurship courses in their curriculum, little research is available to assess its

impact and to know whether a relationship exists between students taking courses in

Entrepreneurial Development Study (EDS) and their intention of becoming entrepreneurs.

Lack of entrepreneurial skills is no doubt a major contributing factor to the problem of

unemployment of graduates and youth in Nigeria (Adebisi & Oni, 2012). In Nigeria today,

unemployment of graduates has become a teething problem. The scourge which has often caused

problems for government in industrialised nations and elsewhere is now assuming gigantic

dimension in Nigeria. Graduate unemployment in the country is cumulative. It increases as

institutions turn out graduates annually. The rate at which young people are leaving school and

seeking employment continuously outpaces the capacity of the economy to provide employment.

The value system of the Nigerian society has changed due to the transition from school to work

to earn a living. This is because Nigeria that once harbored aliens from West African countries

and beyond for employment is currently recording high rate of unemployment (Anyaogu, 2009).

The scourge of graduate unemployment in Nigeria is blamed on the tertiary curriculum which

has been geared towards stereotyped goals and jobs without adequate practical work. In other

words, graduates from our tertiary institution acquire knowledge without entrepreneurial skills

which would enable them, on graduation to practice what was learnt in school, create jobs for

themselves and others and participate in economic development in Nigeria.

Entrepreneurship education is that education which assists students to develop positive

attitude, innovation and skills for their reliance, rather than depending on the government for

employment. This will produce graduate with confidence and capacity for independent thought

to discover new information leading to economic development (Emeteron, 2008). Agu (2006)

opined that entrepreneurship education is the type of education designed to change the

orientation and attitude of the recipient, and in the process will equip them with the skills and

knowledge to enable them start and manage a business enterprise. This type of education aims at

developing the requisite entrepreneurship skills, attitude, competencies and dispositions that will

predispose the individual to be a driving force in managing a business. According to Bassey and

Archibong (2005), the goal of entrepreneurship education is intended to empower our graduates

irrespective of their areas of specialisation with skills that will enable them to engage in income

yielding venture, if they are unable to secure jobs in the public sector. It is a re-orientation from

job seekers to job creators.

Entrepreneurship education is found to be the most influential factor and a ride to self-

employment opportunities amidst the recent graduates. Despite the prominent roles which

entrepreneurship education is playing in providing opportunities for students to gain knowledge

and acquire skills needed for starting up new ventures, joblessness among graduates in

developing countries, like Nigeria, that practice entrepreneurship education as a method of

entrepreneurship development is still on the increase, because small percentage of these

graduates become entrepreneurs after graduation.

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It has been observed that the reason for failure of entrepreneurship education being practically

manifested in our graduate is as a result of the much theory given to students than practical.

However, time spending on practical is very necessary to establish what they have learnt.

The paper therefore, attempts to focus on the impact of quality entrepreneurship

education in the process of making Nigeria students creative entrepreneurial, self-employed and

self-reliant individuals. In achieving the stated objectives, the rest of the paper is organised as

follows: in section two, review of related literature is undertaken; section three examines the

method of data collection and analysis; this is followed by presentation and discussion of the

results; in the final section, conclusion and recommendations were made.

2. Literature review

2.1 Conceptual framework

In Nigeria today, the increasing rate of poverty, unemployment, corruption and so many

other social vices had become worrisome to the government and to every well meaningful

citizen. The incidence of poverty in Nigeria is on the high side (about 70% of the total population

has been classified as poor (Ewhrudjakpor, 2008; Nigeria Entrepreneurship Initiative (NEI),

2009). The problem of unemployment is particularly pathetic as the number of those coming out

from various institutions looking for employment opportunities is increasing day by day. The

situation in Nigeria is of such concern that hundreds of unemployed university graduates

mounted a demonstration in front of presidential offices to express their concern. They

demanded that government should provide them with jobs for them to cater for their essential

needs of life (Dabalen, Oni, & Adekola, 2000).

It is pertinent to note that education can be a means to an end. Education is undisputedly

considered as the bedrock of any meaningful development (Akpomi, 2009), be it economic,

social or political. The advent of entrepreneurship education in curriculum of Nigeria‘s education

for tertiary institution students has created opportunities for self-reliance which can help the

economy and catch up with more technological advance societies which are highly needed to

reduce level of unemployment in the country. Global Education Initiative (2009) reported that

preparing today‘s student for success and eventual leadership in the new global market place is

the most important responsibility in education. Entrepreneurship education is an important tool

in achieving these objectives and should be universally available to provide all students with

opportunities to explore and fulfill their potentials.

Thus, there will be a way out to our educational practices that was initially tailored

towards acquisition of the so-called ―White-collar jobs‖ after graduation. Not only that, these

jobs are no longer available as the public and private sectors have exhausted their employment

capacity, but they have also not led the nation anywhere in terms of development (Onyesom &

Uwaifo, 2013).

In response to these came the introduction and emphasis on entrepreneurial education,

since it was believed that its introduction into tertiary institutions' curriculum would lead to

acquisition of skills that would enable graduates to be self-reliant and consequently reduce

unemployment problems in the country (Nwangwu, 2006).

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61

Entrepreneurship education

Entrepreneurship education is that education which assists students to develop positive

attitude, innovation and skills for their reliance, rather than depending on the government for

employment. According to Owuala (1999), entrepreneurship education is ―a programme or part

of the programme that prepares individuals to undertake the formation of an acquisition of small

business‖.

The Commission Communication (2006) defined entrepreneurship education as the

individual ability to turn ideas into action. It includes: creativity, innovation and risk taking, as

well as the ability to plan and manage projects, in order to achieve objectives. This support

everyone in day to day life at home and in society, makes employees more aware of the context

of their work and better able to seize opportunities, and provide a foundation for entrepreneurs

and enabling a social and commercial activity. While, Essien (2006), defined entrepreneurship as

the totality of self-asserting attributes that enable a person to identify latent business

opportunities, together with capacity to organize need resources with which to profitably take

advantage of such opportunities in the face of calculated risks and uncertainty. According to

UNESCO (2008), entrepreneurship education is made up of all kinds of experiences that give

students the ability and vision of how to access and transform opportunities of different kinds. It

goes beyond business creation. It is about increasing students‘ ability to anticipate and respond to

societal changes. It is also seen by UNESCO as education and training which allows students to

develop and use their creativity and to take initiatives, responsibility and risks. To Lee and Wong

(2005), entrepreneurship education is a catalyst for economic development and job creation in

any society. The above views shows that entrepreneurship education by its scope, nature and

characteristics is a rebranding education culture meant to guarantee a comprehensive educational

system re-engineering arising from the obvious deficiencies of the existing education system. It

is aimed at equipping the students with requisite skills and capacities needed in the world of

work.

Entrepreneurship education is oriented towards different ways of realising opportunities.

This is what makes entrepreneurship education distinctive in its focus on realisation of

opportunity, whereas management education is focused on the best way to operate existing

hierarchies.

Entrepreneurship education seeks to provide students with the knowledge, skills and

motivation to encourage entrepreneurship success in a variety of settings. Entrepreneurship

education according to Ojeifo (2013) and Paul (2005), is structured to achieve the following

objectives:

1. To offer functional education for the youth that will enable them to be self-employed and self-

oriented.

2. Provide the youth graduates with adequate training that will enable them to be creative and

innovative in identifying novel business opportunities.

3. To serve as a catalyst for economic growth and development.

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4. Offer tertiary institutions' graduates with adequate training in risk management, to make

certain bearing feasible.

5. To reduce high rate of poverty.

6. Create employment generation.

7. Reduction in rural – urban migration.

8. Provide the young graduates with enough training and support that will enable them to

establish a career in small and medium sized businesses.

9. To inculcate the spirit of perseverance in the youths and adults which will enable them to

persist in any business venture they embark on and

10. Create smooth transition from traditional to a modern industrial economy.

In order to achieve plausible achievement about the above objectives, there is a need for the

government to re-capture, re-energise and re-strategises various agencies that are established to

regulate educational policy in the state. There will be a new dawn in the educational sector where

good quality students are produced that are full of creativities and initiatives. This will later solve

socio-economic problems; invariably it will help in taking away the youth from criminality,

prostitution, drug abuse, violence, crime, and even unrest, among others (Olorunmolu, 2008).

Entrepreneurship is the capacity to harness the right quantity, quality and combination of

resources that are consistent with profit making under risks and uncertainty.

Entrepreneurship is a key driver to any economy, catalyst to wealth creation and a high

majority of jobs are created by small business started by entrepreneurially-minded individuals,

many of whom go on to become big businesses or large corporations. There is more creative

freedom for people who are exposed to entrepreneurship education. There is higher self-esteem,

and an overall greater sense of control over their own lives. It is the believe of many experienced

business people, political leaders, economists and educators that fostering a robust

entrepreneurial culture will maximise individual and collective economic and social success on a

local, national, and global scale. Therefore, it is with this in mind that the National Standards for

entrepreneurship education was developed, to prepare youth and adults to succeed in an

entrepreneurial economy.

As mentioned earlier, entrepreneurship education is a lifelong process; starting as early as

elementary school and progressing through all levels of education, including adult education.

The standards and their supporting performance indicators are a framework for teachers to use in

building appropriate objectives, learning activities, and assessments for their target audience.

Using this framework, students will have progressively more challenging educational activities;

experience that will enable them to develop the insight needed to discover and create

entrepreneurial opportunities; and the expertise to successfully start and manage their own

businesses to take advantage of these opportunities.

Entrepreneurship education focuses on developing understanding and capacity for pursuit

of entrepreneurial behaviours, skills and attributes in widely different context. It can be portrayed

as open to all. The propensity to behave entrepreneurially is not exclusive to certain individuals.

Different individuals will have a different mix of capabilities for demonstrating and acquiring

63

entrepreneurial behaviours, skills and attributes. These behaviours can be practiced, developed

and learned; hence it is important to expose all students to entrepreneurship education.

Entrepreneurial skills and attributes provide benefits to society, even beyond their

application to business activity. Obviously, personal qualities that are relevant to

entrepreneurship such as creativity and a spirit of initiative can be useful to everyone in their

working responsibilities and in their day-to-day existence. Also, the relevant technical and

business skills need to be provided to those who choose to be self- employed and or to start their

own venture or might do so in the future.

From the above advantages/benefits, entrepreneurship education should be taught to

students in all disciplines in institutions of higher learning. It is not out of place to say that many

business ideas emerge from non-business disciplines, but are often waved aside or ignored

because students are not sufficiently educated in the knowledge and skills required.

Policy framework and curriculum issues of entrepreneurship education in Nigeria

Curriculum is the basic guide line for learning process. According to Onyesom and

Uwaifo (2013), it is concerned with the why, what and how of instruction. While in the words of

Akindolu (2010), it is concern with the goals and objectives of instructions, the content of

organization and evaluation. These elements form the beacon for the development and

implementation of a nation‘s education curriculum.

The history of Nigeria Education System could be traced back to the colonial period; the

educational policy then was geared towards serving the interest of the colonial masters in terms

of supplying manpower for their effective administration of Nigeria colony and protectorate

(Aladekomo, 2004).

Within the first decade of Nigeria‘s independence (1960 – 1970), the country was mainly

agrarian; it thus depended on agriculture both for local sustenance and foreign exchange

generation. The education system was directed at production of graduates for government

employment. It thus continued graduating students without taking cognizance of the labour

market. The matter of unemployment and poverty were not issues of national concern. The

economy though monolithic was flourishing. The public service at that time was capable of

absorbing up to 70% of the labour force. The economy progressed and was further reinforced by

the oil boom of the 1970‘s. However, the trend changed by 1980‘s when following political

instability and inconsistencies in the socio-economic policies of government, the economy began

to crumble. There was unmanageable escalation in the rate of unemployment and poverty. As a

result, the country experienced collapse of several business enterprises, high rate of retrenchment

and retirement of workers.

Thus, there was need for several structural adjustment programmes and policies to grasp the

problem on edge. In the educational sector, there was need to restructure the educational system

so that the curriculum will embrace all activities and experience that contribute to the balance

development of learner throughout their academic career (Unachukwu, 2009). The National

Planning Commission [NPC] (2005) made the following comment ―the educational system is

dysfunctional as graduates of many institutions cannot meet the needs of the country; institutions

64

are in decay, strikes and cultism are common and corruption has become rampant‖. The NPC

comment goes further as ―wide disparities persist on educational standard and learning

achievement. The system emphasizes theoretical knowledge at the expense of technical,

vocational and entrepreneurship education. School curriculums need urgent review to make it

relevant and practical oriented‖.

Role of tertiary institutions in promoting entrepreneurship education.

Entrepreneurship education is a challenge for developing countries since the content and

learning experiences are yet to be fully integrated into the curriculum in institutions of higher

learning. In some countries, these new initiatives are still grappling to gain political and

economic support. But the growing demand and popularity of entrepreneurship education in

recent years has led to the establishment of special centers in higher institutions for the

delivering of specific curriculum instructions on entrepreneurship and other innovative subjects

in new venture creation, enterprise development and capacity building. The European

Commission (2008) indicated that higher education institutions should have a strategy of action

plan for teaching and research in entrepreneurship, and for new ventures creation and spin-off.

The real essence of entrepreneurship education is to ensure the improvement of educational

quality by equipping the young ones with basic skills that will make them functional and

productive in the society. This challenge is in line with UNESCO (2005) on the role of higher

education in improving educational quality. The organisation made reference to the Dakar

Framework for action which gave new impetus to the promotion of quality of education by

designating one of the six EFA goals: ―improving all aspects of the quality of education and

ensuring excellence of all so that recognized and measurable learning outcomes are achieved by

all, especially in literacy, numeracy and essential life skills‖. Similarly, Federal Republic of

Nigeria (2004) (59) a, b, & d listed some of the goals of tertiary education in Nigeria. Emphasis

on entrepreneurship education implies that the problem is more of that of employability. Most

times, the skills that people have are not appropriate for securing employment. Universities and

Polytechnics as centers of learning have always been places where the skills and knowledge of

students are chiseled to suit the requirements of the work places. It is therefore imperative that

our tertiary institutions should assess well in advance and structure courses in a way that will

help their students to be gainfully employed in the labour market. In establishing the conceptual

link between higher education, and economic growth in Africa, Bloom, Canning, and Chan

(2005) indicated that in a knowledge economy, tertiary education can help economies keep up or

catch up with more technologically advanced societies. Higher education graduates are likely to

be more aware of and better able to use new technologies. They are also more likely to develop

new tools and skills themselves. Therefore their knowledge can also improve the skills and

understanding of non-graduate coworkers, while the greater confidence and know-how

inculcated by advanced schooling may generate entrepreneurship, with positive effects on job

creation. Tertiary education can also have direct benefits to the society. How? By producing

well-trained teachers, this can enhance the quality of primary and secondary education systems

and give secondary graduates greater opportunities for economic advancement. All these are

essential characteristics of entrepreneurship education. Equally, Bloom and Rosovsky (2004)

advanced that higher education is a determinant of income and can produce public and private

benefits. It can create greater tax revenue, increase savings and investment and lead to a more

entrepreneurial and civic society.

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2.2 Theoretical framework

This study is anchored on some theoretical background of entrepreneurship among the

proponents of entrepreneurship which include:

Psychological theory of entrepreneurship by McClelland (1961). McClelland postulated that

traits, motives and personalities and major motivating factors instill entrepreneurship spirit in an

individual. The psychologist was of the view that there is an inner urge in someone that makes an

entrepreneur to desire for a change of status and environment that may lead to innovation.

The inner urge or force should be injected into students (undergraduates) to see a desire

for a change of status that inspires them to generate ideas and also energise them pursue small

scale businesses for economic growth and achievement in life.

Hagen's (1962) theory of Social Change centered on various social context that enable the

opportunities on entrepreneurs leverage. In furtherance to Hagen‘s sociological theory, Kilby

(1971) added that entrepreneurship results from ―adaptation‖. For graduates to be an

entrepreneur, he must be ready to adapt to his environment for easy identification of business

opportunity. According to him,adaptation transformed into reality as an enterprise.

Schumpter (1934) marked innovation as a theory of entrepreneurship. The theory credited

to him is also called Schumpterism. Schumpeter‘s theory of 1934 in his work in 1952 saw

innovation as a major force behind entrepreneurship. In his postulation, he argued that ―every

growth oriented venture is a function of innovation without which theory of entrepreneurship

does not exist‖. The Implication of Schumpter‘s theory of entrepreneurship is that entrepreneurs

(graduate entrepreneurs) must not only be innovative but should also be creative.

3. Methodology

This paper tends to investigate the impact of entrepreneurship curriculum on the quality

of entrepreneurship education. The study uses simple random sampling techniques to select a

sample of 100 students from the Federal Polytechnic, Ilaro, Ogun State. The sample was divided

into four groups of 25 students each from level 1 to level 4 (ND1 TO HND2) of the institution.

The choice of the selected school was based on the fact that entrepreneurship education

curriculum is the same across institutions; while the choices of the selected students were

specifically to test their view of entrepreneurship education at all levels. Questionnaires were

administered to 100 students. The questionnaires were divided into four sections, section A

include the perception of students about entrepreneurship education, section B, C and D include

choice of entrepreneurship education, impact of entrepreneurship education, as well as

challenges in entrepreneurship education respectively. Reliability analysis was used to test the

reliability of the questionnaires, while simple correlation was used to test the relationship in the

responses at all levels. The result of the analysis is thus presented below:

Table 1: Reliability Analysis on Perception of Entrepreneurship Education among

Respondents.

Scale mean if

item deleted

Scale

variance if

Corrected

item total

Squared

multiple

Alpha if item

deleted

66

item deleted correlation correlation

Q01 15.5650 17.6141 .6187 .3981 .7906

Q02 15.1654 17.7370 .6190 .3949 .7905

Q03 15.8114 20.7360 .3999 .1665 .8239

Q04 15.6429 18.8056 .6067 .3894 .7937

Q05 15.2159 18.7188 .5768 .3504 .7980

Q06 15.3259 19.3217 .4913 .2497 .8119

Reliability co-efficients 6items, alpha = .8234 standardised item alpha = .8214

Table 2: Reliability analysis on choice of skill selection among respondents

Scale mean if

item deleted

Scale

variance if

item deleted

Corrected

item total

correlation

Squared

multiple

correlation

Alpha if item

deleted

Q07 21.7659 19.8250 .5361 .3435 .8017

Q08 20.7165 21.4417 .5492 .3593 .7996

Q09 21.3450 20.4105 .5750 .3553 .7955

Q10 21.4088 90.9422 .4944 .2724 .8066

Q11 20.9716 20.6393 .5715 .3370 .7962

Reliability co-efficients 5 items alpha = .8208 standardised item alpha = .8234

Table 3: Reliability analysis on the impacts of entrepreneurship education to the society at

large

Scale mean if

item deleted

Scale

variance if

item deleted

Corrected

item total

correlation

Squared

multiple

correlation

Alpha if item

deleted

Q12 4.7219 2.4701 .6484 .4704 .7396

Q13 4.7036 2.4530 .6818 .4672 .7422

Q14 4.4920 2.5037 .6520 .4251 .7725

67

Q15 4.8721 2.4415 .6788 .4170 .7113

Reliability co-efficients 4 items alpha = .8194 standardised item alpha = .8196

Table 4: Reliability analysis on the challenges of entrepreneurship education.

Scale mean if

item deleted

Scale

variance if

item deleted

Corrected

item total

correlation

Squared

multiple

correlation

Alpha if item

deleted

Q16 11.4609 8.1186 .3389 .1337 .5753

Q17 10.2380 6.3955 .3907 .1674 .4765

Q18 10.7923 7.3810 .3162 .1060 .5218

Q19 10.1968 7.2824 .3776 .1441 .4870

Q20 11.6499 7.9879 .2389 .0689 .5628

Reliability co-efficients 5 items alpha = .5699 standardised item alpha = .5729.

4. Discussion of findings

Reliability of the research questionnaire for each section was tested in table 1-4 above.

The results of the analysis thus revealed that the instrument is reliable since the values in the

column labeled alpha if item deleted are either equal or less than the overall alpha. In a reliable

scale, all values in the column labeled alpha if item deleted are expected to correlate or cluster

around the overall alpha.

The correlation analysis was used to test the responses of respondents, to know if there

exists any agreement in their responses. The result thus reveals in section A that the view of

respondents perception of entrepreneurship education, there exist a weak but positive correlation

between level one and level two respondents, level one and level four respondents. On the other

hand, there is a strong positive correlation between level one and other levels. This implies that

even before respondents are admitted into the institution, some of them have heard of

entrepreneurship education in one way or the other. While some just heard of it when they were

admitted into the institution.

On choice of skill selection, there is a strong positive correlation among the four levels.

This shows that when students were introduced to the entrepreneurship education, they were

impressed and ready to participate in it. The responses in section A and B are justified as a

strong correlation exists between the levels of respondents. On this note, the study therefore

shows that the respondents have in one way or the other perceived the impact of the scheme.

Based on the challenges analysed in section D, level one and level four have a weak positive

relationship, level two and level four have a weak and negative relationship, while level three

and level four have a weak, but positive correlation. This result is not in line with those of

section A,B and C. We can deduce that despite the positive perception, as well as the impact

68

perceived and experienced, most respondents have not really participated in the practice, and

thus do not know the challenges involved.

5. Conclusion and recommendations

It has been seen that entrepreneurship education seeks to provide students with

knowledge, skills and motivation to encourage entrepreneurship success in a variety of settings.

The study revealed that entrepreneurship education can served as an important means of

empowering or developing the capacities of youth in tertiary institutions and a medium through

which employment opportunities can be generated for these graduates and also for others.

Based on the findings of this study, the following recommendations were made:

Institutions should ensure the techniques of the scheme are well structured so as to change the

perception of people about the poor orientation system.

There should be a linkage between seasoned lecturers and Industry/guest lecturers on the

application of different pedagogical approach in entrepreneurial educational studies in teaching

and learning institutions. The approach should emphasise simulation and role play

experimentation, that is, exposure of students to grasp close to reality experiences.

Handlers of entrepreneurship education should be encouraged by giving them the

opportunity to learn more about the skills, allow them to practice the skills such that they will

always stand as practical examples to others.

There should be distilled syllabi to include newest technologies and business practice to

enable students grasp business principles and enhance functional knowledge job creation ability.

Finally, the study draws government and other stakeholders‘ attention such as the media,

schools and investors, to create an enabling environment for Nigerian graduates to inculcate

entrepreneurship culture, as well as ensuring their access to finance, mentorship and other basic

needs that would enhance their capacities to achieve a successful career in entrepreneurship.

69

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72

Effects of globalisation on industrial relations practices in Nigeria

Isaac Oludare Faseyiku

Department of Business Administration,

Lagos State Polytechnic, Ikorodu, Lagos

E-mail: Faseyikuisaac@yahoo.com

Abstract

There is a growing body of research on the topic of globalisation, which

seems to be a topic of broad-brush interest to scholars in a variety of fields, such as

anthropology, sociology, communication, political science and international

business. The paper examined impacts of globalisation on industrial relation (IR)

practices in developing countries with emphasis on Nigeria. The essence of

industrial relations is to create harmonious relationship between and among actors

with a view to accomplish the objectives of each of the parties. The objective of the

study was to analyse the challenges brought by globalisation on industrial relation

practices. The study made use of secondary information with discourse analysis of

existing literature on the subject matter. The study found that globalisation has

brought keen competition on both global and local companies which invariably

have serious devastating effects on industrial relation practices and its objectives in

the developing countries. It was concluded that by adopting industrial relations as it

is practiced in China will be of benefit to many Nigerian firms.

Keyword: Effects, globalisation, industrial relation practices and Nigeria.

73

1 Introduction

Globalisation has become a determinant factor because it is a driving force of economic

growth and development. Hence, no one is excluded from its movement. It involves all actors in

the economy, including individuals, government officials, political gladiators, workers,

employers, etc. The main driving forces of this process are advances in technology, reduction in

trade barriers and global competitions. It refers to the crossing of national boundaries, the flow of

goods, capital, information technology and people across national borders, Chow (2005). A

common implicit statement is that this economic globalisation has an impact on industrial

relations or the governance of employment and working conditions. Though, this is fairly

reasonable assumptions, the extent and nature of the impact of economic changes in industrial

relations is not always or easy to quantify. It should be noted as highlighted above that the

drivers of globalisation, the ultimate goals of this transformation is economics. Hence, the driver

of this change is a component of factors of production, i.e. labour. This is a key element or actors

in the industrial relations system of any country. No wonder Dunlop (2005) cited in Fajana

(2006) noted that industrial relation system in any country at any given time consist of several

actors which are employees, (labour) employer and the government.The biggest concern of

researchers is the impact of this economic phenomenon on employers, employees, government

and industrial relations of developing countries. Supporters of globalisation believed that free

trade and increasing presence of Multinational Corporations (MNC) will increase employees‘

earnings. The paper explored effects of globalisation on industrial relation practices in Nigeria.

The rest of the paper considered: conceptual framework on globalisation, theoretical framework

on globalisation, conceptual framework on industrial relations, theoretical framework on

industrial relations, effects of globalisation on industrial relations, summary, conclusion and

recommendations.

2 Concept of globalisation

2.1 Globalisation

Globalisation refers to the emergence of an international network of social and economic

systems. Albrow (1990) presented globalisation as all those processes by which the people of the

world are incorporated into a single world society. In line with the social relationship concept,

Giddens (1990) advanced that globalisation is the intensification of worldwide social relations

which link distant localities in such a way that local happenings are shaped by events occurring

many miles away and vice versa. Held, McGrew, Goldblatt and Perraton (1999) stated that

globalisation is the processes of change which underpin a transformation in the organisation of

human affairs by linking together and expanding human activity across regions and continents.

This definition tacitly places premium on the notion of geographical distant events taking place

across national boundaries. However, Tomlinson (1999) posited a positive view on the facet of

globalisation process that dwells on distant events and the forces that impact on local and

regional activities. Suchacek (2008) presented globalisation as a process of change from national

to global scale of integration of production, exchange and consumption. He further argued that

technological information and revolution have tremendously propelled and laid the necessary

infrastructure required for the formation of a global economy (Suchacek, 2008). This description

places premium on the perspective of economic theory and thus presents globalisation as an

economic process. Friedman (2005) in aligning with the economic perspective of the

74

globalisation process, examines the impact of the flattening of the globe and argues that

globalised trade, outsourcing, supply chain and political forces have made the world tochange for

both better and worse.

The concept of globalisation in economic context places premium on the perspective of

economic theory and thus presents globalisation as an economic process in which production,

exchange and consumption metamorphose from national to a global scale through integration.

Two main strands of process/drivers are central in this concept – the liberalisation of economic

policies, and trade transaction across national frontiers that give rise to global inter-dependence

and inter-penetration (Lechner, 2009). It describes the increase of international transactions and

connectivity due to the falling of barriers and increased inter-dependence of countries. In

specifically economic contexts, the concept of globalisation is often understood to refer almost

exclusively to the effects of trade, particularly trade liberalization or free trade (Bettis & Hall,

1982).

The other key aspect of globalisation is changes in technology, particularly in transport

and communications, which it is claimed are creating a global village (Blyton, Bacon, Fiorito &

Heery, 2008). Held et al. (1999) argued that without reference to expansive spatial connections,

there can be no clear or coherent formulation of the concept of globalisation. Accordingly,

globalisation is located on a continuum with the local, national and regional connections. At one

end of the continuum lies social and economic relations and networks which are organised on a

local and/or national basis; at the other end, lays social and economic relations, as well as

networks that crystallize on the wider scale of regional and global interactions. Globalisation in

this context, refers to the spatial-temporal processes of change which underpins a transformation

of human affairs by linking together and expandinghuman activity across regions and continents.

Economic globalisation - there are four perspectives of economic globalisation on flows

of goods/services across boundaries, namely: free trade (or at least freer trade), flows of people

(migration), flows of capital, and flows of technology. A consequence of economic globalisation

is increasing relations among members of an industry in different parts of the world

(globalisation of an industry), with a corresponding erosion of national sovereignty in the

economic sphere. The International Monetary Fund (IMF) described globalisation as the growing

economic inter-dependence of countries worldwide through increasing volume and variety of

cross-border transactions in goods and services, freer international capital flows, and more rapid

and wide spread diffusion of technology (IMF, 1998). The World Bank defined globalisation as

the freedom and ability of individuals and firms to initiate voluntary economic transactions with

residents of other countries (World Bank, 2008).

In the field of management, globalisation can be viewed as a marketing strategy in terms

of emergence of international markets for consumer goods characterised by similar customer

needs and taste enabling. For instance, selling same cars, soaps or foods with similar campaigns

to people in different cultures. This usage is contrasted with internalisation, which describes the

activities of multinational companies dealing across borders in financial instrument, commodities

or products that are extensively tailored to local markets (Buitendach& De Wite, 2005).

2.2 Concept of Industrial Relations

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The concept of industrial relations has been defined using various terminologies; it is

essentially the relationship between management and labour. Mowday (2002) opined that the

concept of industrial relations concerns all aspects of employment relations dealing with

everything that affects the relationship between workers‘ and employers‘ right from the time the

employee joins the work organisation, until he leaves the job. Fajana (2006) highlighted three

principal actors in an industrial relations system: employers and managers‘ relationship; labour

and trade unions relationship; and government that is consistent with Dunlopian industrial

relations system concept. Interactions between these three actors are usually the concern of

industrial relations. Poole (1986) asserted that industrial relations concentrate on conflict,

accommodation and reconciliation of parties and partly divergent interests of the managers,

labour and trade union, as well as the state of agency in production and distribution spheres

(Panigrahi, 2006). Fajana (2006) argued that the substance of industrial relations is the

intertwining activities of trade unions, employers and the state.

Dunlop (2005) conceived the concept in terms of participants or actors involved in the

process through: hierarchy of managers and their representatives or representatives of

organisations; hierarchy of workers (non-managers) and their spokesmen - workers organisations

and representatives; and, specialised governmental agencies that may include specialised private

agencies created by the first two factors. Industrial relations is therefore the regulation of

employment relations in any employment situation by the employer (management and their

organisations, workers organisations and the third party, and private or/and government acting as

an umpire or a controller). The purpose of joint decision-making is to establish job rules and job

values for co-ordinating manpower resources in order to attain organisational objectives and

trade union objectives. Hence, industrial relations concentrate on inter-relationship between

actors in a workplace. Dunlop (2005) believed that this interaction may involve two main actors,

such as employers/managers and workers. It may also entail their collective actions which may

be between: workers and their union, a unit of workers‘ union and its national body, and

management and the state). Macmillan (1999) stressed that that industrial relations vary across

plant, enterprise, industry, regional and national boundaries.

Fajana (2006) submitted that the objectives of good industrial relations are twofold. That

is to preserve industrial peace and secure industrial co-operation. To establish an industrial

peace, workers must be assured for fair wages in return for their efforts by ensuring good

conditions of work, reasonable working hours, holidays and minimum amenities of life. He

further asserted that the objectives of good industrial relations should base on development and

progress of industry through democratic methods, stability, total wellbeing, workers‘ satisfaction

and industrial peace (Fajana, 2006). Macmillan (1999) also noted that industrial progress

promotes national economic development. When employees feel that their contribution towards

the progress of an organisation is recognised and appreciated; hence, an atmosphere of peaceful

cooperation (co-partnership) will prevail. Peaceful cooperation in an industry is an indicator of a

good industrial relation (Bhatia, 1985).

According to Oginni and Faseyiku (2012), specific objectives of Industrial relations

include protection of management and labour interests to securing mutual relations between two

groups; avoidance of disputes between management and labour; creation of harmonising

relationship between groups to increase productivity; ensuring full employment and reducing

absenteeism. The primary intention of public relations is to promote increased productivity,

76

enhance profitability, foster labour-employer partnership, and ensure industrial democracy.

Provision of better wages and living conditions to workers by the management of an organisation

should not be misunderstood by workers. On the other hand, government should ensure that

minimum wage is established and adequate regulations; thereby bridging the gap between

stakeholders and reshaping complex social relationships associated with technological advances.

To this end, the full concept of industrial relations in organisations consist of multiple

working relationships between labour and management, unions and labour, unions and

management in an industry. Industrial relation is a multidisciplinary field that studies the

employment relationship (Ackers, 2002). Consequently, industrial relations may be viewed as

labour relations. However, industrial relations cover various employment issues beyond

unionized workforce activity.

3 Theoretical framework

3.1 Theories of globalisation

3.1.1 Transformationalist theory

Transformationalist argued that globalisation occurs as states and societies across the

globe are experiencing a process of profound change as they try to adapt to a more inter-

connected but highly uncertain world (Held et al., 1999). Other transformationalists including

Giddens, Scholte, Castells and Wallerstein discussed multi-dimensional approaches to

mechanisms of globalisation. There are indisputable fundamental organisational changes

globalisation that integrate and accelerate socio-economic dynamics (Stefanovic, 2008). The

approach assumes that no nation or group of nations have a monopoly of success or failure

(Trickly, 2001 cited in Briggs, 2014).

3.1.2 Network society theory

The network society theory recognises the relevance of Information Technology (IT) as a

veritable input in the globalisation process. Castells (1997) stressed that technological dimension

of globalisation, based on analysis of capitalist system and its dynamics. Thus, emphasised that it

is not the logic of capitalist development, but that of technological change that is seen to exercise

underlying causal determination in the myriad of processes referred to as globalisation (Castells,

1997). Castells (1997) approach has been closely associated with the notion of globalisation as

representing a new age of information. His concept of a new global economy is an economy with

the capacity to work as a unit in real time, or to choose time on a planetary scale that involves

global financial markets, the globalisation of trade, the spread of international production

networks (Castells, 1997). According to him, the selective globalisation of science and

technology through (1) informational, knowledge-based; (2) global, in that production is

organised on a globalscale; and (3) networked, in that productivity is generated through global

networks of interaction (Castells, 1997).

3.1.3 Time-space theory

77

Giddens (1990) opined that the conjectural essence of globalisation is time-space distance

and defines it as the intensification of worldwide social relations which link distant localities in

such a way that local happenings are shaped by events occurring far away and vice versa. This

implies that social relations are lifted out from local contexts of interaction and restructured

across time and space. In a different view, Harvey (1990) argued that globalisation represents a

new burst of time space compression produced by the very dynamics of capitalist development.

A key causal determinant in the new burst of time-space compression that started in the late

twentieth century was a cyclical crises of capitalism. While Harvey‘s concept is similar to that of

Giddens, the former‘s involves a normative critique of the global capitalist order and it is

restructuring; whereas the latter seems to be almost commemorative. What Harvey means by

time-space compression is the process whereby time is reorganised in such a way as to reduce

the constraints of space, and vice-versa.

3.1.4 The theories of modernity and post-modernity

Another set of theoretical approaches to globalisation refers to process in terms of

modernity and post modernity. Some theories have concluded that we are living now in a post-

modern world, while others argue that globalisation has simply radicalised or culminated the

project of modernity. This view is supported by a number of scholars including Giddens (1990)

and Robertson (1992). For Robertson (1992), an early pioneer in globalisation theory is a process

that represents the universalisation of modernity. Stefanovic (2008) posited that Robertson

provided the most widely accepted definition of globalisation among scholars. The definition as

a concept refers to compression of the world and intensification of consciousness of the world as

a whole, including both concrete global inter-dependence and consciousness of the global whole

in the twentieth century. In what appears as a clear application of the Parsonian social system to

the globe as a whole; the global field is constituted by cultural, social and phenomenological

linkages between individuals, national society, international system of societies and mankind in

general. In such a way, institutions of modernity become universal. Meanwhile, Robertson

(1992) theory is mainly concerned with the subjective, cultural and phenomenological

dimensions of globalisation. The foregoing discussion suggests that a common trend in these

theories is that globalisation enhances flow of people, thereby enhancing productive activities. In

as much as labour is required for productivity, it is therefore imperative that globalisation will

impact the relationship between employees and employers.

3.2 Theories of industrial relations

3.2.1 Unitary theory

An organisation is perceived in Unitarianism perspective as an integrated and harmonious

complete with the ideal of one happy family, where management and other members of staff

share a common purpose and mutual co-operation. Unitarianism perspective assumes that

employees identify unreservedly the organisation‘s aims and its methods of operating. Both

owners of capital and employees are co-partners in terms of common purpose of efficient

production and profit. Hence, there will not be conflict of interest within the organisation.

Furthermore, Unitarianism has a paternalistic approach thereby requires employees‘ loyalty

supported by top management – managers. Consequently, trade unions are deemed unnecessary

78

because employees‘ loyalty between can promote mutual co-operation between employees and

the management.

Oginni and Faseyiku (2012) identified implications of unitarianism as: (1) factionalism

within the organisation or in a part of it is seen as a pathological social condition; (2) subordinate

employees are not expected to challenge managerial decisions or the right to manage; (3) trade

unionism is perceived as being anti-social, anti-managerial mechanism, an illegitimate intrusion

into the unified and cooperative structure of the work place. It is seen as competing with

management for the loyalty and commitment of employees to their employer; and (4) the theory

denied the validity of conflict at work whether between management and employees, between

management and unions or between the organisation and its customers.

3.2.2 Conflict theory

Conflict theory is regarded as pluralism perspective in industrial relations. In pluralism,

the organisation is perceived as consisting powerful and divergent sub-groups, each with its own

legitimate loyalties, as well as their own set of objectives and leaders. In particular, the two

predominant sub-groups in the pluralistic perspective are the management and trade unions.

Consequently, the role of management leans less towards enforcing and controlling and more

towards persuasion and co-ordination. Trade unions are deemed to be legitimate representatives

of employees, and conflict is viewed as rational and inevitable. Conflict can be resolve through

collective bargaining to ensure balance of power between employees and the management.

The substance of pluralism perspective of the conflict theory of industrial relations holds

that just as society is perceived to consist of a number of interest groups held together in some

sort of loose balance by the agency of the state. Hence, work organisations are viewed as held in

balance by the agency of management (Peretomode & Peretomode, 2001 cited in Briggs, 2014).

The pluralists argue that greater stability and adaptability are given to industrial relations by

collective bargaining than by sacking and outlawing trade unions. Consequently, industrial

conflict is accepted as an inevitable natural phenomenon and it is contained within the social

mechanism of collective bargaining, conciliation and arbitration (Panigrahi, 2006 cited in Briggs,

2014).

3.2.3 Social action theory

Social action theory is pre-eminently associated with the studies of Max Weber and the

theory in industrial relations stresses the individual responses to the social actors like the

managers, employees and union representatives to given situations. Social actors are constrained

by the ways they construct their own social realities since they do not share the same value

systems. Briggs (2014) opined that the most useful feature of social action theory in industrial

relations is the way in which it stresses that the individual retains at least some freedom of action

and ability to influence events.

3.2.4 System theory

The system theory to industrial relations was first articulated by Dunlop in 1958.

Dunlop‘s system model suggests that the industrial relations system is divided into four inter-

related elements comprising certain actors: (trade unions, employers,government agencies and

79

specialised third party private agencies); certain contexts (the significant aspects of the

environment in which the actors interact such as the characteristics of the work place and work

community, the market or budgetary constraints and the locus and distribution of power in the

larger society); an ideology binding the industrial relations system together; and, a body of rules

created to govern the actors at the workplace (Dunlop, 2005, cited in Oginni & Faseyiku, 2006).

The industrial relations system model revolves around three actors, namely: employees,

employers and the government. Sound industrial relations can only be based on human relations

and good human relations which indicate that human beings should be treated mal-treated. This

is to promote human dignity, fair dealing, as well as human physical, mental, and social needs

(Telsang, 2007, cited in Briggs, 2014). In the Dunlopian industrial relations system theory,

certain inputs like human labour, capital, and managerial skills are engaged through alternative

processes like collective bargaining, unilateral managerial decisions to produce certain outcomes

like industrial peace, job satisfaction and wage rates. In Nigeria, virtually all authors employed

the system perspective as the most appropriate industrial relations theory (Fashoyin, 1992;

Adebisi, 2013).

Dunlop asserts that industrial relations should not be taken as one which denotes union

management relations operating within the context of industrial peace or conflict. It should be

taken as one which is concerned with the larger subject of industrial relations system which

defines role, status and conduct of different groups of people who work together for productive

purposes in an economy characterised by its social and economic conditions in a given

technological market and political context which gives rise to the bodyof rules that govern the

interactions of different groups of people who are involved in it. Industrial relations in its wider

meaning is a set of functional inter-dependence involving historical, economic, social,

technological, psychological, occupational, political and legal variables. Out of these factors, the

three important factors that influence industrial relations are: trade unions, labour legislations

and industrial democracy (Fashoyin, 1994).

Dunlop also described three environmental contexts that play a decisive part in shaping

the rules of industrial relations systems and with which these actors interact. First, the

technological characteristics of the work place and work community. He regards particular

technologies as having far-reaching consequences in determining industrial relations rule

making. Technology, for example, affects the size of the work force, its concentration or

dispersion, the proportions of skills in the work force, the ratio of mallet o female workers, and

health and safety at the place of work. Second, the market or budgetary constraints that impinge

on the actors. Such constraints may be local, national or International. Third, the locus and

distribution of power in the larger society. This tends to be reflected within the industrial

relations system itself. It is a context that helps to structure the industrial relations system.

Meanwhile, the final input in the Dunlopian systems theory is the ideology or set of ideas and

beliefs held by the actors, that binds the system together. The Dunlopian system theory also

consists of the conversion processes. The process of bargaining, reconciliation, arbitration, law

making and rules constitute the output of the industrial relations systems and there is a feedback

mechanism linking the outputs and inputs.

Dunlop emphasises the core idea of systems by saying that the arrangements in the field

of industrial relations may be regarded as a system in the sense that each of them more or

80

lessintimately affects each of the others so that they constitute a group of arrangements

fordealing with certain matters and are collectively responsible for certain results. In effect,

industrial relations are the system which produce the rules of the workplace. Such rules are the

product of interaction between three key actors (workers/unions, employers and associated

organisations or government). The Dunlop‘s model gives great significance toexternal or

environmental forces. In other words, management, labour, and the government possess a shared

ideology that defines their roles within the relationship and provides stability to the system

3.2.5 Marxist theory

The Marxist view of industrial relations looks at the nature of the capitalist society, where

there is a fundamental division of interest between capital and labour, and sees workplace

relations against this history (Otobo, 1988). This perspective sees inequalities of power and

economic wealth as having their roots in the nature of the capitalist economic system. Conflict is

inevitable, and trade unions would naturally resist exploitation of workers by capitalists. Whilst

there may be periods of acquiescence, the Marxist view may be that institutions of joint

regulation would enhance rather than limit management's position as they presume the

continuation of capitalism rather than challenge it.

3.3 The Effects of globalisation on Industrial Relations

David (1997) believed that increasing international economic inter-dependence has

disturbed traditional Industrial Relation (IR) arrangements in several broad ways. Firstly, such

arrangements have normally been confined to the circumstances created by national markets; but

globalisation has fundamentally changed, and considerably expanded, the boundaries of the

market place. In this respect, the extent of information flows made possible by new technology is

building inter-enterprise networks around the world, is calling into question the traditional

boundaries of the enterprise and is eroding current industrial relations arrangements. MNCs are

the primary driving force for change. They are organisations that engage in Foreign Direct

Investment (FDI) and own or control productive assets in more than one country (Frenkel, 1995).

They are creating very complex international production networks which distinguish

globalisation from the simpler forms of international business integration in earlier periods. As

producers of global goods and services (notably, in the area of mass communications), centres of

networks and large employers, MNCs have an impact extending far beyond urban centres in the

countries in which they are located. In addition to activities of MNCs, many locally-based

enterprises, of varying sizes, in manycountries are using information technology to focus on the

demands of international (and domestic) ―niche‖ markets in a way which is contributing to a

growing individualization and decollectivism of work.

Secondly, globalisation has disturbed the status quo between ―capital‖ and ―labour‖ in

each country, in the sense that capital is significantly more mobile in an open international

environment, while labour remains relatively immobile (here it should be noted that, under

globalisation, international labour migration is continuing, but, proportionately to the rate in the

1970's, has not increased (World Bank, 1995). This can place ―labour‖ at a relative disadvantage,

in that ―capital‖ can now employ ―labour‖ in different countries, at lower cost and on a basis

which can prejudice the continuing employment of workers in the originating country. Thirdly,

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globalisation is having a contradictory impact on industrial relations. It is accelerating economic

inter-dependence between countries on an intra- and inter-regional basis and encouraging

similarities in approach by individual enterprises in competitive markets. This may lead to some

convergence in industrial relations arrangements around the world. At the same time, there is

clear evidence of resistance towards convergence, based on particular national and regional

circumstances.

3.4 Roles of MNC‟s

The principal focus of the changes taking place in response to globalisation is at the level

of the individual (predominantly, private sector) enterprise. MNCs have had and will continue to

have a key role in these changes, although this role should not be over-estimated. United Nations

Conference on Trade and Development (UNCTAD) estimates that, globally, there are about

37,000 MNCs having over 206,000 affiliates. Over 90% of MNCs are based in advanced

countries, with nearly half of all affiliates in newly industrialising and developing countries

(UNCTAD, 1994).

MNCs are a major employer of labour. Globally, approximately 73 million persons are

employed by these enterprises. This constitutes nearly 10% of paid employees engaged in non-

agricultural activities worldwide, and about 20% in developed countries alone (UNCTAD,

1994). Compared with the position in parent enterprises, there has been a substantial increase in

employment in MNC foreign affiliates, particularly in developing countries, during the 1990's.

The World Bank estimates that MNCs employ in the order of 12 million workers in developing

countries, but affects the livelihood of probably twice that number (World Bank, 1995). What is

the impact of MNC's in local markets, particularly where they are competing for workers? And

what is their relationship with trade unions? Available evidence suggests that larger MNC's

generally pay more than local firms and at least matches or exceeds working conditions and

other employment benefits in the local labour market (UNCTAD, 1994). While there are still

disturbing incidences of ―fly by night‖ MNC's, an increasing number of MNC‘s are emphasising

their social responsibility, which reflects itself in a basic commitment to workers' welfare and

―guiding‖ the employment practices of subcontractors and joint venture partners (UNCTAD,

1994).

This role is being reinforced through promotion of the International Labour Organisation

(ILO), Tripartite Declaration and the Organisation for Economic Co-operation and Development

(OECD), Guidelines concerning Multinational Enterprises, and, more recently, through industry

codes of conduct on labour practices in various countries. MNC relationships with trade unions

are influenced both by labour-management relations in their country of origin and circumstances

in their host country. In general, it seems that MNCs prefer not to recognise trade unions or to

bargain with them; but normally do so where it is required (e.g., by legislation). Where MNCs

appear to be predisposed towards trade unions, it is usually towards unions based in the

enterprise. Overall, MNCs vary considerably in their industrial relations and human relations

management (HRM) strategies, and this an important area for future research.

3.5 Information technology and Industrial Relations

The impact of changes in information technology on the organisation of production and

work at enterprise level - the industrial relations heartland - provides a specific example of the

82

forces encouraging and supporting globalisation. Increased competition in global (and in many

domestic) markets has created demand for morespecialised, better quality items. This has led to

higher volatility in product markets and shorter product life cycles. These circumstances require

enterprises to respond flexibly and quickly to changes in market demand. In terms of the

organisation of production, new technologies are increasing the scope for greaterflexibility in

production processes, and are resolving information/coordination difficulties which previously

limited the capacity for production by enterprises at different locations around the world.

Where enterprises are servicing more specialised markets, smaller and more limited

production processes are now involved. New technology has also made it possible to produce the

same level of output with fewer workers. In both situations, there is increased emphasis on

workers having higher value capacities and skills to perform a variety of jobs. This has blurred

the distinction (both functional and hierarchical) between different kinds of jobs and between

labour and management generally. In addition, efforts to improve products (through innovation,

quality, availability and pricing) have led enterprises to establish cross-functional development

teams, transcending traditional boundaries between engineering, manufacturing and marketing.

These developments have been accompanied by the erosion of the standardized, segmented,

stable production process (of the ―Ford‖ type) which had facilitated collective industrial

relations. In many industries and enterprises, there are also fewer workers available to be

organised in trade unions.

Another area of enterprise activity to be affected by globalisation concerns the

organisation of work. To achieve the flexibility and productive efficiency required to respond

quickly and effectively to market changes, narrow worker job descriptions are having to be re-

written. This is resulting in work tasks based on broader groupings of activities, emphasising the

undertaking of ―whole‖ tasks. In the interests of greater efficiency, work is also being re-

organised, giving greater emphasis to team based activities, and re-integrated with a view to

improving linkages across units and departments within an enterprise. Related changes have seen

a ―flattening‖ of management hierarchies and devolution of greater operational responsibility and

authority to lower level managers, supervisors and work teams. In this process of adaptation,

many enterprises have been increasingly relying on internal and external ―benchmarking‖ to

establish and maintain ―best practice‖, and to emphasise ―organisational learning‖ (i.e., applying

lessons related to superior performance to the work of individual managers and workers). All of

these changes are directed to achieving stronger commitment by workers to the enterprise and its

objectives and closer relations between managers and workers, based on consultation and

cooperation.

Finally, enterprises have been seeking to ―rationalise‖ their operations to strengthen

further their competitiveness, by reducing costs (including both wage and non-wage labour

costs). Responses have included identifying core functions (i.e. those which define its essential

rationale and competitive edge and must be maintained), and subcontracting (or reconfiguring

existing such arrangements) for the performance of peripheral functions outside the enterprise;

substituting technology for labour; and ―downsizing‖. Strategic alliances and company mergers

have also increased markedly during the past decade. This has made the employment

environment for workers in the formal sector in many industrialized, and increasingly in

industrializing, countries much more unstable.

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3.6 Government and globalisation

Government all over the world has specific role of ensuring greater FDI higher expo of

and employment generation. Globalisation provides powerful incentives for government to

liberalise and the economics. (Frenkel, 1995). The challenge for government in the face of

globalisation is to encourage and regulate foreign participation in national economies

development in such a way as to promote balanced growth. Globalisation means that government

has less control over economic planning, this does not mean that the role of the state in Industrial

Relation becomes less important.

84

3.6.1 Globalisation and working conditions

Working conditions includes wages and other key job characteristics including but not

necessarily limited to health, safety, hours of work, security, benefits, and representations. The

effects of globalisation on working conditions varies from country to country, this is because

globalisation ha many faces. These faces affect the behavior and the structure of the labour

markets, (World Bank, 2008). The link between globalisation and working conditions is up clear

in the sense that globalisation holds the potential to both help and hurt workers. However,

working conditions of workers in develop countries are generally better than developing

countries.

3.6.2 Globalisation and unemployment

Right from 1986, when Babangida administration accepted the IMF conditions to

liberalise the economy with the introduction of Structural Adjustment Program (SAP), Nigeria

has since then continues to witness high level of unemployment. As economic recession set,

organisation starts outsourcing which led to loss of job.

4 Trade disputes

Due to hardships experience by workers over working conditions, the country has

witnessed many trade disputes in the last 10 years. Justifying the assertion that globalisation

affects workers negatively in developing countries. David (1997) went further that increasing

international and economics interdependent has disturbed traditional Industrial Relation (IR) five

major ways, as highlighted below. One, the continue shift in employment from manufacturing to

service oriented industries, accompanied by a shift from traditional manual occupations to

various forms of white collar employment. Public-sector employment continues to decline.

Giving rise to unemployment. Two, incidence of increasing women in labour. This has been

combined with growing demand for various forms of employment (e.g. part-time, temporary

casual and homework, process work and telework). Three, trade unions memberships are

declining, because the manufacturing and public sector that used to be their traditional base and

support have reduced their employment. Four, the growth of Export Processing Zone (EPZ).

China, in other to attract FDI have included setting up of EP2 which provide cheap, compliant

and abundant labour, good infrastructures, generous incentives and access to domestic and

international market. (UNCTAD, 1994). It is estimated that such zones create employment for

about 4 million people in China. Trade unions are discouraged or banned in such zones (ILO,

1996). Five, cross cultural managing and working: Another consequence of increasing

globalisation is that managers from investing countries in and outside Nigeria need to adapt their

own national management practices to the prevailing practices in the host countries. Government

has to be familiar with the customs, practices and expectations of the home countries in order to

provide appropriate supporting policies and programme.

5 Conclusion and recommendations

5.1 Conclusion

85

Effective labour-management relations are critical to enterprise performance and the

wider country at large. Globalisation has changed the focus of industrial relations and the quality

and type of such relations at enterprise level or organisation level will either position the country

well or not so well to take advantage of the gains inherent in globalisation. Innovative and

competitive organisations are those that can survive in the current globalisation age. To achieve

this sound and effective labour management is key. As far as employment and income

distribution are concerned as a fallout of globalisation effects, organisation should adopt the use

of technology. On the whole, the level of economic and human development matter in shaping

the direction and impact of the current wave of globalisation. The role of physical and human on

infrastructures is crucial in maximizing the positive employment and distributional effects of

increasing trade and foreign direct investment (FDI). In other words, government should remove

the bottlenecks in the course of training and development of employees. The need for

government to fund research and development is key to making globalisation effective in

developing countries.

5.2 Recommendations

In line with the conclusion, the following are recommended:

1. As practiced in China, decentralised collective bargaining arrangement is based on the need to

make enterprise more efficient and productive. It linked wage increase to clearly identified

performance. This can be extended to the public sector in Nigeria. Developing skilled and

adaptive work force. According to World Bank (1993), the main source of productivity and

growth in China is technology, which increases capital intensity, economics of scale and

improvement in labour efficiency. Education and training plays a vital role in promoting labour

efficiency. Government should therefore focus on education and training in Nigeria to enhance

labour efficiency.

2. To achieve the objective of skilled and creative work force, employers should examine a range

of initiatives in collaboration with government. The Multinational Companies (MNC) are not left

out in this scheme.

3. The need to decentralise Industrial Relations (resulting from the need for organisations to

become more flexible, productive and competitive in the face of globalisation) implies that

government must devolve more power and responsibility to managers and workers at industry

and enterprise level to enable them resolve issues of direct concern at the work place. This

implies that the role of the state in Industrial Relations will be called to question. It is, therefore,

necessary to review International Relation legislation, rules and roles of institutions continually

in line with changes in the global environment.

86

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Hackers and computer security: the implications for global competitiveness of Nigerian

business organisations

Biliamin Olanrewaju Isola

Department of Office Technology and Management (OTM) Lagos State Polytechnic, Ikorodu

billy.isola2011@gmail.com

Abstract

The main problem addressed in this paper is to know to what extent are the Nigerian

business organisations are tackling the issues of hacking, so as to enhance their competitive

capability in the global market. The paper considered implications of computer hackers on the security

of information and other assets of Nigerian firms and its effects on global competitiveness. Both

secondary and primary data were obtained from the computer literate staff members of selected business

firms in Lagos metropolis. One hundred and twenty copies of a structured questionnaire were

administered to staff of the selected organisations, but 97 completed copies were retrieved. The data were

analysed and the hypotheses for the study were tested using the Chi-Square Statistics (at 0.05 significance

level). The findings of the study revealed that there is a significant correlation between hacking and loss

of money by Nigerian business firms. It also revealed that several Nigerian business firms do not have in-

house IT experts to forestall the negative activities of computer hackers, which implies that the Nigerian

business community stands to face poor image and neglect from global competition. Based on these

findings, it was recommended that the management of Nigerian business should take the activities of

computer hackers as an important management responsibility, consider the employment of in-house IT

experts (with hacking knowledge) a necessity and introduce all-inclusive cyber security policies with a

view to improving the Nigeria business image and enhance their global competitiveness.

Keywords: Hacking, hackers, computer security, cyber-crime, cyber security, global

competitiveness, Nigeria.

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1. Introduction

Computers play important roles in the effective and efficient running of any business

organisations (small, medium or large). Over the years, almost all kinds of businesses rely on

computers for automating their traditional processes. Vidushi and Ruhi (2012) summarised the

role of computers in business organisation into major areas which include: Business

Communication, Inventory Management, Customer Relationship Management, Payroll System,

Advertisement, Data management, Management Information System and Human Resource

Management. In addition, media profession has also benefit a lot from e-advertising and

marketing. In other words, whether they are paper notices on boards or electronic billboards and

online advertisements, every advert via any media is fully done with a computer.

Furthermore, today, most companies have digital versions of their documents on online (cloud

computing); these documents become instantly available to everyone in the company, regardless

of geographical location. Likewise, Management Information System (MIS) enables companies

to track sales data, expenses, productivity levels, and profitability over time; it helps identify

areas of improvement and use the data as part of strategic planning process (Markgraf, n.d). In

the modern day business competition, computers greatly assist management in human resource

planning, recruitment, wage and salary planning, personnel record keeping, training and

development and many more.

From the above synopsis, we can see that computers serve as versatile working tools in business

organisations; but due to their versatility and wider acceptance in business circle, computer

applications have attracted curiosities from different individuals, including hackers of various

shades and colours and for various reasons (both legitimate and otherwise). Writing on the

interest, Wikipedia wrote that attackers’ motive for breaching computer security vary between;

while some are thrill-seekers, others are criminals looking for financial gain and the source also

mentioned that others are State-sponsored attackers for legitimate reason.

Now, it is no gainsaying the fact that the growing curiosities and attacks on computer is

due to the increasing reliance on computer systems in global economy to accept, process, safe

and transmit information. This is further reinforced by documented evidences about computer

systems‘ vulnerability to working attack; copious examples of businesses that had experienced

various forms of illicit attacks and system vulnerabilities abound in Nigeria.

The PMNews, Nigeria (2014) reported that the figures released by the Central Bank of

Nigeria (CBN) showed that the nation‘s banking sector has lost over N20 billion through internet

fraud in 2013 alone and in September of the same year, undergraduates of a Nigerian federal

university infamously defrauded Union Bank Plc to the tune of N2 billion. According to

businessinsider.com (2009), a hacker took control of a company's general Gmail account and

sent a scam email to at least several dozen people who have corresponded with the company.

BusinessNews (2014) also reported that the Central Bank of Nigeria‘s records released in June,

2014 showed that banks in Nigeria lost N40bn to online frauds in 2013 alone.

Reporting on the system vulnerability, BusinessNews (2014) said that over 25 million

Nigerian payment Automated Teller Machines (ATM) cards were reported prone to hacking from

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July, 2015 when Microsoft Corporation would end its support for the Windows Server 2003 and

Windows Server 2003 R2 software; the main operating software (OS) use by Nigerian Banks to

run their ATM machines. The Information Security Society of Africa Nigeria (ISSAN) (2011), in

one of its Information Technology (IT) articles, reported that about 80 per cent of Nigerian

businesses online and other government organisations with presence on the web are prone to

cyber-attacks. The report showed that top among the organisations, whose web portals and web-

based applications have been found vulnerable to cyber-attacks, include: Central Bank of

Nigeria, Nigeria Stock Exchange, banks, pension fund administrators and switching/electronic

payment companies in Nigeria.

Going by the above mentioned example, hacking is no longer news in Nigerian business

environment, though the prime target has been the financial institutions; though, other sectors of

the economy have not been immune against cyber-attacks. Practically, computer insecurity is due

to the activities of hackers. Studies have shown that hackers do everything within their power to

gain access to the stored contents of computer systems, the processing capabilities of a system,

or intercept information being communicated between systems. Each of these attacks requires a

different set of skills, targets and different set of system vulnerabilities. The main problem

addressed in the paper is to what extent are the Nigerian business organisations are tackling the

issues of hacking, so as to enhance their competitive capability in the global market.

1.1 Research hypotheses

To achieve the purpose of the study, the following hypotheses were formulated:

1. Ho: There is no significant correlation between hacking and computer security of

Nigerian business organisations.

Hi: There is a significant correlation between hacking and computer security of

Nigerian business organisations.

2. Ho: There is no significant correlation between computer security and lost/image of

money by Nigerian business organisations.

Hi: There is significant correlation between computer security and lost/image of

money by Nigerian business organisations.

3. Ho: There is no significant correlation between computer security and global

competitiveness of Nigerian business organisations.

Hi: There is significant correlation between computer security and global

competitiveness of Nigerian business organisations.

2. Literature review

Based on the rapid technological advancement and cheap mobile Information and

Communication Technology (ICT) devices now present in the markets world over, hacker and

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thieves are now seizing this easy opportunity to steal sensitive data from all new mobile

endpoints. IBM MaaS360(2016) reported that the Ponemon Institute estimated that the cost of a

single breach to the tune of $3.5 million in 2014. The source observed that the breach was due to

malicious mobile apps which are typically the greatest source of risk to virtually every enterprise

and as the ―bring your own device‖ (BYOD) policies of business organisations are gaining

popularity, the lines between personal devices and work devices are blurring, meaning that

employees are accessing data from less than corporate level secured devices. Based on the

BYOD policy, IBM suggested that there is need to modernise security with a robust way to

proactively detect, analyse and remediate new mobile threats, learn the true cost of a data breach

and how to best implement company‘s policy.

2.1 The historical background of hacking in the world and Nigeria

2.1.1 The world perspective

According to Devitt (n.d) computer hackers have existed almost as long as computers and

indeed, the "hackers" have been in existence for more than a century. The author cited an

incidence in 1878, just two years after the telephone was invented by Alexander Graham Bell,

where a group of teenage boys hired to run the switchboards were kicked off of a telephone

system in New York, because the boys were more interested in knowing how the phone system

worked than in making proper connections and directing calls to the correct place. In essence,

they were trying to "hack" the system to see how it worked, (the author concluded).

According to Timeline of Computer Security Hacker History (reported by Wikipedia),

((hacking and system cracking appeared with the first electronic computers many years back,

with the first recorded case of hacking and cracking surfaced in 1903 and more recorded cases of

hacking and cracking continued till date. Corroborating this statement, in 1969, Devitt wrote

that the Massachusetts Institute of Technology (MIT) became home to the first computer

hackers, who begin altering software and hardware to make it work better and/or faster. Ward

(2011), a technology correspondent for BBC News, observed that ―the world is full of hackers,

or so it seems; in fact, multi-national companies have been left counting the cost of assaults on

their e-mail systems and websites and the members of the public have had their personal

information stolen and pasted all over the internet.‖ The source added that, ―in the early decades

of the 21st century, the word "hacker" has become synonymous with people who lurk in

darkened rooms, anonymously terrorising the internet.‖

According to Ward, the ―original hackers were benign creatures: the students, in fact.‖

He observed that to anyone attending the Massachusetts Institute of Technology during the 1950s

and 60s, a hack was simply an elegant or inspired solution to any given problem, the writer

concluded. So, many of the early MIT hack tended to be practical jokes and for the early

pioneers, a hack was a feat of programming prowess, the activities that were greatly admired as

they combined expert knowledge with a creative instinct. Conversely, Ward (2011) wrote that the

students at MIT also laid the foundations for hacking's notorious gender divide, which is a reason

why hacking in modern day tended to involve mainly young men and teenage boys. However,

the concept of ‗group dynamism‘ has crept into hacking because as connected computer systems

became ubiquitous, so novel groups of hackers emerged, keen to demonstrate their skills: the

93

groups can be both black and white hat (or sometimes grey) hackers, depending on their

motivation," he said. In hacker parlance, white hats are the good guys, black hats the criminals

but even then the terms are relative; for example, one man's hacker could be another's hacktivist.

Ward (2011) observed that ―If hacking was a business born in the US, it has gone truly

global. Corroborating the view of Ward, Ferguson, in Ward (2011), stated that ―in the more

recent times, groups hackers have emerged around the world in places as far flung as Pakistan

and India, where there are fierce competition between the hackers." In Romania, Ward (2011)

wrote, groups such as HackersBlog have hit various companies and in China and Russia, many

hackers are believed to act as proxies for their governments; now in 2011, it is hacker groups

making the headlines once again, he concluded.

2.1.2 The Nigerian perspective

For now, it is difficult to get the actual date/year the first hacking took place in Nigeria

because cyber-crime data of Nigerian source could not be considered as accurate. In the first

instance, Nigeria does not have a centralised government body that collects and publishes cyber-

crime statistical report, and Nigeria body such as the Central Bank of Nigeria (CBN), that

publishes reports on Internet based crimes, seems to hold a view that represents the trend

differently from the rest of the world (Oyesanya, 2015). Thus, the history of hacking in Nigeria

as presented in the paper, is based on international references; the first replica of hacking in

Nigeria documented in a Reuters‘ article, published in July 2004, according to the article, 48% of

global Spam emails, costing organisations $2.5 million annually, of the nuisance types, and

talking about selling products, providing financial services, purportedly come from Nigeria

(Oyesanya, 2015). Oyesanya, quoting the American Federal Bureau of Investigation, in its 2001

and 2002, Internet Fraud and Complaints Center, reported that Nigeria accounted for 15.5

percent of total reported Internet crime activity to the American FBI, in 2002, and Nigerian letter

fraud accounted for the highest media loss. Based on these records, Oyesanya (2015:2) observed

that there is ―now a significant presence of Nigerian based cyber-crime activity that is global in

nature, and accounting for a significant proportion of global financial loss‖. While the first phase

of cyber-crime in Nigeria was tagged ―419‖ (Oyesanya, 2015), the second phase can be called

―computer hacking‖, with banking industry being the major target; examples based on available

literatures are summarised above.

2.1.3 Hacking: conceptual and theoretical framework

Hacking is carried out in various dimensions. It could come in through internet (Cyber-

attacks) or through direct contact with target computer system. Regardless of the mode of

operation, the aim of hacking could either be negative or positive; the negative hacking generally

refers to criminal activity which might aimed at stealing an organisation‘s intellectual property,

confiscating on-line bank accounts, creating and distributing viruses on other computers, posting

confidential business information on the Internet and disrupting a country‘s critical national

infrastructure (ComputerWeekly, 2013).

Generally speaking, people outside the IT profession see the relationship between hackers

and computer systems in the negative. As already mentioned, some hackers are thrill-seekers or

94

vandals, others are activists or criminals looking for financial gain; state-sponsored attackers are

now common and well resourced. The question we should ask ourselves is: ―who is a hacker or

who computer hacker is?‖ A hacker is someone (a computer literate) who seeks and ((exploits

weaknesses in a computer system or computer network/internet for a reason (either positive or

negative). A hacker can be an insider or operating from outside the computer target, but the most

dangerous one is the malicious insider (Computerweekly, 2016). As earlier mentioned, hackers

may be motivated by a multitude of reasons, apart from profit, protest, challenge, enjoyment, or

to evaluate weaknesses in computer system or programmes with a view to assist in removing

them.

It should be noted that based on the above views (negative/positive), there is a long-

standing ((controversy about the true meaning/nature of a hacker. In this controversy, the term

hacker may be argued to be a ((computer programmers or someone with an advanced

understanding of computers and computer networks, or more appropriate term for those who

break into computers, whether computer criminal ((black hats) or computer security expert

(((white hats) (NSA, 2016).

Generally speaking, the term hacker is fairly controversial in its meaning and interpretation.

Some writers believed that some people claim that hackers are good guys who simply push the

boundaries of knowledge without doing any harm (at least not on purpose), whereas crackers are

the real bad guys. This debate is not productive; for the purposes of this discussion, the term

unauthorised user (UU) will suffice (Rouse (n.d). From the above statement, we can deduce that

UU covers the entire spectrum of hackers, from those involved in organised criminal activities to

insiders who are pushing the limits of what they are authorised to do on a system. In this

instance, there is connivance between the internal and external intruders to invade some

computer systems.

According to Rouse (n.d) said ―the term hacker is used in popular media to describe someone

who attempts to break into computer systems. While Raymond (n.d) observed that hacker is a

term used by some to mean "a clever programmer" and by others, especially those in popular

media, to mean "someone who tries to break into computer systems." Typically, this kind of

hacker would be a proficient programmer or engineer with sufficient technical knowledge to

understand the weak points in a security system, the source concluded. Among programmers, a

hacker can mean anyone who is a good programmer. This means someone who can gain access

to a computer either by legal or illegal means and controls what the computer does. With the

increase in computer use, there is also an increase in the number of hackers. One area that

hackers are moving into is the business world. Thus, business world is interested in hackers,

because businesses are moving towards the use of computers more than ever before; as

information grows, so does the need to contain and gather and transmit information. According

to literature, hackers are very sophisticated in computer programming and have an endless

amount of ways of by-passing a firewall to access a network and a PC. Regardless of antivirus

updates, a hacker can still find a way around the newest upgrades on antivirus programs and

firewalls (Spam Laws, n.d).

2.14 Classifications of hackers

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Researches on hacking activities, according to Raymond (cited in Wikipedia), emphasize

a spectrum of different categories, such as ((white hat, grey hat, (black hat and script kiddie. For

the purpose of this paper, computer hackers are grouped into three major categories namely:

White hat, Black hat and Gray hat

White hat: This group of hackers Internet slang refers to “white hat” hacker as either

ethical or a computer security expert, who specialises in penetration testing and in other testing

methodologies to ensure the security of an organisation's information systems. Studies revealed

that a((white hat hacker breaks computer security for non-malicious reasons, either to test his

own security system, performs penetration tests or vulnerability assessments for a client;

furthermore, a white hat hacker works for a security company which makes security software.

Black hat: A "black hat" hacker violates computer security for little reason beyond

maliciousness or for personal gain" (Moore, 2005, cited in Wikipedia). In simpler term, ―black

hat‖ hackers form the conventional, illegal hacking groups in the computer industry or culture,

and thus, are "the epitome of all that the public fears in a computer criminal", the source

revealed. Variations of black hat hackers include Script kiddie, Hacktivist and Organised

criminal gangs (Moore, 2005).

Grey hat: A ―Grey hat‖ hacker lies between a ―black hat‖ and a ―white hat‖ hacker. For

example, a grey hat hacker may surf the Internet and hack into a computer system for the sole

purpose of notifying the administrator that his system has a security defect. However, a grey hat

hacker may then offer to correct the defect for a fee. Studies also showed that grey hat hackers

sometimes publish the defects of a system to the world instead to a group of people or the

affected organisation (Wikipedia).

2.1.5 How does computer hackers "get inside" a computer?

Quite common is the hacker practice of scanning networks for vulnerabilities and then

exploiting them, which is why it is critical for businesses to stay alert and know how to identify

the weaknesses in their networks, so that they can improve their online security systems

(Marden, 2015). According to (Scientific American, 2004), hackers can gain access to the stored

contents of a computer system, or to the processing capabilities of a system, or intercept

information being communicated between systems.

On one hand, ―known vulnerabilities‖ often exist as the result of needed capabilities. For

instance, allowing different people to use a system in order to accomplish some business process;

a known vulnerability in this case is: the users. Another example of a known vulnerability is

communicating over the Internet; enabling the Internet capability opens an access path to

unknown and untrusted entities: the visitors. On the other hand, ―unknown vulnerabilities‖,

which the owner or operator of a system is not aware of, may be the result of poor engineering,

or may arise from unintended consequences of some of the needed capabilities (Scientific

American, 2004).

By characterisation, exploiting vulnerabilities of computer systems can range from poor

password protection to leaving a computer turned on, physically accessible to unauthorised

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personnel or visitors to the office, technical exploits using pre-programmed software against

specific vulnerabilities, and phishing which include sending scam emails tempting users to click

a link to access a page (Marden, 2015 & Ashford, 2016). Others include spoofing attack: this

approach involves the use of a website that successfully masquerades another known one by

falsifying data and is thereby treated as a trusted site by a user (Wikipedia). Scan for vulnerable

system is an approach which uses a little device called ―demon dialer‖ on any computer system

that is turned on and on internet connection (spamlaws.com and blog.eiqnetworks.com).

Vulnerable IP Lists is another means of hacking. Once hackers identify what computers and

networks vulnerable, they exchange lists of these IP addresses with fellow hackers, so a Trojan

virus can be loaded into the target computer system with the intention of snooping, spying, or

destroying the computer's operating system. The hackers additionally use a tool that system

administrators use to test the security strength of a network system. The tool identifies

vulnerabilities and provides the hacker with a list of exploits or vulnerabilities (Spam Law (n.d.)

& Marden, 2015).

3. Empirical studies

3.1. The effects of computer hacking on business organisations

Identity Theft, Website Security and Credibility: Identity theft refers to hacking of

sensitive information such as credit cards and confidential accounts; hacking website security

involves introducing viruses capable of destroying the website data and compromise website

security; while the afore-mentioned hacking activities affect concerned companies‘ credibility

(science.opposingviews.com).

Interconnected Costs: Financial implications of hacking are well documented by various

researchers. According to an article published by the BBC, computer hacking cost companies in

the United Kingdom billions of pounds in 2004. In their paper "The Economics of Computer

Hacking," economists Peter Leeson and Christopher Coyne wrote that computer viruses created

by hackers cost businesses $55 billion in 2003. In 2011, a single instance of hacking on the Play

Station cost Sony more than $170 million, while Google lost $500,000 due to hacking in 2005.

According to Richard Power, editorial director of the Computer Security Institute, instances of

hacking cost as much as $600,000 to $7m a day for online businesses in 2011, depending upon

the revenue of the operation (BBC News, 2011& Huffington Post, 2013). In Nigeria, Business

News (2014) reported that the Central Bank of Nigeria‘s records showed that Banks in the

country lost N40bn to online frauds in 2013 alone.

Some research studies reported thatthere is more than just money at stake in computer

hacking: organisational structure and its attendant cost are among the list. For once, computer

hacking engenders organisational restructuring; for example, the structure of organisations

previously hacked, or at risk of being hacked or with extensive digital networks will requiring

protection from hacking will probably restructured with a view to reflecting the threat of

hacking. Businesses in such a position, if large and have enough budget, may employ extensive

information technology (IT) teams, which work constantly on creating, updating, developing and

improving computer networks and safety to prevent or deter hackers from accessing information.

But small businesses with limited budgets may face radical re-organisation with a few to

97

reducing the menace of hacking, while new businesses anticipating such preventative measures

must work them into the initial business plan, which means addition financial burden (McCamy,

2014 & Computer Weekly, 2012).

3.2 Cyber Security 2016 and beyond

According to Computerweekly (2016), traditional security approaches and technologies

are no longer enough to tackle new threats that are designed to hold companies‘ data to ransom

or bypass security controls to steal data. Regrettably, the source observed that many companies

are still relying on traditional defenses like antivirus systems and firewalls rather than deploying

encryption and endpoint security, and are pursuing reactive security strategies rather than

investing in systems to be more proactive in protecting data. Many organisations still lack the

ability to detect and respond quickly to malicious activity on their networks and are failing to

train employees effectively in cyber defence. The source further reported that surveys indicated

high levels of confidence by Chief Information Officers (CIOs) of surveyed organisations about

their security posture, indicating a worrying disconnect between perception and reality in the

face of increasingly stealthy cyber threats.

4. Research Methodology

Survey design was adopted for the study. The study population consist of the business

organisations, using websites and web servers to conduct their business operations. A sample of

one hundred and twenty (120) staff members of business organisations with computer experience

were randomly selected for the study. A structured Questionnaire, containing twenty-one (21)

variables, based on Liker‘s 5-point Summated Rating Scale was adopted to gather the primary

data for the study, while related literature was reviewed to determine the type of secondary data

to be collected. The analysis and findings of the study are based on Ninety-seven (or 80%) of the

distributed copies which are duly completed and returned. Weighted mean based on Liker‘s five

point Summated Rating was used to analyse the variables in the questionnaire and item with

mean rating of 3.5 and above was accepted, while below was rejected. Chi-Square Statistical

tool, at 0.05% level of significance, was used to test the research hypotheses for the study.

5. Results and discussion

Goodness of fit testing

Hypothesis one:

Ho: There is no significant correlation between hacking and computer security of

Nigerian business organisations.

Hi: There is a significant correlation between hacking and computer security of Nigerian

business organisations.

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99

Table 1: Testing of Hypothesis one

Items Options

Strongly Agreed Agreed Undecided Disagreed Strongly Disagreed

Fo Fe Fo Fe Fo Fe Fo Fe Fo Fe

To prevent hacking of your

system, you make sure that

your antivirus software is up-

to-date and check frequently

to see if there are new virus

definitions available.

36 19.4 34 19.4 2 19.4 8 19.4 17 19.4

With security monitoring,

vulnerability management,

and other security tools,

businesses can maintain a

strong security posture and

defend themselves from

cyber-security threats.

38 19.4 49 19.4 3 19.4 3 19.4 4 19.4

Source: Field survey, 2016

The result of hypothesis tested:

α 0.05

df 4

χ2 15.07

χ2-crit 9.40

sig yes

Thus, there is a significant correlation between hacking and computer security of Nigerian business

organisations.

Hypothesis two:

Ho: There is no significant correlation between computer security and lost/image of

money by Nigerian business organisations.

100

Hi: There is significant correlation between computer security and lost/image of money

by Nigerian business organisations.

Table 2: Testing of Hypothesis two

Items Options

Strongly

Agreed

Agreed Undecided Disagreed Strongly

Disagreed

Fo Fe Fo Fe Fo Fe Fo Fe Fo Fe

Your organisation has

suffered great loss due

to cybercrime/frauds.

30 19.4 49 19.4 5 19.4 10 19.4 3 19.4

Negative hacking does

not affect the image of

your orgation.

16 19.4 30 19.4 3 19.4 21 19.4 27 19.4

Source: Field survey, 2016

The result of the test:

α 0.05

df 4

χ2 10.34

χ2-crit 9.40

sig yes

Thus, there is significant correlation between computer security and loss of money/image

by Nigerian business organisations.

Hypothesis three:

Ho: There is no significant correlation between computer security and global

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competitiveness of Nigerian business organisations.

Hi: There is significant correlation between computer security and global

competitiveness of Nigerian business organisations.

Table 3: Testing of Hypothesis three Items Options

Strongly Agreed Agreed Undecided Disagreed Strongly Disagreed

Fo Fe Fo Fe Fo Fe Fo Fe Fo Fe

Websites are crucial to a

business, both in terms of

attracting new customers

through on-line searches

and offering an Internet

resource for your existing

customers.

30 19.4 49 19.4 5 19.4 10 19.4 3 19.4

By accessing the email

accounts of employees,

hackers can obtain

confidential documents,

personal information and

other time-sensitive data

that can be used against a

person or business via

malicious means.

16 19.4 30 19.4 3 19.4 21 19.4 27 19.4

Source: Field survey, 2016

The result of the test:

α 0.05

df 4

χ2 24.75

χ2-crit 9.40

sig yes

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Thus, there is significant correlation between computer security and global competitiveness of

Nigerian business organisations.

It was also discovered that criminal activities of hackers damage the image of business

organisation both within and outside Nigeria, and such activities are harmful to your employees

and current customers. In other words, hacking often results in a loss of money and data due to

files deletion or changed or a leak of top secret information that could cause real-world security

issues. This finding is in line with the some research experts (IBM MaaS360, 2016,

Computerweekly, 2016).

It is now a common knowledge that Websites are crucial to a business, both in terms of attracting

new customers through on-line searches and offering an internet resource for existing customers.

It was discovered that computer hackers can damage websites, typically with a virus. If this

happens, the global competiveness of the affected business concern would be hampered. This is

particularly important because most Nigerian business concerns reach and source for their

customers via websites.

It was found that business organisations in Nigeria do not consider protecting their computer

systems as a business priority. Responses from most companies sampled showed that different

people have access to their computer systems in order to accomplish some business process, thus

making their computers physically accessible to unauthorised personnel; most computer systems

have no administrator’s passwords and the passwords of those systems which have are shared

between two staff (at least) and such passwords are not changed very often, thereby making them

prone to hacking. This finding is quite different from the common practice in banking sector.

However, majority of responses received from banking sector showed that hacking activities are

facilitated by the insiders. Also discovered is the non-availability of in-house technicians to fix

any computer system breakdown which means, different technicians can have access to

computers.

In practical terms, criminal hackers are dangerous to successful global competitiveness of

Nigerian business organisations, hence, a need for protection. However, protection against

computer attacks is a multi-step process, which aims to limit and manage the vulnerabilities of

computer systems.

However, to reduce the incidence of vulnerability, most companies sampled are now investing

on new technologies in the areas of hardware and software, especially, the commercial banks.

Fortinet, Inc., (n.d) observed that as organisations grow and embrace mobility and cloud,

traditional boundaries are becoming increasingly complex to secure. Thus, reliance on firewalls

or other perimeter defences as method of security would no longer be adequate because once a

hacker inevitably breaks in, network and all the data stored within are ripe for the picking.

6. Conclusion and Recommendations

From the findings of this study, it can be concluded that hacking on the whole costs

businesses billions of naira/dollars each year. Not only that, the vital weapon of global

competitiveness (the image) of most Nigerian business organisation is at stake because they are not

103

really taking the menace of computer hacking serious. The presence of in-house IT experts is an

essential step in the preparation against the breach of computer security. This means that Nigerian

businesses especially those on-line with presence on the websites are prone to cyber-attacks due

to the increasing spate of cyber-criminal activities being perpetrated in the country (ISSAN,

2011).

The major finding of the study suggests that latest security technologies should be

deployed by all business organisations in Nigeria to protect company‘ computers from hackers

and viruses. Such security systems should aim to keep business properties safe and possibly

purchase insurance cover in the event of a disaster or robbery. Furthermore, the expected

security systems feature should include both technical and managerial controls, for example,

businesses should make sure that every computer system is fortified against virus, malware,

spyware, etc., and be capable of up-to-date and check frequently to see if there are new virus

definitions available. In addition, a technically proficient or authorised hacker should be hired

by especially, the institutions that deals with money and merchandises and government

organisations and others whose primary means of reaching the global markets is on-line, should

considered hiring authorised hackers to counter the menace of the criminal hackers (Nigeria

communications week, 2016). Finally, just like banks are doing, other business and government

organisations, should assign individual password to their staff (following the latest encryption‘s

standards), and secure their websites using the secure sector layer (SSL) approved standards

(Wikihow, 2016; Godaddy, 2016; Hefner, 2016; Scarfone, 2016, Entrepreneur, 2015 & Martin,

2016).

104

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Globalisation and competitiveness in developing nations

By

Emmanuel Odesanya Adesina Email: adeode67@yahoo.com

Festus Adesegun Adefolurin

Email: segunfolurin@yahoo.com

Gideon Oluwaseun Balogun

Email: gideonbal2010@yahoo.com

Kenneth Ikechukwu Amadi Email: k_gloryseed@yahoo.com

Abstract

Globalisation is the integration and inter-dependence of economic and social structures

across the globe. Despite its attendant benefits, it triggers intense competition among economic

units, making it difficult for developing countries, due to lack of resources, to compete

favourably in a globalised society. Therefore, making use of data from extant literature, this

paper discussed the relationship between the developed nations and developing nations in the

context of competitiveness in a globalised society. It found that developing countries are

plagued with the evident imposition of western hegemony, led by the United States and Western

Europe. The paper recommends that a strategy aimed at the development of institutionalised

socio-economic structures should be evolved by the developing countries.

Keywords: Globalisation, competitiveness, developing nations, Nigeria

108

Introduction

Developing nations constitute a major proportion of the entire nations of the world

(Schweb, 2015). Majority of these nations are found in continents such as Africa, Asia and South

America. These are countries, whose citizenry are plagued with varying degrees of deprivation

with regards to basic infrastructures, social amenities, industrial capital, and institutionalisation

among others. It is worth noting, that Africa is one of the continents that has remained in the

psyche and perception of the people as an economically deprived continent, housing a large

concentration of developing countries in its vast territorial land mass.

The developing countries of the world have continued to score very low on all available

indices of development; they are characterised by features such as high mortality rate, low life

expectancy rate, low gross domestic product (GDP), insurgency, kidnapping, political violence,

high rate of unemployment, foreign reserve inadequacy and a continued prevalence of political

instability (Nwoye, Obiorah & Ekesiobi, 2015; Zambakari, 2012). As a result, African countries

cannot compete favourably with developed nations. Thus, on competitiveness, the African

continent is still a far cry from the developed economies. Available records indicate that out of

the 144 economies captured in the 2014-2015 annual assessment of the drivers of productivity,

global competitiveness index (GCI) of the World Economic Forum (WEF), Mauritius, the first

African nation on the list with a score of 4.43 on a scale of 1-7 sat at a distant 46th

position, while

Nigeria occupied the 124th

position on the index with a score of 3.46 (Schwab, 2015).

Today, the Nigerian nation still lacks the required competitive edge even after having

rebased her monolithic economy with a view of making the country more viable (Nwoye, et al.,

2015). Still, on various human and economic development measures, the country has continued

to grope abysmally with a perpetuating high rate of power outages, non-availability of petroleum

products and the attendant depleted economic resources at both the federal and state levels due to

dwindling oil revenues (Adejumobi, 2006; Fapohunda, 2012). This disheartening fall-out has led

to the inability of eighteen state governments out of the thirty-six states of the federation being

unable to pay workers‘ salaries and thereby resorted to the federal government (FG) for bail-out

funds (Wakili & Muhammed, 2015). With a growing list which indicated that a total of 27 states

had applied for the fund with 23 states having received the fund from the FG (Daniel, 2016),

more worrisome is the inability of the states to repay the loan with a heightened evidence of the

need for a second bail out from the FG (Soniyi, 2016).

Hence, in such a weakened state, Nigeria and other developing nations will necessarily

remain as it were, at the receiving end of the intense competition that accompanies globalisation

(Ocampo, 2010). To the best of the knowledge of the researchers, extant literature on the subject

matter believe globalisation is the way forward for developing nations, but this paper attempted

to examine the place of developing nations in a highly competitive globalised business

environment. To achieve this, the rest of the paper is structured into literature review in part two,

while part three concludes.

Conceptual framework

We understand that development is of high priority to individuals and nations alike

(Kameri-Mbote, 2005). It has been defined in terms of social and economic variables by various

scholars, for example, development is the slow improvement made by the society in its socio-

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economic welfare (Kuhnen, 1987; Matunhu, 2011; Mawire, 2013). It is the key to competition

―Africa has nearly 12 per cent of the world‘s population, but only 3 per cent of world GDP. It is

the world‘s poorest region. With a 1998 per capita income, only 5 per cent of that in the world‘s

richest region‖ (Maddison, 2001, p. 161 cited in Zambakari, 2012). This is due to the evident

disparity in development between the African continent and the developed regions of the world.

Extant literature on development presents two classes of development: (1) developed nations and

(2) developing nations (Kuhnen, 1987; Mawire, 2013; Zambakari 2012). This classification,

assumes the existence of two distinct groups on the radar of socio-economic development.

Nations are nations that are considered to exhibit profound weakness and a high degree of

backwardness on the various indices of socio-economic advancement such as: life expectancy,

literacy level, improved standard of living (Adejumobi, 2006; United Nations Development

Programmes, UNDP, 2014).

In the light of this, and with growing concern for the plight of the developing nations, in

the year 2000 endorsed by 189 countries, the millennium development goals (MDG‘s) were

specifically focused on developing nations. With the MDG‘s goal number eight, aimed at

evolving a global partnership for development (Kolawole, Adeigbe, Zaggi, & Owonibi, 2014).

This affirmed the importance of development in the affairs of the nations of the world.

Forthwith, with the MDG‘s substituted for the Sustainable Development Goals (SDG‘s) in post

2015 era, it could still be seen that development remained a central issue as the SDG‘s goal

number eight is a fine-tuned version of the MDG‘s goal number nine as it is targeted at the

development of quality, reliable, sustainable and resilient infrastructures (Aquilina, 2015;

Stakeholder Forum, 2015; World Bank, 2016). But this goal has been criticised by Rippen,

Altenburg and Pegels (2015) who stated that it is focused on infrastructure, industrialisation and

innovation- three different areas that do not fit, is evident of a counter-productive mis-match.

Issues about globalisation have become common place in our world today (Chase-Dunn,

1999; Meyer, 2009; Ocampo, 2010). According to Meyer (2009), globalisation is the strategy of

business organisations to have a global focus in their operations. Ocampo (2010) emphasised that

globalisation is the continuous advancement made towards integration, inter-dependence and

equity among citizens and among nations with regards to the phenomenon of social contract.

Ocampo (2010) further buttressed his position on globalisation and stated that the creation of the

international labour organisation (ILO) through the treaty of Versailles was a step forward in

global co-operation. But with globalisation, increased competition among individuals, businesses

and nations has become the order of the day (Kotler & Armstrong, 2006).

Competition is the quest between or among entities (individuals, households, firms,

nations) to gain ownership and control of socio-economic resources or wealth (Kolter &

Armstrong, 2006) at the cost of rival entities (Bateman & Snell, 1999). According to Tomas

(2011), the value added to the citizen‘s well-being is the basis for measuring national

competitiveness, this value is represented by the performance of such a nation with regards to the

United Nations (UN‘s) human development index (HDI). According to UNDP (2009), HDI

components include: (i) life expectancy (ii) educational attainment, and (iii) improved standard

of living.

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Weihrich, Cannice and Koontz (2008) noted the perspective of Michael Porter, a

foremost scholar on the competitiveness of nations, who stated that a nation‘s possession of

natural resources is not an indication of its competitiveness; rather its competitiveness depends

on its favourable configuration of productive factors. This is the case with Nigeria and other

developing nations. Complementing this view, Berger (2008) observed Porter‘s diamond model

and stated that it is an integration of micro-economic and macro-economic determinants to

explain competitive advantage, the models maintained that the main object of competition are

firms within the nation. Thus, competition is high because in every market, the objectives and the

resources available to competitors are in varying proportions (Kolter & Armstrong, 2006). This

is the major reason for the competition to control resources, and the demand for these resources.

Theoretical framework

Having seen the situation contingent upon developed and developing nations as a result

of the quest for competitiveness, let us now consider some existing theories of development. A

number of theories exist on development. Four of these theories have been put forth and

discussed by a number of scholars, they include: modernisation theory, dependency theory,

world systems theory and globalisation theory (Bolen, 1983; Gabrielyan, 2014; Mawire, 2013;

Shareia, 2015).

The modernisation theory proposed that developing countries should undergo agonies by

abandoning traditional structures and emulating the models of the United states and Western

European nations (Mawire, 2013); the dependency theory is seen by its proponents, as a

sophisticated form of colonialism, with the overwhelming imperialism of the United states and

some Western European countries, thereby constraining the development of other continents

(Gabrelyan, 2014); the world systems theory maintains that peripheries (developing nations) are

deprived of wealth through dominant relationships with the core (developed nations) which

relegate them to economic backwardness and a hierarchy of unequal relations (Shareia, 2015).

Hence, the core (developed nation‘s) cash in on opportunities available in the developing nations

and; the globalisation theory encapsulated the tendencies of a US-Europe driven spread of

capitalism around the globe using communication and international ties as its vehicle of

propagation (Shareia).

On a closer look at the afore-stated theories of development, we are presented with a

clear picture of the mutually exclusive situation between developed and developing nations, with

the developed nations imposing their values on the developing nations. Having considered these

theories, the globalisation theory is of particular interest in this paper and will be used to explain

competitiveness in the context of a globalised society. A better understanding of the globalisation

theory is required in order to appreciate it. Therefore, we consider the work of Chase-Dunn

(1999) who isolated and explained five types of globalisation, namely: (1) The common

ecological constraints (2) The cultural globalisation (3) The globalisation of communication (4)

The economic globalisation and (5) The political globalisation.

However, due to its implication on the perceived imbalance, the focus of this paper is on

economic globalisation. According to Chase-Dunn (1999), the consensus on globalisation is

based on an information and communication technology (ICT) driven global market for

economic competition beyond isolated national or local markets. Citing Paffer (1987) argued that

111

differences in the productivity, intensity of labour processes, and unequal exchange in trade are

the causes of this disparity between developing nations and developed nations. Birkan (2015)

stated that even with the advantages of globalisation, so much opposing factors exist against

global equality. Birkan maintained that the unequal exchange in international trade is implicated

in this continued disparity. As Kreitner (2007) observed, to corroborate the above view, that

―greater economic inter-dependence and power shifts are the result‖ p. 77 Since the operations of

multi-national corporations (MNC‘s) whose equities, are fully or in part held by the government

of the developed nations, encourage and promote economic globalisation, but not with

favourable outcomes for developing nations (Hassan, 2013), leading to an aggravated situation of

imbalance with developing nations, holding forth as mere raw materials suppliers to the

developed nations (Gabrielyan, 2014).

According to Meyer (2009), ―on the global stage, competitive advantage is gained by

creating, transferring and exploiting competencies across operations and locations

internationally‖p. 4. For this reason Robbins and Coulter (2013) observed that to compete

favourably, cost reduction is imperative in developing countries. This situation has heightened

the age long question of reconciliation between high cost of production resulting from

infrastructural deficit in developing countries and competing favourably with the US and

Western-European led monopolies; and by implication, businesses that are domiciled by origin

in developing nations are at the receiving end of globalisation. This is a clear indication that

developing nations are being sacrificed on the altar of globalisation, while developed nations

continue to benefit enormously (Ocampo, 2010). Sequel to this, Matunhu (2011) recalled the

victimisation of the African continent by the unsuccessful structural adjustment programme

(SAP) and European agenda, prescribed and championed by the International Monetary Fund

(IMF).

Globalisation and competitiveness in developing nations

Developed nations are the industrialised nations of the world with highly improved socio-

economic variables such as: health care, education, basic infrastructures, democracy,

institutionalisation and social welfare among others, are found in North America and Western

Europe, while developing nations are nations that have been considered to exhibit profound

weakness and a high degree of backwardness on the various available indicators of socio-

economic advancement (Adejumobi, 2006; UNDP, 2014). With such profound weakness,

developing nations are at the receiving end of the attendant aggressive competition which is

synonymous with globalisation (Ocampo, 2010).

Today, the Nigerian society is still struggling with the aftermath of the SAP fiasco, as the

country has continued to contend with the burden of external debt and declining terms of trade

which are detrimental to development (Adejumobi, 2006; Fapohunda, 2012). Hence, the

developed nations will continue to advance at the expense of developing countries (Matunhu).

Being a direct outcome of the repressive policies of unilateral bodies, such as the World Bank

(WB) and the IMF, which promote Western dominance and capitalism that breeds perpetual

backwardness in developing nations (Kuhnen, 1987; Zambakari, 2012). But, countries such as

Japan, Hong kong, South Korea, Malaysia, Singapore and Indonesia have adopted the economic

112

growth approach; with this approach they have been able to cushion the impact of globalisation

on their economy (Ijaiya, Ijaiya, Bello & Ajayi, 2011). According to Atoloye (1997), cited in

Ijaiya et al. (2011), import substitution and export-led growth strategies both that stem from

economic growth approach have played a vital role in the improved competitiveness of these

nations.

Conclusion and recommendation

Having discussed the forces of globalisation and competitiveness in relation to developed

nations with the implication of globalisation on the affairs of developing nations having been

examined critically, the paper holds that Western dominance in a globalised society is

responsible for the failure of developing nations to compete favourably, and stands as an

impediment to balanced development among the regions of the world. Therefore, since

globalisation has become an inevitable force in the scheme of things, it is recommended that

developing countries should thread with caution and should be effectively engaged with the

institutionalisation of socio-economic structures such as education, healthcare, democracy, basic

infrastructures and other basic requirements that could strategically enhance and promote

balanced development.

113

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Public e-procurement in Nigeria: A catalyst for socio-economic development

By

Ismail Adewale Alli

Department of Marketing

Lagos State Polytechnic, Ikorodu

(e-mail-ismosharley@yahoo.com, ismosharley1974@gmail.com)

Abstract

E-procurement in the public sector is internationally emerging and it is on the

political agenda across the globe, hence, initiatives have been implemented by developed

and developing countries. E-procurement projects are often part of the country‘s larger e-

Government efforts to better serve its citizens and businesses in the digital economy. So

far, the adoption of public e-procurement in developing countries and specifically in

Nigeria is yet to be seen. The objective of this study is to examine how public e-

procurement may be used as a catalyst for socio-economic development in Nigeria. The

research approach applied in this study is mainly based on review of extant literature

related to e-procurement. The study revealed that public e-procurement has been used to

improve openness and transparency in government procurement transactions, enhanced

policy effectiveness and minimized corruption in developed economies, whereas public

e-procurement in Nigeria is yet to be adopted. Subsequently, the study concluded that

public e-procurement will be beneficial to Nigeria‘s socio-economic and political

development. In this vein, it was recommended that the time is ripe for Federal

Government to have its own portal through which public procurement can be transacted

in order to benefit from e-procurement system. Suggestions for further study were made.

Keywords: Public e-procurement, catalyst, socio-economic development, Nigeria.

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1. Introduction

In recent years, Nigeria government and other emerging developing countries across the

globe have increasingly adopted Information and Communication Technologies (ICT) to

promote government services and procurement transactions. Public E-procurement systems have

evolved to become an integral tool for the management of the procurement process for both the

private and public sectors over the years (Expert Group Meeting Reports, 2011), yet most

developing nations including Nigeria have not adopted electronic procurement transactions via

the procurement portal. Henriksen, Mahnke, & Hansen (2004) posited that public sector

institutions perceived the electronic interaction to be beneficial with respect to reduction in

work-load and rationalization. As pointed out by Berryman, Harrington, Layton, & Rerolle

(1998), electronic procurement of commodities represents the greatest potential for savings. E-

procurement simplifies work procedures and automates processes, for example, in order

processing and the handling of invoices and payments. This, combined with the regulated

tendering processes, makes the idea of automating procurement an attractive option compared to

the status quo (Henriksen, et al., 2004). Re-engineering of processes in the public sector is in

itself a very demanding process (Andersen, 2004; Panayaotou, Gayialis, & Tatsiopoulos, 2004)

which, at times, tempers the enthusiasm for implementing e-procurement. The adoption of e-

procurement in public purchases has certainly improved public procurement in many ways. It

expedites the process by eliminating time loss caused by human interaction and reduced paper

work, hence more efficient procurement transactions (Mansor, 2005). E-procurement systems

have also allowed governments to apply standard procurement processes across institutions,

using appropriate monitoring and management controls to delegate more responsibility to the

individual procuring entities. The proper implementations of standard processes and controls has

improved the work efficiency within procuring entities and reduced procurement times by

providing users with electronic tools and environments to support their tasks (Expert Group

Meeting Reports, 2011). Several governments have introduced Public e-Procurement systems to

procure electronically the needs of the public administration. The primary reasons behind this

are, similar to the private sector, cost efficiency and process management improvement (Croom

& Brandon-Jones, 2005; Barbieri & Zanoni, 2005; Singer, et al., 2009).

In Denmark, Korea, Germany, Brazil. Malaysia and USA for instance, e-procurement is a

very basic e-Government tool with tremendous potential of improving government

administrative efficiency, effectiveness, productivity, service delivery, and better governance

(Croom, 2005; Croom & Bradon-Jones, 2005; Hoogwout, 2002; & Timmer, 2000). Market

research reports show that businesses via e-procurement can save between 10% and 50%

(Hommen & Rolfstam, & Timmer, 2000). Similarly, the Commonwealth of Australia (2005)

identified e-procurement as an instrument in public sector reform which enables government to

monitor the efficiency and effectiveness of procurement and provides more transparency and

accountability. The development and implementation of electronic commerce business models,

such as a procurement portal by government and organizations is a challenge that goes beyond

mere technological functionality (Larsen, Henriksen, & Bjorn-Andersen, 2002). Top

management support, organizational adaptation, and training of employees are examples of

critical issues for the successful implementation of any e-procurement system (Kawalek,

Wastell, & Newman, 2003).

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The implementation of e-procurement in the public sector demands for an extra set of

factors that are considered to be influential. These include: financial risk, risks of building the

portal, and legislative issues (Oliveira & Amorim, 2001). Oliveira and Amorim suggested that

three types of models can be considered in order to meet the specific demands related to

implementation of public e-procurement: (1) The public model. Here, all tasks, including the

investment and risks of building the portal, are run by the government. (2) The private model.

Here, all tasks are run by private entities that bear the investment risks of the project. (3) The

mixed model (public-private partnership). In this model the participants share investment risks

and the benefits of the project. An effective public e-procurement policy is fundamental to the

success of the government in achieving its objectives: to generate sustainable, long-term growth,

create jobs and to foster rapid socio- economic development (Henriksen, et al., 2004). The

scholars emphasized further that, emergence of new e-procurement system offers promising

opportunities as regards the efficiency, transparency and opening-up of public e-procurement

portal. Recently, the advent of information technologies has a major influence on commercial

activities, government, public citizens through electronic means, for instance, on-line public

services delivery in general (Hoogwout, 2002), e-healthcare (Henriksen, et al., 2004), provision

of electronic routines to political process, such as voting (Henriksen & Mahnke, 2005 cited in

Gronlund, 2002). Public procurement can influence markets, drives innovation and facilitates

efficient, green industrial growth (Tom & Roy, 2012).

In recent years, Nigerian government has attempted explaining the public e-procurement

phenomenon. Oyebode & Fayokun (2010) explained getting the deal through public

procurement, Ekpenkhio (2003) examined public sector procurement reforms in Nigeria, Elegbe

(2011) explained the reform and regulation of Nigeria public procurement. Zulfiqar, Pan, Lee, &

Huang (2001) explained the challenges faced during the implementation of e-procurement in the

Singaporean context via an explorative study; Anderson, Juul, & Pederson, (2003) enquired the

use of e-procurement in the Danish local government organizations through a statistical study;

Ameyaw, Mensah & Osei-Tutu, (2012) examined obstacles to the procurement reforms in

Ghana; Ramanathan (2004) investigated the diffusion of e-procurement in the public sector-

revisiting centralization versus decentralization debates as a twist in the tale; Filho and Mota

(2012) explained public e-procurement implementation; Henriksen, Mahnke, & Hansen (2004)

conducted a study on public e-procurement adoption. From the foregoing there is a gap in

literature on the use of public e-procurement as a catalyst for socio-economic development in

Nigeria. This study will fill the existing gap. The study will be organized as follows: Section one

introduces the topic; section two will review related literature under conceptual framework.

Section three will conclude the paper. Finally, policy implications and limitations of the study

are discussed.

2. Conceptual framework

An in-depth overview of the public procurement and supply chain management will give

an insight to the public procurement activities, reviewing the legal and regulatory framework, the

institutional arrangements, the procurement methods, the dependence of its effectiveness on

other related public finance management performance, inventory and warehouse management,

the use of information technologies in procurement, opportunities for corruption, the assessment

of public procurement performance and the role of the market and the employment of preference

programs to address misappropriation of public fund and tax payers money. According to Tom

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and Roy (2012), public procurement can influence markets, drives innovation and facilitates

efficient, green industrial growth. Public procurement operates in an environment of increasingly

intense scrutiny driven by technology, programme reviews, and public and political expectations

for service improvements (Bolton, 2006; Eyaa & Oluka, 2011). Procurement is the process of

obtaining goods and services from preparation and processing of a requisition through receipt

and approval of invoice for payment.

World Bank (1995) defined public procurement as the acquisition of goods, services and

works by a procuring entity using public funds. Weele (2010) defined procurement as the

acquisition of goods or services at possible cost to meet the need of the purchaser in terms of

quality. Burton (2005) believes that public procurement is the central instrument to assist the

efficient management of public resources. It supports the works and services of the government

and can cover all acquisitions, including stationery, furniture, and temporary office staff as

complex, and high cost areas such as construction project, aircraft carriers, and other private

financial initiative projects. A United Nations (1999) report argued that public procurement is a

government business system which is concerned about the government procurement process

such as preparing project specification, requesting, receiving and evaluating bids, awarding

contract and payment. According to Odhiambo & Kamau (2003, p.10), public procurement is

broadly defined as the ―purchasing, hiring or obtaining by any contractual means, goods,

construction works and services by the public sector. It involves the purchase of commodities

and contracting of construction works and services if such acquisition is effected with resources

from state budgets, local authority budgets, state foundation funds, domestic loans or foreign

loans guaranteed by the state, foreign aid and revenue received from the economic activity of

state‖. According to Hommen and Rolfstam (2009) public procurement is ‗the acquisition

(through buying or purchasing) of goods and services by government or public organizations‘.

Arrowsmith (2010) contended that the concept of public procurement can be referred to as

procurement planning, contract placement and contract administration.

Public procurement processes have different phases and each phase has a risk of

corruption. Handy and Williams (2008) identified three main phases of procurement process

which include procurement planning and budgeting, procurement solicitation, and contract award

and performance. Szymanski (2007) proposed the five stages of procurement process:

procurement planning and needs assessment, product design and documentation, tender process,

contract award and implementation, and accounting and audit. Identification of the risk of

corruption came from the lack of transparency, limited access to information, and lack of

accountability and control at each stage. Campos, Moss, Noone, and Ware(2012) viewed

procurement as the four stages of project identification and design: advertising, pre-qualification,

bid document preparation, and submission of bids; bid evaluation, post-qualification and award

of contract; and contract performance, administration and supervision. Odhiambo and Kamau

(2003) opined that public procurement has always been a big part of the developing economy

accounting for an estimated 9-13% of the developing nation‘s Gross Domestic Product (GDP)

and it is therefore an area that needs attention in the face of none or low investment. Eyaa, Gerrit,

Ntayi, & (2009) posited that millions of dollars gets wasted due to inefficient and ineffective

procurement structures, policies and procedures, as well as failure to impose sanctions for

violation of procurement rules, thus resulting in poor service delivery.

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Public procurement is central to good public financial management and public resources

allocation (Tom & Roy, 2012). Its importance is derived from its role as the vehicle by which

typically over forty five percent of the budget implementation is managed and which can be as

high as seven percent. It is the means by which a country‘s policy objectives are implemented

(Tom & Roy, 2012). The effectiveness and efficiency of public procurement implementing

policy through the purchase of the right outputs and their delivery is affected by a number of

factors including clear and unambiguous laws and regulations, effective institutional

arrangements including the use of administrative complaints boards, effective controls, record

management, accountability and transparency. It is also affected by how well the market

functions, the linkages with budget preparations and budget release management managed

through the application of procurement plans.

According to Thai (2001) developed as well as developing countries, disregarding their

economy, social and political environment, a sound procurement system seems to have two

groups of goals; the procurement goals and non-procurement goals. He argued further that the

procurement goals normally include quality, timeliness, cost (more than just the price),

minimizing business, financial and technical risks, maximizing competition, and maintaining

integrity. Non- procurement goals normally include economic goals (assisting minority and

woman owned business concerns), and international relations goals. It is very difficult for policy

makers and public procurement professionals to make an optimum decision as there are always

tradeoffs between these goals (Thai, 2001). The principal approach to bringing into balance

competition, effective procurement control, administrative burden, cost, appropriate

authorization and procedural delay is through the appropriate use of procurement methods. A key

objective of sound public procurement is achieving value for money through price competition.

This is of course both a function of the implemented public procurement mechanisms as well as

the functioning of the market. It examines contract management including the treatment of

contract variations.

E-procurement has proven itself as one of the most effective and efficient tools for

bringing good governance to the procurement process in many nations, and e-procurement

initiatives have received significant support from the donor community including World Bank,

the Asia Development Bank, the Inter-American Development Bank and the African

Development Bank (Expert Group Meeting Report, 2011). Bausa, Kourtidis, Liljemo, Loozen,

Rodrigues, & Snaprud (2013) defined e-procurement as the use of electronic communications

and transaction processing by government institutions and other public sector organizations

when buying supplies and services or tendering public works. E-procurement is not just about

placing an ‗‘E‘‘ in front of outdated procurement practices; it is predominantly a governance that

should go beyond ICT aspects. E-Procurement will not guarantee the complete elimination of

corruption practices, but it can serve as a deterrent and as an instrument towards effective and

efficient public administration. E-procurement is also not about delivery of an ‗‘E‘‘ service

offering by governments. E-procurement entails a strategic shift in the delivery and management

of a key business service supported by governance, policies, legal framework and requiring

leadership, support and political will to institute change. Nevertheless, e-procurement attributes

of transparency and visibility promote efficiencyand price reductions (Lenderer 2001; Croom &

Brandon-Jones, 2007). The need for continuous audit of the e-procurement system is necessary

(Brown & Cloke, 2005). This is because the use of the e-procurement systems should guarantee

strict security and data protection (Chu, Hsiaob, Lee, & Chena, 2004). In simplest terms,

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electronic procurement defines the automation of organizations procurement processes using

web-based applications. Unlike enterprise resource planning (ERP) systems that enable

businesses to automate their internal processes, e-procurement enables widely dispersed buyers

and suppliers to come together, interact, and execute purchase transactions directly over the

internet.

E-procurement is defined by Croom & Brandon (2007) as the use of integrated

(commonly web-based) communication systems for the conduct of part or all of the purchasing

process; a process that may incorporate stages from the initial need identification by users,

through search, sourcing, negotiation, ordering, receipt and post- purchase review. According to

Mansor (2005), e-procurement is posited to be series of steps-from the formulation of the

purchasing corporate strategy to the actual implementation of internet-based purchasing system‖.

Leenders & Fearon (1993) defined ―e-procurement (sometimes called supplier exchange) as a

business-to-business-to-consumer purchase and sale of supplies and services through the internet

as well as other information and networking systems, such as electronic data interchange (EDI)

and enterprise resource planning (ERP).E-Procurement enhanced the efficient publication and

dissemination of information which also facilitates the implementation of the anti-corruption

policies (Carayannisa & Popescu., 2005).

Greater procurement in public institutions demand for bureaucratic procedures to be

followed (Croom, 2005; Henriksen, et al., 2005). The majority of items are bought on

requisition; this means that enormous amounts of efforts are spent on sending forms back and

forth in the system. The internal co-ordination costs are therefore high with respect to the

contracting procedure for commodities. In the government sector, procurement somehow tends

to be a subject of corruption, scandals and misuse of public resources, in addition, lack of

personnel with good ability and transparency of the procurement process can also be the source

of problem. Government procurement system is one of the main pillars of the government efforts

to improve its administration. Poor procurement system resulted in high costs for the government

and society (Croom & Brandon, 2007). E-procurement in the public sector has a lot of promise.

A government can negotiate good deals with suppliers which it is able to accumulate all of its

purchasing and negotiate as an entity. The negotiated agreements when made available in the e-

procurement system can be accessed by the end users by logging into the system via the

ubiquitous internet. The end users can place the order electronically utilizing the negotiated

deals. Adoption of e-procurement by the government minimizes the transaction processing costs,

automates several administrative procedures, enhances monitoring abilities and minimizes

opportunistic behaviour among procurement officials. Public procurement has been utilized as

an important tool for achieving economic, social and other objectives (Arrowsmith, 2010; Thai,

2001). Successful implementation of public e-procurement technology remains a challenge in

both developed and developing countries (Filho & Mota, 2012). According to Thai (2001), e-

procurement requires a fundamental transformation of traditional government organization and

development infrastructure, in addition to financial and human resources. A successful

transparent e-procurement system requires policies, legislation, and a legal framework conducive

to reorganizing the government and its services to the citizens, businesses and institutions (Filho

& Mota, 2012).

As noted by Arbin, (2002); Croom & Brandon, (2007); and Timmer, (2000) the

underlying arguments in favour of e-procurement in the public sector is driven by a number of

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considerations. In their opinions, there are many reasons why public e-procurement is a

necessity:

Because of the need to diffuse e-commerce at a national level.

Because it will enhance the building of national electronic market places.

It will facilitate public procurement of standardized products.

Because it minimizes the total public procurement expenses.

It improves the labour productivity of the public sector.

It improves organizational efficiency, simplification, transparency and

accountability, and

It increases the Gross Domestic Product (GDP) of the nation.

Procurement policy and decisions in both public institutions and private businesses are

subjected and driven by cost pressure with respect to efficiency of operations and work-

processes. Services of public institutions, which in Nigeria include hospitals, public schools,

pensioners and security, are managed by means of efficiency and budgetary control. Adoption of

e-Government and public e-procurement has led to rationalization and reduction in costs of

administration. Commonwealth of Australia (2005) argued that public sector e-procurement is a

complex socio-technical system embedded in multiple layers of government. It has the capacity

to become a meaningful agent of transformation in procurement practices through the joint

actions of different layers of government and cooperation across diverse agencies.

Notable among the benefits derived from e-procurement by both private business or

public institutions as posited by Timmer (2000) are: Wider choice of supplier‘s, lower cost and

reduced direct procurement cost and better quality. Improved delivery reduced cost of

procurement and reduced transactional cost. He stated further that, the positive side effect is also

increased transparency and accountability as electronically conducted processes can be more

easily monitored and benchmarked across national and organizational units. E-procurement also

bridges the gap between the buyers and sellers. It allows the articulating buyers and sellers to

exchange information about prices and product offerings quickly and cost-efficient. It creates a

huge potential for transaction cost saving in terms of reduce search, matching and order control

costs. The main benefits of e-procurement reported by (Arbin, 2002; Croom & Brandon, 2007)

are reduced costs through various ways, including minimized ‗maverick‘ buying and so on.

Croom and Brandon (2007) summarized the main benefits offered by E-procurement and

categorize it into four as shown below:

Managerial benefits Supplier‟s benefits

1. Improved management information

across all areas of purchasing.

2. Greater management influence and control

over the purchasing process.

3. Better control of ―maverick‖ spend and

better use of corporate contract.

1. Improved relationships with the

buyers.

2. Cost savings.

3. Time savings.

4. Reduction in paper work and

duplicated records.

5. Bills are paid on time and more

quickly.

Operational purchasing benefits Strategic purchasing benefits

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Cost savings Increased purchasing power

Time savings Increased profit margin

Reduced inventory level and inventory costs Improved efficiency of the

purchasing process

Reduction in excessive paperwork and

duplicated records.

Gaining competitive advantage

In Malaysia, Brazil, USA and Denmark the adoption of e-procurement in public purchases has

certainly improved public procurement in many ways. It improves efficiency in government

administration and achieves better governance (Filho & Mota, 2012). It expedites the process by

eliminating time loss caused by human interaction and reduced paper work, hence more efficient.

It is also supposed to be more effective because government agencies are able to view the latest

products and up-to-date pricing. The result of reducing the process brings down costs to a

minimal level therefore improving the overall management of purchases (Mansor, 2005). He

stated further that the spill-over benefits to the society is that it promotes IT literate workforce

and business, reduces corruption and enhances transparency. More so, it was evidenced in

Malaysia that the suppliers on the other hand have benefited from the introduction of e-

procurement by getting better access to the contracts, cost-saving, better speed and definitely

more accurate on specifications of products and services. Timeliness in payment by government

agencies is another very significant advantage to suppliers. In Denmark, the direct effect of

public e-procurement is seen in a broader perspective including possible reduction in man-hours

spent on procurement process, rationalization and indirect benefits derived from restructuring of

work routine (Mansor, 2005).

The development and implementation of public e-Procurement and electronic commerce

business models, such as a procurement portal, in organizations is a challenge, which goes

beyond mere technological functionality. Top management support, organizational adaptation

and training of employees are typical issues which are critical for successful implementation of

information system in an organization. More so, public e-procurement demands for extra set of

considerations particularly in the areas of: financial risk, building costs and risks, legislative

issues, training costs among others. Indeed, in all countries in the world, estimates of the

financial activities of government procurement managers are believed to be in the order of 10% –

30 % of GNP (Callender & Mathews, 2000). Efficiently handling this size of procurement

outlays has been a policy and management concern as well as a challenge for public procurement

practitioners.

Some notable hindrances to be addressed by the Nigeria government before the adoption of

e-Procurement as experienced by some developed nations like Korea, Denmark, USA, to

mention but few are the following: lack of government policies and legal frameworks, lack of

awareness and capacity building programs, lack of institutional capacity for public procurement,

resistance to change, procuring agencies reluctance to convert to e-procurement, information

technology infrastructures and internet readiness, information technology infrastructures for e-

commerce not mature in many developing countries, ineffective implementation, improper BRP

(Business Process Reengineering), digitalization without procurement reform, technology can

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complicate rather than simplify procedures (Callender & Mattew, 2000; Zaid & Popoola, 2010;

Tom & Roy, 2012).

However, there are a multitude of barriers and challenges, especially in developing

countries like ours, where basic infrastructures are under-developed and human resources in both

private and public sector are not trained. It should be noted that before ―an e-procurement system

can achieve maximum potential, a strong infrastructure must be developed, ICT services

expanded, innovative policies administered to establish a secure online environment, standard

developed‖ (United Nations, 2006, p.3), and leadership and government reorganization are

require.

3. Social-economic development rationality for Public E-procurement

Some of the undeniable socio-economic development and political benefits of public e-

Procurement as a tool for instituting procurement reforms and establishing a fully transparent,

open procurement environment which the Nigeria government stands to gain if adopted and

implemented are:

Appreciable improvement in openness and transparency: This facilitates traceability of

all transactions, effective for preventing fraud and corruption, and provides audit trial.

Promotes value for money; this is evidence by reduction of procurement and transaction

costs, promoted healthy competition, improved resource allocation management and

market intelligence.

Improved work efficiency; reduced excessive paper work, duplication of efforts, reduction

of errors, reduces conflicts, and enhances better enforcement of regulations.

Reduction in errors; manual procurement is prone to errors and lengthen processing and

reprocessing which further causes errors at multiple data entry point. In case of public E-

procurement data is transferred automatically with inbuilt security.

Better compliance: non-compliance or maverick spending occurs when goods and

services are procured from the suppliers, who are not evaluated or selected by

procurement department. Public E-procurement system promotes better compliance,

reduces maverick spending, lower transaction costs, and enhances greater leverage and

pricing discounts with approved vendors.

Improve Sourcing: Public E-procurement fosters better sourcing of vendors through

online which reduces the hardship of manual sourcing.

Further socio-economic development and political benefits of public E-procurement averred

by Arbin, (2003) are: (i.) it facilitates the storage and retrieval of valuable procurement

information. (ii.) Increased participation in the information society. (iii.) Increased democratic

participation (iv.) Enhanced policy effectiveness (v.) Potential higher control over corruption.

(vi.) More corporate social responsibility. (vii.) Standard decision making process. (viii.) More

126

control due to the reduction number of decision maker units. (ix.) Procedure flexibility e.g. direct

procurement system.( x.) Access for new suppliers (no pre-selection), and high autonomy of

single administration.

4. Lessons and implications of this study

The Federal Government of Nigeria should daw lessons from the various tremendous and

unending socio-economic and development benefits experienced by both developed and

developing nations that have adopted and implemented public e-procurement policy. It is

evidenced that lack of electronic procurement in the in public institutions in Nigeria results to a

bureaucratic procedures to be followed. The majority of items are bought on requisition; this

means that enormous amounts of efforts are spent on sending forms back and forth in the system.

The internal co-ordination costs are therefore high with respect to the contracting procedure for

commodities. In the government sector, procurement somehow tends to be a subject of

corruption; scandals and misuse of public resources are among the sources of problem. Poor

procurement system resulted in high costs for the government and society (Croom & Brandon,

2007). Eyaa, Gerrit, Ntayi, & (2009) posited that millions of dollars gets wasted due to

inefficient and ineffective procurement structures, policies and procedures, as well as failure to

impose sanctions for violation of procurement rules, thus resulting in poor service delivery.

It is now imperative for the Nigeria government to adopt public e-procurement policy and

ensure more proactive reforms in the public procurement policy in order to improve openness

and transparency in government procurement transactions, enhanced policy effectiveness,

minimized corruptions, mavericks spending, and foster rapid socio-economic development in

Nigeria. Odhiambo and Kamau (2003) opined that public procurement has always been a big

part of the developing economy accounting for an estimated 9-13% of the developing nations‘

Gross Domestic Product (GDP) and it is therefore an area that needs attention in the face of none

or low investment. The adoption of the e-procurement in the public sector must operate within

the legal framework and this can be achieved only through incremental change (Panayiotou,

Gayialis, & Tatsiopoulos, 2004).

A sound reforms in the public sector procurement, period training and development of

procurement personnel, improvement on Information and Communication Technologies (ICT) to

improve government services and procurement transactions, and public private partnership as

evidenced in Denmark are essential factors to be considered in order to usher Nigeria

government into a digital economy and e-Governance. Ekpenkhio (2003) suggested that to fully

maximize the benefits of public procurement policy, that there is need to develop a new cadre of

professional procurement officers and contracting officers. Capacity building and training (at

home and abroad) workshops, seminars and courses, for new cadre of procurement and

contracting officers and all those involved in procurement awards should be organized. The

study also revealed that information technology (IT) should be utilized by the Nigeria

Government to usher in an era of e-governance aimed at demystifying the role of government,

simplifying procedures, and bringing in transparency, making need based, good quality and

timely information available to all citizens and providing all services in an efficient and cost

effective ways and identified services on an online basis.

127

5. Conclusion and Recommendations

In line with the reviewed literatures, the study summarized the main gains provided by

public E-procurement. E-procurement helps to streamline ordering processes, providing timely

information and improving co-ordination and collaboration, it fosters rapid socio-economic and

political development, which in turn leads to cost savings and economics of time. In recent times,

in spite of many benefits of E-procurement highlighted, the extent of e-procurement adoption

across the globe particularly in developing nations is below the par and expectations. This low

rate of adoption is due to the comprehensive list of barriers for E-procurement implementation

among which are: risk, uncertainty from suppliers, cultural differences, staff resistance to

change, catalogue content readiness, etc. Ekpenkhio (2003) suggested that to fully maximize the

benefits of public procurement policy, that there is need to develop a new cadre of professional

procurement officers and contracting officers. Capacity building and training (at home and

abroad) workshops, seminars and courses, for new cadre of procurement and contracting

officers and all those involved in procurement awards should be organized. Thai (2001) stresses

that there is need for increased efforts in research, knowledge advancement, and experienced

exchanges for a successful adoption, and implementation of public e-Procurement.

Political corruption and bribery behavior is a problem of justice. Therefore, law

enforcement seems to be the winning factor also when using e-procurement systems

(Rijckeghem & Weder, 2001). The adoption of the e-procurement in the public sector must

operate within the legal framework and this can be achieved only through incremental change

(Panayiotou, Gayialis, & Tatsiopoulos, 2004). This is because it is difficult for laws to keep up

with technology improvements and radical change. However, change is inter-related to the

environment configured to be applied. In a similar way, anti-corruption efforts are indivisible

from the political environment (Brown & Cloke, 2005). This means that even e-procurement

systems depend on political economy contexts (Hardy & Williams, 2008). Eyaa & Oluka

(2011)have mapped some of the relevant factors that influence the success of e-procurement

systems. These factors are industrial sector (environment), company size, efficiency,

transparency and control. However, as identified above, other elements such as quality, trust,

technical capacity, training, security and data protection should also be considered when

expecting an e-procurement system to reduce political corruption and enhance socio-economic

development in Nigeria.

Despite the identified barriers to implementation, e-procurement programs result into an

improvement of the labor productivity of the public sector and, as a consequence, contribute to a

number of intermediate outcome like; cost savings, time savings, better services and

transparency, to economic benefits such as (simplification and organizational efficiency) and

improvement in Gross Domestic Product (GDP). The use of traditional procurement system is

recognized for their lack of prompt information and their excessive complexity, all of these

factors leading to waste of time and money (Pop-Sitar, n.d.). According to this scholar public E-

procurement is an essential tool that can be use to solve this problems by streamlining processes,

providing timely information, enhancing digitalization of work processes, improving

coordination and collaboration, all these leading to cost saving and economies of time. As noted

by Pop-Sitar (n.d.) the use of traditional procurement systems is recognized for their lack of

prompt information and their excessive complexity, all of these factors leading to waste of time

and money. Public e-Procurement is promising to solve these problems by streamlining

128

processes, providing timely information and improving coordination, all of these leading to cost

savings and economies of time.

6. Limitation of the study

The study is limited by its review nature. This is due to time constraints therefore,

making it explorative. The follow up to this study will be empirical investigation. Future

researchers should consider empirical analysis of impacts of public e-procurement on socio-

economic and political development in Nigeria.

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133

Globalisation and tourist resort life cycle: A case of Osun-Oshogbo World Heritage site

By

1O. O. Metilelu &

2M.A. Jammal

1Department of Hospitality Mgt. Tech.

2Department of Leisure & Tourism Mgt.

Lagos State Polytechnic, Ikorodu, Lagos, Nigeria E-mail ometilelu@gmail.com

Abstract

The growing trend of the tourism industry in Nigeria and globalisation will

continue to impact on the quality of attractions and the services it offers to tourists.

Nigeria remains a big player as far as globalisation is concerned, being the largest

economy in Africa. The monolithic nature of the Nigerian economy and the drastic fall in

crude oil price in the International Market suggest a strategic direction for the tourism

industry. This paper examines globalisation and tourism on the destination life cycle. The

paper observed that tourism account for 35% of the world export of services and over

70% in less developed countries (LDCs). This trends accounts globally for increase

investment in tourism by government and individual investors as such the Government of

Osun State in Nigeria has taken deliberate strategy to develop tourism through marketing

the Osun-Osogbo festival which has attracted international tourists from all over the

world. The study concludes that Osun-Oshogbo heritage site is still at the consolidation

stage. It has experienced only four stages in the Tourism Area Life cycle.

Keywords: Globalisation, tourist resort life cycle, Osun-Oshogbo and World

heritage site.

134

1. Introduction

The UN Declaration of Human Rights, 1948 gives right and freedom to people to move

from one country to another to engage in holidays, leisure activities with pay. This probably

accounts for increase in tourism growth yearly. In fact, according to world tourism

organisation(WTOs) Tourism 2020 Vision Forecasts, this will generate about 1.6 billion

international tourist arrivals worldwide by the year 2020 (WTO, 2000). This study is aware that

the concept of globalisation has been extensively discussed by various scholars, but with the

consensus that globalisation embraces economic and social integration, transmission of

knowledge and reproduction. According to Larsson (2001), globalisation is the process of world

shrinkage, of distances getting shorter, things moving closer? It pertains to the increasing ease

with which somebody on one side of the world can interact, to mutual benefit, with somebody on

the other side of the world.

Available statistics published by World Tourism Organisation (WTO) (2006), reported that

806 million people travelled in 2005 as international tourist spending about US $680 billion on

purchasing of goods and services in country visited. WTO (2009), cited in Iyiola and Akintunde

(2011), posited that international tourist arrivals reached 922 million in 2008, about 18 million

more than year 2007, thus representing a growth of 2%. The organisation further explained that

international receipt rose by 1.7% in real terms to US$944 billion about (642 billion Euros).

Iyiola and Akintunde (2011), opined that expansion of tourism in the world is as a result of rise

in population, countries becoming richer, expansion and diversification of travel motivators and

expectations, as well as development in the area of information technology, powerful rivalry

between increasing number of tourist destination and most importantly the deregulation of

movements contributes to the growth of tourism industry.

Mass tourism in the last three decades has also been growing tremendously. It has grown

into one of the world largest industries and tourists in this category now outnumber those

travelling for business or personal reasons by substantial margin (Clayton, 2002). This trends

accounts globally for increase investment in tourism by governments and individual investors as

such, government of Osun State in Nigeria has adopted deliberate strategy to develop tourism,

through the marketing of Osun-Osogbo festival to attract international tourist from all over the

world especially the Caribbeans, South Americans and Africans in Diaspora. According to Ojo-

Lanre (2014) reported that 21,713 visitors including 123 international tourist attended 2013

edition of the festival. Indicating that majority of the receipts was both international and

domestic tourists, made possible through globalisation.

This trend supports WTO report that domestic tourism is predominant in tourism activities

that accounts for 80% which is a relatively high receipts of visitors in a small city of Oshogbo,

with the population of about 288, 445 people, according to 2006, National Population census.

The objective of this study is to explore and identify the stage at which the destination of

Osun-Oshogbo is in the Tourism Area Life Cycle [TALC]. The rest of the paper is structured as

follows: in section two, review of related literature is undertaken; section three presents

concluding remarks and recommendations.

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2. Review of related literature

2.1 The study area: Osun-Osogbo World Heritage Site

Osun-Oshogbo grove is located in Osun State, South-Western Nigeria. The state covers

an area of approximately 14,875 square kilometres and lies between longitude 040oE and 05

oS

and latitude o5055 8N and 08

o 07W.

Figure 2.1 Map of Nigeria

Source: As ammended from Google 2016

The state population according to the 2006 census was 3,423,535. The state capital is

Oshogbo wherein the grove is sited; Osun grove is a sacred grove. Osun-Oshogbo exhibits a

large cultural landscape of about 75 hectares of undisturbed forest showing original state since

the year 1310 despite modernisation, this however shows the originality of nature and the

sustainability of the Osun-Oshogbo world heritage site in Osun State, Nigeria (The Nigerian

Voice Magazine, 2013). Osun grove was recognised by UNESCO in 2005 as a World Heritage

Site and Osun-Oshogbo Festival listed as an international festival as a result of the consistency

the festival has enjoyed over the years, as well as the protection of the values of the grove by the

people of Yoruba land in South-West Nigeria (Elizabeth, 2014).The effort of Suzanne Wenger,

an artist, Austrian born Yoruba priestess in popularising the image of the heritage site to attract

global attention has significantly impact on the image of the site. The destination is accessible by

road, rail and by air for international tourists. The international tourists will arrive via Lagos

International Airport about two hours’ drive from Lagos to Osun-Oshogbo, Osun State.

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Figure 2.2 showing the map of Osun State.

Source: Ipokenose (2014).

2.2 Attractions in Osun-Oshogbo World Heritage Site

The first attraction is the grove, while the second attraction is the Osun-Osogbo festival

inside the grove and the entire environs of Oshogbo. The grove is a highly sacred sanctuary

where different shrines, sculptures and various art works have been erected in honour and to

celebrate all Yoruba deities in the grove. The Osun River is a goddess; a major attraction on its

own. It is believed to possess some mythical and metaphorical significance.

Figure 2.3 Entrance to the grove

Source: Tribune (2014).

137

According to Adebisi (1999), cited in Babalola (2014), affirmed that the Osun-Oshogbo

grove has about 164 flora species in which 32 flora were endemic and endangered to the grove,

while 7 flora species were mentioned as extinct and that the grove is also a habitat to some

wildlife. The second attraction at Osun-Oshogbo is the cultural festival that is celebrated in

honour of the goddess of fertility. The events usually take place in the month of August

(Abodedele, 2012). The festival is a two weeks programme out of which seven days mark the

main events. The first week is a prelude, focusing on activities like cultural dance, music, arts

exhibitions, sales of arts and artefacts, ayo and other local games competition, raffle draws and

other competition by sponsoring firms, the list is endless.

According to Elizabeth (2014), the second week which is the main events, starts with the

clearing of the roads to remove weeds and shrubs that could impede movement of people within

the Osun grove. The seventh day and the climax of the whole event is the day of the sacrifice to

the Osun River goddess. On this day, the proceeding starts around 10a.m in the morning with the

Arugba, the bearer of the sacrifice materials, who must be a virgin, leads the king and the chief

priestess to the Osun River. It is a five kilometres walking distance from the palace to the grove.

Many Osun devotees and, tourists from all over the world trek to the grove.

Figure 2.4: Showing offering of sacrifice to the river goddess

Source: Naijatreks.com (2011).

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Figure 2.5: The trek from the king‟s palace to the Osun grove for the sacrifice to the

river goddess

Source: Kwekudee (2013).

2.3 Concept of globalisation

The need to have access to social and economic opportunities of nations and bringing the

products and services to consumers‘ doorstep will continue to be discussed in the globalised

world. The world now is indeed a global village with its attendant‘s effects. This paper is fully

aware of the extensive contributions of various scholars on globalisation from the theoretical

stand point to a process. As much as this paper will argue that globalisation is not a new concept.

The notable growth of receipt from International tourism (WTO, 2000). This, however, shows

that people have been travelling before the concept of globalisation, gaining control over

territories, migration to a more beneficial environment and finding out new places for economic

and social gains.Globalisation refers to the political, economical, social and technological links

in different countries (Hamilton & Webster, 2009). Some authors argued that globalisation is a

contested concept. According to Friedman, globalisation heightens two basic human desires,

namely: the desire for better living (Lexus), and the desire for humanitarian bond (Olive tree).

Globalisation is the free movement of capital, goods, services, skill among companies market

and serving customer with “globalized” tastes and preferences, using the same or slightly

different to suit the peculiarity of that community (Orunmoluyi, 2000). Sustainable globalisation

is crucial for the sustainability of the tourism industry, as it connotes that globalisation should

not erode what needs to be preserved for the future. Sustainable globalisation needs to realise the

balance for the two human desires as proposed in the Olive three model.Steger (2009) opined

that globalisation is a contested concept that refers to shrinkage of time and space.

2.4 Exploring the TALC model on Osun-Oshogbo World Heritage Site

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According to Buhalis (2000), destination is posited to be a place where people travel to

and decide to stay for a period of time in order to savour the experience for destination

experience in leisure travel. It is the principal motivating factor behind the consumer decision

making and expectations (Fletcher, Fyall, Gilbert, & Wanhill, 2013; WTO, 2002).

The Tourist Area life cycle TALC, is a model proposed by R.W. Butler in the 1980s.This

model was used to study the life cycle of a resort and tourism destinations. According to Butler

(1980), most resorts pass through six stages in their life cycle; they include: exploration,

involvement, development, consolidation, stagnation and rejuvenation. Extant literature

described TACL model as the model that has attracted so much discussion and attention

(Lagieswski, 2006; Tooman, 1996; Zhong, Deng, & Xiang, 2008).

According to Butler (1980), most resorts grow gradually until they reach stagnation

within the TACL stages and the curve will vary for different areas, this indicates that various

factors can affect the shape of the destinations at various stages in their life circle. These factors

could be internal such as uniqueness of the tourist attractions; behaviour of local people towards

tourism and external factors such as natural disaster. Agarwal (1997) argued that TALC trend

may not exactly be applicable to all tourist area because of differences in experiences at different

stages of the Tourism Area Life cycle. Haywood (1996) opined that if Butler's tourist life cycle is

to be adopted as management or planning tool for tourism destination, it must be made

operational and noted that the six conceptual and measurement decisions which include:“unit of

analysis, relevant market, pattern and stages of tourist area life cycle, identification of the areas

shape in the life cycle, a determination of the unit of measurement and determination of the

relevant time unit. Despite all criticism, Tooman (1996) viewed the TALC concept as a

meaningful tool to investigate a tourist destination for planning.

Diedrich and Garcia-Buades (2001), argued that “understanding and assessing tourism

impact and communities is important in order to maintain sustainability and long term success of

the tourism industry. This suggests that TALC will be use in this study to assess tourism impact

at each stage of the product life cycle of the destination chosen for this study.

Exploration stage [1310–1950] this stageis characterised by small numbers of visitors

attracted by flora and fauna. During this stage in the destination life cycle, the Osun-Oshogbo

grove was at its pristine natural form. Most people found around the shrine are mostly Osun

devotees who have come for worship, as well as women from far and wide Oshogbo bringing

sacrifice to the river goddess in expectation of the fruit of the womb (Women traditional believe

in the Osun goddess for pregnancy). There were no existing tourist infrastructure and non-

involvement of the locals in tourism business. At this exploration stage as reported by UNESCO

was characterised by British colonial rule which makes the monarch and the priest powerless and

the customary responsibilities of the shrine were neglected and the traditional priest went into

hiding as the British rule shows insignificant interest in the Osun-Oshogbo shrine. These led to

looting and stealing of the statues and sculptures and parts of the grove were taken over by the

department of agriculture and forestry for research. This allows for activities that were forbidden

in the grove such as: falling of the trees, fishing and hunting. Furthermore, the introduction of

Islam and Christianity in the 19th

century had effect on the grove, as the two religions could not

condone the activities of the Osun cults.

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Involvement Stage [1965- 1992] –The notable growth on tourism receipt at this stage

begins to show that there is a definite tourism market. The heritage site was beginning to gain

global attention.According to UNESCO report, it was at this period that a group of artists led by

Australian born, Suzanne Wenger formed a movement called New Sacred Art. This group was

responsible for the restoration of the grove. Part of their activities was challenging land

speculators, chasing out poachers from the grove and protecting the shrines. The artist group also

revive the grove by replacing stolen statue and sculptures with new ones. This supports the

argument of Gbadegesin and Osaghale (2014) that ancient owners, the traditional ruler and priest

of shrines are more committed to the protection of the shrine. The period marks the first part of

the declaration of the first part of the grove as a national monument and this was further

extended in 1992 to cover the entire 75 hectares of land. From the above-mentioned activities, it

can be established that tourism activities have commenced and there is active participation of the

local people. At this stage resident begins to provide some amenities for the tourists, as such

there is recognisable tourist season.

Development stage (1992- 2005) – At this stage there is more active participation of the

local people, and private investors. Some level of tension exists between the locals and tourists.

The developmental stage as argued by Butler (2006) “there is more regional and national

involvement in the planning and provision of facilities”. There is a rapid development of the

tourist area and noticeable physical changes in the grove, more sculptures and shrines were

added. Increase in infrastructures in the form of road construction and hotels were evident at this

stage. It was during this period that UNESCO accorded the destination a World Heritage Site and

the Festival listed as an international festival. Due to globalisation, control passes from the locals

to transnational companies. At this stage both government and private investors show

involvement in the development and marketing of the destination, making economic and social

impact on the community. Consequently, at this stage, the Osun-Oshogbo heritage site through

globalisation attracted more tourists to the destination.

Consolidation Stage [2005 till date]– At this stage in the area life cycle of the grove, the

number of tourists did not decline as proposed by Butler (2006). The scholar noted that only

destinations with exceptional qualities can appeal to a tourist for a longer term. Tourism

activities are at the highest level and become part of the local economy (government, private

investor and the locals are actively involved).

Stagnation Stage: Most destination at this stage are considered no longer fashionable

and tourists activities have reached the peak.

2.5 Issues of carrying capacity at Consolidation stage

From the above analysis, the destination is still at the consolidation stage. It has

experience only four stages in the life cycle, the next stage, stagnation, often associated with

decline in visitors number (Butler, 2006), the level of carrying capacity are reached, there is a

rapid reduction in numbers of tourists visiting the destination. To avoid going to the next stage

which is stagnation, the analysis will only be used in this study as a prescriptive and descriptive

tool for suggesting long term planning measures (Cooper & Jackson, 1989). This aligned with

the argument of Zhong et al. (2008) that carrying capacity levels vary and are not fixed. At the

consolidation stage, the destination carrying capacity limit is stretched, more pressure is on the

141

environment as large number of tourists enters the shrine at the same time to observe or

participate in the ceremony.

According to Swarbrooke (1998), carrying capacity can be classified as physical,

environmental, economic, social, perceptual, and infrastructure capacity. This study will only

attempt to examine physical and environmental capacity:

Physical capacity; the amount of visitor a destination can physically occupy.

Environmental capacity; the amount of visitor a destination can receive before it starts to bring

about decadence to the environment.

Carrying capacity in this study will only be contextualised as a management concept for

planning (Getz, 1992). Attempt in planning show how to reduce the effect of pressures in

destinations on the grove. Godfrey and Clarke (2000) opined that for tourism to be sustainable, it

must be well managed and properly organised for economic, social and environmental

sustainability, putting into considerations several factors. In other words, for Osun-Oshogbo

Festival to be sustainable, it must be able to manage the environmental issues arising from

tourism activities for long term sustainability. Therefore, to ensure sustainability, it is essential to

carry out an Environmental Audit (EA) of the Osun-Oshogbo heritage site.

EA is used to assess the extent to which activities at destination are practiced in a way

that will bring about minimal damage to the environment. Fletcher et al. (2013) viewed it as, an

on-going process of monitoring and evaluating the environment. The assertion is more concerned

on how a destination functions and the consequences of its activities as oppose to Environmental

Impact Assessment (EIA) which is more concerned about the effects of changes in demand.

Therefore, EIA will not be applied in this study as Osun-Oshogbo Festival is not a new project,

but on going. This is corroborated by Fletcher et al. (2013) that it is very rare to develop tourism

without having environmental issues, but with good planning directed at minimising negative

impacts will generate more positive impacts on the destination.

3. Conclusion and recommendations

Conclusively, there are general prescriptive and

preventive methods known for regulating and managing overcrowding, erosion, air and noise

pollution, disturbance of floras and faunas and over usage of infrastructures, the consequences of

pressures caused by growing number of tourists in the grove. A strategic plan involving

sustainable approach will ensure a long term success of the destination. Sustainable development

is more concerned in the provision of secured livelihood that reduces resource depletion, damage

to environment, disruption of culture and social stability (WCED, 1987).

The fact that limitation to carrying capacity can

be attained at any stage in the life cycle of the destination, necessitate the need for a balance

between tourists receipts and carrying capacity of a destination irrespective of the nature, in a

way that allows for high level participation and enjoyment with minimal damage to the

destination (Edgell, Allen, Smith, Swanson, & Edgell, 2008).

142

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145

Nigerian banking sector reforms: Implications on deposit money banks„operational

performance

By

Adetutu Odekunle Email: odekunleadetutu@yahoo.co.uk

Department of Banking & Finance, Lagos State Polytechnic, Ikorodu, Lagos

Abstract

Nigeria had experienced major banking reforms between2004 and 2014. The focus of this

paper was to look at the implications of these reforms on banks operational performance through

customers’ service delivery, return on assets and the rate of financial intermediation between

2004 and 2014. Five commercial banks that control seventy percent of the banking industry

market in Nigeria were used as sample. The study administered questionnaires on customers of

banks and analysed published financial statements of the five banks from 2004 and 2014.The

study revealed that there has been remarkable improvement in the quality of service delivery by

banks since the year 2004 as agreed by over fifty percent of the respondents.The result of the

correlation co-efficient analysis confirmed that the effects of CBN policy reforms,bank specific

characteristics and industry structure have mixed effects on banks’ profitability level and

financial intermediation function.

Keywords: Banking sector, reforms, deposit money banks, performance and Nigeria.

146

1.0 Introduction

The banking sector being very crucial to the development of any economy in the world

cannot be ignored or left without reform measures. A reform remains a major instrument for

banking soundness, especially in the light of global and emerging market trends. The banking

sector in any economy serves as a catalyst for growth and development and is therefore critical to

the economy in terms of stability and growth. Olajide, Asaolu, and Jegede (2011) opined that the

banking sector roles in the economic process is very strategic, as it is the core of the national

economic survival around which other sectors are connected.

Regulatory authorities in different countries strive to evolve an efficient banking system,

not only for the promotion of efficient intermediation, but also for the protection of depositors,

encouragement of competition, maintenance of public confidence in the system, stability of the

system and protection against systemic risk and collapse (Punch, 2011).Over the years, the

Nigerian banking sector being a core aspect of the economy has become a cynosure of reforms.

There have been divergent views on the various banking sector reforms embarked upon by the

Central Bank of Nigeria (CBN). Some industry experts perceived some of these policies as

unfavourable to the banking industry and the Nigerian populace, others believed that the reforms

have prevented series of systemic failure that could have thrown the industry into serious

dilemma.

The Nigeria banking sector had witnessed an avalanche of reforms in a relatively short

time, all being acclaimed to be necessary by the regulatory authorities, but with no end in sight

(Udendeh, 2009). The scholar reiterated that failure to accord due recognition to research

regarding the implication of the incessant banking reforms on the operational performance of

deposit money banks that are the main target, has led to reversing and rewriting of policies.

Thus, there are growing concerns on the implications of these unending reforms on the

operational performance of banks in Nigeria.

It is therefore, pertinent to investigate the extent to which these problems have impacted

banks’ operational performance in the country. While there are extant studies on the impacts of

banking or financial sector reforms on other sectors of the economy (Apati, 2012; Balogun,

2007; Olajide et al., 2011), there have been less empirical studies on the effects of these reforms

on aggregate banks‘ performance in Nigeria. This study being empirical will fill this gap in

literature and extend the frontiers of knowledge. The remainder of the paper is structured as

follows: in section two, review of related literature is undertaken; section three examines the

method of data collection and analysis; this is followed by presentation and discussion of the

results; the final section concludes the study.

The first banking reforms which can be traced back to the introduction of Banking

Ordinance of 1952 ushered in the era of regulations to protect depositors’ funds in a sector that

was initially completely unregulated (Nwakwo, 1980). The next major reforms came with the

introduction of the Structural Adjustment Programme (SAP) in 1986, which led to the

deregulation of the banking industry that was originally dominated by indigenised banks that had

over 60 percent Federal and State Governments’ stakes (Balogun, 2007). This particular

reforms, apart from bringing on scene a glut of financial institutions, also changed in no small

147

measure the role of banking institutions in the economy, with the amendment of the then

Banking Act into Banks and other Financial Institutions Act (BOFIA) 1991.

The third phase which started with the advent of democracy in May, 1999 witnessed the

return to liberalisation of the financial sector, accompanied with the adoption of distress

resolution programmes. This period brought about the introduction of Universal Banking in 2001

which empowered all banks (commercial and merchants) to engage in all aspects of retail

banking and non- financial activities (Ewulu, 2007).The fourth phase began in 2004 with the

adoption of 13-point agenda that was aimed at sanitising and consolidating the banking sector,

with a view to ensuring a diversified, strong and reliable banking sector that will guarantee the

safety of depositors‘ money, play active development roles in the Nigerian economy and become

competent and competitive players in the African Regional and Global Financial System (Central

Bank of Nigeria, CBN, 2004). The banking sector reforms of 2004 merged the banks into 25

from 89 banks that existed as at June 2004.

The banking reforms of 2009 which can be classified as fifth phase were premised on

four pillars (CBN, 2009), and these according to the then Governor of Central Bank of Nigeria

(CBN) Sanusi Lamido Sanusi are; enhancement of the quality of banks in the country,

establishment of financial stability, enabling the evolution of a healthy financial sector and

ensuring the financial sector contributions to the real economy (Echebiri, 2011).The paper is

aimed at examining the implications of the banking reforms in Nigeria on banks‘ operational

performance from 2004 to 2014. Specifically, its focus will be on:

The level ofbanks‘ service delivery from 2004 to 2014.

The extent of effectiveness and efficiency of deposit mobilisation and utilisation by banks from

2004 to 2014.

The level of managerial efficiency in Nigerian banks from 2004 to 2014.

2.0 Review of related literature

2.1 An overview of banking reforms and banks‟ operational performance in Nigeria

The fact according to management experts remains that reforms are part of a change

which has become imperative for every organisation or system (Salami, 2009). Banking

reforms, as opined by Udendeh (2009), is defined as periodic changes made in the conduct of

banking business in order to achieve desired objectives.

Balogun (2007) interpreted banking sector reforms as comprehensive overhauling

process targeted at substantially improving the financial structure, strengthening the regulatory

and supervisory framework in order to tackle the problems of low capitalisation and risk

management, among others. Ajayi (2005) considered reforms as rearrangement of current

situation, so as to achieve a desired objective.Rose and Hudgins, (2013) referred to performance

as the means by which a financial firm measures up to the aspiration of its owners, employees,

depositors, borrowing customers and meets the regulatory authorities set objectives per time.

Profitability and risk were further stated by Rose and Hudgins, (2013) to be the most crucial

148

levels of performance based on the fact that the objective of wealth maximisation with an

acceptable level of risk is the main reason why financial institutions were in existence. Bank

performance according to Jeon and Miller (2006) is referred to as bank profitability and

productivity.

2.2 Justification for banking reforms in Nigeria

Salami (2009) likened reforms to two-edged sword with positive and negative effects.

Proponents of financial sector reforms as alleged by Olajide et al. (2011) were of the view that

improved banks operational efficiency and effectiveness through reforms would impact

positively on the economy, as this will gravitate towards the effective mobilisation and efficient

allocation of resources among various economic units.Soludo (2007) opined that banking sector

reforms can build and foster a competitive and healthy financial system to support development

and avoid systemic distress. Moreover, according to Barth, Caprio, and Levine (2001), over 130

countries, since 1980 have encountered banking problems that have proved costly with

interference to their economic developments leading to calls for banking reforms by national

governments and multilateral organisation such as World Bank and International Monetary Fund

(IMF).

The financial sector as stated by Amao (2005) is the primary conduit through which

monetary policies affect real economic outcomes and determines the resources available to

financial institutions. The sector according to him, occupies a vital position in the economy and

it plays crucial roles in the process of financial intermediation for economic growth and

development. Confidence in the banking sector as further explained by Amao (2005) is also

important and requires the restructuring of banks‘ balance sheets, the removal of bad debts,

strengthening of the management and risk evaluation capabilities of bank management, in order

to avoid insolvency.

Banking sector reforms as indicated in extant literature is essential, if the sector is to play

a major role in pricing, trading risk, implementing monetary and fiscal policies as part of the

process of a shift in emphasis to a private led economy (National Planning Commission [NPC],

2004). It was further argued by this school of thought that reforms which foster institutional

efficiency are important, if the banking sector is to play the desired catalytic role in the economy

(Amao, 2005). Banking sector as posited by Somoye (2008), should be reformed to enhance its

competitiveness and capacity to play its important role of investment financing. Jabar and

Awoyemi (2015) noted that banking reforms contribution to the development of the financial

sector was significant as banks‘capacity to play their financing role in the economy was

enhanced through increased capital base. Abdel-Baki (2010) alleged that monetary policy can be

more effective with the reform of the banking sector in emerging market economies.

2.3 Arguments against banking reforms

A sound banking sector is no doubt critical to the growth and stability of any economy

because of its catalytic roles. Olajide et al. (2011) pointed out that unguided financial

liberalisation opens up banks and indeed the economy to excessive financial shocks, using the

Asian countries financial crisis of 1997-1999 as an example. They further explained that the

continuous reform of the financial system can lead to instability, difficulty in planning and

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ultimately harsh operational environment that may lead to inefficient operational performance of

banks.

Banking reforms in Nigeria as emphasised by Apati (2012) have been revealed to have

led to new source of risks, part of which are stiff competition leading to lower margins, the entry

of new banks without the necessary expertise, among others.

In the view of Olajide et al. (2011), the reversal and rewriting of rules like introduction of

recapitalisation exercise and consolidation of banks in 2004; while the dust of introduction of

universal banking system of 2001 was yet to settle, these do not augur well given the under-

developed nature of financial base of the economy and the dominant roles banks are expected to

play in the transition stage of development in the country. Fadare (2010) alleged that the

frequency of banking reforms after the deregulation of the industry by CBN has led to corporate

governance issues in commercial banks.Ikhide and Alawode (2001) as cited in Olajide et al.

(2011) found out that the outcome of any financial sector reform programme is based on the

application of right combination of policies. According to Olajide et al., the reforms undertaken

so far by CBN have resulted in quite a number of banks insolvency, above average inflation and

an all high interest rates continually in the economy.Fadare (2010) alleged that the incessant

banking reforms in Nigeria has initially led to reduction in banks‘ profits due to the effect of

non- performing loans (NPLs) that have to be written off in compliance with CBN instruction.

Ogunsakin (2015) reported that the relative performance of banking size in terms of assets size,

private sector credit in relation to the economy have been very marginal.

2.4 Banking sector reforms and operational performance of banks

Notwithstanding the conflicting views, all the banking reforms in Nigeria have been

claimed to be necessary by the regulatory authorities. But, according to Apati (2012), Balogun

(2007) and Olajide et al. (2011), the effects of banking sector reforms on banks performance

have been a mixed one. According to these experts, studies have been on the impacts of banking

or financial sector reforms on other sectors of the economy, but there have been less empirical

studies on the effects of these reforms on aggregate banks performance. Harrison et al. (1999) as

cited in Fadare (2010) were quick to point out that banking activity and profitability are a

function of economic growth and not necessarily reforms. Olajide et al. (2011) opined that where

reforms result into efficiency gains,they could lead to enhancement of shareholders‘ wealth. On

the contrary, as further pointed out by them, reforms that do not bring about efficiency may make

the industry unprofitable without adding value to the economy. Ezirim and Muoghalu (2004)

examined the effects of financial sector reforms on commercial banks in Nigeria by comparing

two decades, 1976-1985 and 1986-1995 by using various indices of financial firms‘ performance

such as return on total assets (ROA), deposits assets ratio (DAR), total deposits ratio (TDR).

They concluded that performance of commercial banks was significantly different under

deregulated regime compared with regulated one, that is, period of financial reform is more

favourable.Several reports from Nigeria Deposits Insurance Corporation (NDIC) show that

banks net interest margin (NIM) and return on assets (ROA) which have been on increase for

many years declined negatively after the reforms of 2009 (NDIC, 2010).

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3. Methods

3.1 Study population, sampling technique and research instrument

The Nigeria banking industry and its customers constitute the population of this study.

The banking industry includes all deposit money banks in the banking sector of the Nigerian

economy. The study however focused on five deposit money banks (First Bank of Nigeria Plc.

(FBN), United Bank of Africa Plc., Zenith Bank Plc., Access Bank Plc., and Guaranty Trust

Bank Plc.). This is because the five banks currently control 70% of the market as shown in a

report obtained by Punch Newspapers of Nigeria from Financial Derivative Company Ltd., a

financial survey company in Nigeria (Punch Newspapers, 2013). For this research work, a

sample size of 250 customers across the five banks was chosen.

Simple random sample technique was employed in the research work. The essence of this is to

ensure that every respondent is given equal representation in the exercise; as this is what would

help justify that each respondent that completes the questionnaires is included in the survey

analysis. Fifty (50) customers each were selected by simple randomisation from customers of

the five banks.

The primary data were obtained by means of self-administered questionnaires to customers of

the five banks in order to generate the required data. Likert-scale rating was adopted, in which

respondents were asked how strongly they agreed or disagreed with series of statements

measuring banks’customer service delivery, efficiency of banks and effectiveness of reform

policy instruments. The statements were anchored on a five-point rating scale.

The secondary data were sourced from published annual reports and accounts of five banks that

control 70% of the banking market in Nigeria as listed on the Nigerian Stock Exchange (NSE).

The data collected cover the period between 2004 and 2014.

3.1 Research hypotheses

The following operational hypotheses were tested:

1. There is significant relationship between banking sector reforms in Nigeria from

2004 to 2014 and customers‘ service delivery.

2. There is a relationship between banking sector reforms and return on assets.

3. There is a relationship between banking sector reforms performing

loans/operating expenses and profit before tax/total capital.

4. There is a relationship between banking sector reforms, total assets/quality

earnings.

3.2 Data collection and analysis

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A pilot questionnaire was tested on five customers from each of the five banks. In

addition to the questionnaires, data from ten years audited annual reports and accounts of the five

banks form the major performance indices.The study adopts the use of questionnaire and analysis

of the key performance indices, to provide a comprehensive framework on the implication of the

Nigerian banking sector reforms on banks’operational performance.

To get insight into the implication of banking sector reforms in Nigeria from 2004 to 2014 on

banks, customers were requested to react to eight item-statements measuring the implication of

banking sector reforms on operational performance of banks since 2004. The item statements

were measured on a scale ranging from strongly agreed to strongly disagree.

4. Results and discussion

4.1 Results

The sampled banks return on assets from 2004 to 2014 were analysed by vertical bar

chart. The highest percentage of 3.5, with mean of 2.73was recorded in 2004. The return on

assets eventually on the average nosedived in 2009, indicating a decline in earnings efficiency. It

however, improved from 2010.The rate of financial intermediation was examined by looking at

the growth rate of deposits and growth rate of loans of sampled banks from 2004-2014.The

growth rates of deposits increased compared to growth rates of loans.

4.2 Discussion

It was revealed from the study, that there have been remarkable improvements in the quality of

service delivery by banks, since year 2004 as agreed by over 50% of the respondents. This

actually might be due to stiff competitions among banks. Banks are now aware that customers

are the reasons why they are in existence. Effective and efficient service delivery that will

culminate into maximum customers‘ satisfaction will therefore go a long way in the achievement

of the objective of profit maximisation.Innovative banking products and services are now the

order of the day in the Nigeria banking industry since 2004, with banks coming up every day

with products that can attract more customers.

Appraisal of operational performance of banks with relevant profitability and efficiency

indices

The assessments of the banks‘ operational performance are encouraging. Most of the

participating banks reported good performance on account of banks’operational performance:

return on asset, (ROA), growth rate of deposits, (GRD), growth rate of loans (GRL), performing

loans/operating expenses, profit before tax, total capital, (PBT/OE) and operating earnings, total

assets (QE/TA), etc.

The hypotheses of the study showed/indicated a significant relationship between banking

sector, customer service delivery, deposit mobilisation/financial intermediation of borrowing

money and deposits (earnings spread and financial intermediation, banks return on assets

(managerial efficiency) and performance. The inter-correlation matrix of all the study variables

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resulted into six co-efficients: three (3) of them are statistically significance at 90% level of

confidence and above.

These are:

- Growth rate of loans is not significantly related to return on assets (or is not a

good test/fit of return assets β1 at 15.1%, with the F-change of 23%, adjusted R-

square of 0% and standard error estimate of 99.7%

- Return on assets is a good determinant of banking sector reforms with 100%

indication of β0.

- Growth rate of depositors is not statistically significantly with 24.5% at β2, with

the F-change of 60%, adjusted R-square of 14% and standard error estimate of

98.9%.

- Performing loans/operating expenses is not statistically significant with accounted

for 28.2%at β3 with the F-change of 80%, adjusted R-square of 11% and

standard error estimate of 99.1%.

- Profit before tax and operating expenses and total capital good statistical

predictors of banking sector reforms which shared 50.9% at β4 with the F-

change of 25.9%, adjusted R-square of 18.3% and standard error estimate of 90%.

- and that quality earnings and total asset are good predictors of banking sector

reforms, i.e. they are statistically significant with correlation of 51.4% at β5,

with the F-change of 26.4%, adjusted R-square of 16.7% and standard error

estimate of 90.9%, while the operating earnings and total assets are good

statistical predictors of banking sector reforms/performance.

The results of the analysis depict the active involvement of the Central Bank of Nigeria in

ensuring a formidable, vibrant, sand and safe financial system free from systemic distress. The

banks‘ operational performance was also high in addition to the test of operating hypotheses

revealed significant relationship between the dependent and independent variables.

5.0 Conclusion and policy recommendations

5.1 Conclusion

Four hypotheses were formulated in order to determine or elicit the extent of banking

sector reforms and their implications on banks’operational performance. The result of the study

revealed active involvement of the Central Bank of Nigeria in ensuring banks’operational

performance through issuance of financial sector reforms (policies and prudential regulations)

aimed at ensuring safe and sound financial system, free from systemic distress syndrome and

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which will not erode public confidence, sanity and depositors‘ funds.The result of correlation co-

efficient analysis confirmed that the effects of CBN policy reforms, bank specific characteristics

and industry structure have mixed effects on banks‘ profitability level and financial

intermediation.Bank specific characteristics appear to have significant positive influence on

banks’profitability and efficiency level, while industry structure variables appeared not to have

contributed meaningfully to the operational performance of banks’in Nigeria.

There has been a reduction in the number of banks, which are now stronger and more

reliable thereby, helping to restore public confidence in the industry. But the situation where five

banks control over 70% of the industry market share showed that competition is limited.

5.2 Recommendations

The study has so many implications for regulatory authorities (CBN) and banks

management.

To start with, the industry needs an independent body to regulate the banks, while the

CBN will concentrate on monetary policy, inflation targeting and exchange rate stability.Where

there are more independent directors on a board, the performance of that bank invariably

increases.For a developing nation such as Nigeria to achieve rapid economic growth

anddevelopment, it requires a sound, stable financial system, and for this system to be stable and

highly competitive, it requires banks that are well reformed to attain excellent and maximum

utilisation or resources and high levels of performance.Stakeholders should be carried along in

the formulation of reform policies by CBN.

The CBN should work with Assets Management Corporation of Nigeria(AMCON) in

order to realise AMCON‘s objective of creating liquidity in the banks.The AMCON bond should

lead to liquid cash even if it is in part.However, that CBN should establish policies that would

increase lending to the economy most especially the real sector and other viable businesses.The

banking industry reform needs to be complemented with a whole set of macro-economic

measures stimulating to the economy for banks to thrive well after reform exercise.

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Globalization and information communication technology

Engr. Abdulrafiu Ollaitan Alashiri

Head Of Department, Computer Hardware Engineering

Cifman Institute of Technology and Management,

10/12, Lancaster Road, Opposite Queens College Sabo Yaba,

Lagos State

olaitanalashiri@yahoo.com

Abstract

The most conspicuous development in the globalization context has been the Information

and Communication Technology (ICT) influx. It seems to have turned the world into a global

village. Endless connectivity, interactive organizations, information sharing and infinite access

have all become the new ICT buzz words. Good governance and a vibrant democracy are critical

for human development. ICT has emerged as a key instrument for influencing the process of

governance in various ways and in varying degrees from improving the current service delivery

strategies to bringing about innovations in the mechanisms and nature of service. Hence, the

developing world is gradually catching up with the technological advancement to solve its socio-

economic problems. Even though the benefits of ICT come with the tag of a number of

constraints, it is being considered as a panacea for all ills. The streak of success stories in India

and elsewhere point towards ICT's growing potential but we must remember that development

comes with a price. The legal, physical, financial and human resources framework of each

country must create conditions favorable for ICT. It has to be ensured that the advantages of ICT

do not get outweighed by the costs. This paper attempts to highlight the significance of ICT

against backdrop of globalization, discuss some of the prominent ICT initiatives, examine the

impact of ICT efforts on the society; and bring out certain key socio-economic concerns that

need to be considered by a developing country in making ICT applications favorable for

sustained all-round development.

Keywords: Globalization, Information and Communication Technology (ICT), IT revolution,

hardware, software, telecommunications, Fiber, nanowires, micro-processor.

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Introduction

In nearly every corner of the world, one cannot enter a café or walk down the street

without seeing someone talking, texting, or surfing the Internet on his cell phones, laptops or

tablet PC. Information Technology (IT) has become ubiquitous and is changing every aspect of

how people live their lives. Recent advances in our ability to communicate and process

information in digital form, bring about series of developments sometimes described as an "IT

revolution" which is reshaping the economies and societies of many countries around the world.

IT is a driving factor in the process of globalization. Improvements in the early 1990s in

computer hardware, software, and telecommunications greatly increased people‘s ability to

access information and economic potential. While advancements in Internet-based tools over the

past five to ten years, such as social networking websites, twitter, and other Web2.0 applications

are changing the way people use and share information for personal, political, and commercial

purposes. These developments have facilitated efficiency gains in all sectors of the economy. IT

drives the innovative use of resources to promote new products and ideas across nations and

cultures, regardless of geographic location. Creating efficient and effective channels to exchange

information, IT has been the catalyst for global integration.

Products based upon, or enhanced by, information technology are used in nearly every

aspect of life in contemporary industrial societies. The spread of IT and its applications has been

extra-ordinarily rapid. Just 30 years ago, for example, the use of desktop personal computers was

still limited to a fairly small number of technologically advanced people. The overwhelming

majority of people still produced documents with typewriters, which permitted no manipulation

of text and offered no storage.

Twenty years ago, large and bulky mobile telephones were carried only by a small

number of users in just a few U.S. cities. According to a 2013 International Telecoms Union

(ITU) World Report, there were 6.8 billion cell phone subscriptions worldwide at the end of

2012. Global mobile cellular penetration reached 96 percent in 2012 (ICT Facts and Figures,

2013). In some developing countries, mobile phones are used by more people than the fixed line

telephone network.

But, perhaps most dramatically, just fifteen years ago, only scientists were using (or had

even heard about) the Internet; the World Wide Web was not up and running, and the browsers

that help users navigate the Web had not even been invented yet. Today, of course, the Internet

and the Web have transformed commerce, creating entirely new ways for retailers and their

customers to make transactions, for businesses to manage the flow of production inputs and

market product. and for job seekers and job recruiters to find one another.

The new industry was dramatically transformed by the emergence of numerous Internet-enabled

news-gathering and dissemination outlets. Websites, blogs, instant messaging systems, e-mail,

social networking websites, and other Internet based communication systems have made it much

easier for people with common interests to connect, exchange information, and collaborate with

each other. Education at all levels is continually transforming thanks to innovations in

communication, education, and presentation software. Websites now serve as a primary source

of information and analysis for the masses.

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Globalization accelerates the change of technology. Every day it seems that a new

technological innovation is being created. The pace of change occurs so rapidly many people are

always playing catch up, trying to purchase or update their new devices. Technology is now the

forefront of the modern world creating new jobs, innovations, and networking sites to allow

individuals to connect globally. The timeline below shows the rapid transformation of how

technology has accelerated within the last 20 years to 2012.

·22 years ago: Internet commercialized

·21 years ago: first mobile phone with Internet connectivity

·19 years ago: Google named the search engine of choice by PC magazine

·16 years ago: Blackberry launched

·13 years ago: Facebook launched

·11 years ago: Twitter launched

·10 years ago: iPhone, the first of the smart phones, introduced

·7 years ago: 17 million smart tablets sold — estimated that 100 + million by 2014

· 5year ago: Google Glass announced

·Every 60 seconds (so it seems): new apps, tailored to users‘ specific needs created.

Advances in information technology

The IT revolution drives the extra-ordinarily rapid decline in the cost and rapid increase

in the processing power of digital technologies. The digital device whose technological advance

has perhaps been most crucial to the IT revolution is the microprocessor, the collections of

millions of tiny circuits that serve as the "brains" of personal computers and that are embedded in

an ever-expanding number of products, from video games, to cars, to refrigerators. Using a

concept known as Moore's law the amount of power in a processor doubles approximately every

two years. In 2013 the use of nanowires in microprocessors has allowed this trend to continue

(Peckham, 2013).

Rapid advancements in fiber optic technologies have also been critical to the IT revolution. Fiber

optics technology enables data, including voices captured in digital form, to be converted into

tiny pulses of light and then transmitted at high speeds through glass fibers wrapped into large

capacity telecommunication cables. Hundreds of thousands of miles of these cables were

installed over the past ten years, boosting the speed and capacity of telecommunications

networks. A contributing factor to the growing technology sector is human capital. The majority

of tech firms worldwide have leveled the baseline production of new technology to the point

where they seek new areas of improvement for their products.

Driving down the cost of information transactions

A key reason why these advances in IT has spread so quickly is that they have

progressively reduced the unit cost of computing power or the transmission of a message. For

less than $30, Americans without any advanced technical training can purchase and use a

desktop computer whose data processing power far exceeds the room-sized computers that

powered the spacecraft that carried astronauts to the moon and back in the late 1960s and early

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1970s.

Companies such as Microsoft have even sold $100 computers to consumers in emerging

countries as a way of helping developing countries use more advanced technological resources.

While throughout 2013, the use of traditional PCs are expected to continue to decline as smaller

devices such as tablets and phones become more advanced, vendors are expected to ship 315

million units in the year (Gartner, 2013). The decline in sales is contrary to the rise in the amount

of Internet users. In 2013, 77 percent of the developed world was connected to the Internet, while

31 percent in the developing world was connected to it (ITU, 2013) However, as global PC sales

in the developed world continue to fall, it is expected that those in the developing world will

decline as well.

The last six years have seen a decline in the amount of PC shipments both in the

developed and the developing world. In 2012 there was a -1.4 percent growth in PC sales and in

2013 this only improved to 0.6 percent. However, it is expected in 2017 that there will be a 4.3

percent growth in PC shipment sales. The reasons for this are a weak global economy, and a

preference among consumers for higher mobility devices such as phones or tablets. The growth

in this market is expected to be modest as the technology of mobile devices improves and allows

them to compete with traditional computers (IDC, 2013)

Furthermore, networks built upon the exchange of information, like the Internet, tend to

become more valuable to existing participants as new participants link up with them. Finally, the

cost of using digital technologies, such as Internet service providers, decreases as the number of

users increases. All of these factors have worked together to promote rapid growth in the demand

for, and supply of, IT products and services. During the second half of the 1990s, as more people

bought computers and went online, the average cost of the equipment and services necessary to

access the Internet declined.

Today, individuals go beyond the conventional desktop computer to stay connected:

laptops, smart phones and tablet PCs utilize Wi-Fi networks to make the Internet an integral and

necessary part of everyday life.

The impact of information technology

The next three sections of this Technology and Globalization Issue in Depth will examine

the impact of the IT revolution in several critical areas:

Industrial structure and jobs,

Workforce and Financial markets.

In each of these areas, we will identify ways in which the application of new information

technologies promotes prosperity and enhances lives. But developments in IT are also causing

some problems and raising some concerns in both areas, and the sections that follow will also

look at some of those problems and concerns.

Industrial structure and jobs

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Developments in computing and telecommunications technology are changing America's

industrial landscape and its workforce. The application of new digital technologies to

management, manufacturing, distribution, and services has produced significant and lasting

increases in productivity. The new technologies have also created new industries (e.g., Internet

access providers) and entirely new kinds of work (e.g., website designers) and boosted other

industries. But the new technologies have also shrunk or even eliminated other industries and the

jobs associated with them (e.g., electric typewriters).

IT is fundamentally restructuring business practices. IT innovations have increased the efficiency

of business operations.

By reducing delivery times and inventories, "just-in-time" assembly allows businesses to

meet consumer demand more quickly and cheaply.

IT and the use of the Internet have also dramatically transformed exchanges between buyers and

sellers. Some Web based businesses, such as Amazon.com, are using the Internet to sell and

arrange for the delivery of large quantities of goods without buyers themselves having to access

a network of wholesalers and retail stores. "Business-to-business" (―B2B‖) commerce over the

Internet helps many companies streamline their sourcing of production inputs and allows them to

sell products or services to other companies. Similarly, companies are using the Internet to find

other businesses that might want to buy their products or services or sell them products or

services. The value of B2B e-commerce exceeds the value of e-commerce between Internet

retailers and individual consumers.

There has also been a trend of "reverse outsourcing." In the past globalization shifted the

center of cheap job markets eastward in countries such as India and China. Recently, however,

the creation of new jobs that allow for a virtual work place, sees the return of badly needed jobs

in the West. In short, the off shoring of the past may be replaced with a "redistribution" of labor.

This is also in part due to the growth of online retail replacing brick-and-mortar stores (Icreon,

2013).

Global e-commerce is growing steadily; past growth shows a gradual upward trend.

(Owen, 2012). While the absolute numbers declined in 2009 as a result of the recession, they

bounced back in 2010 and continued to grow in 2011. The US accounted for 33.5 percent of

online sales in 2012 and is expected to account for 31.5 percent in 2013 as China's share grows

(Dusto, 2013). Because of the growth of e-commerce, other sectors of the job market have

shrunk and will continue to do so. For example, employment for stock clerks and order fillers are

expected to drop by 171,000 from 2006 to 2016 (The 30 Occupations with the Largest

Employment Declines. 2008-18.). Nonetheless, physical stores still account for 95 percent of all

retail sales, though this percent may drop to 80 percent in the next ten years (Groenfeldt, 2012).

This expected decrease is due to growth of e-commerce. By the end of 2012, global ecommerce

reached $1 trillion. The most prolific online retailer was Amazon, which has pushed into the

digital television market recently. Most economists attribute the increase in annual productivity

growth to the pairing of labor with new kinds of IT across a broad swath of the U.S. economy.

Many economists believe the recent productivity gains will endure for the foreseeable future.

Extra-ordinary labor productivity growth, coupled with a rapid increase in Internet usage by

businesses and individual, has prompted some economists and other analysts to argue that the

United States now has a "new economy." According to this view, permanently higher

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productivity, more versatile and flexible corporations, and a likely reduction in the periodic ups

and downs of economic activity, known as the business cycle, characterize the new economy.

Workforce

As noted by Finance ―Information technology (IT) is both a huge industry in itself and

the source of dramatic changes in business practices in all other sectors. The term IT covers a

number of related disciplines and areas, from semiconductor design and production through

hardware manufacture (mainframes, servers, PCs, and mobile devices), to software, data storage,

backup and retrieval, networking, and, of course, the internet.‖

The incorporation of new digital technologies into all sectors in the Country and world at large

has created substantial new demand for expertise in software development, the management of

computer and information systems, technical support services, and the manufacturing of high-

tech gear. As of 2011, there were approximately five million jobs in the core IT industry in the

U.S.

IT firms provide telecom services, IT hardware, IT services, and software. As a result of

the slow growth of the global economy in 2013 the IT industry is expected to grow by only three

percent. The global IT industry market reached $3.6 trillion in 2012, with the U.S. representing

more than $950 billion. The IT industry also employs approximately five million workers in

technical and non-technical positions and 4.16 million in business IT departments (CompTIA,

2013).

In 2014 it is estimated that there will be over 100 million knowledge workers in the U.S.

(Infotrends, 2011). Knowledge workers are also called "symbolic workers," as they use very

little physical or mechanical labor. Unlike their industrial counterparts, knowledge workers

spend their time at work manipulating information rather than machines. An increase in

knowledge workers has led to a decline in other sectors of the economy, such as service and

labor-intensive jobs.

The flip side of increased demand for high-tech workers is the decreased demand for workers in

industries where computers and other high-tech devices have replaced tasks that used to be

performed by people. Workers have also lost jobs in industries or firms that have been unable to

adopt new information technologies as effectively as industries or other firms that offer

comparable products or services.

Many of the workers who lose jobs in declining firms or industries lack education or

training to take up jobs in the high-tech sector. A person who spent 30 years in a steel plant that

is shutting down may not be equipped to work for many of the industries that are adding jobs as

our economy transforms itself. State governments and the federal government offer programs

designed to help workers acquire the training and education needed to make the transition from

declining to growing sectors of our economy, but the record of these programs has been mixed.

Unfortunately, many firms in the industries that are succeeding also have a bias in their hiring

practices toward younger workers. They may believe that younger workers are more flexible and

more easily trained than older workers, and they may undervalue the importance of experience

and maturity.

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The IT-driven cycle of job creation and job destruction can be seen in almost every sector

of the new, knowledge-based economy. The automation of assembly lines has reduced jobs in

manufacturing, for example, but it has created new jobs in robotics technology and computer

engineering. The introduction of computers has reduced the need for many kinds of clerical work

in offices, but it has also created a new demand for computer designers, software writers,

computer system managers, service personnel, and data entry workers.

Financial markets

A second area in which the impact of information technology has been profound is in

financial markets. Financial markets encompass a wide variety of institutions and practices

through which lenders and borrowers are able to interact. Lenders include banks and other

financial institutions that make loans to individuals (e.g., for house or car purchases) and to

institutions (e.g., for expansion or acquisitions).These lenders are typically compensated through

interest payments or, in some cases, an ownership stake in an enterprise. Individual investors

who buy corporate stocks and bonds or government bonds are also lenders, and the companies

and governments that sell the investors the stock or bonds are borrowers.

The borrowers hope to use the money raised through these transactions for new equipment, new

lines of business, or other productive purposes. The investor-lenders receive compensation for

their investments through interest earnings, dividends, or an increase in the value of their stock

or bond holdings. Stock markets are perhaps the most familiar institutions in the financial

marketplace, but a wide variety of other institutions and investment vehicles, or "instruments"

are available to those hoping to earn or raise money. These include bond markets, foreign

exchange markets and futures markets, among others. Each of these markets for financial

markets has been impacted by the efficiency improvements from IT.

A combination of policy reforms and IT innovations has transformed financial markets over the

past two decades.

Governments around the world have modified, or eliminated, regulations that limited innovation

and competition in their financial markets. They have also reduced barriers to foreign

participation in their markets.

New IT developments have spurred innovation and international expansion in financial markets

in three ways:

1. By permitting complex domestic and international transactions to be conducted rapidly and

securely.

2. By enhancing data storage, analysis, and other data—dependent tasks associated with the

management offinancial institutions.

3. By giving market actors of all sizes access to a wide array of information on investment and

borrowingopportunities, the performance of companies and financial institutions, economic

trends, and policy developments.

Building upon policy reforms and technological developments, private financial firms

have over the past two decades created numerous new vehicles, or "instruments," through which

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people and institutions can lend, invest, or raise money.

Reforms and technology have also helped multiply cross-border linkages among national

financial markets.

As recently as the 1970s, individual investors, firms, and governments were generally

able to invest or raise capital only within their own self-contained, national financial systems.

Access to foreign bank loans, stocks, and other financial instruments was available only to the

most sophisticated investors.

Closed markets like these are hard to imagine today. Cross-border financial arrangements

have become commonplace. A global financial market has emerged, and the volume and value of

the transactions it supports is staggering. The total daily value of foreign exchange transactions

(exchanges of one national currency for another) increased from $18.3 billion in 1977 to $4.0

trillion in April 2010 (Spears, 2011).

Benefits

The global financial market offers an extraordinary range of opportunities to invest and

borrow money, benefiting investors, firms, and economies. On the borrowing side, if a U.S.

entrepreneur is not satisfied with her American options for raising funds for a new business, she

can seek funds in Europe or Japan. The wider range of options available to borrowers increases

competition among lenders, helping to keep the cost of borrowing down. This makes it easier for

firms to finance business expansion plans and acquisitions, generating jobs and economic

growth.

Likewise, on the investing side, a European stock investor hoping to earn a higher return than he

can earn in his home stock market can now explore alternative investments in the United States.

Access to a wider range of international opportunities helps successful investors increase their

earnings and minimize risk through diversification of their investment portfolios.

The global financial market often increases the growth potential of individual countries. By

opening up their financial sectors to international flows of capital, countries have been able to

acquire the funds they need to support all sorts of private and public sector development

initiatives. These funds can spur higher levels of growth.

Short-term capital concerns

The same technologies that helped create a nearly seamlessly international financial

market also increased both the probability and the potential cost of market volatility. The chief

problem is that the openness of national financial systems and the technologies that facilitate

transactions not only make it easier for investors to find places around the world to put their

money—they also make it possible for investors to pull their money out of particular investments

or countries very quickly. The quick withdrawal of investments can potentially have devastating

consequences for the countries concerned.The funds that investors are able to withdraw on short

notice from foreign markets are often called short-term capital.

International flows of short-term capital have increased at an astonishing rate over the past

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decade, thanks largely to new communication and IT. The buying and selling of currencies has

generated perhaps the largest and fastest-growing flows of short-term capital in recent years,

with an average daily trading volume of four trillion dollars in the foreign exchange market

(Forex)(Macini et. al, 2012).

Currency speculation can cause rapid swings in the value of a country's currency. These currency

swings can make it difficult for a country's businesses or its trading partners to make trade and

investment plans. Large volumes of short-term capital also flow around the world in response to

changing assessments of the health of national economies. If an investor fears that the exchange

value of the currency of an ailing economy is likely to drop by a significant amount, he may

decide he wants to get rid of stocks or bonds he owns in that country. His hope is that he can sell

those foreign stocks or bonds before the relevant currency drops too much, after which the

amount of other dollars or other currencies he will be able to receive in exchange for the sale of

the foreign investments will be much lower.

Improving sectors of the society: Health, education, journalism, and government

The information revolution is creating opportunities in many other sectors of society,

including health care, education, journalism, and government. Over the past decade, new

applications of information and communication technology have improved services,

transparency, and public access in each of these areas.

By improving access to health care, education, and government services to these sectors, new IT

has the potential to help people around the world overcome geographic or income barriers which

currently degraded the quality of their lives. By dramatically increasing access information, the

advances can enhance knowledge, break down barriers to participation, and improve the

accountability of public and private institutions to its people. These developments will prove

especially beneficial to individuals in poor and underserved communities around the world.

In this section we look at some of the ways that IT is enhancing knowledge in health care,

education, journalism, and government. In the next section we look at gaps in access to IT,

sometimes known as the "digital divide.

Healthcare

IT is dramatically improving health care in the following ways:

prevention and control of emerging infectious diseases,

patient to health care provider interaction,

rapid dissemination of information, and

improved responses to outbreak situations.

Efforts to contain outbreaks of dangerous infectious diseases require the rapid collection and

transmission of detailed patient data to medical labs or public health centers. Health

professionals need tools to communicate important scientific or epidemiological findings to other

parts of the health care community. IT is enhancing capacity in each of these areas. Many health

problems in developing countries are being addressed using IT. Digital records and images

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utilizing digital cameras have made it possible for doctors around the world to share information

or offer advice on treatments for complicated ailments. For example, using Internet connections,

doctors working in remote regions of northern area in Nigeria during an outbreak of the deadly

Ebola virus would be able rapidly to transmit their findings to experts at the World Health

Organization in Lagos, Abuja, Geneva and the U.S. Centers for Disease Control at Me Cure in

Lagos or Atlanta.

IT systems have had a profound effect on the healthcare system in the Nigeria as well as other

systems around the world wherein new technologies are utilized in an effort to efficiently

providing healthcare to a large audience. New initiatives are being undertaken by governments in

a multilateral effort to provide for patients that are not within accessible reach of a hospital.

Education

IT improves educational opportunities by enabling educators and students to overcome

barriers of distance and by enhancing the content of instructional materials.

The use of IT to deliver lessons or training from instructors in one location to students in another

is frequently called "distance learning." Distance learning has been around for a long time. For

many years people have listened to recordings of classroom lectures or other educational

presentations, and millions of people have watched educational programming on public

television‘s channels.

Most colleges and universities across Nigeria (eg NOUN) or the United States offer some

online course offerings. In 2012, the latest development is the rise of Coursera, which offers free

online courses from elite universities, such as MIT and Harvard, reaching more than one million

registered students in 2012.

In its first thirteen months Coursera registered 2.8 million users, however completions

rates of programs are found to typically below, with a 27 percent completion for high school

level, eight percent for undergraduate, and five percent for graduate (Mackay, 2013). (Young,

2012) Both the emergence of the Internet and new developments in educational software vastly

enhanced distance education over the past decade. The geographic reach of distance education

has been extended. There has been a substantial increase in the quantity and diversity of

educational material available over the Internet or through the use of satellite video and audio

linkups.

Over the past decade, computers and Internet connections have been widely deployed in

classrooms, from pre-K through the university level. Lessons delivered through computers can

be interactive, which gives students real-time feedback on their work and enables them to work

at their own pace. Kids often enjoy working with computers, so when they are intelligently

integrated into classrooms, computers can create excitement about learning among students.

The Internet provides an extraordinary opportunity for students to extend the reach of their

learning. Before the Internet, the resources available to students were largely those that could be

found in their classrooms, in their outdated textbooks or in public libraries. The Internet enables

students to reach well beyond the physical confines of their classrooms and gain access to

virtually unlimited quantities of information on the topics or events they are discussing in their

classrooms.

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The use of the Internet for school assignments also encourages students to give free rein to their

curiosity and strengthens their research and investigative skills.

IT offers especially valuable educational opportunities for poor people in developing countries.

Students and other residents of poor countries are increasingly using the Internet—often in

community Internet centers—to gain access to information and communicate via e-mail.

Doctors, scientists, and other professionals, for example, can achieve cheap or free access to

journals and other professional publications that are too expensive to afford in hard-copy

versions.

Government aid agencies, foundations, and private firms sponsor numerous distance education

programs designed to teach skills to a wide variety of developing country professionals,

government officials, engineers, scientists, and businesspeople. Internet or satellite connections

enable students from developing countries to take courses offered in foreign institutions. In these

and other ways, technology-enabled educational programs can help strengthen the people who

will be called upon to provide leadership in developing countries in a wide variety of social

welfare, economic, and political fields.

Technology has a positive impact on education, enabling students to learn at their own pace as

opposed to following traditional teaching methods. ―Education technology has been found to

have positive effects on student attitudes toward learning and on student self-concept. Students

felt more successful in school, were more motivated to learn and have increased self-confidence

and self-esteem when using computer-based instruction. This was particularly true when the

technology allowed learners to control their own learning‖ (Technology's Impact on Learning,

2012).

Journalism and media

The technological revolutions of the Internet have ushered in a new age of journalism that cannot

be confined to one medium or one platform of exchange. It has made publishing and accessing

news easier and cheaper than ever before with more sources and varied voices. The Internet

offers unlimited space to whoever chooses to partake, unlike television programs and news

articles that are confined by word count limitations and air time restrictions. The relative ease

with which information spreads creates an interactive playground for users that will only grow

with time.

Characteristics of social networking sites

Networking websites embody many characteristics of Web 2.0, with an interactive, user-based

platform built around the notion of a personalized profile page that reflects how you want to be

perceived. Along with a profile, another important aspect of social networking is being able to

link to the circle of friends that your acquaintances have built, creating a world that is truly

connected by a few clicks of a mouse.

SNSs not only allow for users to stay connected more frequently, but they also provide a more

personal user experience in a generation founded upon technology. Like other web-based

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services, there is a mass conglomeration of social networking websites springing up on the

Internet. According to its website, Facebook boasts more than 800 million active users, while

Twitter, which is growing even faster, claims more than 500 million active users. Social media

accounts for the majority of time spent online.

Social networking sites have gotten much attention recently as privacy has become an

increasingly important issue as younger children begin to use these sites. Further, a recent study

by USC revealed that the younger generation is less likely to hesitate to give out personal

information on sites like Facebook. The generation known as "millennials" has become ever

more engaged with social media sites, ranging from ―liking‖ a product on Facebook, or sharing

their location, and tweeting private information. The number of 18-34 year olds who were

willing to share their personal information was 56 percent compared with 42 percent for those 35

and older.

Cloud computing

Cloud services have become increasingly popular in the business world in recent years. The basis

of cloud computing is that data is not stored on a person's physical machine but hosted in third

party pools known as the cloud. This allows for businesses to store more information without

having to worry about failure of their own computers and risk losing vital information. This type

of storage has already been adopted by Amazon, Google, and Microsoft. It is estimated that 74

percent of enterprises now use cloud computing. There has been a 19% increase in usage of the

service since 2009 (Lynn, 2011).

These services also allow virtual collaboration on projects that can also be worked on

simultaneously, making meetings and traditional office work obsolete. One of the key benefits to

cloud storage is the ability to recover from a disaster, since the data is stored in a third party

location any problems can easily be mitigated. However, there have been concerns about the

security of data that is stored in the cloud and whether this information could be sabotaged

easily. Cloud storage is also used by individuals who enjoy the convenience of having their data

readily accessible from any machine.

Concerns of the technology age

The preceding sections have highlighted ways in which new information technologies are

improving the quality of people's lives. This section will look at two of the leading sets of

concerns that have been raised with respect to the growth of IT.

IT is rapidly creating a knowledge economy, in which productivity and prosperity will

increasingly come to depend on access to information and on the ability to make productive use

of it. But the great promise of these technologies to improve the quality of lives carries with it an

implicit risk: gaps in technological access will reinforce and perhaps even widen existing

disparities in living standards. Access to new IT—and therefore to knowledge—varies widely

within countries and between countries. The promises that information technology provides

require access to and knowledge of the new technology itself—without one or the other, the IT

will not be used to its maximum potential.

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The broad variations in IT accessibility could lead to the exclusion of large numbers of

people from the benefits of the knowledge economy. As knowledge critical to enhancing social

welfare and economic opportunity increasingly comes to depend on IT, these gaps in access to

technology, frequently called "digital divides," will reinforce national and international gaps in

living standards.

Conclusion

Advances in technology are producing many changes in our society at speeds that are

hard to measure and quantify. The shifts within the job market, the rise of open source material,

and the rethinking of firms will bring about new trends in business. More efficient ways to

handle health care and education material will provide more access, flexibility, and coverage to

all parties. Web 2.0 and the Internet Revolution will continue to lead the way so social

networking; peer production projects and comprehensive news coverage will be streamlined to

become an integral part of the expansion of communication across cultures.

However, the rapid expansion of information and computer technology also bears certain

costs. Workers in sectors such as agriculture and manufacturing are losing their jobs as

innovations in IT create a greater demand for high-tech workers and introduce efficiencies that

make manual labor obsolete. Furthermore, governmental programs do not provide the assistance

needed to help these workers transition to the technological age, further wedging the gap

between rural and urban America. This disparity is also magnified within the stratification of

international systems: The digital divide that exists among developed and developing countries is

obvious and the high cost of bringing broadband and technology to third-world countries is an

issue that needs to be solved.

As individuals become more engaged with the possibilities that Web 2.0 brings,

censorship and the imprisonment of journalists in autocratic nations will become a larger and

larger issue that should bead dressed by the international community. Although information

technology and increased knowledge can empower everyone on an individual level, the

limitations of the existing structures within the job market, socioeconomics, and governmental

sovereignty are hard to cast away; an underlying irony has yet to be eliminated. If the new

technologies are to fulfill their promise, it is necessary to direct attention towards the costs and

concerns that come with the globalization of technology. Experience with previous technologies

suggests that prudent policies can help us effectively manage the risks associated with new

technologies without harm to their benefits. History also advises that the measures taken must be

developed through close consultation between governments, private sector experts, and

stakeholders and citizens. We can partake in the on-going debate by staying informed on current

events and technology facilitates the process in a vital way.

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173

Globalisation and sustainability of Islamic banking in Nigeria

By

Mustapha Babatunde Ademola Ashogbon E-mail: ashogbonhtkb@yahoo.com

Department of Banking and Finance, Lagos State Polytechnic, Ikorodu, Lagos

Abstract

Globalised Islamic banking is growing at the rate of 12– 16% per annum. With this, its spread

and acceptance is not limited to only Middle-East or Muslims dominated countries, but is being

embraced in non-Muslim dominated countries in different countries across the globe such as

China, USA, U.K, Denmark, and Nigeria among others. The paper examined the sustainability of

Islamic banking in Nigeria in the face of globalisation. Content analysis was used in the study.

The study revealed that Islamic banking is practiced globally through two main channels and the

banks finance their customers majorly through Mudaraba, Musharaka, Murabaha, Ba’muajjal,

Ijara and Bai’Salam. The paper concluded that there are challenges to be tackled headlong for

the sustainability of Islamic banking in Nigeria and there is need for regulatory authorities to put

more effort to publicise the benefits of Islamic banking in the country. Policy and managerial

implications of the findings were stated.

Keywords: Globalisation, sustainability, Islamic banking and Nigeria.

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1. Introduction

According to Enhancing Financial Innovation and Access ( EFInA) report (2012), the

percentage of unbanked population in Nigeria was 46.3% which translates to 39.2 million adults

as at 2008. Many reasons have been adduced for this high rate of the unbanked and those lacking

access to financial services (Nwankwo, 2014). Some of these reasons include low level of

income, education and financial illiteracy, cost of financial services, unemployment, low level of

economic activity in rural areas, and proximity (EFInA report, 2012; Nwankwo, 2014). The

increasing number of unbanked in Nigeria has been a source of concern to the banking

regulatory authority as well as practitioners (Obiyo, 2008). However, the possible role of Islamic

banking in increasing the number of the unbanked is not included among the factors and has

rarely been investigated in the literature.

The emergence of Islamic banking has been driven by the increasing number of Muslims

who wish to live their lives in accordance with Shariah, the legal code of Islam in which giving

and taking of interest on loan is forbidden (Abdul- Majid, Sallah, & Battish, 2009; Ariff, 1988).

Also, Islamic banking serves as alternative to conventional banking and its contribution in

propelling the development of global economy has been proven in financial outlook (Tahir,

Bakar, Ismail, & Wan, 2006). Islamic banking has been successfully developed into viable

alternatives banking framework in both developed and developing countries in response to

failure of conventional interest-based system to cater for developmental needs of most countries,

particularly in the developing economies (Ahmed, 2000; Mamman, 2005). In August, 2004, the

Islamic bank of Britain became the first bank to be licensed by non –Muslim country to engage

in Islamic banking (Chong & Liu, 2009).

It should be noted that the patronage of Islamic banking is not limited to only Muslims

nor muslim countries; globalisation aids its acceptance and spread to many countries of the

world. According to Fada and Wabeka (2012), Islamic banking is not a religious bank, that is

restricted to people of any given religion or faith as many people mis-conceived. Muhammat,

Jaafar, and Azizan (2011) noted that in Malaysia, non-Muslims constitute the majority of Islamic

banks' customers. The benefits of Islamic banking have made its acceptability transcend Muslim

countries and developing countries. Ighodaro (2011) noted that Islamic banking is now practiced

in some Western Europe such as in Denmark, Luxemburg, Switzerland and the United Kingdom,

which are not Muslim populated countries.

Over the years, several efforts have been initiated by several institutions for the

establishment of Islamic banking services in Nigeria (Dogarawa, 2011). Daud, Yusuf, and

Abideen (2011) pointed out that the promulgation of Banks and other financial institutions

Decree (Now Act) 25 of 1991 which replaced Banking Act of 1969 gave a better momentum to

the agitation for the establishment of Islamic banks in Nigeria.

Abikan (2009) opined that after the promulgation of the last, two existing banks were

given provisional license in 1992 to operate interest free banking but none could start until 1999,

when Habib Bank Nigeria limited (now Keysone Bank PLC) commenced Islamic banking

window upon rolling out guidelines by government, in order to entrench Islamic Banking culture

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in the country; Jaiz Bank International Plc was granted license to operate Islamic Banking in

2011 but started operation in 2012 (Thisday, 2012; Vanguard, 2012). Besides, operational license

has been given to Stanbic IBTC Bank to commence full fledge banking operations in line with

the approved framework for Non-interest banking in Nigeria (Raimi, Shokunbi, Share, & Fadipe,

2013). Abdullahi (2010) noted that Al-Barakah Micro-finance Bank was commissioned as the

first licensed Islamic Micro-finance Bank and had started operations in Lagos since April, 2010.

It is important to note that bank of any nature, be it conventional or Islamic bank relies on

deposits of its customers as a major sources of funds. Haron and Ahmed (2000) submitted that

since depositors’ funds is the target of banks as such management of banks, particularly,

Islamic banks should be interested in factors that influence and sustain customers’ interest in

patronising Islamic banks, especially in Nigeria where Muslims constitute more than 55% of the

over 150 million population (Daud et al., 2011; Dogarawa, 2011). Dogarawa explained that

despite effort made by Central Bank of Nigeria (CBN) to reduce poverty in Nigeria, the interest-

based micro-finance banks were rejected in the Muslims dominated Northern part of the country

due to its non-compliance with Islamic principles, particularly on the issues of payment and

receipt of interest that is forbidden under sharia. This makes it pertinent for Islamic banks to

know those factors in order to improve and sustain the performance of the Islamic banks towards

satisfying its customers, adopting and patronising Islamic banks (Abdul & Omar, 2012).

Within a span of five decades, Islamic banking is developing into a viable alternative

banking framework all over the world with an increasing annual growth rate of 12-15%

(Mamman, 2005) This is as a result of financial globalisation and financial crisis of 2008. In

view of globalisation connecting the world in all regions and sectors; Islamic banking and

finance is no exception.

With globalisation, the rate at which Islamic banking is expanding and spreading to

different part of the world, in Muslim and non-muslim dominated countries at an increasing rate.

With the introduction of this mode of banking into the Nigerian economy, one wonders whether

it can be sustained and diffused to all the regions of the country with increasing rate witnessed in

other part of the globe as a result of globalisation considering multi-religion nature of Nigeria.

The objective of this paper therefore, is to review the factors that can aid the sustainability of

Islamic banking in Nigeria, especially in the global era with a view to encourage its diffusion at a

higher rate than what is witnessed currently in line with global acceptance of this mode of

banking system. In order to achieve the objective of this study, the paper is structure into three

sections. Section one is introduction, section two which deals with review of related literature,

conceptual and theoretical review will be carried out and finally section three concludes and

highlights policy and managerial implications of the findings.

2. Literature review

3.

2.1 Conceptual framework

Adegbite (2007) defined globalization as the enhanced integration of world economic

activities where such activities consist of increased cross national flows of a greater variety of

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goods and services, more extensive cross border flows of short term and long term capital and

increasingly dense and complex network of transactional production network involving multi-

national enterprises, as well as independent supplier companies. Bucur (2012) considered

globalization to be the intensification of the social relation worldwide, which link location

situated at the long distance in such a way that events that occur locally are seen through the eyes

of others similar to them, occurring at many miles away and vice-versa. Husler (2012) explained

that globalisation has been driven by advances in information and computer technologies, the

integration of national economies, liberalization national financial and capital markets as well as

competition among providers of intermediary services. Raluca (2012) stated that globalization is

a concept used to identify a new planetary phenomenon, fusion of consumer markets, production

factors, labour, and technology, financial and cultural capital which is a dynamic and complex

process that is irreversible. It enables individual, corporation and nations to reach the world

further, faster, deeper and cheaper than ever before and in a way that also produce a powerful

backlash from those left behind and brutalized by this process.

An Islamic bank is a company which carries on Islamic banking business whose aims and

operations do not involve any element which is not approved by the religion of Islam (Ighodaro,

2011). In Nigeria, Islamic bank is known as non-interest financial institution, (NIFI)” and the

Central Bank of Nigeria (CBN) defined it as a bank or other financial institution under the

control of CBN which carry out the banking business comprising trading, investment

commercial activities, as well as the provision of financial products and services which are in

accordance with Sharia principles and rules of Islamic commercial jurisprudence (CBN, 2011).

Specifically, Islamic banking prohibits the paying and receiving of interest (called “riba’’),

speculating or gambling as well as being involved in the prohibited (“haram”) industries such

as alcohol, pork, weapons among others (Ghaeeraert, 2014).

Although, the modern experiment with Islamic banking was undertaken in Egypt in the

late 1960 (Ariff 1988; Zaman & Movassaghi, 2001), Nigeria did not have her first licensed

Islamic bank (Jaiz Bank Plc) until 2011 (Yahaya, Yusoff, Idris, & Othman, 2014). Earlier efforts

to establish such bank between 1961 and 2003 proved abortive (Yahaya et al., 2014) as the

policy to establish it was vehemently opposed by members of the public, especially, the Christian

community (Ojo-Agbodu & Omah, 2012 ). However, it should be noted that it is not only in

Islam that interest is forbidden because avoiding interests in business transactions is a

phenomenon that is firmly entrenched in the Judeo-Christian Islamic tradition (Umar, 2011).

Islamic banking is practiced through two main channels which are: specialized Islamic

banks and Islamic windows (Ariff, 1988; Chapra, 2004; Chong & Liu, 2009; Idowu, 2006;

Oyeniran, 2012). Dogarawa (2012) maintained that CBN in its framework provides for three

types of non-interest banking in Nigeria: full-pledge, subsidiary and window. Abdulkarim (2011)

posited that Islamic banks financed their customers in the following ways: Mudaraba financing;

Murabaha; Bai’Muajjal financing; Ijara and Bai’salam. Ariff (1988) stated that Islamic banks

operate different types of accounts for their customers which include: current (Al-wadiah)

which is basically on trust and no return nor service charge attached , savings account and

investment accounts.

177

Sustainability is the ability or capacity to continue an activity or a defined behaviour for a long

term or indefinitely (Hornby, 2010). Barlett (2012) described sustainability as development that

meets the needs of the present generation without compromising the needs of the future

generations. It can also be defined as an ability or capacity of something to be maintained or to

sustain itself.

The sustainability of Islamic banking and finance which has witnessed a significant

growth from mere $137 Billion in total assets in 1996 expanded to reach US $ 895 billion in year

2010 and expected to increase to about US $5 trillion in total assets globally by 2015 has been

influenced significantly by the global phenomenom-globalization (Alamsyah, 2010). It is

expected to continue to always consider values as the central point in economic decision making

and to emphasize equity along with efficiency in the allocation of resources and distribution of

incomes among it customers (Iqbal, 2005). Aktar (2007) emphasized that avoidance of interest

and speculative activities as well as maintenance of structures which offers just and equitable

financial system will not only continue to attract Muslims and Islamic countries but also appeal

to non- Muslims and non-Islamic financial institutions. He maintained that Islamic banking will

expand more if Islamic banks extend their reach to rural areas which are currently not effectively

served by conventional banking system. Ibrahim, Malami, and Abdullahi (2012) emphasized that

it is important to note that Islamic bank can be used to cultivate and sustain banking habit

because of the increasing demand for shariah-compliant products and diversification from

conventional clients. Ariff (1988) suggested that to cultivate and sustain patronage of Islamic

banks, at a profitable level by Muslims, Islamic banks need not be complacent but innovative.

Yunusa and Nordin (2015) submitted that challenges in the way of the diffusion and

sustainability of Islamic banking in Nigeria can be classified into external, posed by non-

Muslims. Particularly, Christian leadership, and internal, which involve lack of adequate

awareness among some Islamic groups. Previous studies have identified a number of challenges

standing in the way of diffusion and sustainability of Islamic banking in Nigeria (Abdullahi,

2010; Danbatta, nd; Fatai,2012; Daud, 2011; Dogarawa, 2011; Idowu, 2006; Ighodaro, 2011;

Lasisi, 2011; Mawoli & Abdusalam, 2012; Yunusa & Nordin, 2015; Yusuf, 2013).

Abdulahi (2010) classified challenges facing Islamic banking in Nigeria into institutional

issues and operational issues. Institutional challenges include banking laws, relationship with

CBN; relationship with conventional and other banks; participation in money and capital

markets; operational challenges comprising: liquidity issues, environmental challenges; high

business risk due to ethics issues, inadequate experience manpower, level of public awareness

and education about Islamic banking as well as issues of accounting and auditing standards.

Religion mis-conception and socio-political environment is one of the hurdles facing

Islamic banking in Nigeria. Yunusa and Nordin (2015) stated that challenges facing diffusion

and sustainability of Islamic banking in Nigeria include: religious challenges which is classified

into external and internal challenges; operational challenges, sharia related issues and inadequate

awareness.

Adamu et al. (2012) noted that non-Muslims religious organizations have mis-conception

about Islamic banking. It was term to be a ploy to dominate them by the introduction of this

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mode of banking as well as islamise Nigeria; the policy was term as imposition of Islam religion

on Nigerians and mis-use of resource in favour of Islam and thereby ask their members not to

patronize it (Mawoli & Abdulsalam, 2012).

Shortage of qualified work force in the field of Islamic banking is another issue to

grapple with in the nascent segment of banking sub-sector in the globe, particularly, in Nigeria.

This is a serious challenge as it is a requirement that members of sharia committees and sharia

advisory council must be academics and sharia experts in Islamic banking and financed (Yusuf,

2013). Ighodaro (2011) emphasized that this problem is a serious hurdles that must be crossed as

it hampers the pace at which Islamic banking is growing all over the world and efficiency to

which verdicts are given on new products are being affected.

Also, there is dearth of scholars who combine knowledge of sharia jurisprudence with

modern banking and finance (Adamu, Malam, Abdullahi, Dabiri, & Karimu, 2011). Bello and

Abubakar (2014) noted that inadequate manpower and poor training of limited qualified

personnel in Islamic finance, as well as little commitment to research on this in tertiary

institutions is a serious hurdles for the sustainability of Islamic banking and finance in Nigeria.

Lasisi (2014) added that shortage of skilled manpower in the field of Islamic banking and

finance is a global phenomena to which Nigeria is not an exception and need to be addressed for

the survival of Islamic banking, particularly in Nigeria. Malami (1992) emphasized that there is

need for adequate staff training and development in this area.

Operational issues must be dealt with for the sustainability of Islamic banking in Nigeria.

Abdullahi (2010) opined that operational challenges facing Nigeria include: liquidity issues,

environmental constraints, issue of accounting and auditing standards. He emphasised that

Islamic banks will not find it easy when they are faced with liquidity squeeze, but more

worrisome situation would be when they have excess liquidity. They can grant the loan without

demanding for interest but will be worried as to the use the borrower puts the fund, which might

be unethical or used for activities that involve receipt and payment of interest. On the issue of

environment which can be classified into internal and external environment (Bello & Abubakar,

2014) stressed that if the banks have control over internal environmental factors like

shareholders, staff, employees among others, external factors like government policies, socio-

cultural belief of the citizenry, political dimension, globalization, technology are uncontrollable

and may affect the operation of the banks negatively. Ighodaro (2011) observed that Islamic

banks have limited instruments to trade in because most organizations in Nigeria in this age of

globalisation engage in instruments that have interest as their reward.

Momoh (2011) stated that operational challenges facing Islamic banking in Nigeria

include: Sharia related issues and inadequate awareness. Danbatta (n.d) asserted that constitution

of sharia supervisory Board that consists of trustworthy scholars who are highly qualified to

issues Fatwa (pronouncement) on financial transaction is an issue that must be looked at

critically for smooth operations of Islamic banks, Nigeria. Lasisi (2014) observed that Islamic

banks might not be able to benefit from loans from CBN. In the period of liquidity crisis because

such loan are interest based. Lack of adequate knowledge of accounting and auditing standards,

which are relevant to Islamic financial institutions could affect the operation of Islamic banks

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(Lasisi, 2004; Yussuf, 2012). Bello and Abubakar (2014) pointed out that limited financial

innovations and lack of profit sharing financing products hinders the diffusion and sustainability

of Islamic banking in Nigeria. Inadequate financial innovation because of shariah requirements,

which delay the introduction of new products and make Islamic bank rigid to innovation thereby

affecting their operations in this era of globalization. Lack of enough profit sharing instruments

is a serious problem facing Islamic banks. Profit sharing instruments are small and this might

make the banks lose a lot of their customers, if this is not resolved, because one of the reasons

for adoption of Islamic banking is the concept of profit sharing.

According to Nwatobi and Mallum (2014), one of the major factors affecting the

operations of Islamic banks is competition with conventional banks which is even more as a

result of globalization which allow for entry of more foreign banks into the banking sub-sector.

In view of financial competition, Islamic banks are finding it difficult to compete with the

established banks to attract staffers, needed capital which are Shariah compliant (Momoh et al.,

2011).

Operational challenges facing Islamic banking in the banking world and by extension

Nigeria, comprising liquidity issues; environmental constraints issues relating to accounting and

auditing standard; limitation of financial instruments and financial innovation; lack of adequate

profit sharing, financial products and sharia related issues are the banes of Islamic banking

globally, including Nigeria must be seriously tackled to increase its growth rate in the world and

particularly for its sustainability in Nigeria.

Institutional challenges is one of the problems affecting operations of Islamic banking all

over the world with Nigeria not being exempted. Momoh (2014) submitted that Central Bank of

Nigeria is expected to come up with regulation and policy which is not only conforms to Quran

and Hadith, but also competitive with conventional banks. Kunyanjui (2013) opined that

institutional challenges facing Islamic banks all over the world need serious attention, if Islamic

banks must continue to expand and carried out those functions hitherto performed by

conventional banks. For this to be dealt with, there is need to establish courts (shariah courts)

which will deal with dispute relating to transactions in the Islamic banks.

Iqbal (2007) opined that if institutional issues facing Islamic banks are addressed, then

the risk from internal control weakness, as well as governance issues affecting the Islamic banks,

investors, regulators and other stakeholders will be properly addressed. Iqbal, Ahmed and khan

(n.d) indicated that Central Banks in the globe should hasten effort that will lead to enactment,

and amendment of Laws and policies that will favour Islamic banking because as it is currently,

the laws are in line with the practices of conventional banks. These hinder the sustainability of

Islamic banks in Nigeria as supportive institutions like money market, Islamic insurance

establishment of schools and research institutes are not on ground or negligible (Ighodaro,

2011; Lasisi 2014).

Bello and Abubakar (2011) noted that institutional challenges affecting the sustainability of

Islamic banking in Nigeria include: inappropriate institutional frame work as the current one

tends more towards conventional banks notwithstanding the one issued by CBN for Islamic

banking, inadequate legal framework; lack of equity institutions; poor supervision frame work as

180

CBN and shariah board might contradict issues instead of complementing each others efforts

among others.

Moral hazard and loan delinquency could affect Islamic banking in Nigeria negatively. Idowu

(2006) noted that this act usually lead to huge bad debt which affects profitability of those banks.

Ibrahim et al (n.d) stated that corruption and unethical practices on the part of customers affect

banks negatively. Some of the immorality include: concealment of information, untruthfulness

among others. Lasisi (2014) explained that some customers usually apply for Qard Hasana loan

(Benevolent loan) with the aim of defaulting which affects the survival and sustainability of

Islamic banking, particulaly in Nigeria. Default i.e delinquency by customers could create bad

debts for Islamic banks which do not receive interest. Nwatoh and Mallum (2014) confirmed in

their work that legal framework in the country tends in favour of conventional banks.

Notwithstanding the increase in introduction of Islamic banking, lack of adequate

awareness about its operations and activities is a major challenge in most countries practicing

Islamic banking, especially in a developing country like Nigeria. Bello and Abubakar (2014)

stated that there is dearth of information about the principles and merit of Islamic banking in

Nigeria, as well as its objectives that need to be corrected for sustainability of Islamic banking as

more customers, Muslims and non-muslims will embrace the banks and patronize them, as well

as correct wrong impression people have about Islamic banking. Lasisi (2014) indicated that lack

of adequate awareness of Islamic banking in Nigeria allows for mischief and mis-conceptions

about Islamic banking have ground. Momoh et al. (2011) submitted that low level of awareness

is affecting the acceptance and sustainability of Islamic banking in Nigeria. Abdullahi (2010)

expressed that low level of awareness about the benefits and various modes of Islamic banking is

affecting its general acceptability.

Moral hazard and delinquency by customers is another problem facing Islamic banks.

Ismal (nd) submitted that Islamic banks face the challenge of moral hazard on the part of debtors

who engage in hazard and pretend that it is default. This is a ploy to terminate the contract before

it. Islamic banking has been operating successfully in countries with ability to tackle headlong

the challenges facing it and thereby reduce its effect in being obstacle to its operations in the

globe. These challenges must be subdue, if its patronage is to be increased by majority of

Nigerians.

Scholars have identified a number of benefits of Islamic banking which if given adequate

awareness will further enhance its sustainability and diffusion in the country (Gheeraet, 2014;

Olokooba, 2014; Muhammed & Gulani, 2013; Salako, Adepoju & Azeez, 2013, Dogarawa,

2012; Adeyemi, 2011, Momoh, 2011; Mobolaji, 2011; Abdullahi 2010; Sidique, 2002).

Attraction of local and foreign investors and funds is one of the benefits of Islamic

banking in the face of globalisation. Salako, et al (2013) opined that Islamic banking aids the

inflow of foreign investment into the countries practicing it all over the world. It attracts the

inflow of local and foreign investors and funds which boost infrastructural development in the

country. Dogarawa (2012) and Momoh et al.(2011) stated that with Islamic banking in Nigeria a

lot of investors, particularly from Middle East, will be attracted to invest in products which they

considered to be Shariah complaint. Locally, some Muslims who are not interested in products of

181

conventional banks because it is interest- based will also be attracted to invest such idle funds in

the Nigerian economy.

Sanusi (2005) cited in Abdullahi (2010) submitted that recognition of benefits of Islamic

banking in a developing economy like that of Nigeria as well as the intention to create enabling

environment, in order to attract multi-million dollar global finance industry to Nigeria which

will enable Nigerians benefit from a number of Shariah banking products and services, is

responsible for the decision of the Apex bank to develop a regulating and supervisory framework

for Islamic banking in Nigeria. According to Muhammed and Gulani (2013), an Islamic banking

provides easily accessible micro credit which helps in reducing extreme poverty and reduces the

rate of unemployment in the country. Dogarawa (2012) pointed that sustainability of Islamic

banking in Nigeria will aid the financing of development in the economy and thereby providing

employment opportunity for graduates in this line. It creates employment opportunities from

acceptance and expansion of its activities, as well as success of business opportunities financed.

(Momoh, 2011; Salako et al., 2013). Another benefit of Islamic banking is that it fosters closer

link between real economic activities that creates values and financial activity that facilitate it

(siddiqqi, 2002; Adeyemi, 2011), this is because financial services render by islamic banks to

carry out various economic activities are done in such a way that the banks and the entrepreneurs

are in to it together because the banks also carry independent and comprehensive analysis of the

business organization before extending the credit facilities (Idowu, 2006).

Islamic banking broadens financial product available in the economy, reduces the rate of

unbanked and aid financial inclusion in the country. Ghaeereat (2014) explained that any country

where Islamic banking is sustained and diffused, there would be reduction in the rate of

unbanked and increase in the percentage of people who participate in the banking system.

Dogorawa (2012) stressed that introduction of new financial products which are Shariah

complaint will make people who do not want to have anything to do with the interest based

conventions banks to participate in the banking system in the country. Mobolaji (2011) submitted

that non-interest banks in the country will broaden the options of financial products and give

alternative to people who do not want to be part of interest based banking and this in turn

enhances financial inclusion in Nigeria as witnessed in Malaysia and other countries where it has

been sustained. Nwakwo (2014) concluded that with the benefit of financial inclusion, there

would be sustenance of developments in the country.

Sustainability of Islamic banking is expected to usher in financial stability in the globe,

particularly in Nigeria. Ghaeeraert (2014) revealed that expansion of Islamic banking would lead

to cost efficiency in the banking sector and financial stability in such countries witnessed in

Malaysia and other countries that embrace Islamic banking. Ibrahim and Mirakhor (2014)

concluded that Islamic banking will add stability to the financial systems; this is in line with their

stability during financial crisis when compared with conventionals banks (Olokooba, 2014;

Salako et al., 2013). As the focus of Islamic banking is profit sharing and not interest on loans,

there will be reduction in price hiking to the bearest minimum which will help in creating a

stable economy as Islamic banking is expected to maintain equity and social justice and as such

there would be equitable distribution of wealth in the society (Olokoooba, 2014; Salako, 2013).

182

If the benefits of Islamic banking are adequately harnessed as done by some countries

likes Sudan, Pakistan, Malaysia, among others, the prospect of sustainability of Islamic banking

will further be enhanced in Nigeria.

Theoretical Framework

Islamic banking is seen as an innovation when compared with conventional banking:

quite a number of theories had been developed in line with explanation to how Islamic banking

can be embraced and sustained particularly in Nigeria. some of the relevant theories are Theory

of reasoned action (TRA) (Fishbein & Adzen, 1991); Technology acceptance mode (TAM)

(Davies, 1989) cited by Baragham (2007); Diffusion of innovation theory (DOI)( Rogers,2003).

However, for the purpose of this work, Theories of planned behavior(TPB); and Diffusion of

Innovation would be used to explain the adoption and sustainability of Islamic Banking in

Nigeria.

TPB which is an extension of TRA added another determinant of Human behaviour

which is Perceived Behavioural Control (PBC) which is in addition to other determinants such as

Behavioral Intention (BI) BI is determined by Attitude (A), subjective norm (SN) social

influence(SI) and perceived intention of a person, while PBC relates to availability of resources

to perform such behavior (Sadeghi & Ferokhian, 2011), this can be adopted for the acceptance

and patronage of Islamic banking in Nigeria in the sense that most people who have the intention

to embrace interest-free banking cannot be able to perform or carry-out their intention because of

limited number or none existence of Islamic banks at their various locations. From the above,

one can deduced that for increase in the patronage of Islamic banking, there is need for easy

accessibility of the services make available across the country.

Sahin (2005) explained that Diffusion of innovation theory is the process by which

innovations are adopted and diffused. According to Rogers (1995) cited in Baraghani (2011)

diffusion is ways and manners by which an innovation spreads through a particular channel

overtime among members of a social system. Rogers (2003) noted that adoption and spread of

new innovation, like Islamic banking involves a process whereby some people are more willing

to adopt new ideas or practices than others: the adopters are classified majorly into five which

are: innovators, early adopters, early majority, late majority and laggards (Rogers, 1995) cited

Sahim, 2006). The intention to adopt and use a particular technology or innovation is usually

determined by five factors which are relative advantage of an idea product compatibility with the

needs of the adopter in this case to be able to engage in banking in line with the belief of the

adopter; complexity, that is, how easy or difficult to other the operation of the new innovation;

Trialability, that is, the extent to which the new innovation can be tested or experimented before

full adoption and observability which means the extent to which the innovation provides tangible

outcome (Roger,2005;Olatokun & Igbinedion,2009; Sahim, 2006). However, innovation offering

more relative advantage, compatibility, trialability and observability will be embraced faster than

other innovation (Roger, 2003; cited in Ashogbon 2016).

From the foregoing, the importance of these theories on adoption and sustainability of

Islamic banking cannot be over-emphasised. This can be seen from the fact that for the

acceptance and patronage of Islamic banking to make an impact and encourage its sustainability,

183

its services must be readily available across the country for potential customers to exercise their

intention of its adoption in line with the theory of planned behavior. In addition, Islamic banks

must provide services that will satisfy the need of their customers which will enable them

patronise and adopt it; this will make for easy adoption and diffusion across the country.

4. Conclusion and Implications of Findings

The paper concludes that globalisation has aided the sustainability and diffusion of

Islamic banking in the world to various regions of the world including non-Muslims populated

countries. Apart from the intention of some Muslims to live their lives in line with the injunction

of the Holy Quran through shariah (Islamic Legal code) for the sustainability of Islamic banking

in the globe, particularly, in Nigeria the challenges of Islamic banking need to be tackled

headlong, while the benefits should be publicised and harnessed. Some of the challenges of

Islamic banking from the content analysis include; legal and regulatory issues, operational

challenges, paucity of sharia-complaint instruments, religious issues and mis-conceptions, moral

hazard, customers’ delinquency, institutional challenges, environments challenges, manpower

and competition from local and foreign conventional banks due to globalisation among others.

The expected from sustainability of Islamic banking are: attraction of local and foreign investors

and funds for infrastructural development, easily accessible micro credit, reduction in extreme

poverty; creation of employment opportunities; reduction in the rate of unbanked and increase in

financial inclusion and financial stability in the globe.

The paper has policy and managerial implications for the sustainability of Islamic

banking in Nigeria in view of globalisation. Central Bank of Nigeria and other regulatory

authorities should step up effort at creating awareness on Islamic Banking and the attendant

benefits to the economy in all the geo-political zones of the country in order to further encourage

its sustainability and diffusion across the country. The government through CBN should engage

in information-sharing with other countries of the world practicing this mode of banking,

especially Malaysia, which has been highly successful in dual banking system like Nigeria. It is

also pertinent to note that regulatory authorities need to partners with other countries of the

world and International Monetary Fund (I.M.F) and Islamic Development Bank (I. D. B) to

sponsor training and research in higher institutions of learning in the country. There is need to

restructure the country’s financial system through the enactment and amendment of laws to

create enabling environment for Islamic banks to carry out their activities, Malaysia and Pakistan

will be good models to adopt.

As for managerial implication, the promoters and management of Islamic banks should

support the government in educating the public on their operations and try to convince and allay

their fears with special reference to those who are opposed to this mode of banking; interaction

with them by organising seminars, and other public enlightenment programme will be in the

right direction. The bank should train their employees and managers locally and abroad in this

area of finance to broaden their knowledge and improve the efficiency at which operations of

these banks are carry out. The banks should also engage in financial engineering without

necessary being in contrast to shariah and thereby encourage more people to embrace Islamic

banking and reduce competition from conventional banks. The banks currently in operations

184

should form a pressure group to make government restructure supporting institution and services

to be favourably disposed to Islamic banking.

185

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Globalization and engineering

by

ENGR. Abdulrafiu Olaitan Alashiri

Head of Department, Computer Hardware Engineering

Cifman Institute of Technology and Management,

10/12, Lancaster Road, Opposite Queens College Sabo, Yaba,

Lagos State

olaitanalashiri@yahoo.com

Abstract

Globalization is a term that is used to describe the increasing trend towards

internationally integrated markets and global inter-connectedness. The impacts of globalization

have been felt all over the world as advances in communications; information technology and the

emergence of international trade agreements have slowly removed the obstacles of trade and the

transfer of information across national borders. The purpose of this report is to provide a brief

discussion of the effects of globalization on the engineering profession in terms of future market

growth, international trade agreements affecting engineers and the education and training of

future engineers. The increasing expansions of engineering services into international markets

present both incredible opportunity and significant challenges for the future of engineering.

Globalization of the engineering profession will lead to greater access to world markets,

competition and the free flow of goods, services, capital and knowledge. However, challenges

facing the engineering profession due to increased globalization include defining global

engineering ethics, developing procedures for the international licensing of engineers and

developing international standards. It is important for the engineering community to recognize

its role in developing and shaping international trade agreements involving engineering services

and preparing the future generation of engineers to meet the challenges of a globalized world.

Keywords: Globalization, engineering, information technology and international trade.

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Introduction

The term "globalization" has gained considerable attention and force during the last few

years. Some see it as a process that is beneficial and a key to world economic development, as

well as inevitable and irreversible. Others regard it with hostility, believing that globalization

increases inequality within and between nations; threaten employment and living standards, and

thwarts social progress. According to the International Monetary Fund, globalization offers

extensive opportunities for countries around the world, but it is not progressing evenly. Some

countries are becoming integrated into the global economy more quickly than others. However,

in some of those countries that are becoming integrated, the divergence between the richest and

the poorest in the country is widening, leaving the poorest even worse off. Still, there is general

agreement that globalization is rapidly changing economic systems around the world.

What is globalization exactly and how is it related to engineering and engineering education?

Globalization is often defined as the process in which geographic distance becomes a

diminishing factor in establishing and maintaining cross-border economic, political, and socio-

cultural relations. Thus globalization can be thought of as widening, intensifying, and increasing

the impact of worldwide interconnectedness.

In the past decade, many organizations and researchers have begun to study the causes

and effects of globalization and the ways in which different governments, institutions, and

industries are reacting to the increasing interdependence of national economies and the social

and political changes shaping international agreements and interaction. Globalization is a multi-

dimensional and complex process. ―The results of globalization are changing the way we live

our lives on a personal basis and they are changing the institutions which we collectively use to

give form and predictability to our economic, social and political relationships‖ (Langhorne

2001, p. 55). Advances in communications and information technology have led many

companies, especially in the pharmaceutical, computer, automobile, and clothing industries, to

expand their operations to become more competitive in both local and global markets. In

addition, the emergence of international trade agreements, which promote the international free

trade of professional services such as engineering, have had and will continue to have a dramatic

effect on the future of these services and how they are governed in an international marketplace.

The purpose of this paper is to provide a brief discussion of the effects of globalization on

the engineering profession in terms of future market growth, international trade agreements

affecting engineers and the education and training of future engineers. Although, globalization

will lead to greater opportunities and access to world markets, there are several challenges facing

the globalization of the engineering profession. These challenges include developing

international licensing procedures and international engineering standards, defining global

engineering ethics and the engineer‘s responsibility to society, and breaking language and

cultural barriers. With increased globalization, the role of the professional engineer will change

significantly. It is important for the engineering community to recognize its role in developing

and negotiating international trade agreements involving engineering services as well as

preparing the future generation of engineers to meet the challenges of a globalized world.

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What is globalization?

Globalization is a term that is used to describe the increasing trend towards

internationally integrated markets and global inter-connectedness, making national boundaries

less important in terms of political, cultural, technological, financial, environmental, and national

security issues. It can have a positive effect on society, providing tremendous opportunities and

benefits - increased access to world markets, greater competition and freer flow of goods,

services, capital and knowledge. However, globalization may also lead to serious negative

impacts on society, especially in developing nations where increased poverty and lack of access

to clean drinking water, education, good health and other basic services of life have increased

with globalization (Held, 2000). The impacts of globalization have been felt all over the world

and ―in all aspects of social life from the food we eat and the TV we watch, to the sustainability

of our environment‖ (Held 2000).

Globalization and engineering

Globalization is not a new phenomenon. Carthage, Rome, the Ottomans, several

European powers and mercantile city-states had multi-continental trading networks made

possible by a combination of economic power, military power, and the latest technology. At

certain stages in their history, they all outsourced elements of production, education and even

armies. Eventually, however, these globalizations collapsed often because of the political and

economic consequences of war. The globalization we are experiencing today is unprecedented in

its magnitude and reach. The whole world has become a market for the economies of many

countries and globalization is transforming not only the location and organization of production

and services, but also social and economic patterns. The long-term consequences are still

unfathomable, and the debate rages on, not only in the United States, but also in Europe and

elsewhere. In our country, there are growing concerns about the impact of globalization on our

technological prowess, the long-term maintenance of our manufacturing capability as critical

technological skills migrate abroad, our energy supplies, our research capacity, and our ability to

stay on the cutting edge of engineering and science, which is essential to preserving our strength

and freedom.

These concerns are aggravated by the anemic production of engineers, where enrollments in

engineering colleges have remained practically static for the past 20 years. The 70,000 or so

engineers we graduate each year, including foreign students, represent a decreasing percentage of

the worldwide total.

Even if 70,000 seems to be in balance with job opportunities at this moment, it is

worrisome that less than 5 percent of Nigerian university students go into engineering, far fewer

than the 12 percent in Europe and the 40 percent in China. While other countries are setting very

high targets for the number of engineering Ph.D.‘s as a key to future success, the number in

Nigeria has increased very little. Combined with similar declines in the sciences, Nigeria is

becoming less technologically literate, although the country is bound to depend more and more

on political post and crude oil for her future security, prosperity, and health leaving other mineral

resources behind.

Clearly, for this Country to hold her own in technology and prosper in a globalized world, we

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must rethink engineering education and make it more attractive to young Nigerians. We must

also develop a far-sighted science and technology policy and re-think our funding priorities in

the physical sciences and engineering. Dissipating the fog and uncertainties of globalization and

taking advantage of the opportunities created by globalization will require cool heads and

realistic assessments, rather than knee-jerk reactions. We are moving into uncharted territory,

and time is not on our side. But we should become aware of what is needed to be done.

Globalization of engineering profession

The effect of globalization on the engineering profession and the increasing expansion of

engineering services into international markets present both incredible opportunity and

significant challenges for the future of engineering. As the world becomes more globalized and

as world population increases, engineers will play a critical role in addressing the concerns of the

global community. However, due to increased access to international markets, engineering will

change considerably as issues that control the international trade of professional services -

international licensing requirements, international codes and standards, and international treaties

and trade agreements affecting engineers are created and finalized. In addition, civil engineers

must consider how international policies regarding intellectual property rights, emerging markets

for engineering products and services, and other factors affecting the practice of engineering and

the education of future engineers (Vaziri 2000).

Knowledge-based economics are key to development

In a quest to address globalization and its economic challenges, the European Union (EU) set an

ambitious target for itself during its March, 2000 Lisbon Summit: that Europe "would become

during the next decade the most competitive and dynamic knowledge-based economy in the

world." Non-EU nations that want to be considered for inclusion in the EU realize that they need

to develop their knowledge-based economies. Thus, the World Bank recommends SEFI-IGIP

Joint Annual Conference, 1st-4th July, 2007 University of Miskolc, Miskolc, Hungary that these

nations concentrate all their efforts on four major areas [2]: education and training, information

infrastructures, economic incentive and institutional regime, and innovation systems. The basic

premise is that knowledge is becoming a primary factor of production, in addition to capital,

labor and land. In fact, many economists now argue that knowledge has become the most

important component of production. The belief is that a knowledge economy will lead to

improved quality, reduced costs, better response to consumer needs, and innovative products.

However, there is an increasing digital, scientific and technological divide between

developed countries that are exploiting knowledge, science and technology for economic well-

being and those less-developed countries (and less-developed regions within countries) that are

not fully participating in globalization. In the World is flat, author Tom Friedman [3] suggests

the world is in its third wave of globalization, one that is governed by people and

communications. He states that the flattening of the world happened at the dawn of the 21st

century; and those countries, communities, individuals, governments and societies can and must

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adapt to the challenges that this ―flat world‖ presents. Thus, globalization is making both

developed and developing countries think about effective and efficient strategies that will

advance their economies and social development. Many countries around the world have made

significant strides in the past 10 years in laying the foundations upon which market economies

and democratic societies can flourish. Examples include: Taiwan, Singapore and Ireland.

The World Bank recommends that countries that want to develop their knowledge-based

economies focus on four areas:

Education and training; an educated and skilled population.

Information Infrastructure; a dynamic information infrastructure-ranging from radio to

the Internet.

Economic incentive and Institutional regime; a regulatory and economic environment

that enables the free flow of knowledge, supports investment in Information and

Communications Technology (ICT) and encourages entrepreneurship.

Innovation systems; a network of research centers, universities, think tanks, private

enterprises and community groups that can tap into the growing stock of global

knowledge, assimilate and adapt it to local needs, and create new knowledge.

To “use knowledge for development” as the World Bank recommends, a country must

ensure its people have the right set of knowledge, skills, competencies and values. It is people in

the NGO, government, academic and private sector who develop the necessary information

infrastructure, the economic incentives and institutional regimes, and the innovation systems.

The United States has long set the world benchmark for building a knowledge economy, but the

World Bank points to additional nations that have addressed these four points systemically and

efficiently. Finland, Ireland and Korea are clear examples, where significant reform and

investments have been made in science and technical education, and innovation systems.

Engineers are key to developing and growing knowledge-based economies If technology and knowledge form the basis for meaningful economic development, given that

globalization is radically accelerating the pace of change and raising the long-term stakes, it is

clear that success in knowledge-based economies depends largely on the capabilities of SEFI-

IGIP Joint Annual Conference, 1st-4th July, 2007 University of Miskolc, Miskolc, Hungary

people who are credentialed in meaningful and consistent ways. Further, the kind of knowledge

countries need to develop is key: first, literacy of the general population, and then educating

problem-solvers who can build the technical infrastructure for sustainable change. Engineers are the ideal problem solvers. When you consider that economic studies conducted

before the information-technology revolution show that as much as 85 percent of measured

growth in U.S. income per capita was due to technological change [4], a strong case can be made

for seeing engineers as the key knowledge workers for capacity building and sustainable

economic growth in emerging economies.

It follows then, that to effectively compete in the knowledge-based economy, developing

countries must invest in producing a large enough pool of high-quality and accredited

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engineering graduates. Of course, the pool will be drained somewhat because some of these

graduates will leave for jobs in developed countries. However, many will choose to stay where

family ties and native culture provide a comfortable environment and competitive quality of life.

By building the technical capacity of their workforce, through quality engineering-education

programs, countries can build a competent technical workforce, which can provide several paths

to economic development: attraction of technically oriented multi-national companies that can

invest in the country; effective use of foreign aid funds to build appropriate infrastructure

projects, and then have the technically competent citizens of the country to operate and maintain

them; and creation of small business startups by technically competent entrepreneurs who either

live in the country, are living elsewhere but return home, or immigrate from other countries. The

United Nations Educational, Scientific and Cultural Organization and the World Federation of

Engineering Organizations are actively engaged in technical capacity building in developing

countries [5].

The imperative to innovate and reform engineering education

High-quality and pertinent engineering education, and quality-assurance mechanisms are

imperatives for creating a knowledge-based economy. Engineering education must respond to

local challenges, as well as global opportunities. Quality-assurance systems with peer-review

accreditation must be present to promote high-quality education programs and make degrees

portable to other parts of the region and of the world. Quality-assurance systems can provide the

basis for cross-border recognition systems, permitting the flow of services and goods across

national boundaries and creating a net ‗brain gain‘ for the country or region.

To innovate and reform engineering education, a country‘s educators need to understand what an

engineer is, and what skills and competencies s/he must possess. Their education and

professional development is not only about knowledge, but also about skills, values and

competencies. Engineers face problems as a way of life. Engineers must not only be

knowledgeable about science and technology, but also have the skills, competencies and

values to address problems and opportunities in effective and creative ways. Higher education, in general, is responsible for formally preparing the next generation of

business leaders, technical professionals, government officials and educators. Engineering

education, in particular, plays a central role in our increasingly technology-based societies. The

education of engineers must prepare them for the multi-disciplinary nature of the problems they

will face.

The need to innovate and reform engineering education is vital and undeniable. In the

United States and Nigeria for example, prestigious organizations like the National Science

Foundation (NSF), the American Society for Engineering Education (ASEE), the National

Academy of Engineering (NAE), the Council for Regulation of Engineering in Nigeria

(COREN) have reported on the growing need for change in engineering education [6,7,8,9].

Sweeping changes in accreditation criteria made in 2000 by the Accreditation Board of

Engineering and Technology (ABET) AND National Board for Technical and Engineering

(NBTE) are evidence of the context for engineering accompanied by significant changes in the

challenges offered by the engineering workplace bringing urgency to the need for broad change

in the education of engineers. But herein lays the problem: Engineering education has not

traditionally concerned itself with the development of skills and competencies needed in the job

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market and workplace.

According to Richard M. Felder, co-director of the U.S. National Effective Teaching

Institute, ―We‘re teaching the wrong stuff [10].‖ He argues that since the 1960s, the United

States has concentrated almost exclusively on equipping students with analytical (left-brain)

problem solving skills, and that (a) most jobs calling for those skills can now be done better and

or cheaper by either computers or skilled foreign workers (and if they can be, they will be), and

(b) American workers with certain right-brain skills will continue to find jobs in the new

economy. (For example, researchers, designers, entrepreneurs, as well as other self-directed

people, and people with strong interpersonal, cultural awareness and language skills.) Felder

questions whether the U.S. education system is helping students develop the attributes they will

need to be employable in the coming American and global engineering job market which same

thing it‘s happening here in Nigeria.

To better understand the programmatic implications of the broad changes needed in engineering

education, in 1995 the NSF organized a workshop on restructuring engineering education [6].

The task was to address the curricular content (including experiential, contextual and service-

learning activities) and the broad academic framework of an engineering education. Workshop

attendees included individual investigators, engineering education coalitions, engineering

societies, industry and students. They concluded that, to be restructured, engineering education

must be examined from a different point of view, with new measures and expectations.

In their report, workshop participants called for diversity in all aspects of engineering education:

diversity in pedagogy, curriculum, cross-disciplinary approach, faculty and students.

Restructuring requires rewards and incentives designed to achieve the desired diversity.

Workshop discussions and recommendations focused on four dimensions deemed critical to

engineering education reform:

Students are central to the educational process. As such, they should be active

participants in the educational transformation process. The educational experience should

develop in students the motivation, capability, and knowledge base for lifelong learning.

Faculty need to assume a more active role not only in delivering the educational

experience but also in innovating and continuously improving engineering education to

meet the new global challenges. Changes in assessment, recruiting and the reward

structure are most critical for encouraging faculty changes.

The learning experience must move away from lectures as the dominant mode and

toward a higher level of active learning approaches, such as laboratory and internship

experiences. These experiences should encourage world-class design, development and

implementation processes for engineering. Cooperative learning approaches and other

contextual and experiential learning must be integrated into the classroom.

Engineering curricula should be broad and flexible, preparing students for leadership

and specialist roles in a variety of career areas. Each curriculum should be designed to

produce graduates who are life-long learners and contributors to the profession, fully

capable of succeeding in a global, multi-disciplinary marketplace. The learning

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experiences should accommodate students with various learning styles as well as

different cultural, ethnic, class, gender, age and racial backgrounds. Further, engineering

education should provide an opportunity for non-majors to study engineering topics and

concepts, and enable engineering discipline and approaches to inform other disciplines.

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How to prepare the next generation of engineering students: The U.S. National Academy of

Engineers Report

In 2005, the National Academy of Engineering published its report, The Engineer of

2020: Visions of Engineering in the New Century [8]. The report begins with the premise that for

the United States to maintain her economic competitiveness and improve the quality of life for

people around the world, engineering educators and curriculum developers must anticipate

dramatic changes in engineering practice and adapt their programs accordingly. Written by a

group of distinguished educators and practicing engineers from diverse backgrounds, the report

includes various future scenarios based on scientific and technological trends. In addition to

identifying the ideal attributes of the engineer of 2020, the report asks: ―What should engineering

education be like today, or in the near future, to prepare the next generation of students for

effective engagement in the engineering profession in 2020?‖ The report recommends ways to

improve training to prepare engineers for addressing the complex technical, social, and ethical

questions raised by emerging technologies.

What is the role of the professors?

Traditional scholarly work (including engineering) centers on the professor, his/her

course(s), and his/her professional career and research agenda. Teaching is often considered

secondary, even a burden. Faculty is mostly rewarded for research activity and outcomes. But the

need and changes described in the NSF and NAE reports shared above will be an insurmountable

challenge if education does not recognize and value the scholarship of teaching, in addition to the

scholarship of discovery [9]. We need to ensure that the full range of scholarly activity by

college and university faculty is recognized: discovery, integration of knowledge, teaching and

service. We need to create a reward system that values faculty‘s full range of scholarly activity,

one that recognizes those who make an effort to bridge the ‗disconnects‘ that exist between

academia and the real world [10], especially in the teaching of engineering. The key to economic

development is people, the question arises, ―What can one person do?‖ For one, a professor can

use his/her engineering skills and address the problem! Listen to stakeholders, use non-

conventional teaching and learning strategies in the classroom, including active and cooperative

learning, hands-on learning and a focus on problem-solving skills instead of the usual tons of

theory. Some examples follow.

Future challenges for the engineering profession

The increasing trend for civil engineers to work across national borders calls for the

engineering community to concentrate on the most effective delivery of professional services,

locally and internationally, using the latest relevant technology within a sound business

framework (Vaziri 2000, 4). There are several challenges facing the increasing international

trade of professional engineering services - defining global engineering ethics, developing

procedures for the international licensing of engineers, and developing and enforcing

international standards.

200

Defining global engineering ethics

Ethics is generally understood as the discipline or field of study dealing with moral duty

or obligation (WFEO/FMIO, 2001) and engineering ethics is considered a branch of a broader

ethical concern involving the impact of technology on society. ABET‘s Engineering Criteria

2000 requires that graduates of engineering programs have ―an understanding of the professional

and ethical responsibility‖ and ―the broad education necessary to understand the impact of

engineering solutions in a global and societal context‖ (Herkert 2000, p. 102). As engineering

becomes more globalized, the need to consider the professional engineer‘s responsibility to

society is increasing. Issues related to engineering ethics that need to be discussed and regulated

on a global scale include business ethics and individual professional ethics related to

engineering. The challenge for professional organizations is to develop a global code of ethics

that can apply to a variety of professions in the science and technology field. But, is a global

code of ethics practical?

Engineering societies and organizations should encourage and lead a discussion on

international ethics related to involving not only engineering, but also other professional

disciplines. The National Science Foundation (NSF) has already initiated debates related to the

conduct and ethics in engineering practices related to NAFTA. The objectives of the NSF

project were to 1) study the aspects of conduct and ethics related to engineering practices under

the provisions of NAFTA and 2) develop a mutually agreed upon set of ethical principles. The

code of ethics developed by a group of representatives from the United States, Canada, and

Mexico was accepted under NAFTA in 1995. However, a global code of ethics for professional

engineers related to GATS, the FTAA, and other international trade agreements have not been

developed. Although, the development of an international code of ethics may be complex and

difficult, it is essential for the honest and effective practice of engineering around the world.

Developing procedures for the international licensing of professional engineers

The licensing process for professional engineers can vary considerably from country to

country. For example, in the United States engineers that meet the education and professional

work experience requirements are eligible to write the nationwide professional engineering exam

specific to their discipline. The professional engineering exams are usually eight hours in length

and ask specific computational questions related to the respective engineering discipline.

However, in Canada engineers with the proper qualifications (e.g., education and work

experience) are eligible to write the Canadian professional engineering exam. Based on law and

ethics, the exam covers legal definitions and legal precedent-setting cases, professionalism and

professional practice, regulation of the profession and the Engineers Act. All Canadian

engineers take the same law and ethics exam regardless of discipline. In Mexico the professional

licensing process is less rigorous. The federal professional engineering license is awarded to an

engineer following the completion of an exit exam or thesis and the successful completion of a

four-year engineering program. It is clear that as the engineering profession becomes more

globalized, an internationally acceptable licensing procedure for professional engineers is

needed.

In an effort to recognize the validity of engineering degrees obtained from other countries

and to increase the ability of engineers to practice in other countries, the Washington Accord was

201

developed and signed in 1989. The goal of the Washington Accord is the mutual recognition of

accreditation systems and professional engineering qualifications between the participating

countries of the United States, Canada, Australia, Hong Kong, Ireland, New Zealand, South

Africa, the United Kingdom and Japan. ABET has played a significant role in addressing the

issues of international accreditation and recognition of engineering programs and the

Washington Accord is an important step towards the free trade of engineering services.

However, the Accord does not address the international licensing or registration of professional

engineers. The development of international licensing procedures will be met with many

obstacles due to the many differences or lack of licensing procedures for professional engineers

between countries.

Conclusion

Engineering education and economic development meet this convergence helps achieve

economic development. It happens when engineers make a difference, when they possess the

skills, competencies and values to make a significant contribution to their countries, regions and

eco-systems. Engineering education that focuses on outcomes and on producing engineers that

society, regions, nations and the world need is an imperative, one that countries committed to

bettering the lives of their citizens must address.

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204

Consumers‟ income and dynamics of entrepreneurship development in

Lagos and Ogun states, Nigeria

By

Olawale T. Oladunjoye, Ph.D

Centre for Entrepreneurship Development

Yaba College of Technology, P.M.B 2011, Yaba, Lagos, Nigeria

&

Engr. Chris N. Igwe

Centre for Entrepreneurship Development

Yaba College of Technology, P.M.B 2011, Yaba, Lagos, Nigeria

*Corresponding author‟s e-mail: oladunjoyeolawale@yahoo.com

Abstract

The interplay between entrepreneurship dynamics and consumers‘ income presents a complex

relationship. While some authors determined L-shaped, some came up with U-shaped. The main objective

of this study was to determine the significance of consumers‘ income on entrepreneurship dynamic in

Lagos and Ogun states, Nigeria. A sample of 1600consumers, residents in the states were served

questionnaires to obtain information. 730 copies of questionnaire were properly filled and returned. The

instruments of analysis for descriptive statistics were percentages, mean, standard deviation and for

inferential statistics were Pearson Product Moment Correlation Analysis and ANOVA. The findings of

the study showed that consumers‘ propensity to consume has significant effect on entrepreneurship

dynamic in the states; consumers‘ purchasing power has significant effect, so also consumers‘ wages and

salaries. It was recommended that conducive environment should be consciously provided by the

government to promote more entrants into self-employment. Indigenous entrepreneurship tailored along

the needs of communities should be identified and encouraged, and living wages and salaries should be

paid to employees in the private sector.

Keywords: Entrepreneurial dynamics, consumers‘ income, wealth creation, indigenous entrepreneurship.

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Introduction

In Nigeria, like in many parts of the world, the assumption is that government has the

responsibility to provide employment for the people (Adebayo, 2008), create enabling economic

environment for business to thrive (Okwu, 2012), as well as drive economic growth (Evesta,

2010). But, economic reality has shown that government alone cannot generate full employment

for the entire population of those who are willing to work (Essia, 2005). However, government

has the economic machinery to stem the rate of unemployment by formulating policies that

stimulate individual to embark on small scale businesses. Nigerian government‘s response to

stemming unemployment has therefore been the promotion of entrepreneurial activities, support

for establishment and promotion of small and medium scale enterprises (SMEs) (Ayoola, 2003;

Bakare, 2011) which partially anchor on consumers‘ income level.

In considering income level vis-a-vis consumers‘ purchasing power, National Bureau of

Statistics (NBS) (2012) has reported that about 61.2 percent of the Nigerian population or more

than 100 million Nigerians lived on less than $1 a day at the end of 2010. These statistics show

that many Nigerians live in poverty and can barely afford the basic necessities of life. It was

predicted that the rising trend may continue (Nwafa, 2014). Furthermore, in the North-West and

North-East of Nigeria, poverty rates were recorded at 77.7 percent and 76.3 percent respectively,

compared to a poverty rate of 59.1 percent in the South-West (NBS, 2012). There is disparity

between Nigeria‘s Gross Domestic Product (GDP) growth rate of 7.75 percent and the country‘s

high poverty rate (Sanusi, 2012). Using absolute poverty measure, 54.7 percent of Nigerians

were in poverty in 2010 which increased to 69 percent or 112.516 million in 2012 (Central Bank

of Nigeria, CBN, 2013), it was suggested that Nigeria‘s GDP in current terms has not had

significant impact on the people‘s standard and level of living. From extant literature, we found

that the implication of poverty on entrepreneurial development is mixed. Some authors shared

the view that poverty compels people to start personal businesses. This view has given rise to the

concept of necessity entrepreneurship (Schraam,2004; Williams, 2009). Nonetheless, other

researchers submit that poverty compels people to search for employment with greater

determination (Banerjee & Doflo, 2007;Blanchflower, 2004). The inconclusiveness and

inconsistency of previous studies call for further examination of the implication of low income

level on entrepreneurial development in Nigeria with emphasis on Lagos and Ogun States,

Nigeria.

Therefore, thestudies objectives are: i. To examine how consumers‘ propensity to consume

influence entrepreneurship in Lagos and Ogun states; ii. To assess how consumers‘ purchasing

power influence entrepreneurship in Lagos and Ogun States; and iii. To evaluate how

consumers‘ salaries and wages influence dynamics of entrepreneurship in Lagos and OgunStates.

Conceptual framework

There is no topic in macro-economic that has a richer, deeper, or more prominent literature than

households‘ choice of how much of their income to consume and save (Banerjee & Duflo, 2007).

The level of household income determines consumption ability. The relationship between

income level and entrepreneurship development can be explained in terms of the relationship

between consumption and investment as put forward by different scholars. Keynes argued that

consumption is determined by income level and investment is also a function of income level

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(Todaro & Smith, 2009). The crux of his argument is that through consumption, investment

income level will grow. If entrepreneurial development is used as investment in this context, then

the fundamental questions will be what happen to entrepreneurshipdevelopment, when income

level is high? What is the response of entrepreneurial development when income level is low?

There are two schools of thought which provided explanations to the questions above. Some

scholars assume that with a high income level, entrepreneurship development experiences

growth, since more investment and businesses through saving will be established. The argument

principally ascribes a weak position to potential entrepreneurs whose income levels are

inadequate, thus accord competitive advantage to adventurous entrepreneurs who are ready to

take risk in the business environment. This line of thought is in support of the Keynes

consumption-income theory. The other school of thought claims that high level of income

discourages entrepreneurial development. The argument is that with a high income level,

potential entrepreneurs become opportunistic entrepreneur that only take advantage of market

distortions. This is because their income level is large enough to finance their consumption.

Carree, Van Stel, Thurik, and Wennekers (2007) showed that the national level of entrepreneurial

activity has a statistically significant association with subsequent level of economic growth.

Hessels, Van Gelderen and Thurik (2008) concluded that the relationship between business

ownership rates and economic growth changes over time and also depends on levels of economic

development. Saez (2002) concluded that only a few innovative and high-growth entrepreneurs

cause a positive effect on economic growth.Carter, Gartner, Shaver and Gatewood (2003)have also

shown that income level and entrepreneurship development have ‗L-shaped‘ relationship model.

Carree et al. (2007) found a U-shaped relationship between the level of per capita income and the

rate of self-employment in 23 OECD countries. Most of the studies on income level and

entrepreneurial development are restricted to the developed economies with varying conclusions

on U-shaped or L-shaped relationships. This is a pointer to the need for this study in Nigeria and

particularly in Lagos and Ogun States.

Research hypotheses

Research hypotheses for the study in null forms are as follows:

Ho1: There is no significant relationship between consumers‘ propensity to consume and

entrepreneurship development in Lagos and Ogun states.

Ho2: There is no significant relationship between consumers‘ purchasing power and

entrepreneurship development in Lagos and Ogun States

Ho3: There is no significant relationship between consumers‘ salaries and wages and

entrepreneurship development in Lagos and Ogun States

Theoretical framework for the study

Schumpeter‟s theory and entrepreneurship development

Schumpeter‘s theory hinged on entrepreneurial behavior. It focused on the entrepreneur who

introduces innovations through the combination of finance and other production factors

(Agrawal & Kundal, 2007). Schumpeter attributed the growth process during entrepreneurial

economic dispensation to three fundamental elements which are: innovations, the entrepreneur

and credit (funds). Schumpeter posited that when the entrepreneur takes risks and introduces

some innovations into the economic system, such efforts result in some profits or surplus which

spurs other individuals to join the production system as they are now motivated by the

entrepreneur‘s initiative (Schumpeter, 1934, cited in Agrawal & Kundal, 2007). He identified

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five innovations which the entrepreneur can initiate as follows: producing new goods, devising a

new quality for an existing product, employing a new method of production, exploring a new

market, locating a new source of supply and reorganizing a firm for effectiveness and efficiency.

These innovations are relevant for economic development and, in particular, entrepreneurship

development in developing countries.

The theory further explores the leadership qualities of the entrepreneur. The entrepreneur,

according to Schumpeter, is a dynamic individual who is motivated by challenges, uncertainty

and the desire to do something new. However, such an entrepreneur is deeply interested in profit

maximization, but this is usually not self-interest as much as many people would suggest.

Besides the element of innovation from the entrepreneur, finance is an essential feature of

Schumpeter‘s theory.

Availability of funds empowers the entrepreneur financially to undertake investment risks

connected with innovations. Where the entrepreneur relies on the banks, the significance of the

banking industry to economic growth and development is brought to the fore. Without funds, the

entrepreneur can hardly embark on any innovation. It is, however, observed that the banking

industry is a significant feature of the business environment (Iyanda, 1988). Another element of

the theory is the cumulative process of output expansion. As production increases through the

initiative and innovative efforts of the entrepreneur, other entrepreneurs are attracted into the

industry, thus raising the volume of output and expansion of the industry.

However, growth and expansion, according to Schumpeter, are not continuous. They both reach

certain limits and start over again. This is the element of cyclical growth in Schumpeter‘s theory.

The limit of growth and expansion are attained when the business environment for innovational

investment becomes unfavorable. Consequently, the economic growth advocated by

Schumpeter‘s theory is hinged on entrepreneurs who invest in innovative activities with adequate

funds. This development tends to eliminate or relegate old products and old industries.

Schumpeter‘s theory was tremendously influenced by the equilibrium theory. Schumpeter

suggested that, in order to reach equilibrium, actions and decisions of economic actors have to be

replicated in the same way for macro-economic stability in the interim. In Schumpeter‘s view,

the entrepreneur is an innovator, manager and controller of the dynamics of macro-economic

activities. Another proponent of the Schumpeterian theory is Kirzner who further propagated the

theory. Kirzner emphasized the relationship between the entrepreneur and macro economy.

Although, the thrust of his perspective of the Schumpeterian theory is rooted in macro-economic

equilibrium (Naude, 2007).

Kirzner‘s explanation is based on the role of the entrepreneur who is seen as an economic agent

in the disequilibrium market. In a state of dis-equilibrium, economic actors‘ actions do not

match, thus requiring revision and adaptation to a new market situation. In Kirzner‘s view, the

entrepreneur creates a dynamic market process as much as he is alert to opportunities (Dwivedi,

2007). Kirzner‘s strand of entrepreneurial theory is premised on the assumption that

opportunities characterize a state of dis-equilibrium and the entrepreneur, as an agent, recognizes

such opportunities to act on them. It is therefore, the entrepreneur‘s action that restores stability

to the market situation.

In applying Schumpeter‘s theory to entrepreneurial development and economic growth in under-

developed countries, Schumpeter saw some limitations in the restricted role accorded to the

entrepreneur. Also, there other constraints which tend to impinge the initiative of the

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entrepreneur according to Schumpeter. These are the diversity of socio-cultural environment,

grossly inadequate capital and government‘s over-bearing role in controlling the business

environment through unfavorable public policies, other than allowing the forces of demand and

supply to dictate economic activities (Glover, 2012). In spite of these limitations, Schumpeter‘s

theory is still apt, considering the increasing number of enlightened entrepreneurs who appear

prepared to take dynamic initiatives in developing countries. Moreover, the volume of technical

information available for entrepreneurial decision-making is on the increase.

Methods

Population and sampling technique

The population of this study consisted of all income earners and operators of small scale

businesses in Nigeria. A sample size of1600respondents were used, made up of 1000consumers

and600 operators. They were served copies of questionnaire to obtain information. Random

sampling technique was used that covered different sectors of operation. The study was limited

to Lagos and Ogun states, this was informed by the fact that the two states were ranked as two of

the fastest growing industrial hubs in Nigeria (Business Newspaper,2015).They shared

boundaries and have long economic history, being an integral part of the old Western region of

Nigeria.

Research instrument

Research instrument was six-point Likertscale questionnaire. Two sets ofquestionnaire were

drawn and administered separately to consumers and operators. The items on consumers‘

questionnaire were anchored on what informed their consumption patterns and how this impacts

entrepreneurship in the states, while items on small scale business operators

questionnairecentered on what they do to induce consumption and patronage of their products

and how this influence entrepreneurship.

Data analysis

The data generated for the study were analyzed using descriptive and inferential statistics of

Pearson Product-Moment Correlation. In analyzing the data, descriptive statistics were employed

to generate percentages, means and standard deviation. Correlation Co-efficient was employed to

determine whether relationship exist between economic environment variables of public

infrastructural level, consumers‘ income level and entrepreneurship development in Lagos and

Ogun States. Analysis of Variance (ANOVA) Test was also used to check the significance

difference between each economic variables and entrepreneurship development in the states.

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Table 1: Testandresults of the hypotheses

1 2 3 4 5 6 7 8

Spearman's rho

Entrepreneurship development

Correlation Coefficient 1.000

Sig. (2-tailed) .

N 7 3 0

Propensity to consume

Correlation Coefficient .249**

1.000

Sig. (2-tailed) . 0 0 0 .

N 7 3 0 7 3 0

P o v e r t y l e v e l

Correlation Coefficient -.132**

-.173**

1.000

Sig. (2-tailed) . 0 0 0 . 0 0 0 .

N 7 3 0 7 3 0 7 3 0

Propensity to save

Correlation Coefficient .163**

-.087* . 0 5 2 1.000

Sig. (2-tailed) . 0 0 0 . 0 2 1 . 1 6 4 .

N 7 3 0 7 3 0 7 3 0 7 3 0

Regularity of income

Correlation Coefficient .165**

.153**

-.396**

-.216**

1.000

Sig. (2-tailed) . 0 0 0 . 0 0 0 . 0 0 0 . 0 0 0 .

N 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0

Consumption level

Correlation Coefficient .221**

.276**

-.434**

- . 0 7 3 .262**

1.000

Sig. (2-tailed) . 0 0 0 . 0 0 0 . 0 0 0 . 0 5 3 . 0 0 0 .

N 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0

Purchasing power of workers

Correlation Coefficient -.093* . 0 0 9 .345

** -.119

** . 0 0 1 . 0 0 4 1.000

Sig. (2-tailed) . 0 1 3 . 8 0 8 . 0 0 0 . 0 0 1 . 9 6 9 . 9 0 9 .

N 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0

Consumers‘ wages and salaries

Correlation Coefficient . 0 4 7 .403**

.124**

.228**

-.110**

. 0 0 9 .245**

1.000

Sig. (2-tailed) . 2 0 9 . 0 0 0 . 0 0 1 . 0 0 0 . 0 0 3 . 8 1 7 . 0 0 0 .

N 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0 7 3 0

* . C o r r e l a t i o n i s s i g n i f i c a n t a t t h e 0 . 0 1 l e v e l ( 2 - t a i l e d ) .

* . C o r r e l a t i o n i s s i g n i f i c a n t a t t h e 0 . 0 5 l e v e l ( 2 - t a i l e d ) .

Source: Researcher field survey result from SPSS output (2016)

The hypothesisdepicts significant relationship between propensity to consume and

entrepreneurship development. The correlation co-efficient (.249) forpropensity to consume

shows a positive influence on entrepreneurship development and it is statistically significant at

(.000). The findings indicate thatpropensity to consume is significantly related to

entrepreneurship development. The correlation related to poverty level (.132) shows a positive

relationship on entrepreneurship development and it is statistically significant at (.000). This

indicates that poverty level is significantly related to entrepreneurship development.

The correlation related to marginal propensity to save (.163) shows a positive relationship on

entrepreneurship development and it is statistically significant at (.000). This indicates that

marginal propensity to save influencesentrepreneurship development in the states.The correlation

related to consumption level (.221) shows a positive relationship on entrepreneurship

development and it is statistically significant at (.000). This indicates that consumption level

affects entrepreneurship development.

The correlation related to purchasing power of workers (.093) shows a positive relationship on

entrepreneurship development and it is statistically significant at (.013). This indicates a positive

relationship between purchasing power of workers and entrepreneurship development. The

correlation related to wages and salaries (.047) shows a positive relationship on entrepreneurship

210

development but not statistically significant at (.209). This indicates that there is a threshold

income level when wages and salary will promote entrepreneurship

Table 2: Model summary

M o d e l R R Sq u a r e Adjusted R Square Std. Error of the Estimate

1 . 4 2 9a . 6 8 4 .176 .787

Source: Researcher field survey result from SPSS output (2016)

From the above table 2, the correlation co-efficient (R) value is .429* which implies that there is

a weak positive linear relationship between consumers‘ income level and entrepreneurship

development in Lagos and Ogun states, Nigeria. With reference to the same table, we observed

that the co-efficient of determination is 0.684 which means that about 68.4% of entrepreneurship

determinants were explained by the considered factors, while other factors not under

investigation would be responsible for about 31.6%.

Table 3:ANOVA

M o d e l Sum of Squares D f Mean Square F S i g .

Regression 9 6 . 7 3 7 7 1 3 . 8 2 0 2 2 . 3 1 1 . 0 0 0b

R e s i d u a l 4 2 8 . 0 0 4 6 9 1 . 6 1 9

T o t a l 5 2 4 . 7 4 1 6 9 8

Source: Researcher field survey result from SPSS output (2016)

Since the P value (.000) is less than the specified level of significance .05, we therefore reject Ho

and conclude that there is significant relationship between consumers‘ income level and

entrepreneurship development in Lagos and Ogun states, Nigeria.

Discussion of results

Empirical analysis in the current study proves the conclusion that consumers‘ income level has

significant relational value with entrepreneurship development in Lagos and Ogun States.

Consumers‘ income theory provides insight into the assumption that as consumers‘ earnings

increase, their purchasing power equally increases (Ayoola, 2003). From the theory, a correlation

may be established between consumers‘ income level and entrepreneurship development.

Benson (2011) submitted that entrepreneurs‘ businesses will grow and generate reforms when

products and services are regularly patronized. However, such patronage is a function of needs,

availability of the products/services, competition with other brands, consumers‘ purchasing

power and disposable income within consumers‘ reach (Adebayo, 2008).

Studies on the extent of correlation between consumers‘ income and entrepreneurship

development have shown no clear preponderance of negative correlation from econometric

analysis. Van dan Haals (2009) provided empirical evidence of a strong positive correlation

between consumers‘ income and entrepreneurship activities in developed countries. The study

cited high income countries and consumers indicating a discriminatory approach in the selection

of study subjects and data. Nonetheless, the study is consistent with the consumers‘ income

211

theory and paradigm of assumed positive association between purchasing power and level of

patronage (Ayoola, 2003).

There appears to be another variant correlation between consumers‘ income and

entrepreneurship development. Although not statistically significant, neither is it negative

(Yonkel, 2002). The study was conducted in the agricultural region of Brazil. What may suggest

a negative correlation between consumers‘ income and entrepreneurship development was

predominant poverty within the environment of entrepreneurial activities (Todaro & Smith,

2009). Again, consumers‘ non-acceptability or non-patronage of certain products may result in

such a negative correlation between consumers‘ income and entrepreneurship activities.

Saez, Slemrod and Giertz(2009) have deduced reasons why in some studies a negative correlation

was established between consumers‘ income and entrepreneurship input, while in others a

positive correlation was found. In other studies, the correlation was neither negative, but merely

weak. They have argued that such factors as high income and consumer preferences especially

among high class citizens could determine strong positive correlation between the two variables.

The result of a study conducted by Wennekers and Thurik (1999) seems to confirm the extent of

correlation between consumers‘ income and entrepreneurship activities. Both researchers used as

proxy income per capita for economic development to test the relationship with entrepreneurship

growth. Two tests in the study produced two statistically insignificant correlations. It is difficult

to assert from their result whether lagging errors were responsible for the results. Nevertheless,

the representation of variables by means of proxy has always revealed statistical biased errors.

In yet another study, Carree et al. (2007) found a correlational association between level of per

capita income and rate of business ownership (entrepreneurship) in 23 developing countries.

Their result is suggestive of the critical role of consumer income in the growth of

entrepreneurship activities. Indeed, most studies on consumer income and entrepreneurship

activities conducted in developing countries have shown inconsistencies in results compared to

studies on such variables conducted in Europe.

The discovery of a negative correlation between consumers‘ income and entrepreneurship

development implies that general consumer income level or per capita income is inadequate to

promote entrepreneurship activities. This is traceable to worst economic performance and a

general reflection of poverty (Summerel & Loyola, 2013).

Oldenburg (2005) employed impact analysis to investigate the correlation between consumers‘

disposable income and entrepreneurship activities in the agricultural sector of Mid-western

region of the United States. The study reported a strong negative correlation, but the researcher

emphasized the non-significance of the agricultural products used in the study. In essence,

essential products will always compel consumes to make a purchasing decision, provided such

products are necessary and have no immediate rival brands. The direction of Oldenburg‘s work

is supported by arguments from Benson (2011), Ayoola (2003) and Adebayo (2008). Further

evidence from these researchers acknowledged the view that other interference variables such as

consumers‘ perception, product price (service charges), consumers‘ immediate need and product

potential influence the extent to which consumers engage in purchasing expenditure leaving a

bearing on both entrepreneurship activities and returns (Samuelson, 2013).

212

Conclusion and recommendations

The influence of consumers‘ income level on entrepreneurship development in generating

employment cannot be overemphasized. Entrepreneurship has high potential for creating new

jobs, in the study of Ayoola (2013) a lot of youths, retired workers (mostly, victim of today‘s

industrial downsizing) and out of school graduates are now into self-employment, thereby

reducing the unemployment rate and its attendant social complications of armed robbery and

white collar crimes. The basic job axiom of wealth is finding a need and meeting it is related to

entrepreneurshipimitativeness. According to Benson (2011), we need to understand that every

problem is a potential business. An entrepreneur discovers these needs, seizes them as

opportunities and converts them into profitable businesses. The alternative wealth creation

principles are the ability of the entrepreneurs to stimulate a desire in the minds of prospective

buyers with the intention of devising means to meeting them. All these are manifested in the

rural and urban small scale ventures such as small retail shops, cottages, restaurants, poultry

farms, GSM shops, milling of rice, groundnut, corn, cassava, manufacture of local pomade, local

textile dying, toiletries, etc. By its very nature, small scale venture has a much higher capacity to

generate employment per unit of invested capital and per unit of energy consumed. They also

have more employment perspective as they utilize more labor- intensive modes of production.

Perhaps, the ever increasing level of the unemployment is as a result of governments‘ inability to

create more jobs, this is attributed to lack of comprehensive industrial development plan which

compelled many unemployed teeming populaces to discover their entrepreneurship talent and

skills. It is widely held that majority of the entrepreneurs were inspire to venture into

entrepreneurship as the last resort to break the circle of unemployment

However, government intervention is necessary in providing necessary infrastructures and

providing conducive atmosphere in the rural and urban areas that will stimulate the growth and

development of entrepreneurs, to provide the platform in offering job opportunity and to address

the imbalance between the rural- urban drift. Evesta (2010) opined that most Nigerian youths

concentrated in the large urban center where there is considerable high wage package. Since the

enterprises produce consumer goods and services, they tend to be located where purchasing

power is sufficiently high to sustain profitable operation, in order to augment the income level of

the populace.

Based on the conclusion, the following recommendations are made:

• Government should as a matter of policy establish entrepreneurship development scheme

as a platform in training and developing rural and urban entrepreneurs.

• Government should establish infrastructural development agency whose function should

be basically to provide infrastructures such as good road network, electricity and pipe

borne water to reduce over-head cost and the incessant hardship in the rural and urban

areas and this can serve as a stimulus in boasting the national economy and curbing rural

–urban drift.

• Micro finance banks should be encouraged to extend their services to rural area as well,

extend micro credit to rural entrepreneurs as a way of improving and alleviating the

financial constraint facing rural entrepreneurs in financing production and distribution.

• Government should provide incentives to entrepreneurs in the form of tax relief and

concession for at least 10 years to encourage entrepreneurs to plough back earnings for

expansion.

213

• Government should encourage and sponsor trade fair and exhibition to provide

opportunity to entrepreneurs to show case and exhibit their products and services and also

encourage citizens to patronize locally made goods and services, especially one produced

by local entrepreneurs.

• A national entrepreneurship programme should be publicized both in the print and

broadcasting media as a way of showcasing to the rest of the world local made products

and services, as well as marketing products and services through free publicity.

The researchers recommend the following areas for further studies:

• Research is needed to investigate the potential relationships of other extraneous variables,

such as government policy, infrastructural development, taxation, leadership styles

among others on the entrepreneurship development in Lagos and Ogun states.

• Studies similar to the one carried out here should be conducted in each state to bring out

their peculiarities.

214

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Utilizing computer-based test (CBT) for efficient conduct of examination in Nigeria

By

Oluyemi Adekanmbi

(HND, MNIM, MIPM, MABEN, MBA)

Lagos State Polytechnic, Ikorodu

Department of Office Technology & Management

Email: oluyemiadekanmbi@gmail.com

Akeem Lanre Ajani

B.Sc. MBA, M.Sc (Mgt)

Lagos State Polytechnic, Ikorodu

Department of Business Administration & Management Email: ajaniakeemlanre@yahoo.com

Abimbola Iyabode Alao

Department of Office Technology & Management

Lagos State Polytechnic, Ikorodu

Abstract

This paper examined the importance of computer-based test (CBT) in the quest to improve the

conduct of various examinations in educational institutions in Nigeria. The objective of this

paper was to examine how computer-based test can be effectively deployed to ensure sound

service delivery in the area of examination conduct through the use of designated application soft

ware. Being a review paper, data were obtained mainly from a secondary source. It was,

however, revealed that deploying Information Technology (IT) for the conduct of examination in

Nigeria can eventually lead to effective service delivery as it affects examination conduct and

performance. In this regard, it was concluded that if future examinations are properly planned,

implemented, monitored and controlled, coupled with the use of computer-based test (CBT), it

would be more effective and more result-oriented in future conduct and performance of

examination in the country.

Keywords: Utilizing, Computer-based test, Examination, and Nigeria

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Introduction

Brown (1997) stated that CBT is the acronym for computer-based training, which refers

to the use of computers and specially developed tutorial programmes for teaching. CBT uses

color, graphics, and other attention-getting aids to help maintain interest, and it has both simple

and sophisticated applications. A software developer, for example, might include a series of CBT

lessons with an application to give new users a hands-on feel for the programme; a consultant

might use a longer and more detailed CBT programme as a tool in a management-training

seminar.

Computer-Based Training (CBT), diverse and rapidly expanding spectrum of computer

technologies that assist the teaching and learning process. CBT is sometime known as computer-

assisted instruction (CAI). Examples of CAI applications include guided drill and practice

exercises, computer visualization of complex objects, and computer-facilitated communication

between students and teachers. The number of computers in American schools has risen from

one for every 125 students in 1981 to one for every nine students in 1996. While the United

States leads the world in the number of computers per school student, Western European and

Japanese schools are also highly computerized (Simonson, 2008).

Information that helps teach or encourages interaction can be presented on computers in

the form of text or in multimedia formats, which include photographs, videos, animation,

speech, and music. The guided drill is a computer programme that poses questions to students,

returns feedback, and selects additional questions based on the students' responses. Recent

guided drill systems incorporate the principles of education in addition to subject matter

knowledge into the computer programme (Redmond, 2008).

Eboch (2012) stated that computers also can help students visualize objects that are

difficult or impossible to view. For example, computers can be used to display human anatomy,

molecular structures, or complex geometrical objects. Exploration and manipulation of simulated

environments can be accomplished with CAI—ranging from virtual laboratory experiments that

may be too difficult, expensive, or dangerous to perform in a school environment to complex

virtual worlds like those used in airplane flight simulators

CAI tools, such as word processors, spreadsheets, and databases, collect, organize,

analyze, and transmit information. They also facilitate communication among students, between

students and instructors, and beyond the classroom to distant students, instructors, and experts.

CAI systems can be categorized based on who controls the progression of the lesson. Early

systems were linear presentations of information and guided drill, and control was directed by

the author of the software. In modern systems, and especially with visualization systems and

simulated environments, control often rests with the student or with the instructor. This permits

information to be reviewed or examined out of sequence. Related material also may be explored.

In some group instructional activities, the lesson can progress according to the dynamics of the

group. (William 2010).

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1. Literature review

1.1 History of Computer-Assisted Instruction (CAI)

In the mid-1950s and early 1960s collaboration between educators at Stanford University

in California and International Business Machines Corporation (IBM) introduced CAI into select

elementary schools. Initially, CAI programs were a linear presentation of information with drill

and practice sessions. These early CAI systems were limited by the expense and the difficulty of

obtaining, maintaining, and using the computers that were available at that time

Programmed Logic for Automatic Teaching Operations (PLATO) system, another early

CAI system initiated at the University of Illinois in the early 1960s and developed by Control

Data Corporation, was used for higher learning. It consisted of a mainframe computer that

supported up to 1000 terminals for use by individual students. By 1985 over 100 PLATO

systems were operating in the United States. From 1978 to 1985 users logged 40 million hours

on PLATO systems. PLATO also introduced a communication system between students that was

a forerunner of modern electronic mail (messages electronically passed from computer to

computer). The Time-shared Interactive Computer-Controlled Information Television (TICCIT)

system was a CAI project developed by Mitre Corporation and Brigham Young University in

Utah, USA. Based on personal computer and television technology, TICCIT was used in the

early 1970s to teach freshman-level mathematics and English courses (Becker 2009)

With the advent of cheaper and more powerful personal computers in the 1980s, use of

CAI increased dramatically. In 1980 only 5 percent of elementary schools and 20 percent of

secondary schools in the United States had computers for assisting instruction. Three years later,

both numbers had roughly quadrupled, and by the end of the decade nearly all schools in the

United States, and in most industrialized countries, were equipped with teaching computers.

A recent development with far ranging implications for CAI is the vast expansion of the

Internet, a consortium of interlinked computers. By connecting millions of computers worldwide,

these networks enable students to access huge stores of information, which greatly enhances their

research capabilities.

2.2 Advantages and disadvantages of CAI/CBT

CAI can dramatically increase a student's access to information. The programme can

adapt to the abilities and preferences of the individual student and increase the amount of

personalized instruction a student receives. Many students benefit from the immediate

responsiveness of computer interactions and appreciate the self-paced and private learning

environment. Moreover, computer-learning experiences often engage the interest of students,

motivating them to learn and increasing independence and personal responsibility for education

(Wittich, 1999).

Although it is difficult to assess the effectiveness of any educational system, numerous

studies have reported that CAI is successful in raising examination scores/performance,

improving student attitudes, and lowering the amount of time required to master certain material.

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While study results vary greatly, there is substantial evidence that CAI can enhance learning at

all educational levels.

In some applications, especially those involving abstract reasoning and problem-solving

processes, CAI has not been very effective. Critics claim that poorly designed CAI systems can

dehumanize or regiment the educational experience and thereby diminish student interest and

motivation. Other disadvantages of CAI stem from the difficulty and expense of implementing

and maintaining the necessary computer systems. Some student failures can be traced to

inadequate teacher training in CAI systems. Student training in the computer technology may be

required as well, and this process can distract from the core educational process. Although much

effort has been directed at developing CAI systems that are easy to use and incorporate expert

knowledge of teaching and learning, such systems are still far from achieving their full potential.

(Lumsdaine1987).

2.3 CBT, the Nigeria Experience

There is the common dictum that the future of a country depends, to a large extent, on the

quality of education it imparts to its up-coming youth. Most countries of the world (Nigeria

inclusive) have, therefore, tied their national development plans to the educational sector. In

Nigeria, for example, one of the main objectives of National policy of Education, is ―the

acquisition of appropriate skills, abilities and competencies, both mental and physical, as

equipment for the individual to live in andcontribute to the development of his society‖ (Federal

Republic of Nigeria, 1981).

The realization of the overall objective of National Policy of Education is directly linked

to the successful conduct of examination. Pinsent (1982) stated that ‗the vital area of

examination is accomplished by requiring those taking the examination to reproduce what has

been learned, to answer questions, and solve problems presented to them‘.

Conduct of examinations in Nigeria system of education has always been problematic as

a result of the usage of the conventional pen and paper. Until recently, CBT is alien to the

system of examination conduct in Nigeria. It is only in the recent past that some private

universities adopted the use of CBT for the conduct of their various matriculation examinations.

Such universities like Covenant University, Babcock University among others pioneered the use

CBT as well as the Joint Admission and Matriculation Board (JAMB).

It is instructive to take into consideration the crises that followed the unfortunate story of

students and parents protesting that the JAMB conducted one of the worst University entrance

examinations in Nigeria this utilizing CBT. It is also on record how JAMB has worked tirelessly

to defend its reputation, labeling those who are protesting as being angry that they were unable to

cheat at the last examination, which was why they took to the street in protest

The reasonable question to ask is should we simply run away from CBT that many

countries of the world have already embraced, or should we take a critical look at the problems

surrounding these and other forms of examination conduct with a view to proffering solutions

that will deal with the challenges of computer-based tests? In today‘s global economy, access to

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information, critical thinking, entrepreneurial skills and a strong foundation in Mathematics and

Sciences, are imperative, if we are to prepare tomorrow‘s workforce to meet the skills demand of

the knowledge economy. Education is the single most powerful tool we have for unlocking new

economic avenues to building a foundation for a brighter future. Technology plays an increasing

critical role in enabling and supporting that educational effort, linking millions around the world

to skills they need and the opportunities to put them to use.

In present day realities, some developed countries are actually running Diploma, First

Degree, Masters and even PhD courses online and they are receiving lectures via the internet and

also taking part in computer-based tests and examination virtually (More, 2008).

Why must we ridicule ourselves in the comity of nations? It is absurd to hear that we do

not have the capacity of using technology to conduct examinations for less than five million

people. What we keep shying away from is making the right investments and yet, wanting the

best outcome. Why would one run a computer-based test in a school environment where there is

no steady power supply? It would have been smarter to even provide alternative power supply,

solar energy, in all examinations centres so that the exercise would not be disrupted in order to

achieve effective outcome.

Apart from the National Open University of Nigeria (NOUN), a

limited number of institutions in Nigeria offer complete college degree programmes via

computer conferencing. The Online Campus of the New York Institute of Technology offers

bachelor‘s degrees in science. A distance education programme called Connect Ed offers a

master‘s degree in Technology and Society in conjunction with the New School for Social

Research in New York City. The University of Phoenix Online, a programme at the University

of Phoenix, offers computer-based courses leading to degrees in business and management.

2.4 Impact of CAI/CBT on Education

The United States and other countries have begun to take advantage of the ability of

audiovisual devices to transcend geographical barriers. Audiovisual devices can expose students

to experiences beyond the classroom, and they can disseminate instruction across large areas,

making education accessible to more people. In the U.S., communication satellites distribute

educational programming to all public television stations; some programmes are broadcast and

others may be viewed on closed-circuit systems. India has also experimented with satellites to

broadcast educational materials. In England, the Open University provides a college education

by using radio, television, and regional learning centers. Other nations that have used audiovisual

devices to transmit educational materials over large distances are France, Canada, and Brazil

(Skinner, 1996).

As technology improves, educational capabilities increase correspondingly. The

emergence of inexpensive computer technology and mass storage media, including optical

videodiscs and compact disks, has given instructional technologists better tools with which to

work. Compact disks (the CD-ROM and CD-I) are used to store large amounts of data, such as

encyclopedias or motion pictures. At new interactive delivery stations with computers and CD-

ROM, CD-I, or videodiscs, a student who is interested in a particular topic can first scan an

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electronic encyclopedia, then view a film on the subject or look at related topics at the touch of a

button. These learning stations combine the advantages of reference materials, still pictures,

motion pictures, television, and computer-aided instruction. With even newer technologies now

being developed, such learning stations will eventually be commonplace in homes for both

entertainment and educational purposes (Ittelson, 2000).

3 Conclusion and recommendations

Nigeria as a country is still grappling with the usage of CBT as a platform for conducting

examinations. As discussed earlier, CBT as a platform is very important for the educational

development of a country. The developed countries, such as United Kingdom, Germany, Japan,

China and USA have gone very far in the usage and adoption of ICT and this development has

definitely helped their economies. There is no educational business in developed countries that

can be conducted without the use of ICT.

The importance of ICT in education cannot be over-emphasized; the use of internet is

encouraged for better training and learning. Students in developed countries have access to

computers, internet and smart phones right at a very tender age. However, students in Nigerian

schools have limited or no access to computers and internet facilities; computer literacy is very

low, internet use, though has improved in recent years is still very poor. Therefore, it is

important for Nigeria as a country to brace-up in the development of ICT capacity to catch up

with the rest of the world, especially the developed countries.

In other for Nigeria to effectively utilize CBT for efficient conduct of examinations, the

following are recommended:

1. Government should invest massively in CBT centres /hubs. One can actually kill two

birds with one stone in the sense that one can develop structures that will serve as CBT

centres and technology hubs at the same time. An idea of what is known as public-private

partnership model is desirable in this sense so as to make such centres sustainable.

2. Partnership with Technology giants is another way to conduct examinations utilizing

CBT. Almost all the top technology giants have offices in Nigeria; Google, IBM, Intel,

Microsoft, Cisco, Oracle and many others. There are even equally good local brands

such as Zinox and Omatek, among others. Getting some or all of these technology giants

to a round table and strike a deal in the area of public-private partnership will not be a

bad idea.

3. Federal government of Nigeria should make budgetary provision for the effective funding

of ICT in the annual budget of the country.

4. ICT infrastructure should be made readily available in schools throughout the country in

order for students to benefit from ICT and subsequently prepare them for future

challenges related to CBT.

5. Computer literacy in schools should be made available and compulsory for all students.

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6. Government should make concerted efforts at subsidizing internet and

telecommunication charges, so as to make it affordable for all and sundry.

References

Audio-visual Projectionists Handbook (1960) Business screen magazine incorporated,

Chicago:

Becker S. L (2009) Technique for planning and performance. Holt, rinehart and windston

incorporated

Brown, J. W (1997) A- Z instruction: material and methods. New york: McGraw-Hill book

company

Eboch, S. C (2012) Operating audio-visual equipment. San francisco: howard chandler

publisher.

Federal Republic of Nigeria (1981). National policy on education (Revised). Lagos: federal

government of Nigeria press.

Ittelson. J. C (2000) A compendium and resources for integrating technology into the

school, classroom, and curriculum.

Lumsdaine, A. A (1987) Teaching machine and programmed learning: A source book,

Washington, D.C, department of audio visual instruction NEA

Moore, M. G. (2008) "Distance education." Microsoft® Encarta® 2009 [DVD]. Redmond,

WA: microsoft corporation, 2008.

Pinsent, M. A. (1982). The principles of teaching method (2nd

ed.), George G. Harrap & Co

limited, high holborn, London,

Redmond, E. J (2008). Computers and how they work. Cincinnati: South-western publishing

Company

Simonson, M. R (2008) A hand book on instructional technology and distance learning at

Nova southeastern university in fort lauderdale, Florida

Skinner, B. F (1996) Glossary of terms in computers and data processing. Newtonville,

massachusetts, berkeley entreprises, Inc., 1960

William, C. M (2010) Teaching aids laboratory pamphlet: Columbus, ohio, ohio state

University

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Wittich, W. A (1999) Audio visual material, third edition, New york: harper and brothers

225

Globalisation and International Treaty: China as a case study

Mutiu Adeyemi Badmus

School of Communications and Liberal Studies

Lagos State Polytechnic, Ikorodu

Abstract

The World is now a global village; technology has made it easier for countries to learn

from one another. Three decades ago, China was not a force to be reckoned with, but today, it

has become an industrialised nation with the second fastest growing economy in the world. The

purpose of this paper is to examine China‘s experience as regards her efforts to make her

national laws conform to the best global practices. This paper attempts to provide the

international community with a succinct summary of the major steps in the evolution of Chinese

policies towards international trade and foreign direct investment (FDI) and their consequences

since the beginning of 21st Century. It explained the reliance of globalisation on three major

forces for development: the role of human migration, international treaty and rapid movements

of capital and integration of financial markets. The paper concluded that other developing

countries could learn from China to become industrialised, since China did in involving her

citizens to be part and parcel of accelerated economic development, which made her becoming

the largest economy in the world. It is assumed that if Nigerian government creates conducive

environment for her citizens, the country will witness economic development.

Keywords: Globalisation, International Treaty, Constitution, lessons, technology.

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Introduction

Concept of globalisation

Today, few doubts the reality of globalisation; yet no one seems to know certainly what

makes globalisation real. So, while there is no agreement about what globalisation is, the entire

discourse on globalisation is founded on a quite solid agreement that globalisation is?

Globalisation is all about doing things in modern way, as such; it is a process of change taking

place ‗out there‘: serious minded scholars tend to regard globalisation as an undeniable and

inescapable part of contemporary experience1

Globalisation essentially is the worldwide process of homogenising prices, products,

wages, rates of interest and profits. The primary objective is to breakdown impediments that

unnecessarily clog relations amongst countries and thereby create fully integrated world

economy where borders, jurisdictions would thin out and be replaced by homogenous economies

and products, integration of economies around the world, particularly through trade and financial

flows. It aims to create a platform whereby there would be no any hindrances or barrier in

trading among nations.

The term sometimes refers to the movement of people (labour) and knowledge

(technology) across international borders. There exists now cross fertilization of ideas openly

embraced by the members of world community. There are also broader cultural, political and

environmental dimensions of globalisation that are yet to be covered. It refers to an extension

beyond national borders of the same market forces that have operated for centuries at all levels of

human economic activity: village markets, urban industries, or financial centers.

The conventional wisdom among the proponents of globalisation is that markets promote

efficiency through competition and the division of labour—the specialisation that allows people

and economies to focus on what they do best. Global markets offer greater opportunity for

people to tap into more and larger markets around the world. It means that they can have access

to more capital flows, technology, cheaper imports, and larger export markets. Globalisation

relies on three forces for development: The role of human migration,international treaty and

rapid movements of capital and integration of financial markets.2

Globalisation has been described as ―a journey‖. But it is a journey towards an

unreachable destination –―the globalised world‖. A globalised economy could not be defined as

one in which neither distance nor national borders impede economic transactions. This would be

a world where the costs of transport and communication would be zero and the barriers created

by differing national jurisdictions had vanished. Needless to say, we do not live in anything even

close to such a world. And since many of the things we transport (including ourselves) are

physical, we never will.‖3

1. (Bauman, 1998; Gill, 1991; Luke, 1993).

2. Globalization: Threat or Opportunity? Compiled by IMF Staff April 2000

3. Will the Nation State Survive Globalization?: Article written by Martin Wolf January

2001.

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Effects of the world trade organisation (WTO)

Among the various sources of Nigerian law is International Treaty, that is, International

Conventions in which Nigeria as a sovereign country having appended her signature is duty

bound to obey the terms of the agreement. One of the means used in championing the course of

globalisation is the World Trade Organisation (WTO). The WTO was created as a result of the

Uruguay Round trade negotiations and is one of the world‘s leading economic institutions. It is

an international organisation responsible for global rules governing trade among nations. The

WTO serves as a forum for on-going multi-lateral trade negotiations aimed at liberalising world

trade and administration of resulting trade agreements.4

Trade Liberalisation is the primary focus of the WTO and its trade agreements are

reached based upon a consensus of participating members and ratified domestically by each

member. Trade liberalisation essentially focuses on removing impediments involved in the

provision

and procurement of goods and services, thereby fortuitously affecting and consequently

increasing the wealth of the respective countries. Services currently account for over 60 percent

of global production and employment. Many services, which have long been considered genuine

domestic activities, have increasingly become internationally mobile. This trend appears likely to

continue, owing to the introduction of new transmission technologies.

The primary consideration of the WTO in liberalising trade is to induce the economic

prosperity of member states. It seeks to achieve this by accession of member states to its

multifarious agreements inclusive of the General Agreement on Trade in Services (GATS), our

primary concern. What significantly sets the WTO apart from other similar treaty based

agreements is that it has teeth. What this means is that there is an established administrative

mechanism in dealing effectively with erring members. The treaty based agreements are backed

by the coercive powers of the organisation itself. This is most evident in its capacity to override

the laws of nation-states, as well as key treaties between states such as agreements on human

rights and bio-diversity or on issues of global warming, all which testify to the status of

globalisation today and to the dangers it poses to humanity and nature alike.5

The vehicle

The General Agreement on Trade in Services GATS is one of the landmarks

achievements of the Uruguay Round that entered into force in January, 1995. The GATS, a

multi-lateral treaty based agreement was inspired by essentially the same Objectives, as its

counterpart in merchandise trade, the General Agreement on Tariffs and Trade (GATT): creating

a credible and reliable system of international trade rules; ensuring fair and equitable treatment

of all participants (principle of non-discrimination); stimulating economic activity through

guaranteed policy bindings; and promoting trade and development through progressive

liberalization. GATS is one of the 60 agreements and decisions signed in 1994 at the conclusion

of the. Uruguay Round of negotiations. When countries signed GATS, they committed

themselves to periodic negotiations to progressively eliminate barriers to international trade in

services without requiring further approval from other member states as evidenced in Article 19

of the agreement which compels members to enter into negotiation of specific commitments

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4. Beyond the World Trade Organisation: Joel Kovel, Green Party of NewYork

5. The World Trade Organisation: Article Posted on www.wto.org

―directed to the reduction or elimination of the adverseeffects on trade in services of measures as

a means of providing effective marketaccess‖. This process shall take place with a view to

promoting the interests of allparticipants on a mutually advantageous basis and to securing an

overall balance ofrights and obligations.6

Essentially, the agreement comprises legally binding rules set for trade in all commercial

services, the intention being to spur economic growth by removing barriers, limiting trade in

services and enabling countries to attract foreign investment by opening highly regulated

services to international competition.

Relevance of gats as a body of rules

A brief discussion of the relevant provisions of the GATS is useful.

Article 2(10) - The Most Favoured Nation principle. This requires all member states

to apply

equal treatment to each and every member services or service supplier operating within its

territory.

Article 2.2 provides conditions under which discriminatory measures may be meted out

to nations, but makes the Council for Trade in Services the determining body. This obliges a

country to treat other companies from WTO countries as its own in effect other Law firms as

well.

The role of developing countries is accentuated in Article 4 which seeks to increase

their participation. This is to be achieved through negotiated specificcommitments that imbibe

ideals such as strengthening domestic service capacity and efficiency, improvement of access to

distribution channels, liberalisation of market access in sectors and modes of supply of export

interest to them.

Further, Article 4.3 reveals the premium placed on developing countries by placing a

special priority on least developed countries in the implementation of negotiated specific

commitments.

Article 6 is of special interest to our discourse. It focuses largely on the Domestic

Regulation of Trade in Services. The provision makes it mandatory for all measures stipulated in

the agreement to apply in totality to all negotiated specific commitments. Also, Article 6.4

focuses on the development of disciplines ondomestic regulation. The implication of this

provision is far reaching. It empowers the Council of Trade in Services to develop through

appropriate bodies necessary disciplines in order to ensure that issues such as

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qualificationrequirements, technical standards, and licensing requirements do not constitute

unnecessary barriers to trade in services.

Article 12 provides instances where exceptions to the agreement are permitted, i.e, in

the event of serious balance-of- payments or external financial difficulties, but it does not permit

use of this exemption for the protection of a particular servicesector.Also, any reservations or

exemptions shall be notified to the General Council.

Article 14 provides general exceptions which do not constitute restriction on trade in

services. The thrust of the provision is to allow exemptions from the agreement in the interest of

public safety, order, morals and health and other aesthetic parameters.

6. General Agreement on Trade in Services: Annex 1B

Article 16 revolves round one of the two central themes of the Agreement which is

Market Access and this essentially functions as an incentive for member states.

Under their individual specific commitments, members are not allowed to unilaterally impose

limitations in form of quotas, service operations, service suppliers, value of service transactions

and number of persons that may be employed in a service sector…. In sector specific areas.

Article 17 is on the other central theme, National treatment. The provision is to the

effect that no discriminatory measures will be meted out against service suppliers of member

states in favour of domestic suppliers.

Article 18 is on additional commitments and the idea is to allow members latitude to

negotiate commitments as regards services that are not subject to market access and national

treatment. Areas such as qualifications, standards and licensing can be negotiated.

Article 19 of Part2 borders on Progressive Liberalisation (Negotiation of Specific

Commitments). The implication of this provision aside from mandating negotiations on a 5 year

basis is to essentially accelerate market access. Members go into successive rounds of

negotiation to achieve progressively higher levels of liberalisation. Progressive liberalisation

occurs on the tide of 2 important considerations:

1. The National Policy Objectives of each member

2. The Level of Development of each individual member

Article 20 makes it compulsory for each member to set out in a schedule the specific

commitments it undertakes with specifications on market access, national treatment and

additional commitments.

Article 21 allows a member to modify its commitments in its schedule after 3 years

have elapsed having given 3 months notice to the Council of Trade in Services.

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The Council also establishes procedures for rectification or modification of schedules.

The modifying member must also negotiate compensatoryadjustments with the affected member

which could either be monetary orconceding another sector in lieu of the one withdrawn.

The overall effect of the above is that GATS seeks to price open markets for the benefit

of transnational corporations at the expense of national economies, workers and other groups in

the developing economies. With the acceleration of world economic integration, law firms have

become increasingly concerned with advising clients on international transactions covering a

variety of business concerns including mergers and acquisitions with foreign companies and

contractual arrangements for franchises, dealerships and product sales. The multi-jurisdictional

nature of transactions requiring multi-jurisdictional advice underpins the evolution that has

occurred in Law. In such situations therefore, lawyers and law firms are regarded as part of the

infrastructure of commerce.

The consequent effects as relates to the legal profession would mean that conglomerates

would rather deal with international law firms with multi-jurisdictional spread than domestic law

firms. Such international law firms could operate through two of the four modes of service

supply, namely: commercial presence and presence of natural persons.

Furthermore, the mistake of the past has always been to ratify agreements without proper

consideration of their implications over a protracted period of time or analysing their impact only

to find ourselves hamstrung.

What Advantage would be obtained from opening legal market to foreign law firms?

It has been argued that entry of global law firms would create broad based synergies and

amalgams between the global and local firms that would strengthen local content.But this benefit

is largely questionable given the large cross borders disparities existing between developed and

developing economies.

Traditionally, the Legal Profession has been regarded differently from other types of

services given the distinct cultural/national flavour of law, the territorial jurisdiction of the courts

and the fact that lawyers are admitted / licensed to practice on a jurisdictional basis. These are

the same qualification barriers which GATS seeks to circumvent as evinced in Article 6 and 6.4

in particular.

Another major issue is that of representation. It has been contended that the GATS

policies are written by and for corporations with inside access to the negotiations. For example,

the U.S Trade representative gets heavy input for negotiations from 17 Industry Sector Advisory

Committees. Citizen input by consumer, labour organisations is consistently ignored. How can

there be fairness in its policies, if there is no adequate representation. This is further worsened by

the alarming statistic that asserts that the richest 20 percent of the World‘s population consume

86 percent of the world‘s resources, while the poorest 80 percent consume just 14 percent7.

231

Aside from the need to protect nationalistic interests, the envisaged situation would not

augur well for the development of the law profession given the lopsided imbalance that would be

created following the entry of the better established international Law firms.

232

China‟s success

China‘s accession to the World Trade Organization (WTO) in 2001 was a momentous

decision made by the top leadership. It was a big gamble for the Chinese enterprises, because

prior to the accession, they were extremely weak in every measure compared with global firms

(Nolan, 2001; 2004). Furthermore, they were either not consulted or excluded from negotiations.

Contrary to the conventional wisdom that China‘s deep integration into the global economy is a

natural trend of economic development; It would be argued that it was not the economic success

in the 1990s that naturally led to China‘s deep integration, but the predicament in the country‘s

reforms and industrialisation that forced China to join the WTO at its earliest possible time to

keep the economy growing. Premier Zhu Rongji stated it clearly to Stephan Roach, chief

economist of Morgan Stanley in March 2002; ‗If China did not join the WTO, it is impossible to

restructure and sustain economic growth‘8.

The globalisation logic is that competition is the panacea. Competition will bail out the

inefficient State-owned Enterprises (SOEs) and makes them more competitive. The real drive,

however, is political. The Chinese leaders made extensive concessions at the negotiation table.

The rationale was that economic growth is the only reliable source of legitimacy after the Global

1989, and joining the WTO was understood by them as a strong stimulus for China‘s external-

oriented economic growth.

7. Foreign Agricultural Service, U.S. Department of Agriculture, 2000, People‘s Republic

of China: Grain and Feed Annual Report 2000

8. Ianchovichina, E. and T. Walmsley, 2003, ―Impact of China‘s WTO Accession on East

Asia,‖ unpublished manuscript, World Bank.

Ironically, Nigeria has been a member of WTO since 1995 with little or nothing to show

for it. Her over reliance on oil as a means of earning foreign exchange led her to the stage where

she is now. Unlike China, she lacks the political will to make drastic decisions. Radical

liberalisation of trade and investment means that China gave up most of the industrial policies

that had been successfully implemented in East Asia in the 1970s and 1980s. This runs counter

to the normal practice that industrialisation precedes liberalisation. In Ha Joon-Chang‘s words,

―virtually all NDCs actively used interventionist industrial, trade and technology (ITT) policies

that are aimed at promoting infant industries during their catch-up periods

Indeed, a handful of Chinese firms have grown into giants after the accession. All these,

however, are oligopolistic SOEs that the state has spared no effort to sponsor in the past decades.

Private businesses were once encouraged in the late 1990s prior to the accession, but they have

fallen into an increasingly unfavourable condition ever since. After all, the rise of private

capitalists was politically undesirable to the regime. Foreign capitalists in contrast were less

dangerous politically because they were more interested in money not politics. Rather, they were

allies of the Chinese government in terms of lobbying on the latter‘s behalf to separate trade

from politics.

These policies significantly restricted the role of private businesses in China‘s economic

and political development. Wider market access and cheap labour made China the best

production site of the multinational companies (MNCs) who relocated core economic activities

233

to China. They are the market leaders and became more competitive by dominating China‘s

high-tech sectors and international trade. With industrial policies invalidated by the WTO

agreements, China maintained extensive intervention in the state sector not for the purpose of

making them more competitive, but making them bigger in size and enormously profitable

through monopoly or oligopoly.

The renewed investment boom driven by the influx of FDI after the WTO accession

made China the factory of the world. Thus, as the world‘s manufacturing powerhouse, the China

of today is in no sense the replica of the Britain of the 19th century which took the lead through

industrial innovation. Rather, it is essentially the assembly plant of the world; an extension of the

global supply chain9.

In face of the MNCs possessing global market, global brand, and global procurement

systems, indigenous firms were unable to compete on the global level playing field established

on China‘s home market. Within the globalised international division of labour, they increasingly

depended on the importation of ―designs, critical components and manufacturing equipment‖

from the advanced economies. They reaped only a small portion of the value-added at the final

stage of the labour-intensive assembling (the production process of iPhone, for instance). Even,

if they imported cutting-edge equipment to manufacture new products, given the unrivalled

competitive advantage of the foreign-invested enterprises (FIEs), they had little choice, but to

focus on undifferentiated and standardised products. This sort of so-called commodification

production lowered the entry barriers and sharply reduced the profit margins of the indigenous

firms as a whole.

Therefore, they were unable to massively invest in research and development (R&D) to

upgrade. By year 2005, the increasing market domination by the FIEs and the decline of Chinese

manufacturing companies alerted the leadership. They propounded the idea of the innovative-

state, pledging that the state will increase R&D outlays and introduce a set of industrial policies

to promote indigenous innovation, so as to reduce the country‘s technological dependence on

foreign sources from 50% to 30% by year 2020.

9. ―China‘s Telecom Vendors Are Thriving Abroad,‖ Wall Street Journal

Online, February 19, 20004.

Yet, China‘s indigenous innovation project designed to enhance domestic firms‘ original

innovation capabilities were considered by many MNCs to be a blueprint for technology theft on

a scale the world has never seen before. They were particularly sensitive to the imposition of

local content requirement by the Chinese government to leverage technology transfer from

foreign investors. However, this overstated China‘s capacity to catch up with the West simply

because without the substantial enhancement of the absorptive capacity of indigenous firms there

remained no way to out-innovate the West in long-term; even if China managed to acquire

sophisticated technologies of the West through unconventional means. Just think about the

example of the former USSR

In addition, indigenous innovation is in no sense a techno-nationalism, which did not

violate China‘s WTO commitments. Those industrial policies are legal policy instruments within

the WTO framework. For instance, the Trade-related Investment Measures TRIMs agreement

234

that China agreed to honour did prohibit the imposition of local contents requirements in

principle, but there remained some grey areas that China could legally utilise to apply the local

content stipulation to the very few unopened industrial sectors.

Thus, China is not seeking alternatives to the liberal globalisation approach through its

sponsoring of industrialisation. Instead, it is attempting to modernise the country strictly within

the bounds of the WTO rules. This can been seen clearly from China‘s further liberalisation

commitments in the three-round Strategic and Economic Dialogues (S&ED) with the United

States of America (2009-2011), in which China agreed to open up ―high-end manufacturing,

high-tech industries, modern services, new energy, energy savings and environmental protection

sectors‖ to foreign investors, join the WTO‘s Agreement on Government Procurement GPA,

withdraw local contents requirements, and open up stock index trading. China had to accept

these requirements in exchange for the US keeping its door open to Chinese products.

Indigenous innovation has achieved some progress, but it is far from successful partly

due to policy incoherence, and partly due to the intensifying liberalisation pressures from

China‘s main trading partners. As a result, the general trend of market domination by the FIEs

did not diminish, but intensified after 2005. So far, foreign direct investment (FDI) has

controlled over half of China‘s international trade and 85% of its total high-tech exports. The

official report claimed that until 2009, market control by the FIEs had exceeded the danger level

of the country‘s industry security.

Chinese firms were institutionally ―locked in‖ at the low end of the global value chain.

This vindicated the non-mainstream arguments of authors such as Amsden (2004) that

―latecomers may not necessarily industrialise simply by specialising in a low-tech industry‖.

Without a number of ―nationally-owned, professionally managed firms‖ becoming national

champions on domestic and global markets, industrialisation will be hopeless. This is a practical

issue not a self-fulfilling prophecy as neoliberals believed. Nor is industrialisation just a matter

of time that will naturally be completed with sustained economic growth. Thus, economic

growth alone is no means the hard evidence of China‘s rise in any meaningful way. Globalisation

did not make China any closer to an emerging industrial power. The prospect of catch-up

remains remote10

.

Amid the present global economic crisis, China as a member of the international

community has her responsibility to help re-balance the global economy. But, unlike the US that

may bring manufacturing back home through implementing some kind of ―strategic industrial

policy‖ to double its exports, say in five years, China is different. As argued, upgrading is

institutionally hampered by its WTO commitments, which makes the transition from an export-

driven growth to innovation-driven growth extremely difficult if not completely impossible.

10. Boltho et al., 2004, ―China‘s Emergence: Prospects, Opportunities, and Challenges,‖

Policy Research Working Paper 1339, the World Bank.

It is evident that the Chinese model of development in globalisation is far from being a

successful model applicable to other developing countries. With special interest groups having

grown so powerful as to capture the state, it is now nearly impossible to seek an entire reversal of

the current reforms within the confines of the current authoritarian political framework. What‘s

more, any revision to the global rules China has subscribed to for the purpose of an internal

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integration-based development will tarnish the image of a ―responsible Great Power‖ that it has

carefully crafted in the past decades. Rather, China needs to engage in two reforms at home and

abroad: Political reform in the sense of establishing checks and balances, and, to bridge the gap

between the rich and the poor, the enforcement of the rule of law. However, these reforms alone

are not enough. China also needs to actively get involved in the reform of global institutions to

make globalisation more favourable to global development. Only by making globalisation better

will China be able to keep her economy developing (not just growing in a narrow sense) in a

more sustainable way, thereby making the global economy healthier and more stable.11

The Interaction between International Treaty Obligations & Nigerian Law

The Constitution of the Federal Republic of Nigeria 1999 is the grand norm in Nigeria, from

which all other laws derive their validity. Section 1(1) of the Constitution states that the ―...

Constitution is supreme and its provisions shall have binding force on all authorities and persons

throughout the Federal Republic of Nigeria.‖ The Constitution specifically addresses the issues

of enforceability of treaty obligations in Nigeria.

Under Section 12, a treaty entered by the Federal Government of Nigeria, would not have

the force of law, except to the extent to which any such treaty has been enacted into law by the

National Assembly. This provision was judicially interpreted in the case of Abacha v.

Fawehinmi 12

where the Nigerian Supreme Court adopting the reasoning of the Privy Council in

the decision of Higgs & Anor v. Minister of National Security & Ors 13

stated that before its

enactment into law by the National Assembly, a treaty would not have the force of law as to

make its provisions justiciable in Nigerian courts. The effect therefore is that the Nigerian courts

would not have any jurisdiction to construe or apply the provisions of a treaty, nor would an

―unenacted‖ treaty change Nigerian law.

Such treaties would not have any impact on the rights and responsibilities of Nigerian

citizens. The Supreme Court however went on to state that in the event of a conflict between the

provisions of a ―statute with international flavour‖, that is, a statute which ratifies an

international treaty, and those of another statute, the provisions of the statute with international

flavor. Under Nigerian law, international treaties must be enacted as statutes before they become

enforceable in municipal courts.

Nigeria‟s failure

A cursory look at S16 CFRN 199914

reveals the economic objective of Nigerian state –

(1) The State shall, within the context of the ideals and objectives for which provisions are made

in this Constitution –

(a) harness the resources of the nation and promotes national prosperity and an efficient,

a dynamic and self-reliant economy;

(b) control the national economy in such manner as to secure the maximum welfare,

freedom and happiness of every citizen on the basis of social justice and equality of status

and opportunity;

11. Nolan, P. (2004): Transforming China: globalization, transition and development.

236

12. (2000) 6NWLR at page 228

13. (2000) 2W.L.R 1368

14. Constitution of the Federal Republic of Nigeria 1999

(c) without prejudice to its right to operate or participate in areas of the economy, other

than the major sectors of the economy, manage and operate the major sectors of the

economy;

(d) without prejudice to the right of any person to participate in areas of the economy

within the major sector of the economy, protect the right of every citizen to engage in any

economic activities outside the major sectors of the economy.

(2) The State shall direct its policy towards ensuring –

(a) the promotion of a planned and balanced economic development;

(b) that the material resources of the nation are harnessed and distributed as best as

possible to serve the common good;

(c) that the economic system is not operated in such a manner as to permit the

concentration of wealth or the means of production and exchange in the hands of few

individuals or of a group; and

(d) that suitable and adequate shelter, suitable and adequate food, reasonable national

minimum living wage, old age care and pensions, and unemployment, sick benefits and

welfare of the disabled are provided for all citizen.

(3) A body shall be set up by an Act of the National Assembly which shall have power –

(a) to review, from time to time, the ownership and control of business enterprise

operating in Nigeria and make recommendations to the President on same; and

(b) to administer any law for the regulation of the ownership and control of such

enterprises.

(4) For the purposes of subsection (1) of the section –

(a) the reference to the ―major sectors of the economy‖ shall be construed as a reference

to such economic activities as may, from time to time, be declared by a resolution of each

House of the National Assembly to be managed and operated exclusively by the

Government of the Federation; and until a resolution to the contrary is made by the

National Assembly, economic activities being operated exclusively by the Government of

the Federation on the date immediately preceding the day when this section comes into

force, whether directly or through the agencies of a statutory or other corporation or

company, shall be deemed to be major sectors of the economy;

(b) ―economic activities‖ includes activities directly concerned with the production,

distribution and exchange of wealth or of goods and services; and

(c) ―participate‖ includes the rendering of services and supplying of goods.

In spite of this laudable economic objective, Nigeria is still groping in the dark.

237

Since independence, foreign countries have been attracted and captivated by the high rates of

return, investors from all over the world have now set their sights on The Federal Republic of

Nigeria. As Africa‘s most populous country, Nigeria also boasts the continent‘s second largest

oil reserves and has a very promising growth outlook. Poised to eclipse Africa‘s largest economy

by 2020, Nigeria is becoming a rather worthy recipient of foreign capital, receiving anywhere

from $10-$12 billion per year. But, this has been greatly reduced due to the oil glut in world

market. However, in order to take full advantage of what foreign investment has to offer, Nigeria

must first improve its economic and political climate.

For Nigeria, meaningful, long-lasting economic growth and development is almost

entirely contingent upon securing substantial amounts of foreign direct investment. FDI, as it is

called, is crucial for the Nigerian economy, as it permits the transfer of technology and facilitates

improvements in productivity. Ultimately, this can help alleviate Nigeria‘s widespread poverty

by increasing per capita income and elevating overall standards of living.

To be sure, Nigeria has a difficult road ahead should it want to achieve the economic

growth and stability that it seeks. Nigeria‘s development plan is simple in theory, yet rather

difficult in practice given its poor track record. Due to its long history of economic

mismanagement, corruption, incompetent leadership, political instability, and poor infrastructure,

Nigeria has numerous obstacles that collectively deter foreign investment. Thus, at a

fundamental level, Nigeria needs to create an environment that is conducive to foreign

investment and healthy economic growth.

To do so, Nigeria must address each of these impediments to growth through extensive

political and economic reform. First, there must be a dramatic and comprehensive restructuring

of Nigeria‘s economy. Currently, petroleum and petroleum products account for 95% of

Nigeria‘s exports. Such a heavy reliance on rich mineral reserves makes Nigeria highly

vulnerable to volatile economic fluctuations. A fall in commodity prices can have a potentially

devastating impact on the country‘s terms of trade, and thus on the economic well-being of the

nation.

Therefore, in order to achieve greater macro-economic stability and diminish its

vulnerability to commodity prices moving forward, Nigeria must reduce its dependence on oil

and natural gas. It would be best for Nigeria to develop and promote its non-energy exports,

which include manufacturing, knowledge-based services, and agriculture. At this point,

manufacturing and services accounts for only one-third of Nigeria‘s GDP, as compared to

upwards of 80% for other, more diversified African nations. With regards to agriculture, despite

only accounting for 41% of GDP, the sector employs 70% of Nigeria‘s population. Overall low

productivity caused by poorly managed harvests, and failed preservation techniques have forced

Nigeria to import food to feed its growing population. If it improves its efficiency in non-energy

sectors like agriculture, Nigeria can begin to diversify her economy by exporting cash crops like

cocoa, citrus, cotton, and peanuts.

Through a greater diversification of the economy, Nigeria can also diversify the

distribution of the FDI it receives. Up until now, Nigeria‘s FDI inflows have been almost

exclusively in the natural resources sector, specifically in the oil and natural gas industries.

238

However, such a concentration in FDI limits technology transfer and inhibits job creation, due to

the capital-intensive nature of the extraction process. Should Nigeria attract FDI in other sectors,

including manufacturing, tourism, consumer products, and construction, these new FDI projects

could generate greater employment and create more balanced economic growth.

Next, should Nigeria seek to develop these other segments of her economy, it must

address her infrastructure problem. Infrastructure in Nigeria is largely publicly owned, and thus

poorly maintained. Inadequate telecommunications, power generation and distribution networks,

ports, roadways and railways all deter investors, as well as push up unit labour costs, offsetting

any potential comparative advantage Nigeria has in that particular industry. For Nigeria‘s

manufacturing sector to be efficient, sound infrastructure is needed in order to keep

transportation costs low.

A reduction in inefficiencies within Nigeria‘s prized oil industry will play a pivotal role

in helping Nigeria realize its potential. Despite producing an average of 2.38 million barrels per

day in 2011 and holding the title of Africa‘s largest crude oil exporter, Nigeria is nowhere near

its productive potential. Ironically, Nigeria has to import refined fuel, due to its unproductive and

inefficient oil refineries that operate at just 25% capacity. In fact, estimates suggest that Nigeria

could produce approximately four million barrels per day within 10 years. To do so however,

requires more efficient use of resources and thoughtful economic management that has been

largely absent up until now. Improper handling of oil discoveries in the past has led to inflation,

which caused an increase in the price of manufacturing goods. By making these goods less

competitive on the world markets, the oil industry has effectively crowded out other export

industries, reinforcing Nigeria‘s over-dependence on oil.

Recently, Nigeria has also undertaken initiatives to reduce her reliance on fossil fuels in

favour of renewable energy sources. Wind, solar, and geothermal power have all been identified

as potentially promising areas for growth and investment. Nigeria‘s first ever wind farm,

consisting of 37 wind turbines, is set to go operational in July, 2012. Financed by a Japanese

agency, the project should contribute approximately 10 MW of electricity. Similarly, Nigeria has

also begun an 800kW solar panel project, which is expected to supply electricity to one of the

nation‘s universities.

In addition to programmes on the part of individual nations, African nations are now

allying with the European Union to further coordinate their efforts. Designed to keep each nation

focused on reaching her fullest output potential, the Africa-EU Renewable Energy Cooperation

Program and the Africa-EU Energy Partnership (AEEP) have established renewable energy

targets for 2020. Again, meeting these goals requires substantial amounts of investment capital,

further stressing the need for political and economic reform.

An ongoing skills deficit also poses a problem for African nations like Nigeria. Nigeria is

in desperate need of educational reform, to improve the value of human capital, raise

productivity, and ultimately increase wages. Nigeria‘s labour force is growing rapidly, but with

lagging literacy rates and the lack of necessary skills, investors remain wary. To be fair,

however, Nigeria, as well as other African countries, is already making progress in this regard, as

239

productivity is growing at a rate of 3% per year in Africa, which outpaces that of America by

.7%.

The nature of African markets, namely the restricted movement of capital and human

resources across borders, has also posed concerns for foreign investors. Because of this, trade is

quite low between African nations, since on average, 80% of African exports go to non-African

countries. To mitigate this, Nigeria, as well as other African nations, has begun to liberalise her

economy by reducing tariffs, import restrictions, and other trade barriers. In doing so, Nigeria

promotes increased competition and boosts intra-African trade. Perhaps more importantly,

though, these measures allow more nations to reap the mutual benefits from trade, and attract

greater foreign investment now that African markets are more integrated.

Continued institutionalised economic reform programmes like the National Economic

Empowerment and Development Strategy (NEEDS) will be essential for Nigeria moving

forward. NEEDS seeks to liberalise the economy, promotes private enterprise through increased

privatisation and lowering corporate taxes, reduces corruption, diversifies Nigerian exports,

improves education, develops sound infrastructure, and ultimately reduces poverty and increases

standards of living. NEEDS provides a tangible agenda that helps Nigeria stay focused on

reaching her development goals.

Political reform is paramount, as political stability will be a key component in attracting

foreign investment in the future. With a fragmented, multi-cultural society consisting of 250

ethnic groups, rival factions competing for power often times creates a politically unstable

climate. Meanwhile, Radical Islamist groups like Boko Haram, which has killed hundreds in

violent attacks in the past year, further discourages investors by increasing political instability

and jeopardising the return on investment.

What is more? Nigeria is considered one of the top 40 most corrupt nations in the world,

particularly in her dealings with the oil industry. The most recent fuel subsidy scandal involving

Nigerian oil companies and Nigerian officials, which lasted three years and cost the country $6.8

billion, is representative of the larger, omnipresent problems of corruption, weak leadership, and

economic mis-management. Overall, through strengthening her democratic institutions, Nigeria

can help tackle corruption, maintain political stability, and make good governance a priority.

It is important to recognise that increased foreign direct investment is not limited to Nigeria

alone. Rather, other African nations— among them Tanzania, Ghana and Mozambique—have

also experienced a recent increase in capital inflows. As a whole, the African continent is

inviting more and more FDI than ever before.

FDI in Africa is predicted to reach $150 billion by 2015, compared to just $84 billion in

2010. The vastly under- realised productive potential of many of these African nations, coupled

with an expected GDP growth rate of around 6% over the next couple of years, makes Africa a

very attractive prospect for investment15

.

For example, in Mozambique, U.S. energy companies are seeking investment opportunity

in its energy industry, given its recent discovery of substantial offshore reserves in the Rovuma

240

oil field. In fact, in an effort to penetrate this lucrative East African market, American oil giant,

Shell, has just offered.

Recommendations: the way forward

As earlier discussed, efforts have been made in the past, but it comes to nothing. The

country is now at a cross road with the option of carrying on in the old way or adopting new

method to combat the problems: the educational system producing half-baked graduates,

unskilled and unproductive; political system producing masters and bosses not leaders. Political

class in Nigeria consumes 75% of national income leaving the meager 25% to be spent by over

170 million Nigerians. Economically, the oil boom period is finally over. There must be total

restructuring of the existing systems and reforms in all facets of life.

Democracy as presently practiced in Nigeria is damn too expensive. Election to political

offices remains a battle involving ballot snatching, intimidating political opponents, voters

apathy and hooliganism. This attitude of winner takes all must be discouraged. Above all, there

is the need to incorporate existing traditional political institution in Nigeria to suit our

environment. During the colonial era, the British consul used traditional rulers in their

administration in what was called ‗Indirect Rule‖ It was cost effective, durable and cheaper. The

current dispensation of keeping National Assembly which consists of the ‗Upper House‘- the

Senate, equal representation, that is, three representatives from each state of the Federation-109

members including a sole representative from Abuja being the Federal Capital of Nigeria. The

―Lower House‖ i.e, House of Representative consisting of about 360

15. Prospects and Challenges,‖ IMF Occasional Paper no. 232.

members, Just to make laws. To make the matter worse, the same scenario is replica in all the

states of the Federation, the various states House of Assembly. The 1999 Constitution must be

amended in order to send these political jobbers packing.

In the field of education lies the greatest challenge. Illiteracy ratio is very high in Nigeria.

The truth is that no meaningful development can take place unless people are educated. Hence,

education should be made free at all level right from primary school to university. Secondly, the

teaching curriculum must change. Pupils from primary school must embrace ICT [Information

Computer Technology]. If free education will not be possible, then government must award

scholarship to indigent students.

It will remain a mirage if Nigeria is thinking that she can become an industrialised nation

by relying on transfer of technology. The only viable option for her is to set up cottage industry

and encourage her people to go back to land to farm. By doing this, she will be able to

accomplish two major objectives: One, feeding the populace thereby attaining self- sufficiency in

food production; providing raw materials for the cottage industry. It was done in the past, it

could be repeated now.

One must not failed to mention the cankerworm called corruption which has eaten deep

to the soul of Nigerians. In spite of the effort being made by the Buhari‘s government to tackle

241

corruption in all ramifications, it is clearly obvious that he was merely scratching the surface. For

instance, close to first anniversary of Buhari‘s government, EFCC has just been able to probe

one ministry. Imagine if other ministries have been probed or if the various states government in

Nigeria embark on the same drive. It would have been a can of worms. Nigeria needs to

strengthen her institutions. By so doing, she will be on the path of attaining greatness just like

China. It will take time, but like the case of Israelites in the wilderness, eventually they reached

the Promised Land. So shall it be for Nigeria‘.

Conclusion

Just as China did in involving her citizens to be part and parcel of this accelerated

economic development which has the potential of becoming the largest economy in the world

within the next two decades. Likewise, Nigeria‘s government must create a conducive

environment for her citizens. Issue of militancy in the Niger-Delta region must be addressed with

tact. By destroying the illegal refinery is compounding the problem. The state can grant license

to those who are engaging in illegal bunkering, thereby solving problem of unemployment and

generating income to the state. Thus, dousing tension in that region and checkmating the

activities of the Avengers. Without peace and stability in Nigeria, rapid economic development

envisages will remain a mirage.

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Back notes

Ahearne, A., J. Fernald, P. Loungani, and J. Schindler, 2003, ―China and Emerging Asia:

Comrades or Competitors?‖ International Finance Discussion Paper no. 789, Board of

Governors, Federal Reserve System.

Amsden, A. (2004): The Rise of ―The Rest‖ – Challenges to the West from Late-industrialising

Economies, Oxford: New York.

Bai, C. E., Y. Du, Z. Tao, and S. Tong, 2004, ―Local Protectionism and Regional

Specialization: Evidence from China‘s Industries,‖ Journal of International Economicsvol. 63,

no. 2, pp. 397-418..ed?‖

Brookings Papers on Economic Activity, 2001, vol. 1., pp. 217-226.

Dean, J., 2004, ―Long a Low-Tech Power, China Sets its Sights on Chipmaking,‖ Wall

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245

Impact of Globalization on Nigerian Economy

By

James Olufemi Ademeso

Department of Business Administration and Management,

Federal Polytechnic, Ilaro,

Ogun State, P.M.B 50, Nigeria

E-mail: olufemiademeso@yahoo.com

and

Yusuf Adebola Bako (PhD)

Department of Business Administration and Management ,

Federal Polytechnic, Ilaro,

Ogun State, P.M.B 50, Nigeria

Corresponding author

Abstract

In the present day global economy, direct investment, imports and exports have contributed

largely to the growth of both developed and developing nations. This research attempts to study

the level of impact of direct investments, as well as imports and exports of goods and services on

Nigeria economy based on the nation‘s Gross Domestic Product (GDP).Ordinary Least Square

(OLS) technique was employed to fit a realistic model into the collected data, and several

model‘s validity techniques (including Co-efficient of determination (R2), Correlation co-

efficient(r) and F-statistic) to validate the model. Hypothesis was also tested to validate the

theoretical background on IGR. The result revealed that all the globalization factors considered

(direct investments; and imports and exports of goods and services) impacted significantly on the

growth of Nigerian economy as observed in the R2 of 0.991%, Correlation co-efficient of 0.996,

and F-result of 605.37 with significance value of 0.000.

Keywords: Globalization, Direct Investments, GDP, Imports, Nigeria

246

Introduction

Globalization is a process of vertical and horizontal integration involving increasing

volume of and variety of trans-national transactions, in goods and services, in international

capital flows, in human migration and through a rapid and widespread diffusion of technology. It

plays positive role in reducing economic and social disparities within and among, the nations. It

is also a valuable tool for sustainable development. In today's dynamic global market, it has

become necessary for countries to expand internationally to gain competitive advantage.

Globalization has forced organization and governments as a whole to continuously re-strategize

on the management of nation‘s economy. In the era of globalization and increasing competition,

locally or globally organizations should be more adaptable, resilient, agile, and customer-focused

to succeed. The concept of globalization is perhaps the most recurrent term employed by

scholars and world leaders alike to rationalize the development and under-development of the

various parts of the world. Hence, it has assumed the status of an essentially contested concept

and put on the toga of a recurring decimal in the North/South dialogue. While it is used to

explain the development of countries in the Northern hemisphere, it is also employed to

rationalize the under-development of countries in the South (Omotola, 2003).

Generally, globalization encompasses the increasing interaction among persons and

institutions across the globe. It refers to the growing interactions in world trade, national and

foreign investment, capital markets and the ascribed role of government in national economics

(Ojo, 2004). According to Obadan (2004), globalization is about increasing inter-connectedness

and inter-dependence among the world's regions, nations, governments, business, institutions

communities, families and individuals. It fosters the advancement of a ―global mentality‖ (elitist

mentality) and conjures the picture of a borderless world through the use of information

technology to create partnership to foster greater financial and economic integration. There exists

a plethora of works on globalization perspectives on the subject, though scholars‘ views differ

depending on their ideological conviction (Waltz 1999; Ake, 1999; Ninsin, 2000; Mittleman,

2000; Rugumamu, 1999; Scholte, 2000).

In general, the phenomenon has been conceived from two contrasting paradigms, namely:

globalization as inter-dependence and globalization as imperialism. Scholars of globalization as

inter-dependence are of liberal persuasion. They see the concept as a framework of complex and

growing inter-dependence among nations. The global socio-political and economic integration is

viewed in the context of inter-dependencies which has restructured the world into a new and all-

inclusive social pattern. They associate globalization with economic liberalization as a policy

option for the development of the South through a process of free trade, investment and capital

flows between countries. Fukuyama, for instance, in his treatise ―The end of history and the last

man‖ perceives globalization as universalization of Western values. He proposed the celebration

of a globalized world and the unabashed victory of political and economic liberalism that is

evidenced in the triumph of Western ideas and values and in the exhaustion of viable systematic

alternatives to Western liberalism (Fukuyama, 1992). Rugumamu (1999) opines that

globalization is not merely a buzzword; rather it is ―a new paradigm in international economic

relations which apparently signals the triumph of capitalism on a truly global scale following the

end of the cold war, the collapse of the Soviet system and the dissolution of planned economies,

247

particularly in Eastern Europe‖. Scholte (2000) also noted that the phenomenon constitutes a

transformation in the spatial organization of social relations and transactions.

Proponents of globalization as inter-dependency to ensure a better world if states realize

and maximize opportunities presented by inter-dependency resulting from globalization. Their

belief is hinged on the premise that inter-dependency has opened up the world, reduced the abuse

of human rights and eradicated, to a large extent, social and economic injustices by national

governments. Advocates of globalization as imperialism on the other hand, are mainly of the

radical persuasion and political economy genre. While the inter-dependence school of thought on

globalization claims that inter-dependence is the reality of globalization and that it constitutes a

positive development in world affairs. Scholars who view globalization as imperialism insist that

the phenomenon as it is today, represents nothing but capitalism and imperialism. Scholars that

allude to the same position have proclaimed that globalization is a transformatory capitalist

project, which can only serve to impoverish the under-developed nations on the fringe of the

world capitalism. Ake (1995) for instance, sees globalization as a capitalist project that is

structured to perpetuate the under-development of Africa and other Third World countries.

He construed globalization in terms of profit maximization, and perceptively referred to it

as the march of capital across the world, in search of profits; a process that is facilitated by the

expansion of multi-national corporations, and driven by the technical advances in

communication. In his words: Globalization is about growing structural differentiation and

functional integration in world economy; it is about growing inter-dependence across the globes;

about the nation-state coming from under pressure from the surge of transnational phenomenon;

about the emergence of a global mass culture driven by mass advertising and technical advances

in mass communication. ( Ake, 1995)

Literature review

Concept of Globalization

Globalization is today probably the most singular factor exerting the greatest influences

not only on nation-states, but also on all dimensions of human existence and interactions (Saliu,

and Omotola, 2006). In point of fact, no universal definition of globalization has emerged. There

are as many definitions as there are scholars. However, for our purpose, a number of these shall

be put forward. Globalization is the transcendence of the economic, social, cultural, political and

environmental constraints across territories. To the International Monetary Fund (IMF), it

denotes greater integration of goods, services and capital between countries in the international

system (IMF, 1997).

Globalization manifests in many dimensions. Again, it is so profound that today, distance

is no longer a barrier. This is because of technological innovations. Territoriality is being

eclipsed by telemetrically (Tuathail, 1998). Globalization could be taken to mean the ‗‗changing

way of production organized as required by general dismantling of trade barriers and the free

mobility of financial and productive capital (Garea, 1998). It is the internationalization not

production, finance and exchange (Pearson and Rochester, 1998). Oyejide‘s comprehensive

definition provides an illumination, according to him; it is the increased integration across

countries, of markets for good, service and capital. It also implies accelerated expansion of

248

economic activities globally and sharp increases in the movement of tangible and intangible

goods across national and regional boundaries (in Ukaogo, 2003). Aluko (2003), defines

globalization as ‗the growing interactions in world trade, national andforeign investments, capital

market and the ascribe role of governments in national economies. ‗Globalization is the

intensification of world-wide social relations which link distant localities in such a way that local

happenings are shaped by events occurring miles away and vice versa‘(Giddens, 1990). From the

foregoing and deluge of definitions of globalization, albeit, the inflowof goods and capital may

be guaranteed, however, the manifestation of imperialism is revealing.

Components of Globalization

The globalization process has a number of components. Akin-Aina supported us when he

comprehensively presented the following:

i. The emergence of a time-space compressed inter-dependent world where inter-

dependence does not preclude polarization and inequality.

ii. The emergence of a new world order where there is a shift from the bi-polar world of the cold

war era to a unipolar dominated and led by the United States of America. The recent war on Iraq

is a pointer to this.

iii. The emergence of a new international division of labour and unequal and polarized global

economy that seeks to integrate all other local economies through a process of trade

liberalization and deregulation, often term ‗‗structural adjustment programs‘‘ (SAPs).

iv. The emergence of a world of new flows of persons, culture, ideas, finances, etc. (Appadorai,

1990).

v. The emergence and spread of new technologies, particularly with the information revolution

and their transactionalization.

The increasing importance of knowledge and information for production, culture and economy

and the creation of new forms of social differentiation and stratification in society (in Taiwo,

2004).

The polarized global economy is classified into three-part hierarchy by Cox. According

to him: At the top are the global economy managers and the relatively privilege workers, who

serve global production and finance in reasonably state jobs. At the second level are those who

serve the global economy in more precarious employment. These are those who will first get the

boot whenever restructuring occurs. The third level consist of ‗‗superfluous labor‘‘. Those whose

lots are exclusion from the global economy and who serve it only as a potentially destabilizing

force. This bottom level also constitutes the ‗‗Wretched of the earth‘‘ or the object of global

poverty and not control. Indeed, the whole region of the third world belongs to this third level (in

Egbadju, 2007). There is a three-part hierarchy of the social structure of the world as shaped by

the forces of globalization.

Challenges of Globalization in Nigeria

In spite of the global changes, many third world writers on globalization have argued that

there is little to celebrate about the phenomenon. Thus, Julius Ihonvbere poignantly argues that:

249

Globalization offers Africa the opportunity to be fully integrated into the emerging global

capitalist order to exploit the developments in science and technology, the new information

revolution, and the expansion of the global market. Such integration allows opportunities for

trade investment, foreign aid and support for development objectives. But in spite of these

apparent benefits, the challenges in the world system hold the possibilities for further

marginalism (Ihonvbere,1996).

He maintains that the constraining legacies of colonial and neo-colonial exploitation,

foreign domination, conditions of poverty make participation in the global order impossible.

Viewedfrom the foregoing, third world countries, including Nigeria that are still suffering from

infrastructural decay, grinding conditions of poverty and weak institutions cannot actively and

effectively participate in the global order.

Our understanding of the challenges of globalization can be perceived from the

relationship status between and among the participating actors in the global system.

Globalization is not only a force of marginalization, but inequity and also a factor of

fragmentation (Adedeji, 2005). In truth, globalization has succeeded in breaking borders,

collapsing space and time. In sum, it has turned the world to a global village. Yet, it has

aggravated the gulf between the poor and the rich countries. A country like Nigeria that is still

battling with the forces of backwardness and economic stagnation cannot effectively harness the

benefits of globalization. In point of fact, as the world economy becomes more integrated, new

reality constraints nation states. As Egbadju (2007) puts it ‗‗the current situation in developing

countries, whereby they export largely primary commodities such as crude oil and cocoa, make it

impossible to gain from the trade driven by American globalization.‘‘ This is because; such

commodities are often characterized by unfavorable laws. This to a large extent affects

developing countries. Similarly, Jahosh notes that increased international trade and financial

integration of the under-developed countries has worsened their balance of payment problems

and national development (Mkor, 2012).

Methodology

The data use in this study were sourced through Central Bank of Nigeria statistical bulletin

between the years 1995-2014 and it is presented as shown below:

Ye

ar

TOTAL

(GDP

N'MILLI

ON)

Direct

Investmen

t

(N'MILLI

ON)

Imports (cif) N'MILLION Exports & Re-Exports (fob)

N'MILLION

Oil Non-Oil Total Oil Non-

Oil

Total

199

4

899,863.2

2

22,229.2

42,349.6

120,439.

2

162,788.

8

200,710.

2

5,349.

0

206,059.

2

199

5

1,933,211.

55

75,940.6 155,825.

9

599,301.

8

755,127.

7

927,565.

3

23,096

.1

950,661.

4

199

6

2,702,719.

13

111,290.9 162,178.

7

400,447.

9

562,626.

6

1,286,21

5.9

23,327

.5

1,309,54

3.4

199 2,801,972. 110,452.7 166,902. 678,814. 845,716. 1,212,49 29,163 1,241,66

250

7 58 5 1 6 9.4 .3 2.7

199

8

2,708,430.

86

80,749.0 175,854.

2

661,564.

5

837,418.

7

717,786.

5

34,070

.2

751,856.

7

199

9

3,194,014.

97

92,792.5 211,661.

8

650,853.

9

862,515.

7

1,169,47

6.9

19,492

.9

1,188,96

9.8

200

0

4,582,127.

29

115,952.2 220,817.

7

764,204.

7

985,022.

4

1,920,90

0.4

24,822

.9

1,945,72

3.3

200

1

4,725,086.

00

132,433.7 237,106.

8

1,121,07

3.5

1,358,18

0.3

1,839,94

5.3

28,008

.6

1,867,95

3.9

200

2

6,912,381.

25

225,224.8 361,710.

0

1,150,98

5.3

1,512,69

5.3

1,649,44

5.8

94,731

.8

1,744,17

7.7

200

3

8,487,031.

57

258,388.6 398,922.

3

1,681,31

3.0

2,080,23

5.3

2,993,11

0.0

94,776

.4

3,087,88

6.4

200

4

11,411,06

6.91

248,224.6 318,114.

7

1,668,93

0.6

1,987,04

5.3

4,489,47

2.2

113,30

9.4

4,602,78

1.5

200

5

14,572,23

9.12

(341,717.3

)

797,298.

9

2,003,55

7.4

2,800,85

6.3

7,140,57

8.9

105,95

5.9

7,246,53

4.8

200

6 1

18,564,59

4.73

(740,208.2

)

710,683.

0

2,397,83

6.3

3,108,51

9.3

7,191,08

5.6

133,59

5.0

7,324,68

0.6

200

7 1

20,657,31

7.67

(1,640,136.

1)

768,226.

8

3,143,72

5.8

3,911,95

2.6

8,110,50

0.4

199,25

7.9

8,309,75

8.3

200

8 1

24,296,32

9.29

(2,006,498.

2)

1,386,72

9.9

3,803,07

2.7

5,189,80

2.6

9,913,65

1.1

247,83

9.0

10,161,4

90.1

200

9 1

24,794,23

8.66

(2,224,046.

6)

1,063,54

4.2

4,038,99

0.2

5,102,53

4.4

8,067,23

3.0

289,15

2.6

8,356,38

5.6

201

0 1

33,984,75

4.13

(2,978,258.

3)

1,756,72

4.6

5,857,71

5.8

7,614,44

0.5

10,157,3

28.2

397,81

6.5

11,532,0

22.7

201

1 2

37,543,65

4.70

(3,506,908.

7)

3,042,78

5.4

7,194,99

0.2

10,237,7

75.6

12,674,1

34.8

485,24

3.6

14,231,4

53.4

201

2 1

40,544,09

9.9

(3,457,683.

0)

3,064,25

5.9

6,020,19

8.8

9,084,45

4.7

14,259,9

90.9

476,11

0.7

14,736,1

01.6

201

3 2

42,396,76

5.7

(3,924,052.

1)

2,429,37

6.1

6,378,72

6.5

8,808,10

2.6

14,131,8

43.1

708,87

2.2

14,840,7

15.3

Sources: National Bureau of Statistics (NBS) and Central Bank of

Nigeria (CBN)

MODEL SPECIFICATION

The model specified for this work is

GDP = f ( FDI ,Total Imports , Total Exports) +

When this model is written in explicit form, it becomes

Where

GDP represents Gross Domestic Product; FDI represents direct investment and is the error term

which is normally, independently and identically distributed with mean and variance

251

The methods of data analysis employed are

7. Ordinary Least Squares technique

8. Correlation technique

9. Analysis of variance (ANOVA) technique: F- Distribution

10. Co-efficient of determination

Ordinary Least Square Techniques

Given a simple linear regression equation

Given Y (1)

∑Yi

Since

(2)

Estimation of

(3)

For the purpose of this research, the specified OLS is stated as

GDP = FDITotal ImportsTotal

Exports

Correlational Analysis Correlation analysis is the use of statistical correlation to evaluate the strength of the relations

between variable.

According to Pearson product moment correlation co-efficient between Xi and Yi,

= (5)

Where Cov (x, y) =covariance of X and Y

=∑ () ()

= (xyy)

= (∑xy∑y∑x∑)

= (∑xy)

= (∑xy

Var(x) = Variance of X

=∑(x)

=∑(∑x

=∑∑)

=∑n)

Similarly, Var(Y) =Variance of Y

∑n)

Hence (6)

Co-Efficient of Determination (R2):

The co-efficient of determination ―‖ is the proportion of the total variation of Y that is accounted

for or explained by X.

(7)

Analysis of Variance (ANOVA)

This technique was used to test the overall effect of globalization factors on GDP at 0.05

level of significance.

252

253

ANOVA TABLE

Same of Variation Degree of

Freedom

Sum of square MEAN SQUARE F

Treatment T-1 SSR MS F

Error N-t SSE MSE =

Total N-1 SST

Where SSR = Total variation due to Regression estimates

SSE = Total variation due to error.

Results and Discussion

Results

The results obtained from the analysis carried out on SPSS are summarised below:

R2 = 0.991, r = 0.996, F = 605.371

Thus, the OLS model fitted is given as:

GDP = 864649.864 – 1.811 FDI + 0.863 Total Imports + 1.702 Total Exports (8)

Discussion

Model 8 specified that when all indicators considered for the impact of globalization (i.e

FDI, Imports, Exports) are held constant, Nigeria economy only recorded a record growth of

#864,649,864,000 (eight hundred and sixty-four billion, six hundred and forty-nine million, eight

hundred and sixty-four thousand naira only. FDI was observed to have a negative impact on the

economy by causing a total reduction of one million, eight hundred and eleven thousand naira

(#1,811,000). This was as a result of the global melt down experienced by the world over during

the periods under consideration which lead to the negative investment recorded in the years 2005

– 2013. Meanwhile, total import and exports gave positive contributions of #863,000 and

#1,702,000 respectively as observed in the fitted model. Thus, all the globalization indicators

have contributed significantly to the nation economy for the periods under review.

The R2 value which is 0.991 indicating a 99.1% variation of the average GDP as

explained by FDI, Total Imports and Total Exports, while the remaining 0.9% variation is due to

unexplained variables/uncontrollable factors not considered in this research work.

Based on the ANOVA results, the significant value of our model indicates p value< 0.001

which is less than the critical value of 0.05, we therefore, conclude that FDI, Total Imports and

Total Exports have significantly impacted on Nigerian economy as measured by the GDP.

254

Conclusion

Going by the existing literature, including the ones reviewed in this study, there seems to

be an in exhaustive work on globalization with special reference to Nigerian economy. There is

general believe that economic advancement is often linked with the rate at which government

reach out to the international communities, especially the developed nations of this world. In

recent times, policy makers in most part of the globe have taken the problem of globalization

very seriously as recently being undertaking by the present Nigerian government under the

leadership of President Mohamadu Buhari, and in fact have considered them as major catalyst in

their wheels of progress.

With Nigeria‘s population currently put at over 170 million people compared with Gross

Domestic Product (GDP) that is not too encouraging and inflation still sky-rocketing, there is the

fear that future living standards may substantially depreciate, if serious efforts were not

channeled into attracting foreign investor. From the multiple regression analysis carried out, it

can be reasonably concluded that the remaining 0.9% of the variation in economic growth of

Nigeria may be due to other factors such as internal growth of Nigerian economy.

Recommendations:

1. Government at all levels should encourage more foreign direct investment.

2. Government should put in place fiscal policies to encourage exports and reduce imports

to the standard minimum level.

3. Government should put action in place to diversify economy from too much

concentration on Oil exports.

4. Inflationary trend should be put under check to take full advantages of globalization.

255

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Globalisation, international law and challenges of criminal jurisdiction

By

Emmanuel A. Adesina LLB, BL, LLM

School of Communication and Liberal Studies,

Lagos State Polytechnic, Ikorodu.

Oluwole E. Bamgbala LLB, BL, LLM

Legal Practitioner

Abstract

This paper is an examination of concepts of globalisation, international law and the

jurisdictions on criminal law in broad terms. It examines the inter penetration issues arising from

the exercise of criminal jurisdictions of some tribunals set up under international law. It reviews

the challenges of the exercise of such jurisdictions, the impact of a globalised world where

national boundaries and sovereignty are sometimes collapsed to assimilate the pressures of

international justice and collective drive to end impunity. The method adopted includes the

examination of concepts, legislations, treaties, the review of jurisprudence relevant to the

exercise of criminal jurisdictions of international court, the concurrent exercise of national

jurisdictions, the impact of the dichotomy in the drive to achieve international justice. It also

evaluates concepts in international criminal law that drive towards a goal of universality in

international criminal justice delivery system and removal of safe havens for suspects escaping

justice by seeking safe havens in States of custody away from scenes of crimes.

Keywords: Globalisation, challenges, international law and criminal jurisdiction.

257

1. Introduction

Globalisation as a concept has several manifestations. In this paper, the concerns

that are examined, analysed and treated are impacts of globalisation on legal architecture

especially as it relates to criminal matters. Legal globalisation is examined by Laurence

BoulleI, as manifestation of harmonisation of natural laws, the standardisation of legal

processes, the inter connection of natural laws and dispute resolution systems, and

internationalisation of law making, law enforcement and legal practice. It is a term used

to describe cross border investment liberalisation, reduction of trade barriers.

Globalisation also describes the inter connection, inter penetration of legal systems,

natural systems, social systems. It identifies the increasing softening of natural

boundaries and an apparent build up of a pathway towards uniform legal systems

globally. Law is one of the Institutional systems that is shaping globalisation through the

erection of structures of plurality of legal sources, penetration of jurisdictional

boundaries, as we shall examine in the context of the paper. Globalisation is usually used

within the context of the whole world, the world view of issues of legal structures that

take account of international experience2. Within the context of globalisation, we

recognise that an event in one part of the world resonates in almost every other part of the

world. The internet has created a basis for a sense of uniformity in the world. Ease of

movement, lifting of barriers have been occasioned by the effect of globalisation. Crimes

are now committed across national boundaries as a result of globalisation. The internet

has provided a veritable tool for internationalising of crimes, hence the need for an

effective structure of international law to ensure that the behaviour of persons, especially

those aspects of behaviours that offend against the norms of international community is

redressed with a view to putting an end to impunity.

2. Definition of concepts

(i) International law: International law is sometimes depicted as comprising mainly

laws whose observance is concerned with statutes, conventions, protocols and customs

that govern state parties, that regulate relationships of state parties within the context of

international community and international co-operation, sometimes to the oppression of

domestic laws. The idea of international law imports the body of rules, regulations that

strike at the heart of norms of international community that sets standards of behaviour

for State parties within that Community. These rules are set and enforced to bind State

parties, create obligations that are international in nature. They are a compendium of

obligations, national legislations, precedents, customary international law practice, treaty

practice, customs that are tools that drive international relations and ultimately

international justice. (Ferreira, Carvalco et al, 2013). An example is the Vienna

Convention on Law of Treaties 19693which make the terms of treaties binding on

Countries who have ratified them. Such treaties are binding in most common law

jurisdiction with the enablement of adoption in domestic legislations. Under international

law, once a treaty is signed by a country, the country automatically assumes a duty to

refrain from acts that infringe on the object and purpose of the treaty. Only upon

ratification is a country bound on international law by the provisions of the treaty.

However, in dualist states, mostly common law regions, there is a third level requirement

258

of treaty domestication. See S12 of the constitution of Federal Republic of Nigeria 1999

and the Nigerian Supreme Court‘s decision of the case of Abacha V. Fawehinmi.

(ii) Crimes. International crimes are crimes that are infractions on the norms of

international community. They are crimes that offend against the International interest of

the community which seek to redress it using legal structures. International criminal law

indeed, is a subset of public international law. While international law typically concerns

inter-state relations, international criminal law concerns individuals. In particular,

international criminal law places responsibility on individual persons—not states or

organisations—and prescribes and punishes acts that are defined as crimes by

international law. These crimes include crimes against humanity, war crimes and

genocide. They are embedded in the four Geneva Conventions of 1949, legislations as

1970 Hague Convention for the Suppression of Unlawful Seizure of Aircraft. 1988

Vienna Convention on Trafficking in Narcotic Drugs, 1979, Conventions On The

Physical Protection of Nuclear Materials, 1971 Convention for the Suppression of

Unlawful Acts Against the Safety of Civil Aviation. These are just samples of

Legislations against international crimes fostered by rising tide of globalization.

International law seeks to repress these international offences.

(iii) Jurisdiction: It is defined as the capacity of a court to adjudicate over a matter.

Jurisdiction can be exclusive, cumulative or concurrent. One of the most fundamental

questions of law is whether a given court has jurisdiction to preside over a given case. A

jurisdictional question may be broken down into three components:

whether there is jurisdiction over the person (in personam),

whether there is jurisdiction over the subject matter, or res (in rem), and

whether there is jurisdiction to render the particular judgment sought.

The term jurisdiction is really synonymous with the word "power". Any court

possesses jurisdiction over matters only to the extent granted to it by the Constitution, or

legislation of the sovereignty on behalf of which it functions. The question of whether a

given court has the power to determine a jurisdictional question is itself a jurisdictional

question. Such a legal question is referred to as "jurisdiction to determine jurisdiction."

There are different types of criminal jurisdictions that are recognized in international law.

Territorial jurisdiction by which states have the right to exercise jurisdiction over all

events in their territory or to over facts originated or completed elsewhere if one of the

elements of the offence occurs in its territory.

The principle of active nationality entitles states to exercise jurisdiction with

respect to the conduct of their nationals aboard. With respect to passive nationality

principle, it assets that jurisdiction is exercised by a state over crimes committed against

its nationals whilst they are abroad. Moreover a state has jurisdiction according to the

protective principle over extra territorial activities that threaten state security. (Robert

Cryer et al., 2007, p. 40-47).

259

2.2.1 Before proceeding to examine jurisdictional framework, we wish to examine the

implication of the cybercrimes (Prohibition prevention etc) Act 2015 Federal Republic of

Nigeria. It is a law promulgated by the Nigeria government under the administration of

President Goodluck Jonathan. It prescribes punishment for crimes related to cyber

crimes not adequately covered by existing criminal legislations. It prescribes penalty to

unauthorized access to data vital to national security. It prescribes penalties for

unauthorized trafficking in passwords which affect public or private or individual

interests (See Anyadubalu, 2016). The law in S.20 prescribes an offence for issuance of

unauthorized electronic instructions. It must be stated that whilst it is not the intention of

this paper to examine national laws that reflects globalization, it is important to highlight

the significance of the passage of the act to show that national jurisdictions are trending

to align its criminal jurisdictional practice with demands of international justice.

3. Diverse jurisdictional framework for redressing international crimes. There are

existing frameworks for legal obligations legislative and judicial, for the protection of

rights that drive the exercise of various global jurisdictions. The four Geneva (Red Cross)

Conventions5, and protocols to these conventions as Convention on the Prevention and

Punishment of the Crime of Genocide, Protocols to Geneva Convention, Convention

against torture and other Cruel, Inhuman, or Degrading Treatment or Punishment 1984.

These are global international legislations aimed at the repression of breaches of

international crimes and crimes that are surrendered to international courts or prosecuted

by national courts under the concept of universal jurisdiction.

Jurisdictional framework of international tribunals

One of the primary jurisdictions for the punishment of international crimes is the

International Criminal court. It is an international tribunal that invested on the judicial

jurisdiction. Its function is to decide on international rights, as it is the function of

international tribunals in general. It determines international rights and responsibility of

states or other subjects of international law. (see Dapo Akande, 2003) It is noted that

where international tribunal exercise jurisdiction, it is international and it does not

proceed on the basis of delegated national jurisdiction but on the basis of proper

international jurisdiction (see also Dapo Akande 2003). ICC was set up under the Rome

statute of the International Criminal Court6. The ICC Act vests it with jurisdiction over

nationals of states that are not parties to the Rome statute without the consent of these

states. ICC can prosecute nationals of states who are not signatories, if the ICC

prosecutor has a referral by the UN Security Council. Also, such non party nationals are

subject to the courts jurisdiction if they committed a crime on the territory of a state that

is a party to the ICC statute.7 Further, non-party jurisdiction may be asserted over

nationals of a non party where such nonparty has consented to the Rome statute and has

vigorously objected to the possibility that ICC may assert jurisdiction over its nationals

without its consent. (See United States Department Fact Sheet on ICC).

The ICC does not have the power to formally indict states or to make rulings on

state responsibility but can only exercise its jurisdiction over Nationals8. There are

contentions as to whether the exercise of ICC jurisdiction over officials of non parties

260

would be unlawful in cases in which the person has acted pursuant to the officially

approved policy of states.

ICC has jurisdiction to enforce its judgment under its enforcement jurisdiction. It

has exercised the jurisdiction in the case of Professor Gbagbo the former Head of

Government in Cote d‘ivorie who was jailed for war crimes committed in the country

after the election that led to this exit from government. It is clear that ICC has never

shied away from asserting jurisdiction over state officials who committed high

international crimes against their citizens on behalf of the state. As was noted, (Dapo

Akande, 2003) in the case of international armed conflict, those accused of war crimes

will almost invariably be soldiers of a state army or other officials exercising state

authority. Of course, such states would be unwilling to prosecute such offenders

necessitating the involvement of ICC.

Limitations of the ICC jurisdictions

There are limitations to the ICC jurisdiction. It is established that the official

capacity of an individual does not exempt that person from substantive criminal

responsibility in relation to crimes prohibited by international law9. Senior state official

may be held criminally liable for crimes under International law.

ICC does not have the power to formally indict states or to make rulings on state

responsibility but it can only exercise its jurisdiction over individuals10

. It is the rule that

ICC does not focus on the state‘s legal responsibility. It also appears that ICC may not be

concerned with exercise of jurisdiction in cases concerning officials acts of non party

nationals. It is based on the rule that state officials ought not to be subject to criminal

prosecution about their state without consent. It appears that the doctrine of Immunity

does not apply to international crimes. It seems that the official position of an individual

does not exempt him from individual responsibility for international crimes. (See Dapo

Akande, 2003).

Recently, the President of Uganda, Yoweri Museveni, referred the atrocities of

the Lord‘s Resistance Army (LRA) to the International Criminal Court11

. We therefore

see an assertion of jurisdictional power over international crimes as defined by the ICC

Act to vest powers in the International Criminal Court.

Elsewhere, challenges of jurisdictional framework have reared its ugly head in

circumstances of emigration of errant criminals seeking to avoid justice who escape

countries of commission of crimes to other countries following trend of globalization that

has eased travel, to the so called safe haven states. A case in point is the Soering V

United Kingdom decision12

. It came up in the European Court of Human Rights. It was a

case that centered on the rights of a suspect in a murder case. The suspect, a West

German national, had apparently murdered his girlfriends‘ parents in Virginia, United

States. He fled United States of America to United Kingdom. United States of America

had requested for his extradition to try him in America. The issue of human rights of the

trial suspect in America became the focus of objection to extradition of the suspect

261

especially in the light of Article 3 of the European Articles On Human Rights. The case

threw up the issue of jurisdiction, proper forum of trial of a suspect of a foreign national

who commits a crime in a country, not of his, and escapes to another country to seek a

safe haven. In the case, extradition was rejected because of human rights concerns. The

Court could not guarantee that the United States of America would observe the human

rights of the suspect if he was tried in the United States of America.

4. Challenges of jurisdictional framework

In order to fully appreciate the challenges of jurisdiction in criminal trials

especially under International Law, which is the aim of this paper, it is important to

highlight the types of criminal jurisdiction. As earlier discussed, there is territorial

jurisdiction, by which states, have the right to exercise jurisdiction over all events in their

territory over facts originated or completed elsewhere, if one of the elements of the

offence occurs in the territory of the state. This is consistent with most national

jurisdictions position on venue of adjudication of suspects of crimes13

. A State has

jurisdiction according to the protective principle over extra territorial activities that

threaten state security14

. Additionally, it is suggested that a principle of best venue rule

applies to trial of some offenders under the so called locus delicti rule. It means that

trials are best conducted at the venue where crimes are committed. The trial of Mrs.

Gbagbo of Cote D‘ivorie whose indictment at the International Criminal Court led to her

trial in Abidjan, the venue of the atrocities that led to her trial for war crimes in Abidjan

instead of the Netherlands15

.

The case of MBARUSIMANA presents an interesting perspective to the question

of venue of trial. The objection to jurisdiction was to the effect that the case fell outside

the territorial jurisdiction because throughout the period of commission of the crime, he

was in Paris and not DRC16

.

5 Universal jurisdictions as a framework

Another aspect of jurisdiction which this paper intends to consider in light of the

impact of globalisation in the legal architecture at International level is the concept of

Universal jurisdiction and its impact in the shaping of jurisdiction under International

Law. It is the norm of customary international law (Jus Cogen) that every state has an

obligation and an interest to exercise jurisdiction to combat egregious crimes which these

states have roundly condemned. Such international crimes include crimes against

humanity, war crimes and genocide17

. Thus, the essence of the concept is that every state

is sovereign and has an obligation, as long as the offender is within its jurisdiction, even

when the crime is committed outside the state‘s sovereignty, to try such offences where

the state where the offence is actually committed is unable, unwilling to prosecute the

offender. An example is the situation in France, where victims of Genocide in Rwanda,

filed complaints against Rwandan genocide suspect before French Courts under the

universal jurisdiction rule. However, there were complaints of lack of political will to

expedite or determine these trials within a short period of time18

.

262

The other case in point is that of the ICC decision in Belgium V Senegal in the

HissenHabre Case. HissenHabre was the notorious President of Chad Republic19

.

He was deposed. He fled the country to Senegal. Indictment was issued against him.

Belgium filed an application against Senegal before the International Court of Justice on

17th

February, 2009. The complaint was that Senegal had refused to grant Belgium‘s

request for extradition of the former Chadian Dictator for crimes against humanity and

acts of torture. Belgium alternatively requested Senegal to prosecute the offender under

the obligation to extradite or prosecute rule, allied to universal jurisdiction within the

meaning of the 1984 Convention against Torture to which both states were subject. The

trial took place in Senegal even though the crimes were committed in Chad. This case

exemplifies the global impact of a judicial principle that seek to interpenetrate sovereign

states into one umbrella international jurisdiction through the impact of globalization.

6. Referral rules: Rule 11bis

of the International Criminal Tribunal Act – Completion

strategy and the issue of referrals.

Another concept which underlies the plurality nature of jurisdiction in a

globalised world is the rule under the International Criminal Tribunal for Rwanda20

which

allows for referring of uncompleted criminal trials of international crimes to Rwanda for

completion. The rule is similar in concept to the Rule 11bis

of the rule of procedure and

evidence of the International Criminal Tribunal for the former Yugoslavia ―ICTY‘21

. This

provision was enacted as part of the completion strategy of the Tribunals and the essence

was to ensure continuity of trials. The idea was to transfer the uncompleted cases to

national jurisdictions. It underlies the concept of complementarity, a co existence of

international jurisdiction and national jurisdictions existing side by side and

complementing themselves. Some of the parameters set in the rules for the application is

that the national courts must be competent, willing and able to accept the referral, and

also an examination of the penal structure, absence of death penalty and issue of fair trial

concerns.

The International tribunal must be satisfied that the fair trial concerns of the

suspect are respected at the point of referral. This paper examines rule 11bis

within the

concept of globalisation and examines it to see how the concept fits within the mould of a

thirst for an acceptable uniform jurisdiction framework in an evolving globalised world.

What jurisdiction, international or national?

It is stated that the essence of the rule is to lay down recognition of the role of

national jurisdictions in the prosecution of grievous international crimes. The strategy is

also to enhance the capacity of national jurisdictions to try heinous international crimes.

Article 9 of the International Criminal Tribunal for Yugoslavia indicates for instance that

the tribunal was not intended to displace national courts. Rather, the tribunal coexists

with national courts under a system of concurrent jurisdiction22

.The International

Criminal Tribunal for Rwanda refused to refer the case of Yusuff Munyakuzi to Rwanda

for continuation of Trials because of human rights concerns23

. The concept is

263

symmetrical to the provisions of complementarity in the ICC Act, Articles 17 and 20

respectively. The ICC may not exercise jurisdiction over nationals of non parties where

the state has exercised jurisdiction over such individuals, it is asserted that the jurisdiction

of the court is supplemental to national jurisdiction and is not exercised where those

national jurisdiction are functioning properly.

7. Conclusion and recommendations

The purpose of this paper is to draw attention to concepts in international law and

jurisdiction within the cast of globalisation. We know that globalisation is a process of creating a

wholistic world brand, branded by a uniform rules, principles and experiences. It is an attempt to

tear down the walls of national boundaries and destroy the ―myth‖ of sovereignty. It seems

apparent from this discourse that national jurisdictions as a concepts are strong notwithstanding

the intervention of international justice.

Every nation state has legal systems that build national jurisdictions, but all existing

within the milieu of International co-operation and multi-lateral obligations. Certain values

appear to be weaved as a common thread. It is called by international law scholars as Erga

omnes obligations. They are obligations that are paramount, compelling and transcending of

treaty obligations and barriers reflected by nation state idiosyncrasies. An obligation not to

commit genocide is not a restrictive or nation centric concept. It is a universal concept fired by

the embers of atrocities committed by the Germans that platformed the Nuremburg trials, that

inspired the Polish lawyer to conceptualise ―GENOCIDE‖. Abolition of slave trade is also

universal, so is freedom from discrimination and torture. A case examined that fully celebrated

the complexities of globalization in relation to international law and jurisdiction is the

Mbariyamana‘s decision in the ICC jurisprudence. The suspect was based in France but directed

the atrocities through cell phones directed at accomplices in Democratic Congo Republic. In the

International Criminal Tribunal for Yugoslavia case of Prosecutor V AntoFurundzija IT-95-17/-T

rendered on 10th

December, 1998, initiated by the Prosecutor, ICTV, it concerned humanitarian

law including torture, rape committed at the Head Quarters of Croatian Defence Council. The

ICTY tribunal held that the prohibition against Torture was juscogens. They are acts that offend

against the basic norms of International Community grave enough to be tried at the International

Court. It however asserted that every state is entitled to investigate prosecute and punish

individuals for torture once they are present in their territory as if the acts took place therein

under their jurisdiction.

In all these cases, it appears that International Community is recasting the legal

architecture into a common mould, guided by common principles. However, jurisdictions

continue to be nuanced by plurality of national boundaries and legal systems.

Our reflection on the issues of Globalisation and Criminal Jurisdiction has brought up the

need for the Nigeria to evaluate treaty making process, in order to ensure all multi-lateral treaties

that will aid the prosecution of international crimes and serious crimes like; Terrorism, Money

Laundering, Handling of Nuclear Materials are adequately ratified and appropriate legislations

are put in place to domesticate these treaties under our national laws in order to aid the

prosecution of offenders of these crimes. When this is achieved, it will align our criminal

264

delivery system for the prosecution of international crimes with the standards dictated by

jurisdictional framework for the prosecution of international crimes.

265

REFERENCES

1. The Law of Globalisation - An Introduction. Global Trade Law Series at Page 7

paragraph 1.3.4.

2. Nadjar Alexander on International and Comparative law.

3. Journal of International Criminal Justice (2003), 618-650

4. https://www.law.cornell.edu/wex/jurisdiction

5. Convention on the Prevention of the Crime of Genocide of 9 December 1948, entry into

force 12 January 1951.

6. Article 13B July 17 1998 otherwise known as ICC Act

6a. See Generally Dapo Akande: Jurisdiction of International Criminal Court over Nationals

of non-parties – legal basis and limits, 2003.

7. Article 2(2)(a) and (3) of the ICC Act .

8. Article 25(1) of ICC Act

9. S.2(b) 2 ICC Act.

10. Art 25(1) of ICC Act

11. Suit No. ICC – 20040129 44 – January 29th 2014.

12. Felipe and Martin 2001/ 581 – 583,

13. Administration of Justice Act of Nigeria (2014)

14. Robert Cryer 2007 at Page 40 – 44.

15. ICC-CPI-20141209-PR1075: The Prosecutor v. Simone Gbagbo

16. ICC-PIDS-Q&A-DRC-04-001/11_Eng Updated: 11 August 2011: The Prosecutor v.

Callixte Mbarushimana

17. Comments of Randall 1988 at Page 113

18. www.trial-ch.org/en/trialwatch/profil/ab/facts/wencestasmunyeshiyakainst assessed

August 2008).

19. Ferreira, et al (2013), UFRGSMUN UFRGS Model United Nations Journal. 1, 202 –

221 - Obligation to prosecute or extradite (Belgium v. Senegal) Mr. Hissene Habre

266

20. Procedure and Evidence, Rule 11bis, available at

http://69.94.11./ENGLISH/rules/080314/080314.pdf (last accessed August 2008)

21. UN Doc. IT/32/Rev. 44 December 10 2009

22. Olympia Bekou (2009) – Rule 11bis: An Examination of the Process of Referrals to

National Courts in ICTY Jurisprudence. Fordharm International Law Journal Volume 33

Issue 3 Article 2 Page 728

23. The Prosecutor v Yussuf Munyakazi, Case No. ICTR-97-36-R11bis, 28 May 2008.

267

The influence of information and communication technology (ICT) on marketing of life

assurance products in Nigeria

by

Wahid A. Alasiri

Department of Marketing, Lagos State Polytechnic, Ikorodu

GSM: 08023409214. E-Mail: W. alasiri@yahoo.com

Abstract

Information and communication technology (ICT) has taken important position in the

future development of life assurance products marketing through the use of mobile service and

internet as a means of distribution channel, especially for both local and international trades. The

objective of the paper was to examine the influence of ICT on marketing of life assurance

products in Nigeria. In addition to the review of literature, primary data were obtained from a

valid sample of 22 life assurance companies in Nigeria. Data were analysed using Komolgorov-

Smirnov formular. The analysis showed that ICT has a significant influence on marketing of life

assurance products, and that ICT can be used to improve service delivery in the life assurance

companies. Based on these findings, the paper recommended that life assurance firms should

invest more on ICT and train the staff, in order to enhance its marketing development, expansion

and satisfaction of the clients.

Keywords: Information communication technology, marketing, life assurance products and

Nigeria.

268

1. Introduction

Information is indispensable in every level of human and organisation‘s

endeavour and existence (Oliver & Chapman, 1993). ICT has not only turned the world

into a global village, but also a global audience through information dissemination which

has necessitated understanding, peaceful co-existence and timely decision making. This

has greatly influenced the ways people and organisations do business (Egwuatu, 2016).

Technology has revolutionised the business sector in an unprecedented manner. It has

enhanced production and media offering, as well as providing an entirely new way to

look at marketing functions.

A change has come on how marketers show information to clients, as well as how

and when customers receive information to capitalise on this ever changing marketing

environment (Mahabir & Geeta, 2013). According to Accenture technology, digital

technologies such as social, mobile, analytics, cloud and increasingly the internet are

actually redefining and shaping customer behaviour and needs, but because of the way

organizations are adopting digital technologies, they are not able to do it in such a way

that it helps customers address pressing problems, or to even address their needs (cited in

Egwuatu,2016).

In this digital age, a new market place has appeared which is accessible anytime

and anywhere and the competition has been very intensive (Bayraktutan, Arsan, &

Druka. n.d.). It has been a key contributor to the major transformation on how

organisations perform their marketing functions (Loki & Bichanga, 2014). ICT has not

only helped in speeding up decision making, but has made the organisation to remain

customer-focused, cost saving, efficient in performance, improved on service delivery,

logistics, selling and marketing communication programmes.

With the new information system, organisations have to change their marketing

actions. ICT has helped marketing to improve on its functions. The web, mobile phones,

computers, social media, customer relationship management system and marketing

information system have all greatly affected modern marketing. The insurance industry is

not exceptional in this newly found development that makes the service provider,

stakeholders and clients satisfied.

Today customers and stakeholders seek information, communicate and connect to

other people and enterprises in the world in the comfort of their homes from their

computer/phones through various technologies such as: computer, phones, ffacsimile,

internet and social media (face book, LinkedIn, Pinterest, Twitter, etc); customers are

able to have access to many sources of information, especially on product, environment,

organisation activities, including promotion and service delivery on their own and hence

make decisions. In the insurance market, people‘s phones are daily bombarded with

various life insurance covers of low value, especially on travels both within Nigeria and

West African countries, with low premium. This enhances convenience for survival in

this ever increasing pace of life (Oluwagbemi, Abah, & Achimugu, 2001).

In Insurance, sale precedes production. Consequently, what many clients received

or experienced after the contract have been sealed always fall short of their expectations,

to the extent that many either cancelled, abandon and back out due to many reasons.

269

Today, clients can get information on what and how a company treats its clients and

products through ICT. Marketing is about competition, clients‘ satisfactions and

objectives accomplishment; but what role can it play in order to ensure that clients do not

regret going into insurance contract, especially, the life products?

Many studies have been done on ICT in some organisations like banks especially

with regard to their human resources, productivity, customer relations and management,

but only a few studies have been undertaken on ICT and marketing in the insurance

industry in Nigeria. Studies on the influence of ICT on marketing of life products in

Nigeria, to the best knowledge of the researcher,, is rare. This paper intends to fill this

gap. The objective of this paper is to examine the influence of ICT on marketing of life

policies in Nigeria. The study is guided by two research questions and hypotheses. These

are: what are the roles of ICT in the marketing of life assurance products? And (2) Can

ICT be used to ascertain effectiveness in the performance of life assurance firms? The

hypotheses tested are: ICT has no significant influence on marketing of life assurance

products; and (2) ICT can not be used to improve service delivery in the life assurance

organisations.

The rest of the paper is organised as follows: section 2 reviews relevant literature based

on theoretical, conceptual and empirical studies, while section 3 is devoted to

methodology adopted in the study. Section 4 contains the result and discussion, and

section 5 presents the conclusion and recommendations.

2. Review of relevant literature

2.1 Conceptual review

The world at large requires information to facilitate understanding, peaceful co-

existence and timely decision making. Information is needed by man and at all

levels/units in an organisation for need assessment, logistics and planning, resources

utilisation, operational control, measurement and evaluation of results (Yannopoulos,

2011).

Nwankwo (1984) cited in Alasiri (1987) explained that information encompasses

a wide range and variety of things ranging from oral and printed words, figures,

statements and documents to such intangible elements as sound, signals, ray of colors and

waves. Whatever the forms information takes the importance of it is that it conveys a

message. Adesiyan (1984) and Appleby (1981) agreed that communication is the process

of sending information from one person called the sender (encoder) to another called

receiver (decoder) in a way that the latter understands and acts upon it through feedback.

This suggests that communication is not complete until action is taken on the information

and a feedback is received.

Many definitions have been given to describe the term ICT. Anamakiri (2004)

stated that ICT is a way of getting knowledge and facts through the use of components

that process inputs and produce output for individuals, and organizational use. For Ige

(1995) noted that ICT is a modern way of handling information by electronic means,

which involves access, storage, processing, transportation or transfer and delivery of

information activities. While many scholars such as Ige (1995), Nweke (2005) and

270

Wilcocks and Lester (1996) believed that ICT is electronic devices, Buckland (1995) and

Nwankwo (1984) asserted that the information handling system can be operated manually

or mechanically. For Buckland, ICT is simply any technology used in handling

information.

Anamakiri (2004), Buckland (1995), Wilcock and Lester (1995) pointed out that

other information technology systems aside computer are telephone, fax machine, GSM,

wireless- radio phones, very small Aperture terminal (VSAT), Satellite, calculator

machines, local and network (LAN), Electronic organizer, Electronic mail,

Internet,electronic data, interchange, Document- imaging, etc.

Marketing is all involving and is often a skill that nearly everyone in the

organization who has contacts with the customers should have (Alasiri, 2005; Cheng,

2006), hence marketing should be highly integrated into many aspects of the organization

(Zeitheml, Bitner, & Gremier, 2005). It is all encompassing and goes beyond and applied

to not only tangibles and intangibles to include things of value/objects such as people,

events, organisations, ideas, etc. (Kotler, 2001), its relevance today seems stronger than

ever (Cheng, 2006).

Life assurance is an aspect of insurance business and can be sub-divided into

individual life, group life and pension, and health insurance (Nigeria insurance Act,

2003). Life insurance is a contract between an insurer and a policy holder, whereby a

benefit is paid to the designated beneficiary in the event of an occurrence, which is

covered by the policy (Tuff & Tuff, 1987). The contract can cover the death of the

insured or other events such as terminal or critical illness, term and whole life assurance,

endowment and investment-linked assurance, mortgaged protection, school fees and

education assurances (Gbede, 2002; Meidan,1984; Olufawo, 2005; Redja, 2008), hence

life products are purchased for many uses, reasons, benefits and applications, namely:

thrift habit, cushion personal risks effects, education fee/training, family

protection/legacy, mortgage/loan, claim settlements, tax relief and retirement plan

(Naido, 2010; Olufawo, 2005; Tuff & Tuff, 1987).

Insurance firms rely heavily on their service personnel to enhance the provision of

quality service to acquire and retain their customers in the designed service process and

service scale. Therefore, customers' satisfaction, motivation, communication and

confidentiality are important issues in marketing of service products generally (Palmer,

2005).

For life assurance firms, success is not simply selecting customers and planning

products for them, but interaction between customers and service providers matter most

(Cheng, 2006). The firm must add value and demonstrate its competitive advantages

during the interactions (Iron, 1991 cited in Cheng, 2006). Vargo and Lusch (2004) opined

that insurance marketing strategy is centered on the customers, usage and relationship in

order to achieve success, hence, the firms must focus on the service-dominant paradigm

with investment in people, technology, human resources policies and organisation linked

to service performance of employees.

Technological advancement and innovations have a contributing effect on the

growth of the insurance sector industry. More transactions are being concluded on the

271

internet, the service of vending machine is unique, and information-based service can be

delivered almost instantaneously across vast distances through electronic channel of

distribution, like the automated teller machine (ATM) (Alasiri & Cole, 2010).

2.2 Theoretical review

The theory considered and found appropriate for this study is the Means- End Chain

theory (MEC). The original development and application of MEC took place in the area

of marketing and advertising research developed by Gutman in 1982. According to this

theory, consumers‘ motivation towards products originates from consumers‘ personal

relevance to those products and those motivations encourage consumers to purchase

products and achieve value. This theory is concerned with relationship among attributes,

benefits and values. MEC addresses motivational issues that lead to behaviour especially

why consumers purchase the product and brand they do.

The MEC views consumers as goal-oriented decision makers, who choose to perform

behaviour that seems most likely to lead to desired outcomes. Two assumptions are

relevant in this goal–oriented framework: First, the consumers buy and use products

depending on their evaluation of the self-relevant consequences of these behaviour. The

second assumption has to do with the level of intent and awareness of consumption-

related behavioural decisions. Consumers are assumed to make voluntary and conscious

choices between alternative objects, which are guided by the search of positive

consequences and or the avoidance of negative outcomes.

The MEC is based on the assumption that consumers see products as a means to

important ends and try to explain how the selection of a product or service facilitates the

achievement of desired end-states.

The application of this theory to life assurance products is that people do not buy

products just for the product's sake, but for the benefits that their consumption or

patronage can provide. That is, the utility of a product is not so much in its features, but in

the functional and psychological consequences it delivers, which are in turn important for

the realisation of consumer's goals and values. Thus, MEC can be used to view consumer

as goal-oriented decision maker, who chooses to perform behaviours that seem most

likely to lead to desired outcomes.

2.3 Empirical review

This section is devoted to review of some empirical studies on ICT and influence

on organisation‘s products marketing. In a study on ICT and customer relationship

management (CRM) in insurance industry in Nigeria, Oghojafor, Aduloju, and

Olowokudejo (2011) collected data using questionnaire from 78 respondents from ICT,

marketing and underwriting departments of 30 insurance companies in Nigeria. Their

findings among others revealed that not all firms have fully integrated their ICT with

CRM, hence, a good number of clients still visited the offices to make some major

transactions; that efficient combination of high level CRM and ICT led to increase in

level of customer patronage, service delivery and ultimately the organisation‘s

profitability.

272

Kuzak (2005) as cited in Aliyu and Tasmin (2012) investigated the influence of

the ICT evaluation on the profit and cost effectiveness of the banking industry within the

period 1992-2003 and concluded that a significant relationship existed among the

executed ICT, productivity and cost savings. Their findings aligned with that of

Anamakiri and Adesola (2006): that ICT has helped the banks with regard to service

delivery, customer relationship, network deposit/payment, interconnectivity of branches

and enhanced customers‘ confidence in the banks‘ operations. However, contrary to

above, Solow (1987) cited in Aliyu and Tasmin(2012) found a high decelerating in

growth as the technologies were becoming ubiquitous; also, Turban et.al. (2008) cited in

Aliyu and Tasmin (2012) found out that ICT could not improve bank‘s earnings, but can

contribute significantly to a firm‘s output level (Brynjolfison & Hitt, 2000).

Using a structured questionnaire among 35 top and middle senior management

staff of six mega banks in Port Harcourt, Nigeria, Anamakiri and Adesola (2006) sought

to know the impact of IT on the banking industry in Nigeria. Their studies revealed that

IT contributed greatly to the growth, development, productivity and profitability

performance of banks. They found out that IT has helped the banks with regard to service

delivery, customer relationship, network deposit/payment, interconnectivity of branches

and enhanced customers‘ confidence in the banks operations. Many of the banks used

various forms of IT such as LANS, Facsimile service, telephone, electronic file transfer,

wireless phone, e-banking and internet.

Hamidi and Safabakhsh (2011) in a bid to determine the impact of ICT on e-

marketing collected data through questionnaire from 80 respondents from some selected

government agencies, e- marketing users, designers, suppliers and from balance sheet and

income statement of some companies in Golestan, Iran and found out that ICT provided

opportunity at every place and time for advertisement, contribute to increase in

company‘s income, decrease in environmental pollution and energy consumption.

Meduene (2009) as cited in Oghojafor et al. (2011) reported that ICT enhanced efficiency

and the strengthened service quality. Also, Surely (1991) found out that ICT brings about

convenience onto customers in their business dealings information alert and value added

services.

2.4 Influence of ICT on marketing of life products

The influence of ICT on marketing functions is remarkable when we consider the

various ways and tools (e-mail, internet, e-business, social media, telephone, SMS etc) in

which information can be disseminated. ICT has taken marketing to another level which

is far better than the traditional methods. It is now more customer- focused. Most of the

time all the client needs to invest is time (Hamidi & safabakhsh, 2011). The widespread

usage of ICT has made it an inexpensive and a useful tool for marketing operations and

objectives (Hamidi & Safabakhsh, 2011) and when used appropriately can affect how

business processes are planned, implemented and evaluated (Anamakiri & Adesola,

2006).

The internet has made the world a smaller place and made it possible for

organisations to sell and market their products, life insurance inclusive, globally (Loki &

Bichanga, 2014), and provide necessary information accessible anytime and from

anywhere, thus reducing the importance of distance (Konsbruck, 2013). The insured can

273

now gather information on the insurers and their products, including competitors‘ on their

own, even through social media in order to make purchase decision (Yannopoulos, 2011).

The ICT has brought faster delivery of information between the customers and services

providers (Chavan, 2013).

Smith and Chaffey (2001) cited in Oseni (2006) declared that ICT can be useful for need

identification, anticipation and satisfaction. The internet plays an important role in co-

ordination of market and marketing researches, as additional channel by which customers

can access information and make purchase; can be helpful in market penetration, market

development, product development, marketing communication, advertising, sales

promotion, public relations and product differentiation (Anamakiri, (2004); Hamidi and

safabakhsh (2001); Oghojafor et al.(2011); Oseni (2006); and Yannopoulos (2011)).

According to Roche (1992), cited in Hamidi and Safabakhsh (2001), ICT plays an

important role in the coordination of research and development, production and

marketing activities across borders; ICT can serve as facilitator for gaining competitive

advantage in the international field (Deans & Ricks, 1991 cited in Hamidi &

Safabakhsh,2001). The internet serves as a powerful communication medium that can act

as a ‗corporate glue‘ that integrate the different functional part of the organization (Oseni,

2006).

With the ICT, there is increase in decision making for marketing management

(Loki & Bichanga, 2014) and serves as an essential tool for the entire marketing

organization (Hamidi & Safabakhsh, 2001). ICT has facilitated the evolution of e-

commerce, e-marketing, mail order retailing where products can be ordered and shopped

on-line and then dispatched through integrated transport/courier companies that rely

extensively on ICT to control their operations. On-line marketing has been made by

presenting the advertisements to target group on the web sites. Service products such as

insurance, software etc can be marketed on-line thereby reducing the cost in production

and distribution channel (Mahabir & Geeta, 2013; Yannopoulos, 2011).The new trend is

that firms can outsource their manufacturing to other nations and rely on

telecommunication to keep marketing, research and development, and distribution teams

in close contact with the manufacturing groups (Mahabir & Geeta, 2013).

The insurance firms stand to gain a lot by integrating ICT into their operations,

especially the marketing functions. With the increase, in insurance firm capital base

(recapitalisation Act 2005), intense competition within and from other financial service

providers, the life insurance marketing firms need to rise to the challenges by being more

information - alert, customer driven and ready to improve on its market shares. Modern

insurance business is no longer the usual arm chair insurance marketing (Alasiri, 2007).

With mass of information (internal and external) at its disposal, an insurance firm

needs to improve on its service and product qualities, delivery , customer satisfaction and

profitability, by taking the many advantages and opportunities that modern ICT offers. In

his submission Pengfu (2002) stated that on-line insurance can raise the efficiency of

running the insurance, reduces the cost of operating the insurance, widens insurance

enterprise‘s business scope, changes the mode of marketing and customer service,

reduces the market access barrier and sharpens market competition.

3. Methods

274

A cross sectional survey was adopted in this study among life assurance

companies located in Lagos, Nigeria. 25 life assurance firms existed from the 53

members released as sampling frame by the Nigeria Insurance Association (NIA) (2016).

14 were pure life assurers, while 11 engaged in both life and general insurance

businesses. All the selected firms were established more than eight years, licenced by

National Insurance Commission (NAICOM) and apply some forms of marketing in their

operations.

An adapted survey instrument was developed from the one designed by Oghojafor

et al. (2011) in this study. Prior to collection of main data for the study between 1st and

7th

of March, 2016, a pilot study using three life assurers were conducted in February, 10-

13th

, 2016 to establish both face and content validity of the instrument. A test-retest

method to determine the reliability of the tool was done a week after on same pilot study

using Pearson product moment correlation and a 0.737 co-efficient was obtained.

Due to some constraints, 57 out of the 66 copies of questionnaire sent out to 22

life firms were retrieved. Three copies were given to each firm (IT, marketing and

underwriting departments). Apart from the questions (7) on bio-data, all others (10) were

structured and measured on 5-point Likert scale ranging from strongly agree (SA) to

strongly disagree (SD) and were drafted to determine the extent to which the firms

understand, utilise, practice and apply ICT and marketing in their operations. The tests

were done using Kolmogorov- Smirnov (K-S) statistical formular at 5% level of

significance. K-S is a non-parametric tool used to test the goodness of fit of an ordinal

data (Cooper & Schindler, 2000). This test looks at the degree of agreement between the

distribution of the observed values and some specified theoretical distribution (expected

frequencies) and it focuses on the largest value of the deviations among observed and

theoretical proportions. The theoretical distribution represents what would be expected

under the null hypothesis. It treats individual observation separately and thus, unlike Chi-

square test for one sample it needs not lose information through the combining of

categories and thus, it is more powerful than Chi-square test (Siegel, 1956 cited in

Oghojafor et al. 2011).

4. Results and Discussion.

Below is the analysis of the responses from the 57 respondents that participated in

the study. The bio-data analysis (table 1) shows that there were more male 39 (68%) than

female 18 (32%) participants. A total of 7 (12%) of the sample were senior staff, 9 (16%)

belonged to the management cadre, while 41 (72%) were heads of the three departments

surveyed. The age and marital status distributions are also depicted in table 1.

Responses (appendix 1) from the survey depicts that a total of 52 (91%) of the

sample stated that their marketing operations is fully computerised. This shows that many

of the insurance firms appreciate the importance of ICT in their operations.

Moreover, 54 (95%) of the respondents agreed that marketing is important for the

survival/performance of their products; only 3 (5%) disagreed with this statement.

Furthermore, the 50 respondents (88%) stated that their firms used various ICT

tools to disseminate information regarding their products to the target markets, when only

275

7 (12%) people disagreed probably affirming that the firms still used the traditional

methods.

48 (84%) of the sampled agreed that many life assurance firms could not survive

in this highly competitive world without the use of relevant ICT. Only 9 (16%) deferred.

Results from responses on questions 3, 7 and 9 affirmed the various roles which

ICT play in the successful marketing of life insurance products in Nigeria as posited in

the study research question 1. In other words, ICT as stated can be used to pass

information regarding a product, attends to clients‘ complaints promptly, makes on line

payments, signs contract without visiting the firm‘s office, etc.

Moreover, responses on questions 8 and 10 provided answers to research question

2. In other words, ICT can be used to ascertain effectiveness in life product marketing

through cost savings, reducing client‘s waiting time, contact hours, payments and co-

ordination of marketing activities among the staff to achieve result most effectively and

efficiently. This finding was consistent with Anamakiri and Adesola (2006) that ICT

contributes greatly to the growth, development, productivity and profitability of an

organisation. It corroborated Hamidi and Safabakhsh (2011) claim that the widespread

usage of ICT has made it an inexpensive and useful tool for marketing operations and

objectives.

Testing the hypotheses

The hypotheses are tested using K-S at 5 % level of significance. The K-S is

given as

DN = Maxx F° (x)-Fo (x)

Where, F is the number of observations; F° (x) is the specified (or theoretical) cumulative

frequency distribution under Ho for any value of x; Fo (x) is the observed cumulative

frequency distribution of a random sample of N observation for any value of x.

The decision rule is that Ho is rejected if the calculated D (Dcal) is greater than the

tabulated D (Dcal) under the deviation level of 5%.

Hypothesis 1.

H1: ICT has no significant impact on marketing of life assurance products.

Question 4 was used for the test as presented below.

Table (2): K-S frequency table for hypothesis 1

SA A U D

SD

F=Number of responses on: ICT help in enhancing marketing of life Products 05

38 3 4 7

F°(X)= Theoretical cumulative distribution of choices under Ho 0.200 0.4000

0.6000 0.8772 1

Fo(x)= Cumulative distribution of observed choices under Ho 0.0877 0.7544 0.807

0.8772 1

276

F° (x) - Fo(x) 0.1123 0.3544* 0 .207

0.0772 0

From above, the calculated D value is the point of greatest divergence between the

cumulative observed and cumulative theoretical distributions, which is 0.3544

The tabulated D from the K-S test table at (αN=1.22/57 is given as;

D=α =1.22= 1.22 = 0.1616.

N 57 7.5498

Since Dcal is greater than Dtab (0.3544 › 0.1616), then the null hypothesis is

rejected, hence we accept the alternative which says ICT has significant impact on

marketing of life assurance products. This outcome supports the findings by

Pengfu(2002) that on-line insurance can raise the efficiency of running the insurance,

reduces the cost of operating, widens insurance enterprise‘s business scope, changes the

mode of marketing, customer service and reduces the market access barrier and sharpens

market competition.

Hypothesis 2

H2: ICT cannot be used to improve service delivery in the life assurance organisations.

Question 6 was used for the test as presented below.

Table (2): K-S frequency table for hypothesis 2

SA A U D SD

F=Number of responses on: Our service delivery 5 44 3

2 3

improves through the use of ICT

F° (X)= Theoretical cumulative distribution

of choices under Ho 0.2000 0.4000 0.6000

0.8000 1

Fo(x)= Cumulative distribution of observed

choices under Ho 0.0877 0.8596 0.9122 0.9473

1

F° (x)- Fo(x) 0.1123 0.4596* 0.3122 0.1473

0

From above, the calculated D value is the point of greatest divergence between the

cumulative observed and cumulative theoretical distributions, which is 0.4596

The tabulated D from the K-S test table at (α/ √N=1.22/√57) is given as;

D= α = 1.22 = 1.22 = 0.1616

√N √57 7.5498 .

277

Since Dcal is greater than Dtab (0.4596 › 0.1616), then the null hypothesis is

rejected, hence we accept the alternative which says ICT can be used to improve service

delivery in the life assurance organisations. This outcome is consistent with the findings

by Muduene (2009), cited in Oghojafor, et al.(2011) that ICT enhanced efficiency and

strengthened service quality.

278

5. Conclusion and recommendations

ICT has revolutionised the way service providing organisations conduct their

business and marketing generally. The use and application of ICT is inevitable for any

life assurance firm in this dynamic and increasing competitive world where customers

can speedily access information about available products world wide, in order to make

purchase decisions. Thus, the justification for ICT adoption lies in its many benefits.

However, the non utilisation of ICT by any life assurance marketing firm will

result in delay of services, loss of valuable customers, increase in fraudulent activities by

workers, dwindling profit, dearth of information on market target and global challenges.

But, if properly utilised, ICT can facilitate operational speed, better communication,

improvement in product quality, speedy decision making, competitive advantage and

motivation of personnel. ICT has positively affected the smooth operations and

improvement in the marketing of insurance products.

Based on the study conducted to confirm the relevance of ICT as an increasing

critical tool for marketing success especially for life insurance products, it is hereby

recommended that;

Insurance organisations should now follow the new trend of alliance or

partnership marketing where organisations join and adopt co-operative marketing

strategy of offering their products to their clients for convenience. Examples are as found

where insurance organisations offer their products (life and general) through

telecommunication firms. Multi-level marketing and bank assurance operations are also

in vogue, for instance among insurance organisations and banks in Nigeria.

Life assurance marketing firms should imbibe, adopt and invest more on ICT, in

order to enhance their marketing development, expansion and satisfaction of customers.

This, however implies more people (workers) need to be trained on the usage.

279

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Appendix

Table 1: Biodata Analysis. Source: Field Survey 2016

Sex % Job status Age %

Male 39 68 Management 9 16 20-30 19 33.33

Female 18 32 Senior 7 12 31-40 22 38.60

57 100 HODs 41 72 41-50 14 24.56

57 100 50- 2 03.51

57 100

Marital: % Education % Department

Single 11 19.30 SSCE/WAEC - -

Married 38 66-67 OND/NCE 9 15.79 Marketing 22 38.60

Separate 6 10.53 HND/BSC 27 47.37 IT 21 36.84

Others 2 03.51 PG 21 36.84 Underwriting 14 24.56

57 100 57 100 57 100

APPENDIX 1

Section A. Bio data

Instruction: Please tick the appropriate option.

1 Gender: Male Female

2 Age : 20-30 31-40 41-50 50 and above

3 Marital status : Single Married Separated Others

4 Work Experience : 1-5yrs 6-10yrs 11-15 16 and above

5 Highest education attained: SSCE OND/NCE HND/BSC PG

……………….

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6 Department: Marketing IT Underwriting

SECTION B: Please tick the most appropriate.

Strongly Agree(SA) Agree(A) Undecided(U) Disagree (D)

Strongly Disagree(SD)

SA A U D SD

My firm‘s marketing operations is fully computerised.

Marketing application is important for my firm‘s life product performance.

We send information regarding our products to clients using appropriate ICT tools.

ICT helps in enhancing marketing of life products.

In this competitive world, life product marketing will still be enhanced without ICT.

Our service delivery improves through the use of ICT.

Client complaints are treated promptly mostly on -line daily.

Customers waiting time and contact hours are reduced through ICT alternatives.

Major marketing operations such as payment, information alert, contracts are done via

ICT.

Marketing activities among staff is co-ordinated in my firm via ICT.