International Business in Nigeria - Case Study Example

Student’s name: Professor’s name: Course name: Date: International Business in Nigeria Background information of Nigeria Nigeria is among the richest countries in Africa today after South Africa and Libya. International trade has made it possible for the country to improve the economy and create many job opportunities. Oil is the main source of revenue fetching million of dollars for the country. However, Nigeria has the highest cases of poverty because of high cases of corruption. The high cases of corruption make it difficult for the government to eradicate the massive poverty among the civilian population. According to Lamers (3177), Nigeria is the most populated country in Africa making it necessary to formulate strategies to increase for the country. International trade has remained the sole opportunity where the government can increase revenue as well as creating employment for her people. An expansive number of global associations and agents have been careful about working together in Nigeria for a long time. It may appear to be bizarre given that Nigeria is a standout amongst the most crowded nations in Africa and, besides, being a standout amongst the most oil-rich spots on the planet (Zirak, Masoumeh, &Mohsen 35). Couple this with the way that the nation is plenteous in numerous other joint assets and has great port offices, and you may surmise that universal business would be battling for a slice of the profits in Nigeria. The way that Nigeria is not a magnet for global speculation could be seen as a catastrophe of huge extents. Enormous steps have been made in the most recent couple of years to attempt to handle the numerous endemic issues which pounce upon the nation (Zirak, Masoumeh, &Mohsen 35). With political and financial security being seen as the key weapons in assaulting the destructive impact of debasement. Whether the moves being made on the ground have prompted emotional changes in levels of straightforwardness and levels of corporate administration stay to be seen. Meanwhile, the nation battles along and those working together in Nigeria should be mindful of the issues that anticipated. History Nigeria is rich country in terms of history, culture and natural resources. Presence of natural resources and distinctive culture make attracted the British explorers who eventually settled in the region. Therefore, modern Nigeria is a product British colonial rule hence adoption of various characteristics of the British culture such as language, dressing and military. Massive population in Nigeria prompted the British a source of market for their manufactured goods. Moreover, Nigeria had many natural resources that the British used as a source of raw materials for their industries. Prior colonial rule, the current Nigeria had distinctive names depending on the names of the kingdoms and empires in the region. Such empires flourished, while others died, until the coming of the British colonial rule. Concentration of the British army in (Lagos) Nigeria started as early as 1850 changing the political set up of the country entirely (Madawaki 152). Anthropologists assert that Nigeria got its name from River “Niger” which means black and the word “area”. The two words combine to form Nigeria meaning an area of black people. The wife of Fredrick Lugard, Flora Louise Shaw coined the name in1898 becoming the mother of Nigeria. The northern and southern region of Nigeria has distinctive religions, i.e. Muslim and Christianity that has brought chaos over the years. Nigeria has a history of trade where various goods were available in the market. The common goods were slaves, cowries, gold and iron. The coming of the British strengthened the trade but abolished slave trade but built a new platform for a better trade. Moreover, the discovery and mining of oil in early 1960s contributed to growth of the economy and boosting trade in Nigeria (Madawaki 152). Geography of Nigeria Nigeria is a West African nation sharing its legal boundaries with Benin towards the west, Cameroon towards the east, and Niger towards the Northern part. The coast lies in the gulf of Guinea while in the south it borders Lake Chad. Nigeria has massive geographical features such as the Adamawa Highlands, Jos plateau, Mambilla plateau and the Niger Delta. According to (Zirak 78) Nigeria is within the plateau where the climate is a bit humid and damp. Moreover, Nigeria has four climatic types that include the southern part of Nigeria, middle belt and the northern part. The various climates in Nigeria make her suitable for agriculture, pastoralist and mining. These activities create daily bread for the Nigerians making it an ideal nation. The most common climates in Nigeria include the tropical monsoon climate according to the classification of the Koppen climate (Zirak 79). It is on the southern part of the country influenced by the renowned monsoon winds originating from the southern part of Atlantic Ocean. The climate makes it possible for the country to experience frequent rains making the land possible and conducive for agriculture. Tropical monsoon climate has minimal temperature ranges creates constant rage throughout the year. For instance, the town of Warri records the highest temperature of 28 degrees and the lowest of 26 degree. In the same breath, the southern part of Nigeria experiences abundant rainfall and storms experienced are convectional in nature. It receives high annual rainfall explaining the existence many tropical rain forests in the world. The geography of Nigeria makes it ideal for agriculture, dairy farming and forestry making among the best in the world (Zirak 89). Government Nigeria is a federal republic that resembles United States leaving the executive power to the president. The Westminster system has affected the parliament of Nigeria because it has upper and lower houses forming the bicameral legislature. The present assumes the position of the head of state, government and chairperson of the multiparty system. The politics of Nigeria revolves around the representatives of the democratic republics and the federal presidential and the ultimate power lies in the hands of the president. The supreme court of Nigeria is the highest arm of the judiciary and it has the ultimate authority superseding the president (Manova 730). Rule of law is the backbone of the legal system of Nigeria and it is applicable in the formulation of the constitution of Nigeria. The distinctive legal systems include the common law, customary law, and the English law.The English law emanates from the colonialists who are the British. The common law developed after colonialists and the customary deprived from the traditions of Nigerians. Moreover, the law has threads of Sharia that strictly applies to the Muslims and their family issues. The current constitution came into operation in 1999, after inception of democratic rule (Nayyar 490). The constitution of Nigeria clearly recognizes the courts clearly as state or federal courts. The primary difference is that the state governors appoint the judges of state courts while the president appoints the federal judges. However, all appointments must conform to the national judicial council. The three federal courts include the court of appeal, federal court and finally the Supreme Court. On the other hand, the state courts include the high court at the state level, Sharia court and the appeal court (Nfa, Taylor & Thomas 90). There are some legal requirements that individual must fulfill before investing in Nigeria. The laws of Nigeria are friendly to local and foreign investors since 1995. This year marked liberalization allowing foreign investors to carry out their activities effectively. The most significant laws on the foreign investment include the Investment promotion Act of 1995. Moreover, it also includes the foreign exchange miscellaneous and monitoring act. The other major statues related foreign investments include the 1009 act of allied matters and the (NOTAP) 1979. The leading institutions manage to create and regulate the statues of the Nigerian investment Promotion Commission (NIPC) as well as the corporate affairs commission (CAC).These bodies have made it clear that investment in Nigeria is for everyone and the foreigners are welcome (Manova 740). The law states that any individual willing to start a business or take over an existing business in Nigeria must have a valid permit in the immigration department that will help him or her carry out the business. Moreover, foreign enterprises willing to carry out business in Nigeria must acquire relevant legal documents that will help him or her to continue with the business. Immigration permits are paramount to ensure that rule of law applies to all the individuals. It is important to note that some economic production arms are illegal to both Nigerians and foreigners (Zirak, Masoumeh, &Mohsen 35). For example, military uniforms and narcotic drug are responsibilities of the government. However, outside the premises, the outsiders can fully own and operate businesses with minimal disturbance. The foreign investors can also fix the prices of securities where they will buy into the Nigeria securities with minimal supervision from the agents of the government. This is lucrative opportunity making it possible for investors to make money and fulfill their goals (Madawaki 152). Some business enterprises require valid approval from the government whether owned by Nigerians or foreigners. For example, licenses of banking are under the central bank of Nigeria, the national insurance board must vet any insurance company as well as telecommunication industry. However, the printing business does not require other registration apart from the corporate affairs commission. Arbitration is a process of business in Nigeria and requires that all foreign laws must be under the English common law and any variation can take place through legislation. Under normal circumstances, English is the common language of the law requiring that all contract and agreements to take place in English. Moreover, the Nigerian courts operate on the Anglophone language hence formulation of all agreements based on English language entirely. All foreign investors are free to bring the capital for investment and able to repatriate both capital and income proceeds. Under normal circumstances, capital may be in either hard currency through authorized dealers and banks (Manova 720). Nigerian law accepts transfer of technology as well as its protection. The copyrights, patents, trade secrets, and associated features are paramount in the process of strengthening business. The law requires that the national office of technology and promotion to register any patent and transferred technology. However, it is important to note that the office can refuse certain registration based on terms of fairness in the Nigerian party of contract. Moreover, the patent or transferred technology must work for the greater good of the nation (Zirak, Masoumeh, &Mohsen 35). Taxation is among the most crucial aspects of business regulation. International taxing rates for the republic of Nigeria are not onerous. The rate of company income tax is 30% an additional 2% company tax for the purpose of education (Manova 75). This translates to 5% of withholding tax chargeable on the unearned income. The foreign investors include 10% of withholding tax and final tax towards the dividends. The rate of capital gains has an average of 10% and this translates to exemption of the capital gains tax. It is usually very significant tax for the investors. The stamp duties are normally chargeable for several documents in the valorem rates. PAYE and social security’s requirements are mandatory contributions that a company must remit to the taxation department. Demographics of Nigeria Demographic of the Nigerian republic includes the population density, education level, ethnicity, economic status, religious affiliations among other key features of the population. Nigeria is the most populous country in Africa and carries approximately one sixth of the African population. According to Zirak, Masoumeh&Mohsen (37), 50% of the Nigerian civilians dwell in urban centers where they get their daily bread from local businesses and employment. The twenty-four cities have more than100, 000 people asserting the intensity of population in Nigerian cities. It exhibits variety of traditions, customs and languages because it has approximately 389 ethnic groups. The aspect gives the country cultural diversity that is unique in the entire world. Census statistics facilitates regional funding as well as representation of religious and ethnic groups in the services of the government (Manova 75). The approach provides an incentive for inflating the local populations. On the other hand, the academicians assert high population of Nigeria has never gotten right in the eyes of the government explaining the reason for disparity throughout the years. Population is a sensitive and controversial issue because it has serious implications in the process of shaping, state and the ethnic relations. Moreover, it facilitates the balance of power making it an instrumental tool in governance of Nigeria (Manova 75). In the past, people manipulated the census results for the sake of political power making it impossible for most parts of Nigeria to experience development. In the northern region, the most influential common tribes are the Hausa and Fulani many of which are Muslims. On the other hand, the southern part has the Yoruba people who are mainly Christians. Over the years, the southern part has dominated governance leadership and governance. It is evident through constant developments noted in that region (Manova 75). Nigeria has well more than 300 ethnic gatherings, each of which has its dialect or lingo. In such a dialect various nation, English has come to be seen as the bringing together dialect and in spite of the fact that the predominant indigenous dialects of Hausa, Igbo and Yoruba are broadly utilized they are not generally caught on. Nigerians like to utilize dialect in a real elegant form and will regularly address you with remarkable kindness and plain indications of appreciation. This yearning to show admiration to individuals appears in the Nigerian utilization of titles and honorifics (Lamers 1390). Individuals will regularly be tended to as Uncle, Auntie, Chief, Mazi, and Doctor and so on as opposed to by the utilization of first names. Try not to be astonished to hear yourself being tended to as "Sir" or 'Manager.' Business discussions will regularly veer towards the individual, and you may be made inquiries about family, side interests and different hobbies inside of conferences. It is a critical segment of the meeting and ought to be dealt with all things considered. It is not seen as excessively individual yet rather as a sign of warmth and fellowship. Economic sector Nigeria has approximately 173 million people being the largest country in Africa. It accounts for 47% of the West African population and biggest exporter of oil in Africa. It has greatest reserves of natural gas in the African continent. The large reserves in terms of natural and human resources made it possible for it to have the best economy. The economic growth can improve the standards of people as well as reduce the cases of poverty significantly (Lamers 1390). From early 1999, the country has embarked on an ambitious endeavor to stimulate growth of the economy. Serious endeavors and intellectual contribution have contributed to smooth growth of the economy decreasing levels of poverty significantly. There are some recent developments noted in 2014, where the Nigerian economy has continued to experience a robust growth simply because of contribution of foreign and local investments. Despite the fact that there is significant reduction in oil, production that does not that the economy will decline. The situation indicates that conglomeration of oil and other products can scale Nigerian economy to greater heights than expected. The actual GDP estimates to have increased by an average of 6.1% due to continued strong performance. Declining of GDP of oil emanates from continued theft of oil in the Niger delta where there have been serious disruptive effects. The disruptive effects included the major companies of oil as well as shut down of some pipeline companies (Madawaki 152). By the end 1960s, the cocoa business had ended replaced by the oil business. The oil business brought large revenues for the country-creating platform for economic growth. In early 1974, there was a lot of money emanating oil and that created inflation for the country. Organizations in charge for exportation of oil later restored the situation and Nigeria continued growing her economy (Madawaki 152). The boom of oil in 1970s facilitated recovery of the nation from the losses incurred during the Biafra war and the economy continued growing normally. It was a period of sprung of many manufacturing industries hence increasing the growth of the country. The production has continued to increase growth of economy because the country has a steady income making it possible for it to provide quality services to the civilian population (Manova 720). Nigeria like many other countries has embarked on the process of privatization to increase productivity and quality services today. United Nation utilized privatization strategy in 1980s and it proved effective in the end (Zirak, Masoumeh, &Mohsen 35). Similarly, Nigeria has adopted the concept of privatization where it allows private companies to sell services and goods to the civilians and government. Formal introduction of privatization took place under the decree of 1988 because it was part of the structural adjustment program (SAP) accredited by Ibrahim Badamosi.SAP is among the neo-liberal developments devised by the international financial organizations to facilitate economic growth. Financial Sector The economy of Nigeria has occasionally experienced external and domestic shocks in the past years that culminated in 2009 financial crisis. The economy has grown rapidly hence achieving 7percent of growth annually. Performance of various financial institutions has improved though some emergency and anti-crisis has continued to persist. Success in maintaining stability in finances after the drastic crisis has faced major threats reflecting the broad-based and decisive policies from the central government as well as the government of Nigeria. The crisis prompted the authorities to take a comprehensive remedial measure to restore the situation. The liquidity injected a guarantee project for depositors as well as the interbank for the foreign credit lines of all banks. Formulation of Asset Management for Nigeria (AMCON) aimed at purchasing the banks as well as non-performing loans substituted by the coupon bonds bringing the capital back to zero. This culminated in abandonment of universal banking and instead establishing holding companies for non-bank activities (Nfa et al, 89). Taxes are part of fiancés for the Nigerian government. The import duty is a necessary consideration in the course of importing products in Nigeria whether as a company or individual. The method of evaluation follows the CIF (overall cost, freight charges and insurance charges). Import duty indicates that goods must have arrived in the port for taxing to take place. In addition, the duty imports must go through the sales taxes and other taxes that are specific certain commodities. The duty taxes of Nigeria vary from 0-35% while the average duty is approximately 16.96 although some products are duty free. The sales Tax goes for 5% of the total sum of the CIF (Manova 730). Foreign exchange controls and regulations help to regulate the financial sector of Nigeria. Under normal circumstances, Nigeria normally runs a free enterprise economy but the government has enhanced significant control. The country’s location makes her control her exchanges keenly because miscalculation may contribute to eventual fall of the economy. Trading of the foreign currency is acceptable although through strict observance of the law to avoid infiltration of foreign currency altering local currency the fact that can culminate in inflation (Manova 732). Problem Solving Approaches In many instances, human beings are faced with problem-solving situation or conflict resolution challenges. Indeed, almost every minute human brain solves problem or initiates a problem-solving mechanism (Jackson 2013). The challenges or conflict may be a mega or minor issue and as such varied approaches are required. For instance, conflict can be exemplified by tribal crashes, religion-based conflict or even land-based conflict (Jackson 2013). In Northern Nigeria, perennial problem of religion-based conflict has persisted where both Muslims and Christian are always at longer-heads. While each conflict/problem requires unique approach mechanisms, all conflict have some common ways of solving them. The first approach to any problem is to understand in details the genesis of the problem. Comprehend the evolution of the problem since it started as well as the outcome of the problem to the parties involved both long-term and short-term (Jackson 2013). In this regard, peace champions in Northern Nigeria have to comprehend the conflicts fully including their causes and the evolutions of the problem. According to Umaru (2013), the major courses of the Muslim and Christian are doctrinal differences, political as well as economical power struggle, and regular defection of members from one religion to the other. Secondly, one needs to research and generate alternative solutions to the problem at hand. In this regard, one conducts research from both the Muslims and the Christians involved in the conflict hence facilitating in formulation of a list of solutions. Thirdly, cost-benefits analysis off every alternative solution is conducted hence the best viable option adopted. Conducting cost-benefit analysis on the different variables may involve studying variable in as a sample and even piloting. Consequently, the best applicable method is adopted and implemented hence solving the problems and in this case the Muslim and Christian conflict in Nigeria (Deutsch, Coleman & Marcus 2011). At implementation stage, monitoring process has to take place so as to ensure set objectives are optimally met as per the set standards. Lastly, the evaluation process is undertaken where the parties involved seek to answer whether they solved the problem sustainably. In this regard, the parties try to comprehend whether the mission and vision of the entire process were achieved according to the set goals and standards (Deutsch, Coleman & Marcus, 2011). Conclusion Nigeria is rich and productive country that can facilitate massive trade to take place. History and geographical endowment increases the prospects of a suitable trade increasing the chances of economic growth. Presence of good rains and oil has made it possible for Nigeria to export agricultural products and oil boosting the economy of the country. The law of the land clears guidelines on economy, finance and investment increasing the chances of foreign investors. Favorable conditions for taxes, terms and common law has created more opportunities for local and foreign investors hence boosting the local and international trade. Works Cited Deutsch, M., Coleman, P. T., & Marcus, E. C. (2011). The Handbook of Conflict Resolution: Theory and Practice. New York, NY: John Wiley & Sons. Lamers, Patrick, "Developments in international solid biofuel trade. An analysis of volumes, policies, and market factors." Renewable and Sustainable Energy Reviews 16.5 (2012): 3176-3199. Madawaki, Abdulkadir. "Adoption of international financial reporting standards in developing countries: The case of Nigeria." International Journal of Business and management 7.3 (2012): p152. Manova, Kalina. "Credit constraints, heterogeneous firms, and international trade." The Review of Economic Studies 80.2 (2013): 711-744. Nayyar, Gaurvika ML, et al. "Poor-quality antimalarial drugs in southeast Asia and sub-Saharan Africa." The Lancet Infectious Diseases 12.6 (2012): 488-496. Nfa, A. T., Taylor, A., & Thomas, C. (Eds.). (2013). Global trade and global social issues. Routledge. Jackson M. R., (2013). Fun Conflict Resolution for the Workplace: SLIMO: Stuff Learning Is Made Of. New York, NY: Publish on Demand Global. Umaru, Thaddeus. (2013). Christian-muslim Dialogue in Northern Nigeria: A Socio-political and Theological Consideration. Xlibris Corp. Zirak, Masoumeh, and Mohsen Mehrara. "Ranking of developing countries Based on the Economic Freedom Index." International Letters of Social and Humanistic Sciences 02 (2013): 32-38. Read More