The Influence of Multinational Companies in the Economic Development of Nigeria

The Influence of Multinational Companies in the Economic Development of Nigeria

Much have been said and written about the activities of multinational companies in developing countries. But not many of such literatures however focused squarely on the very subject, which this study intends to examine. The researcher consulted previous work related to this subject and their fact were analyzed and re-interpreted. Ideas and opinion already expressed by various scholars were also taken into considerations. In view of this, a proper review of previous literatures of this research becomes highly desirable.

The awareness and controversy generated by the activities of multinational corporations appears to have been deduced for and against their operation. Quite a good number of works have been produced by scholars in both developed and developing countries of the world in an attempt to explain the operations of the multinational corporations. Their operations have been viewed and analyzed differently depending on the approach adopted and the social and political background of these scholars.

In addition, there are divided opinions on the need for multination in the developing countries in which Nigeria belong. These divided opinions made up the two major conflicting schools of thought. The first is the radical thinkers who are of the Marxist socialist orientation and the second one are the orthodox thinkers who are considered to be conservative and of capitalist inclinations. In between these two groups, are the moderate’s schools of thought who are neither too radical in their thinking nor too conservative? It is on the basis of these three diverse groups that the related literature on the activities of the multinational corporations is reviewed.


According to Waish L.D. (1981) A multinational company is defined as a company:

  1. Which has a direct investment base in several countries.
  2. Which generally derives 20-50 percent or more of its net profit from foreign operations and
  • Who management makes policy decision based on the alternatives available anywhere in the world.

From the above singular definition, the following points can be analyzed, that a multinational enterprise is an enterprise with a global outlook including direct investments in many countries. The investment could be in goods or in services. The philosophy must have a worldwide approach with global congratulation of both domestic and foreign operations.



The radical school of thoughts is made up of the following scholars Claude Ake, Arthur Nwankwo, Hugo Radice, Ikenna Nzimiro, Joan Edelman Spero, Bade Onimode and Daniel Offiong. This person sees the activities of the multinationals with a clash of cynicism. They argued that the multinational company takes advantage of their business experience and monopoly power to drain resources from the developing countries. They maintained that the fact that the multinationals are increasingly investing the labour intensive activities such as assembling, or the production of spare parts or in brewery industry does not mean that the developing countries are getting a good deal. Arthur Nwankwo in his book titled can Nigeria survives Foreign Monopolies adversely initiate against all efforts by developing countries to achieve take-off into substantial growth.

He further argued that the capital investment in both the extractive, distributives and the brewery industries by the MNCS in the developing societies does not at the end contribute in anyway to the development of the host countries. The reason for this is party because very little is invested in brewery industries. Productive industries and largely because the lion’s share of the economic surplus generate from the countries of the monopolies productive industries.

The radical thinkers believed that one of the roots causes of the continued economic backwardness and poverty of most third world countries is the over prolonged sojourn of multinationals and the inability of these countries to domesticate the MNCs to stop their exploitation activities. On the claim that the multinationals are agents of technology transfer, the radical thinker counter it by pointing out that the technology transferred by the multinational Company (MNCS) are substandard to the economy of their host countries. Wayne Nafriger in his book African Capitalism a case study in Nigeria Entrepreneurs (1977) maintains that multinationals restrict the use of technology and output in Nigeria and other less developed countries by banning exports, limiting technology to the period of agreement, preventing modification of technology, and requiring purchase of intermediates inputs into the technology from the foreign company’s country. He added that the MNCs forbid their employees in the branches from transferring techniques and information to other enterprises in the same host countries. These type of restrictions decreases the contributions of foreign firms to the transfer of industrial technology in Nigeria.

On the same line of thought, carence zuveska in his book economic development an introduction (1979) says that, the multinational corporations may utilize capital, intensive technologies inappropriate to the host countries factor proportions. “He argued that these technologies evolved in the face of labour scarcity in the developed countries and that MNCS only transfer ill adapted countries which have a good stock of labour”.

Moved by the exploitative practices of the multinationals, Bode Onimolde in his book titled imperialism and underdevelopment in Nigeria (1983) regrets that unfortunately the patronage of imperialist investors that was sough in order to transfer technology has turned out to be a miserable disappointment. Although George Peninou agrees that multinational enterprises dominants the entire sectors of the economy and work in specialize ways. He however warned in his book titled who is afraid of the multinational (1978) that close down by these companies may throw many people into the ocean of unemployment. He generalized his argument by saying that multinationals are little less than heralds of company) economic (the strangling of small business, the monopolizing of whole industries and the destruction of free competition financial the switching of capital and inflation, political (the pressuring of governments or culturally) (the destruction of the traditional social frame work in the countries of the third world).

Penmou therefore sees the multinationals as evil genius, which could eventually extend itself over the world economy, its nations and its daily life. He maintained that they can close down or cease operations in a particular country at any time without thinking of the implications of their actions.

Professor Ikenna Nzimiro writing on the distortation of investment patterns of new dependent economy by the MNCs says that they shift from the industrial foundations of the country under exploitation to the Benefits Corporation achieves to themselves. Their investment pattern according to him shifts drastically to the area that would be more rewarding to them and not to the benefits of the host country itself. The radical thinkers also condemn the involvement of the multinational in the politics of their host countries. They claimed that the senior management positions in the MNCs are dominated by politicians and that politics plays a pertinent role in the strategy.


The scholars of this group are made up of Professor Authur Lewis, A. N. Haken etc. These groups claimed that the activities of the multinationals are beneficial to the developing countries maintaining that they are agents of development.

However, they further claim that the attractiveness of the multinationals to developing countries is that there are convenient ways to help fill the gap between the domestic savings rate and the investment rate deemed necessary for the achievement of national economic goals. They therefore suggest that unless the government itself is willing to assume the entrepreneurs role, for these priority industries to be established in the short run. The orthodox thinkers even asked for the MNCs to be commended, claiming that by investing in developing countries, the multinationals run some risks since the firms have to access the country concerned, both in political and economic development of the host countries.

In this connections A.N. Hakan (1966) says that there are other risks, which such corporations faced when, include termination of concessions by the host governments, imposition of heavier royalties, taxes and nationalization of all parts of its investments. To them, they believed that the nation gains positively from the activities of the multinational companies by stimulating indigenous entrepreneurship through local sub contacting or demonstration effect.



This people stand in between the radical thinkers and the orthodox thinkers. They first evaluate the views of both extreme schools of though and try to reconcile the negative and positive effects of the corporations. They believe that those who argued against the activities of the multinationals are often motivated more by the sense of the importance of national control over domestic economic activities and minimization of the dominance dependence relationship between powerful multinational and third world government. These people according to the moderate’s thinkers see these giants’ corporations not as needed agents of economic change but more vehicle of anti-development. The moderate schools maintain that although it is true that MNCs reinforces dualistic in-equalities with their wrong products and in-appropriate technology and that though some opponents call for outright confiscation (without compensation of foreign owned enterprises. It should be remembered that these MNCs stimulate economic growth and development in a way their host country could not have if it were left alone.

The researcher’s study of Guinness Plc as an example of multinational corporations in Nigeria will certainly profit from the above works. They seem to be no study specifically on this corporation.

To sum up this literature review, the views of the moderates group is therefore seem to hold a more useful promise for objectives and balanced assessment of the role of MNCs in developing countries. The lack of literature in Guinness Plc Benin City which is the main region of the study is a setback but the information on multinational companies in general can be an attractive compensation.


We shall look at the economic consequences or effect of the activities of these foreign firms critically examining how they have helped to solved the problem of unemployment, their role in the transfer of technology, balance of payment problems and finally how they have helped Nigeria to overcome the problem of hunger and mass poverty.

  1. EMPLOYMENT GENERATION: The multinational have employed so many Nigerians in their organization, thereby reducing unemployment problem in the country. They have equally contributed to the promotion of most business activities. This is so because all most every shop in this country sell their products. This will help to create self-employment.
  2. EDUCATION: Apart from assisting tertiary institutions in the country financially, the multinational such as Nigeria Breweries Oil Companies, Nigerian Bottling Company etc offers scholarships to our deserving sons and daughters in their various disciplines of higher institutions of learning.
  3. HEALTH: The multinational companies do not only take care of their employees families and even relations. Above all, they help in establishing hospitals and clinics in Nigeria for example, Guinness Plc. Constructed an eye clinic with N250,00 and handed it over to the then Anambra State Government.
  4. SKILLS DEVELOPMENT: Many Nigerians have been trained in their various skills both in technical and managerial profession by the multinationals. Many after being trained worked for some time with their companies, left to the classrooms in our universities thus putting practical experiences into our students.
  5. SOCIAL RESPONSIBILITIES: Multinational always put something back into the society as reward for purchasing their products through activities such as becoming leaders in the crusade for environmental protection. They have helped in the building of primary secondary schools, hospitals and the rest of others.
  6. TRANSFERS OF TENCHNOLOGY: The transfer of technology to Nigeria by MNCS can be evaluated in terms of availability of personnel who imbibe this technology write it down, interpret it, and apply it. According to Nwankwo (1931: 64) “Without people who can interpret and apply technology, replace it and improve upon it, any technology supplied is incomplete”.


The multinational corporations through nefarious activities contribute to our negative balance of payments problems. They perpetuated this act through the repatriation of profits to their parent companies in Metropolitan Europe and America. Most of these firms indulge in the practice or act of tax evasion and this means a great loss to the government revenue.


Okafor (1990) says that the economic basis determine the super structure which in turn exercises influence on the former”. Invariably, political independence without economic freedom is useless and he who controls the political process. In the case of Nigeria, the political process. Foreigners are known to be involved in explaining and interpreting the Nigeria politics on tribal terms for example, the British high commission to Nigeria in 1966 and the American Ambassador were instrumental to the coming to power of General Gowon in August 1966, states Kindleberger (1969).

Again, it was a widely view that the foreign companies where involved in the abortive coup of February 13, 1976, that ousted General Murtala Mohammed, regime revealed by Krishnamurti (1973).

Above all, the MNCS also act as cover for foreign intelligent agents. They also finance the activities of foreign mercenaries with their host state, especially where there interest are threatened.

This article was extracted from a Project Research Work Topic



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