CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

Before Nigeria's independence, little or no manufacturing took place in the country. The role that the colonial authorities envisaged for their colonies was that of producers of raw materials and consumers of finished products, and scholars of the period argue that the colonial process made the industrialization of Nigeria as a colony practically impossible. Planned industrial development began in earnest only after independence, with the First National Development Plan (1962–1968), which embraced import-substituting industrialization (Chete, Adeoti, Adeyinka & Ogundele, 2014). Economic activity changed as power shifted from the colonial authorities to Nigerians, and the Indigenisation Policy of 1972 was a central expression of that shift.

In order to consolidate its political position, the Nigerian government began to encourage individuals to establish industries, mainly for import substitution (Otoghile & Ebomoyi, 2016). Manufacturing firms were set up by private individuals to produce goods and services such as processed foods, agro-allied products, chemicals, pharmaceuticals and petrochemicals.

Owing to government encouragement of indigenization, more businesses were established from 1972 onwards. Because of the vital roles that business plays in an economy, more manufacturing and multinational companies were also established to stimulate economic activity and to develop the economy as a whole. Even before independence, most of the manufacturing firms operating in the Nigerian economy were largely owned by foreigners. The 1972 decree sought to transfer control of small-scale industries and services to Nigerian entrepreneurs, to reduce profit repatriation by foreign investors and to raise Nigerian participation in the production of intermediate capital goods (Onuegbu & Aniefiok, 2016). The Act was later amended and replaced by the Nigerian Enterprises Promotion Act of 1977 (Chete et al., 2014). With indigenization, Nigerians took greater interest in the establishment and operation of businesses, although many business owners and manufacturers became profit-conscious rather than consumer-conscious.

In fact, almost everybody wants to make money fast and become a millionaire overnight. This ambition has led many manufacturers to produce low-standard products that are detrimental to the health of the general public, and many products are below standard and at times fail to achieve the objectives for which they were produced. Recent editorials and enforcement reports show that the problem persists, with counterfeit and substandard goods now sometimes produced inside the country itself (Leadership Editorial, 2026; ThisDay, 2022). Because of the value that many Nigerians attach to money, they often do not care how wealth is acquired, which is why some people turn to swindling, duping unsuspecting business people and innocent members of the public. Instead of causing more harm to the Nigerian economy, such people should have gone into the production of goods and services, which would improve the economy, conserve dwindling foreign exchange, generate employment for school leavers and university graduates, and earn some foreign exchange.

A developing country needs multinational companies for a few specific reasons, and their contributions in an economy such as Nigeria's may be described as follows: health, employment, education, creation of industries, skills development, social responsibility and similar benefits. Companies such as UAC Foods Plc, Guinness, SmithKline Beecham and M&B have, through these provisions, contributed to the development of the economy. Multinational companies such as the United Africa Company were already prominent in Nigeria during the colonial era (Onuegbu & Aniefiok, 2016).

On the other hand, much harm has been done to the development of the Nigerian economy, and there are loopholes in total development. Businesses have not performed as expected. This study proceeds from the premise that the two case organizations, Sunrise Flour Mills and UAC Foods Plc in Enugu State, may not differ from this general pattern in the management of resources, and it tests that premise rather than assuming it.

Because of the damage that many businesses have caused to the economy of a developing country, government has embarked on the regulation and control of business, in order to raise productivity and to make a positive impact on the economy. The Standards Organisation of Nigeria Act 2015 empowers SON officers to inspect, seize, seal and destroy substandard manufactured items, while the Federal Competition and Consumer Protection Act 2018 protects consumers from deceptive sales practices, false trade descriptions and hazardous products (Mondaq, 2026). Government has also reformed ownership through the Privatization and Commercialization Act of 1988 and the Bureau of Public Enterprises Act of 1993, which defined privatization as the relinquishment of part or all of the equity and other interests that the federal government holds in enterprises (Ehiorobo, 2018). The outcomes of these reforms are mixed: privatization has reduced the public sector, but the effectiveness of privatized enterprises is still questioned (Okolie & Udom, 2023).

1.2 Statement of the Problem

The performance of business organizations in Enugu State is a major source of concern and worry to all well-meaning citizens of the state, and even to the state government. Most business organizations in Enugu State are equipped with large numbers of workers, materials and other resources to manage.

In spite of government regulation and control aimed at putting these businesses on a sound footing, the managements of these organizations have proved to be inefficient, ineffective and not result-oriented. Even government-owned industries have performed woefully. Reviews of privatization in Nigeria similarly note that public enterprises were established to drive development yet have often performed poorly (Okolie & Udom, 2023; Ehiorobo, 2018).

Looking closely at this statement, we can deduce that Nigeria is endowed with many natural resources, too numerous to mention. In spite of this endowment, mismanagement, lack of direction and misappropriation, among other factors, work against the development of the Nigerian economy.

The researcher will, however, go further and add other factors, namely the government regulation and control imposed on these business organizations, which have proved to be an impediment to their profitability. These regulations and controls include the appointment of unskilled and/or untrained staff to these businesses.

1.3 Purpose of the Study

The broad purpose of the research is to study government regulation and control of business in a developing economy. The specific purposes are to find out:

(i) the reason why government regulates and controls business organizations in a developing economy;

(ii) the tools used by government for effective and efficient regulation and control; and

(iii) how government regulates Sunrise Flour Mills Ltd and UAC Foods Plc.

1.4 Scope of the Study

The research topic spans businesses in the Nigerian developing economy, but the researcher covers only two business organizations in Enugu State, Sunrise Flour Mills Ltd and UAC Foods Plc.

Normally, a study of this nature would require a random sample drawn from a large population to validate the initial postulation that most business organizations in Nigeria perform below expectation. The research does not ignore this requirement, but it regards the concentration on Enugu State as not undermining the validity of the generalization, because it has become an accepted observation that most business organizations perform poorly. For this reason, the researcher believes that what obtains in one setting is likely to obtain in comparable ones. The findings in these business organizations are therefore expected to be applicable to other business organizations in the Nigerian economy, although this assumption is itself a limitation of a two-firm case study.

1.5 Research Questions

1. Does any factor constitute the major problem of the business organization?
2. What are the factors responsible for the poor performance of the business organization?
3. Does the organization have a performance rating?

1.6 Research Hypotheses

H01: Government regulation is contrary to the private objective of the business.

H02: Government law affects business operations adversely.

1.7 Significance of the Study

It is worth noting that today is a review of yesterday and the basis for future plans of action. That the Nigerian economy is at a stage of development today is evidence that the economy will develop and appreciate to the benefit of all. This research study is therefore relevant, first, to the various sectors of the economy. It is equally relevant to the policy-making bodies of government, since government is itself a participant in some businesses in the economy.

It is hoped that the study will benefit the top management of these business organizations by reviewing their whole operations, and will provide a kind of checklist for efficient business management for the academic community and Nigerian society. The study will also serve to arouse deeper and genuine interest in the subject matter for further research aimed at eliminating these undesirable situations from our system. It is by deliberate action that the study intends to contribute towards improving the quality of business administration and management in Nigeria and, in particular, in Enugu State.

1.8 Definition of Terms

Government: The body of persons governing a state.

Business: An economic activity involving the production of goods and services for the satisfaction of mankind.

Capacity Building: The ability of an entity to perform through the strengthening of institutions, systems and procedures, and through an extensive system of training for the planning, coordination and utilization of resources.

Commercial Bank: A privately owned bank that receives deposits and makes loans through a large number of branches. In Nigeria, commercial banks are concerned mainly with receiving deposits and making short-term loans to private individuals, companies and other organizations.

Commercialization: The reorganization of government-owned firms so that they operate as profit-making commercial ventures, like privately owned firms, without receiving subventions from government. Such firms charge fees for their services even though they remain government-owned.

Delegation of Authority: The assignment of the right to use power, and of responsibility, to another person for the carrying out of specific activities in organizations.

Deregulation: The lifting of restrictions on business, industry and other professional activities for which government rules were established and bureaucracies created to administer. This is the idea behind the privatization of state-owned business organizations.

Development: Growth and increase in the productive capacity of society. It is a rapid and sustained rise in real output per head, with corresponding advances in the technological, economic and demographic characteristics of society. It is also known as economic development.

Development Banks: Banks that encourage capital investment for the reconstruction and development of communities, either by channelling the necessary funds or by making loans from their own resources.

Economic Growth: The steady process of increasing the productive capacity of the economy and hence of increasing national income.

Infrastructural Facilities: The underlying capital of a society, embodied in roads and other transportation and communications systems, as well as water supplies, electric power and overhead capital. The term is often widened to include the health, skills, education and other qualities of the population.

Privatization: The transfer of government-owned shareholding in selected companies to private shareholders, who may be individuals or corporate bodies. The Bureau of Public Enterprises Act of 1993 defines it as the relinquishment of part or all of the equity and other interests held by the federal government or any of its agencies in enterprises (Ehiorobo, 2018).

Regulations: The most detailed form of economic plan for a country, as well as the rule-making process of those administrative agencies charged with the official interpretation of a statute.

Small and Medium Enterprises: Enterprises classified by size. Under an earlier scheme, they were enterprises with fixed assets ranging from a minimum of N400,000 to a maximum of N20 million, and enterprises whose fixed assets exceeded N10 million were considered large-scale. Under the current SMEDAN National Policy on MSMEs, small enterprises employ 10 to 49 people and have total assets of at least N5 million but below N50 million, while medium enterprises employ 50 to 199 people and have total assets of at least N50 million but below N500 million (PwC Nigeria, 2020).

REFERENCES

Chete, L. N., Adeoti, J. O., Adeyinka, F. M., & Ogundele, O. (2014). Industrial development and growth in Nigeria: Lessons and challenges (Learning to Compete Working Paper No. 8). Brookings Institution.

Ehiorobo, O. A. (2018). Privatization of public enterprises in Nigeria: Recipe for sleaze or national development? Academic Journal of Economic Studies, 4(1), 68–73.

Leadership Editorial. (2026). Menace of fake products. Leadership. https://leadership.ng/menace-of-fake-products/

Mondaq. (2026). Fake products in Nigeria: Legal remedies, civil actions, and brand protection strategies. https://www.mondaq.com/nigeria/trademark/1851114/fake-products-in-nigeria-legal-remedies-civil-actions-and-brand-protection-strategies

Okolie, U. C., & Udom, I. D. (2023). Privatization policy and public service delivery in Nigeria. Manajerial: Jurnal Manajemen dan Sistem Informasi, 22(1), 83–110.

Onuegbu, F. C., & Aniefiok, I. H. (2016). Indigenisation of Nigeria's economy: Appraising the Second and Third National Development Plans, 1970–1980. International Journal of Academic Studies.

Otoghile, A., & Ebomoyi, I. (2016). Crisis of industrialization in Nigeria. Research on Humanities and Social Sciences, 6(8), 111–.

PwC Nigeria. (2020). PwC MSME survey 2020. PricewaterhouseCoopers. https://www.pwc.com/ng/en/assets/pdf/pwc-msme-survey-2020.pdf

ThisDay. (2022, November 3). Fake and substandard products. ThisDay. https://thisdaylive.com/index.php/2022/11/03/fake-and-substandard-products