Examination of the Plight Market in Nigeria - Paper Example

Nigeria for a long time has been known for its strong economic prowess. There is a wide range of economic activities that people do engage inh7gv65f. Because of this, there have been investors from outside the country that have invested in the country. Local investors have also taken advantage of the opportunities that are in Nigeria. This explains why there have been tremendous growths regarding economic development. The government also had put in place various strategies that were aimed to foster economic growth in Nigeria. However, in the recent past, there have been a lot of factors that contributed to plight market in Nigeria. The Nigerian market is not as strong as it used to be because of various factors (Adewumi, 2010). This chapter will examine into details the plight of the Nigerian market and identify the possible roles for 3PLS.

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The Nigerian power sector has contributed largely to the Nigerian market plight. The poor performance of the Nigerian market has been attributed to the controlled power sector that has resulted in frequent blackouts and the unstable electric supply(Ayogu, 1995). This has affected the ordinary Nigerians because of the ineffectiveness of their governments. Despite privatization of the power sector, the situation has not yet improved much. The government subsidies have also not played any big role in trying to end the situation (Fcib, 2013). Currently, the deteriorating state of the income largely because of the collapse of the global oil prices has made the government to have a hard time convincing the frustrated electricity users that they must accept the substantial increases in the energy tariffs in Nigeria so as to achieve a constant, stable, nationwide electricity supply in the country (Bates, 2005). The poor state of the power sector explains why there have been challenges with the Nigerian market. Economic activities rely on power. Power is the driving force that is used to carry nearly all economic activities. Therefore, the constant power blackouts are a major disruption to various economic activities. There are huge losses that are suffered during this time (McCall, 2002). The power blackout also causes a stop to other important economic processes. An increase in the tariffs also discourages the local investors. An increase in the tariffs and the constant blackout is even more devastating. The situation of the power blackout also discourages the investors from outside Nigeria into coming into the country to invest. Also, the local investors have also been discouraged by the situation and have decided to invest in foreign countries. This explains why there has been plight in the Nigerian market. There has been a plea of the investors to other countries where there are favorable investing conditions.

Corruption is also a major factor that has largely contributed to the plight market in Nigeria. The government is trying with always possible to cut down on the level of corruption in Nigeria. A study that was conducted by LEAP Africa showed that more than 84 percent of adult Nigerians believe that the existence of corruption in the country is the cause for the challenges that the Nigerian market is facing (Segun, 2013). The study showed that reasons that have contributed to the higher levels of corruption in Nigeria include the high poverty levels in the country and the weak government institutions (Bob, 2005). Those people that are well connected in the various business industries gain from the anti-competitive practices that protect Nigeria from the market forces. There are various forces that have been put in place to try and eliminate the high levels of corruption. However, the placed forces have done very little to try and eliminate corruption. Corruption is a big obstacle to a free and stable market. It has denied the startup companies to progress and become a stable in the country economy. Through corruption, the Nigerian market has only been favoring the rich people while the poor people continue to suffer in poverty. The rich people demand bribes before they can help. This is creating a culture of corruption in the country whereby only those that can afford the bribe fee are the people that do benefit in the market while the poor ones are forced to remain in the lower levels or work extra had to benefit in the Nigerian market. Because of the rampant corruption, there has been a lot of challenges in the advancement of the Nigerian market (Abatan, 2012). Foreign investors have been discouraged from coming to invest in the country with the fear that they will lose their investment to the corrupt people in the market. Also, some of the local investors that are not favored by the system are forced to look for other countries where they can invest. This means Nigeria is losing some of their stable investors to foreign countries thus weakening their market. When these people are driven off the Nigerian market, the market is left with few investors that are driven by their greedy ambitions. The result is that the plight market in Nigeria increased. This is the current state in Nigeria.

The foreign exchange restrictions have also contributed to the plight market in Nigeria. The Central Bank of Nigeria on May 2016 decided to make a move to a more flexible system though it did not describe into details what this will mean to the citizen and the investors in the Nigeria. The primary goal of the move was to help Nigeria adjust better to the changed market conditions that have been brought about by the significant fall in the international oil prices. When this decision was made in 2016, the Central Bank of Nigeria intensified its interventions in the foreign exchange market with an intention to maintain the value of the naira. In the beginnings of 2015, the CBN stopped auctions of the foreign currencies to foreign exchange suppliers and banks. This led to to a shortage of hard currency and in turn expanded the use of the parallel market whereby the naira currency was trading at a wider range in 2014 as from below 300 Naira dollar to over 350 Naira dollar while the Dollar-naira conversation rate remained at 197 Naira per dollar (Abatan, 2012). This made the CBN in June 2015 to announce that it would not offer foreign exchange at the official rate to pay for the import of the 41 sections of items that the Central Bank of Nigeria showed that can and should be produced locally. Despite the restrictive measures that were put in place, there was still a great fall in the foreign reserves that were placed by the Central Bank of Nigeria. This also explains the plight market in Nigeria.

The local content also has contributed to the plight market in Nigeria. Oil and gas are the major local products for the Nigerian market. The United States businesses have significant concerns about the Nigerian Gas industry and the oil industry Content Development Act of 2010. This legislation required that the preferences should be given to goods and services that are made in Nigeria for all the projects in the gas sector and the Nigerias critical oil (Saint, 2003). The domestic sourcing mandates that were put under the Ct apply to everything from the physical materials that are used in the construction to the financial, telecommunication as well as professional services that are used in the gas and the oil industry (Homaifar, 2008). The companies in the United States have raised concerns that the set conditions and the requirements for a waiver from the domestic content provisions lack full clarity and are subjective (Oladokun, 2015). Questions have been raised concerning the local content provisions in the oil and the gas sector as to whether Nigeria is complying with the World Trade Organization obligations (Mayall, 1976). This is an indication that there are a lot of rifts with issues of compliance to the world standards of trade. This also helps in creating rift. Investors are scared of putting their money in the local industries because of fear that the industries are not complying with the world standards (Aderamo, 2011). Oil and gas production are the main products that Nigeria as a nation produces. Any problem with the production of the two products means that the Nigeria market is at a problem that needs immediately fixing. The oil exports from Nigeria earn the country huge amount of income. All these problems have extended to the Nigerian market and have caused the plight (Sanusi, 2010). The oil and gas industry also have serious concerns for the future potential of the government of Nigeria to trade secrets and protect data because of the localization process that is needed in the disclosure of source code as well as other sensitive design elements as standards of doing the business. These restrictive measures interfere with the global supply chain as well as the flow of data while they increase the intense innovation and costs that is needed to create a globally competitive industry. This explains why most of the United States ICT firms that are operating in Nigeria have pushed back strongly against the numerous measures. Furthermore, the Americans firms have also suggested applying a coordinated approach to revising the local content needs so as to encourage the economic growth. All these are disruptions to the market. This shows that there is rift between the United State businesses and the local authority as well as the domestic businesses. The lack of unity or the disunity among parties have led to plight in the Nigerian market and is impacting it negatively. Investors are also scared away from investing in the country following the set conditions that do not favor foreign investors The conditions are also not too favorable to the local investors. As a result, the economic state of the Nigerian market is continuing to deteriorate and the country is losing its economic prowess. The Nigerian market has also been affected negatively because of the numerous disruptions that are in the agricultural sector. The numerous challenges farmers are facing in the agricultural market have contributed to the plight market in Nigeria.

Limited source of funding is also another factor that has contributed to the plight market in Nigeria. Limited funds are an obstacle to a lot of economic developments that can take place. A huge percentage of the Nigerian citizens are poor and do not have the necessary capital that they may use to start and run their businesses (Chuang, 2013). Real estate is always capital intensive and Nigeria has all the key factors for a lot of real estate investment, rapid urbanization, growth in consumption, the growing middle class population as well as the young demographic compared to the more matures economies. However, financing still remains a problem both for potential home owners and the property developers (Adawo, 2013). Therefore, any potential investor that is thinking of investment property or getting real estate loans for financing a personal home for purchase must still face the issue of insufficient funding at the bottom line of it all. Real estate is just one of the examples where people are struggling financially. This is line with the devaluation of the naira (Tagoe, 2005). The value of naira fell and this disrupted the Nigerian market. The recent devaluation of the naira is a great challenge to the Nigerian market as it affects all spheres of the Nigerian market. The disruptions in the oil and the gas industry have even worsened the condition in Nigeria as other sectors of the Nigerian market are heavily dependent on the industry.. The devaluation of naira led to increase in the prices of a lot of commodities (Olugbenga, 2013). This also helped in destabilizing the state of the Nigerian market.

The high taxation for both the local and the foreign industries have contributed to the plight market in Nigeria. People are discouraged running th...