Commerce SS 3

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Theme 1       Business Capital and Customer Services      

  1. Capital
  2. Credit
  3. Profit
  4. Turnover

Theme 2       Establishment and Management of Business         

  1. Business Law
  2. Structure of Business
  3. Introduction to Business Management
  4. Introduction to Marketing
  5. Consumer Protection
  6. Business Documents
  7. Commercialization
  8. Privatization
  9. Deregulation

Theme 3       Capital Market      

  1. History of the Nigerian Capital market
  2. Stock Exchange (SE)
  3. Second Tier Securities Market (SSM)

Theme 4       Economic Groupings in West Africa   

  1. Economic Groupings In West Africa




Theme 1  Business Capital and Customer Services


The term “capital” has different meanings and implications depending on the context in which it is used, such as economics, accounting, and in everyday language.

  1. Economics Definition:

In economics, “capital” refers to the assets, resources, or financial wealth that can be used to generate income or production. It can be broadly categorized into three main types:

  1. Physical Capital: This includes tangible assets like machinery, equipment, factories, and infrastructure that are used in production processes.
  2. Human Capital: This refers to the skills, knowledge, education, and expertise of individuals that contribute to their productivity and earning potential.
  3. Financial Capital: This involves money, funds, or investments that are used to support business operations, make investments, or generate returns.

In the context of economics, capital is a critical factor in economic growth and development.

  1. Accounting Definition:

In accounting, “capital” is generally used to refer to the financial value invested in a business by its owners or shareholders. It is also known as “equity” or “owner’s equity.” It represents the difference between a company’s assets (what it owns) and its liabilities (what it owes). In simpler terms, it’s the residual interest in the assets of the company after deducting its liabilities. It’s essential for determining the financial health and net worth of a business.

  1. Layman’s Definition:

Capital in business refers to all the assets and property of a firm.



  1. FIXED CAPITAL: This category pertains to the tangible assets owned by a company that are consistently utilized in its income-generating operations. Examples include buildings, machinery, fixtures, and fittings.
  2. CIRCULATING OR FLOATING CAPITAL: This form of capital is essential for ongoing production and continually shifts as the business functions. It encompasses resources like raw materials and finished goods (such as stock, cash, and debtors).
  3. LIQUID CAPITAL: Liquid capital comprises the immediate cash, debtors, and bank balances held by a firm. These assets are considered liquid because of their ease of conversion into cash.
  4. WORKING CAPITAL: Working capital is calculated by deducting current liabilities from current assets. It signifies the surplus of resources available for day-to-day operations.
  5. CAPITAL EMPLOYED: This denomination represents the capital infused into the business by the proprietor(s). It can be determined by subtracting current liabilities from total assets.
  6. OWNERS’ EQUITY, NET WORTH, or OWNED CAPITAL: This term designates the surplus resulting from the subtraction of total assets from liabilities—specifically, the excess of combined fixed and current assets over the entirety of liabilities, encompassing both long-term and current liabilities.
  7. LOAN CAPITAL or BORROWED CAPITAL: This category pertains to liabilities of a long-term nature. For instance, it includes debenture stocks and long-term loans from banks that are repayable beyond the span of one year.
  8. RESERVE CAPITAL: This constitutes the segment of the issued capital that has not yet been called upon. It is alternatively recognized as uncalled capital. The formula for Reserve Capital is Issued Capital minus Paid-Up Capital.
  9. NOMINAL or AUTHORIZED CAPITAL: This denotes the upper limit of capital that a company is legally sanctioned to raise, as indicated in its Memorandum of Association. It is also referred to as nominal capital or registered capital.
  10. ISSUED CAPITAL: This represents the proportion of the authorized capital that has been allocated to shareholders through subscriptions. It may equal or be less than the authorized capital.
  11. CALLED-UP CAPITAL: This signifies the section of the issued capital that shareholders have been obligated to pay up to the present date. For instance, if a company has issued shares totalling N115,000 from an authorized capital of N200,000, and shareholders have been summoned to pay N0.60 for each share out of the N1 due per share, the called-up capital would amount to N90,000, leaving an uncalled capital of N60,000.
  12. PAID-UP CAPITAL: This corresponds to the portion of the called-up capital that shareholders have actually remitted. It denotes the sum physically received in cash by the company in response to the payment call. For instance, from the called-up capital of =N=90,000, the actual amount paid by shareholders might be =N=87,000.
  13. UNCALLED CAPITAL: This encompasses the complete amount yet to be invoked from the issued capital. It signifies the difference between the called-up capital and the issued capital. This component may be solicited in the future when additional capital becomes necessary.
  14. CALLS IN ARREARS: This encapsulates the variance between the called-up capital and the paid-up capital. It represents the section of the called-up capital that remains unpaid by shareholders even after the call for payment has been initiated.
  15. CALLS PAID IN ADVANCE: This constitutes funds received before the official issuance of payment calls—essentially, sums collected by the company prior to requesting payments from shareholders.



  1. Working capital helps to determine the liquidity position of an organization.
  2. It determines the fund available for the day-to-day running of the business.
  3. Since it is used to purchase stock for sale more working capital indicates higher profit.
  4. It checks against the tying down of capital.
  5. It is used to determine the solvency of the organization.
  6. It indicates that the organization is not relying on finances from suppliers.




  1. Credit

Credit refers to the arrangement allowing a customer to obtain goods or services without immediate payment, relying on the belief that payment will be made in the future. Credit materializes when a seller authorizes a buyer to possess and utilize a product, with the expectation of eventual payment. This process involves the transfer of goods and services from the seller to the buyer for utilization without an immediate exchange of value.


Basis for credit:

Before granting credit, the following considerations are crucial:

  1. Payment sources
  2. Buyer’s income
  3. Personal integrity
  4. Payment timeframe
  5. Present employment status


Benefits of credit-based sales:

The advantages of selling on credit encompass:

  1. Promotion of bulk purchases: Credit stimulates customers to acquire larger quantities compared to their original intentions.
  2. Access to goods without upfront payment: Customers can own and enjoy goods without an immediate monetary exchange.
  3. Enhanced living standards: Credit sales enable buyers to afford items they initially deemed unattainable.
  4. Addressing temporary cash needs: Credit serves as a solution for short-term cash requirements, allowing buyers to allocate available funds elsewhere.
  5. Potential improvement of quality of life: For instance, credit is frequently used to purchase homes, making it possible to pay for items through installments.


Drawbacks of credit-based sales:

There are several disadvantages associated with credit sales:

  1. Potential for excessive purchasing: Credit sales may tempt customers to surpass their intended purchases.
  2. Price inflation: Buying on credit can result in sellers adding extra charges, leading to higher prices.
  3. Capital immobilization: Selling on credit might tie up the seller’s capital in customers’ hands, potentially impacting business operations.
  4. Non-payment issues: Some buyers struggle to repay their credit purchases.
  5. Increased record-keeping demands: Credit sales require meticulous record-keeping of both sales and cash transactions.
  6. Legal actions possible: Unpaid credit can lead to legal actions if the buyer refuses to pay.


Types of credit sales:

There are different categories of credit sales, including:

  1. Hire purchase: Hire purchase involves the buyer having possession and use of goods while the owner retains ownership until the final payment.


Characteristics of hire purchase:

  1. Involves hire charges
  2. Suitable for durable items
  3. Requires documentation
  4. Clearly states cash and hire purchase prices
  5. Seller can reclaim goods if the buyer defaults
  6. Ownership transfers only after the final instalment payment.


Advantages of hire purchase for the seller:

  1. Accelerated turnover rate
  2. Increased profitability through higher goods pricing
  3. Facilitated promotion of durable products
  4. Encouragement of large-scale production


Disadvantages of hire purchase for the seller encompass:

  1. Possibility of legal actions
  2. Challenge in reselling repossessed goods
  3. Capital immobilization potential
  4. Risk of customers defaulting, leading to bad debts



A mortgage is a credit system in which building societies or mortgage banks assist individuals in purchasing property or houses by lending them a portion of the purchase price.


Key aspects (features) of a mortgage

  1. The property serves as collateral security.
  2. Interest is paid by the borrower (mortgagor).
  3. The lender is referred to as the mortgagee.




  1. Loan and Overdraft:

Loan refers to borrowed money from financial institutions or individuals, repaid over an agreed period at a set interest rate. An overdraft is a type of credit provided by banks, permitting customers to withdraw more than the funds available in their accounts.

1. Book-me-down:

  1. Common among low-income earners, particularly in underdeveloped countries like Nigeria, book-me-down entails purchasing goods on credit and recording names. Payment is often made at the end of the month after receiving a salary.

2. Leasing:

  1. Leasing involves a property owner granting exclusive possession to another for a fixed period in return for regular payments. For example, leasing houses.

3. Factoring:

  1. Factoring involves selling trade debts to a factoring firm (bank) for immediate cash at a lower amount than the actual debt value. It pertains to purchasing and collecting accounts receivable or advancing cash based on accounts receivable.

4. Budget Account:

  1. A budget account operates in departmental stores, where customers commit to monthly payments, enabling credit up to eight times that amount. Features of a budget account include its prevalence in advanced countries, limited shopping options, and popularity among high-income earners.

5. Conditional Credit Sales:

6. Trading Cheque or Voucher:

7. Finance House:

8. Club Trading: Club Trading is a credit arrangement in which certain entities establish clubs to gather regular contributions from participants. These pooled funds can then be withdrawn at intervals to facilitate purchases at various stores.

9. Deferred Payment: Deferred Payment refers to a credit mechanism in which ownership and possession promptly transfer from the seller to the buyer upon an initial down payment. The remaining balance is settled at a later point. In this setup, if the buyer defaults on payment, the seller’s recourse is through legal action rather than reclaiming the goods directly.


Similarities between hire purchase and deferred payment

  1. Involvement of durable goods in both hire purchase and deferred payment.
  2. Requirement of an initial deposit in both systems.
  3. Incorporation of installment-based payments and credit options.
  4. Allowance for the hirer or buyer to utilize and enjoy the goods before full payment.
  5. Assurance that the buyer gains possession of the goods in both credit methods.


Differences between Hire purchase and deferred payment

| Aspect               | Hire Purchase                  | Deferred Payment               |
| 1. Pricing            | Higher price charged           | Lower price charged            |
| 2. Goods              | Goods are on hire               | Goods are sold                  |
| 3. Favorability       | Favors the seller               | Favors the buyer                |
| 4. Repossession       | Seller can repossess goods      | Seller cannot repossess goods   |
| 5. Goods Durability   | Involves durable goods          | Involves less durable goods     |



In a lease arrangement, one party (lessee) is granted the privilege of utilizing an item and concurrently makes periodic payments (rentals) to the owner (lessor). Two primary types of leases exist:

  1. Finance Lease: In this type, ownership of the asset is handed over to the lessee at the conclusion of the lease term.
  2. Operating Lease: In this variation, the asset continues to be the property of the lessor even after the lease agreement concludes.

Rental and lease bear resemblance, albeit rentals typically encompass brief durations, while leases extend over longer periods.



Credit instruments are written documents utilized for extending credit or effecting repayments in credit-related transactions. They encompass various forms such as:

  1. Bill of exchange
  2. Money order
  3. Bank drafts
  4. Cheques
  5. Promissory Notes
  6. Credit Cards
  7. Letter of Credit
  8. Debentures
  9. Bonds
  10. I. O. U




  1. Profit

Profit refers to the financial gain or positive difference between the revenue generated from a business’s activities and the expenses incurred in running that business. It is essentially the amount left over after deducting all costs and expenditures from the total revenue. Profit is a key indicator of a business’s financial performance and success, as it reflects the ability of the business to generate more income than it spends to operate.


Types of profit:

  1. Gross Profit: This is calculated by subtracting the cost of goods sold (COGS) from the total revenue. COGS includes all the direct costs associated with producing or acquiring the goods that were sold. Gross profit provides insight into a business’s ability to produce goods efficiently and manage production costs.

   Gross Profit = Total Revenue – Cost of Goods Sold


  1. Net Profit: Also known as the “bottom line” or “net income,” net profit takes into account all expenses, both direct and indirect, associated with operating the business. This includes operating expenses such as salaries, rent, utilities, marketing, and other overhead costs. Net profit provides a more comprehensive view of a business’s overall profitability.

   Net Profit = Total Revenue – Total Expenses


Both gross profit and net profit are crucial measures for assessing the financial health of a business. High profits indicate that a business is generating healthy revenue and managing its costs effectively, while low or negative profits can signal potential financial issues and the need for improvements in operations, pricing, or cost management.




  1. Turnover

This refers to the total net sales during a period.  The turnover is variously referred to as the stock turn, sales turnover or stock turnover.


THE RATE OF TURNOVER (or Rate of Stock – turn)

This refers to the number of times average stock is sold during a given period, usually a year.

It is calculated by dwindling the cost of goods sold by average stock.  This means that to find the rate of turnover first, the cost of goods sold must be calculated thus:

COST OF GOODS SOLD                                       N

Opening Stock                                                5,000

Add purchases                                               35,000


less: Closing stock                                          8,000

COST OF GOODS SOLD                                  32,000



COST OF GOODS SOLD:                                          N

Sales                                                                            50,000

Less: Gross profit                                                      18,000


Secondly, the average stock must be calculated thus:



=          5000 + 8000      =   13000  =  N 6,500

                     2                         2



Finally, find the rate of turnover:

Rate of Turnover =   Cost of goods sold

                                       Average Stock

=          32,000




The number of times a trader buys goods and resells them determines the size of his gross profit.  In other words, a trader’s gross profit can be increased by boosting his rate of turnover.  The various measures to be applied to increase the rate of turnover of a business can be inferred by considering the following factors which affect the rate of turnover.

  1. Nature of the product.
  2. Advertisement and Sales Promotion
  3. Location of the business.
  4. Goodwill or reputation of the seller
  5. Prices
  6. Wide variety of products offered for sale
  7. Reliability and frequency of supply
  8. Credit facilities.
  9. Application of modern sales techniques e.g. self services that encourage impulse buying




Theme 2  Establishment and Management of Business

  1. Business Law

Business law encompasses all aspects of legal regulations governing business transactions. Business laws consist of a set of rules that oversee business transactions. These rules pertain to the functioning of business activities.


Categories of Commercial Law.

The different branches of commercial law include:

  1. Law of Contract.
  2. Agency
  3. Sales of goods.
  4. Law of Employment.
  5. Hire purchase.
  6. Guarantee
  7. Lien
  8. Pledge
  9. Bankruptcy



A contract is a legally binding arrangement that imposes rights and obligations on parties and is enforceable through legal action. It involves promises, and the law provides remedies for breaches and recognizes the performance of these promises. An agreement necessitates at least two parties, an offeror who makes a proposal, and an offeree who accepts the proposal.


In simple terms, a contract is an agreement that holds legal enforceability.

A contract can be broadly defined as an agreement between parties that establishes enforceable rights and obligations.

The foundation of all contracts is an agreement, a shared “ad-Idem,” signifying the convergence of two parties with mutual intent. However, it should be noted that not every agreement qualifies as a contract. For instance, an agreement to borrow a friend’s new TV game for the weekend does not create a contract as it lacks the intention to create a legal obligation.



Contracts can be classified into two types:

  1. Specialty contract or contract of the deed.

A speciality contract is formal, signed, sealed, and delivered by one party to another. Some contracts require a seal, such as property transfer or conveyance and contracts without consideration.


Essential elements of a Deed:

  1. Writing
  2. Signature
  3. Seal
  4. Delivery


  1. Simple Contracts:

These contracts require consideration and possess characteristics like offer and acceptance, intention to create legal relations, valuable consideration, etc. They do not require a seal as mandated by the law.



The following attributes define a valid contract:

  1. Offer and acceptance.
  2. Capacity of contracting parties.
  3. Intention to create legal relations.
  4. Genuine consent of the parties.
  5. Lawful objectives.
  6. Feasibility of performance.
  7. Clear and definite terms of agreement.



One party, the offeror, extends an offer that the other party, the offeree, accepts unconditionally. Acceptance is final and unambiguous assent to the terms of the offer. An offer signifies a willingness to be bound by specific terms and can be converted into a contract through acceptance.



A contract requires valuable consideration, ensuring a balanced exchange between parties. Consideration often involves the payment of money and represents the element of exchange in a bargain.



For an agreement to be a binding contract, parties must intend to create legal obligations.

CASE: Merrit Vs. Merrit. A man agreed to pay his wife a monthly sum after their marriage broke down, with the wife promising to discharge their mortgage. The man’s failure to fulfill his commitment resulted in a legal suit, which he lost. The court ruled that their intention was to be legally bound by any agreement they entered into.



The terms of the agreement should be clear to all parties involved. These terms can be expressed or implied.


Contracting parties must have the capacity to enter into an agreement. Exceptions apply to certain groups, such as minors, aliens, mental patients, and drunkards.



The genuine consent of each party is essential for a contract. Consent should not be influenced by mistakes, misrepresentation, undue influence, or duress.



Some contracts require specific forms to ensure clarity and prevent disputes. These contracts must be:

  1. Under seal
  2. In writing
  3. Evidenced in writing



A valid contract’s object must be legal, as contracts contravening public policy or involving illegal acts are void.


Examples of Illegal Contracts:

  1. Contracts for criminal activity.
  2. Contracts for public office sales.
  3. Contracts impeding justice administration.
  4. Contracts with wartime enemies.
  5. Contracts for immoral purposes.
  6. Contracts facilitating unlawful acts.
  7. Contracts with fraudulent intentions.

A valid contract necessitates the feasibility of performance, ensuring that parties can fulfill their obligations. Parties can enter contracts when confident in their ability to fulfill them.


Types of Contracts

The prevalent categories of contracts within the realm of commerce include:

  1. Informal Contracts: Informal contracts lack certain fundamental elements of proof present in formal contracts, making them challenging to enforce.
  2. Formal Contracts: Formal contracts encompass several primary types, namely:
  3. Contracts Under Seal: These written contracts bear an imprinted or affixed seal, indicating their speciality nature. They don’t necessarily originate from the agreement itself.
  4. Contracts Of Record: These contracts are registered and acknowledged by the court.
  5. Oral Contracts: Contracts established through spoken communication, such as agreeing on a taxi fare. They carry the weight of formal contracts with sufficient evidence.
  6. Written Contracts: Contracts are documented with written terms, which can be either formal or informal depending on circumstances.
  7. Implied Contracts: Contracts inferred from the conduct of both parties, lacking written or oral evidence.
  8. Expressed Contracts: Contracts where both parties openly declare their intentions and terms.


  1. Valid Contracts: These contracts possess all necessary conditions to be legally binding and enforceable.
  2. Voidable or Void Contracts: Contracts are potentially binding but can be rejected due to missing essential elements, like signing under duress or lacking legal capacity.
  3. Void Agreements or Contracts: These have no legal effect and are unenforceable due to illegal subject matter.
  4. Executed Contracts: Contracts fully performed, leaving no further claims from the obligee.
  5. Executory Contracts: Contracts not yet fully performed, requiring additional actions.
  6. Bilateral Contracts: When parties exchange promises, forming a mutual agreement.
  7. Unilateral Contracts: Contracts where only one party is expected to fulfill their obligations after formation.


Methods of Contract Termination:

There are five methods through which contracts can be terminated:

  1. Performance
  2. Consensus
  3. Operation of Law
  4. Frustration
  5. Breach of Contract


Remedies for Breach of Contract:

In case of a contract breach, the following remedies are available:

  1. Damages: The aggrieved party can seek compensation for losses.
  2. Rescission: Parties can request restoration to their pre-contractual state in a court of law.
  3. Injunction: The injured party can secure a court-mandated order.
  4. Specific Performance: When the injured party sues to enforce the contract.




  1. Structure of Business

A business structure refers to the legal and organizational framework within which a business operates. It determines how the business is organized, managed, and owned. Different business structures have varying implications for factors such as taxation, liability, decision-making, and overall operational flexibility. The choice of the business structure depends on the nature of the business, its goals, and the preferences of the owners. Common types of business structures include:

  1. Sole Proprietorship: A business owned and operated by a single individual. The owner is personally liable for the business’s debts and obligations.
  2. Partnership: A business owned by two or more individuals who share profits, losses, and responsibilities. Partners can be personally liable for the business’s debts.
  3. Limited Liability Company (LLC): A hybrid structure that offers limited liability protection to its owners (members) while allowing for flexible management and taxation options.
  4. Corporation: A separate legal entity from its owners (shareholders), providing limited liability protection. Corporations have a complex management structure, issue shares of stock, and have their own tax implications.
  5. S Corporation: A type of corporation that offers limited liability protection while allowing income to be passed through to shareholders’ personal tax returns, avoiding double taxation.
  6. Cooperative: A business owned and operated for the benefit of its members, who may be customers, employees, or suppliers. Profits and decision-making are shared among members.
  7. Nonprofit Organization: A legal entity formed for purposes other than generating profit. Nonprofits often focus on charitable, educational, or social causes.

The choice of business structure has legal, financial, and operational implications, so it’s important for entrepreneurs to carefully consider their options and consult legal and financial professionals before making a decision.


The organizational structure establishes a framework for the division, grouping, and coordination of tasks. This involves segmenting a business’s activities into departments, divisions, units, and sub-units, while assigning positions, responsibilities, and authorities to business officials.


Purposes of an Organizational Chart:

  1. Illustrates the hierarchy of authority and responsibilities within an organization.
  2. Depicts the connections between different departments and personnel within the organization.
  3. Displays the pathways of communication and information flow within the organization.
  4. Depicts the various roles and positions held within the organization.
  5. Highlights the roles and status of individual organization members.
  6. Shows the extent of control that each supervisor or manager has over their respective areas.
  7. Provides an immediate overview of the entire organizational structure.
  8. Simplifies the analysis and evaluation of the organizational structure through visual representation.



  1. Linear Organization: This pertains to the direct operational connection existing between subordinates and superiors, with a hierarchical flow of authority and responsibility extending from top-level executives to the lowest-level subordinates.
  2. Functional Organization: This approach is employed when an organization’s operations are structured based on its fundamental business functions. As a result, similar or interrelated tasks are clustered within each respective department.
  3. Committee Organization: This is implemented when a group of individuals is appointed to undertake specific responsibilities. For instance, a committee might be established to provide recommendations or oversee project implementation.



Authority is the defined right to issue orders or directives and enforce compliance with those orders. This authority can be directly exercised or delegated to others.

Delegation of Authority involves the transfer of decision-making power and responsibility for a specific task from a superior to a subordinate. Despite the transfer, the superior retains accountability for the success or failure of the subordinate’s task.



  1. It alleviates the workload of the superior.
  2. It cultivates and prepares subordinates for higher responsibilities.
  3. It accelerates the decision-making process.
  4. It fosters motivation and bolsters the morale of subordinates.
  5. It expedites the execution of tasks.
  6. It enhances communication flow within the organization.
  7. It facilitates smooth succession planning, ensuring subordinates are ready to assume roles in case of the sudden departure of the superior due to retirement, death, or transfer.
  8. It can foster a harmonious relationship between subordinates and their superiors.
  9. It nurtures the managerial skills of subordinates.



  1. Subordinates might misuse or abuse delegated power.
  2. It could lead to redundant efforts across different organizational levels.
  3. Subordinates may make costly errors, posing a risk to the organization.
  4. Superiors might be tempted to evade their own responsibilities.
  5. The transient nature of delegated authority might deter subordinates.
  6. Confusion and conflict may arise within the organization, such as allegations of favoritism or role conflicts where a subordinate performs better than a superior.
  7. Quality of work might suffer, especially if subordinates lack experience.


The span of control refers to the number of subordinates a manager can effectively oversee, or the number of subordinates working under a superior.

Factors Influencing the Span of Control:

  1. Nature of the tasks.
  2. Managerial/supervisory skills.
  3. Subordinate training.
  4. Quantity of available subordinates.
  5. Organizational size.
  6. Organizational structure, including the level of departmentalization.




  1. Introduction to Business Management

  2. Meaning of Business:

Business refers to the organized effort of individuals to produce, sell, or buy goods and services with the aim of generating a profit. It involves various activities such as production, marketing, sales, finance, and operations, all geared towards achieving financial success and sustaining the enterprise.

  1. Meaning of Management:

Management involves the coordination and organization of resources (both human and non-human) to achieve specific goals and objectives. It encompasses planning, organizing, leading, and controlling the activities of an organization to ensure efficient and effective use of resources.

  1. Meaning of Business Management:

Business management is the process of planning, organizing, leading, and controlling the activities of an organization to achieve its objectives. It encompasses various functions and responsibilities that are necessary for the successful operation of a business, including decision-making, resource allocation, and strategic direction.

  1. Business Resources:

Business resources are the assets and inputs required for the operation of a business. They can be broadly categorized into human resources (employees and their skills), physical resources (machines, equipment, facilities), financial resources (funds and capital), and intellectual resources (knowledge, patents, trademarks).

  1. Business Objectives:

Business objectives are specific, measurable goals that a company aims to achieve. These goals provide a sense of direction and purpose for the organization. They could include financial objectives (profitability, revenue growth), market objectives (market share, customer satisfaction), and social objectives (sustainability, corporate social responsibility).

  1. Management of Business – Functions of Management:

Management of a business involves several key functions that are essential for achieving organizational goals:

a) Planning:

Planning is the foundational function of management that involves setting a course of action to achieve specific objectives. It includes:

  1. Defining Objectives: Clearly identifying the goals the organization wants to achieve within a certain timeframe.
  2. Determining Strategies: Deciding on the approach or methods to achieve those objectives, taking into consideration the organization’s strengths, weaknesses, opportunities, and threats (SWOT analysis).
  3. Outlining Actions: Breaking down the strategies into actionable steps, assigning responsibilities, and creating timelines.

b) Organizing:

Organizing involves structuring the resources and tasks necessary to carry out the planned objectives. This function encompasses:

  1. Structuring Tasks: Dividing tasks into smaller, manageable units and assigning them to individuals or teams.
  2. Allocating Resources: Ensuring the appropriate allocation of human, financial, and physical resources to support the execution of tasks.
  3. Designing Processes: Developing efficient workflows and processes to streamline operations and maximize productivity.

c) Leading:

Leading, also known as directing or influencing, involves guiding and motivating employees to work towards the achievement of organizational goals. This function entails:

  1. Motivating Employees: Inspiring and energizing employees to put forth their best efforts by offering incentives, recognition, and a positive work environment.
  2. Guiding Employees: Providing clear directions, goals, and expectations to help employees understand their roles and responsibilities.
  3. Directing Teams: Guiding teams through challenges, facilitating communication, and fostering collaboration to achieve common objectives.

d) Controlling:

Controlling is the process of monitoring and regulating activities to ensure they are aligned with the planned objectives. This function involves:

  1. Monitoring Performance: Collecting data and tracking progress to assess how well the organization is performing in relation to its goals.
  2. Comparing to Standards: Comparing actual performance to established standards or benchmarks to identify deviations or areas that need improvement.
  3. Taking Corrective Actions: If discrepancies or problems arise, take corrective actions to bring performance back in line with the objectives.


  1. Departments in Business:

Departments in a business are specialized units responsible for specific functions or tasks within the organization. Common departments include marketing, finance, human resources, operations, sales, research and development, and customer service. Each department focuses on a particular aspect of the business’s operations.

  1. Departmentalization:

Departmentalization is the process of grouping and organizing activities, tasks, and people into departments based on their functions, processes, products, or customers. It helps create a clear structure within the organization and promotes efficient resource allocation.

  1. Social Responsibilities of Business:

Businesses have responsibilities beyond just generating profits. These include:

Responsibility to Communities: Engaging in activities that benefit the local community, such as supporting local charities or participating in community development projects.

Responsibility to Government: Complying with laws and regulations, paying taxes, and participating in public policy discussions.

Responsibility to Shareholders: Maximizing shareholder value through ethical and transparent business practices.

Responsibility to Employees: Providing fair wages, safe working conditions, training, and opportunities for growth.



  1. Introduction to Marketing

Definition of Marketing:

Marketing can be described as the process of evaluating consumer needs, desires, preferences, and demand. It involves crafting and manufacturing products and services that cater to these needs and facilitating the distribution of these products and services to end consumers with the goal of generating profits for an organization.


Significance of Marketing in the Economy:

  1. Stimulates mass production, leading to reduced unit costs for goods and services.
  2. Fosters competition and efficiency.
  3. Enhances people’s quality of life by making contemporary goods accessible.
  4. Generates employment opportunities.
  5. Ensures consumer contentment.
  6. Bolsters productivity (GDP) and drives economic growth.


Roles of Marketing:

  1. Exchange function
  2. Procurement function
  3. Sales function
  4. Storage function
  5. Transportation function
  6. Financing function
  7. Risk-bearing function
  8. Pricing function
  9. Standardization and grading of products
  10. Market research and information
  11. Production planning and development
  12. Determining production levels


Concept of Marketing:

The marketing concept posits that a business’s primary purpose is to fulfill the needs and desires of its customers. Consequently, all marketing endeavors are oriented towards identifying consumer needs, creating products to satisfy those needs, and concurrently achieving the organization’s objectives, such as profit maximization. A company adopts a marketing concept when all its endeavors are centered on meeting consumer needs and aspirations.


Marketing concept encompasses:

  1. Identification of consumer needs
  2. Development of products aligned with these needs
  3. Formulating and executing programs to deliver products to consumers
  4. Conducting post-sales activities to ensure product satisfaction


Marketing Mix:

The marketing mix refers to the amalgamation of four controllable variables that a business employs to establish its marketing strategy, aiming to fulfill consumer needs and enhance sales. These variables are commonly referred to as the 4Ps:

  1. Product: Pertains to developing appropriate products for the target market, encompassing packaging, labelling, branding, design, quality, and durability.
  2. Price: Involves setting a reasonable and justifiable price that suits customers and ensures profitability. Elements of the price mix encompass discounts, credit terms, margins, mark-up, and freight.
  3. Promotion: Encompasses strategies used to inform the public about products and services, including personal selling, sales promotion, advertising, publicity, and public relations.
  4. Place: Encompasses all activities associated with transporting goods and services to consumers, involving the proper market, time, quantity, and quality.


Definition of Marketing Terms:

  1. Consumer Sovereignty: Assumes that consumers’ preferences and desires dictate a firm’s production decisions, emphasizing a consumer-centric approach.
  2. Market Research: Comprises studies conducted by firms to determine consumer demand and guide production and marketing strategies.
  3. Market Segmentation: Involves categorizing consumers based on their purchasing habits, aiding in defining target markets.
  4. Consumer Orientation: Embraces a marketing philosophy that prioritizes consumer needs and wants over organizational objectives, with the primary aim of ensuring consumer satisfaction.



  1. Consumer Protection

A consumer refers to an individual who utilizes goods and services for their final purposes. Protection, in this context, signifies safeguarding. Consumer protection is a concept encompassing diverse strategies employed by both governmental bodies and private entities. Its objective is to prevent consumers from being deceived by producers and intermediaries, while also ensuring that consumers derive the utmost contentment from their purchased goods.


To put it differently, consumer protection involves measures implemented by governmental and private entities to guarantee that consumers are safeguarded against deceit and, at the same time, experience optimal satisfaction from their acquisitions.


Basis for Consumer Protection:

  1. Substandard Products: Preventing the circulation of subpar goods.
  2. Deceptive Advertising: Countering misleading marketing.
  3. Unreasonable Pricing: Mitigating excessively high pricing.
  4. Safety from Harmful Products: Ensuring protection against hazardous items.
  5. Ensuring Satisfaction: Striving for maximum consumer contentment.
  6. Maintaining Supply: Ensuring consistent availability of products.


Consumer Rights:

  1. Right to choice: The freedom to select products that best serve one’s needs.
  2. Right to Redress: The ability to rectify wrongful actions.
  3. Right to Healthful Environment: Entitlement to live in an environment conducive to health.
  4. Right to Safety: Protection from unsafe or hazardous products.
  5. Right to Information: Access to relevant and accurate information.
  6. Right to Participation: The right to voice opinions and be heard.
  7. Right to Essentials: Entitlement to fundamental necessities of life.


Consumer Protection Entities:

Standard Organisation of Nigeria (SON): Ensures product standards compliance.

National Agency for Food and Drug Administration and Control (NAFDAC): Monitors food and drug safety.

Price Control Board: Regulates pricing to prevent exploitation.

Manufacturing Association of Nigeria (MAN): Represents manufacturers’ interests and quality standards.

Environmental Protection Agency: Safeguards environmental health.

Rent Tribunal: Deals with rental disputes and grievances.


Consumer Rights

  1. Right to Safety in Product and Service Use:

This entails safeguarding consumers from any physical or psychological harm arising from product or service utilization. Legal recourse can be sought if potential side effects are not adequately disclosed.

  1. Right to Accurate Quantities:

Consumers possess the right to receive the precise amounts of goods they have purchased. Manipulation of quantities, such as through faulty weighing devices, constitutes a violation of this right.

  1. Right to Adequate and Accurate Information:

Consumers should be provided with complete and accurate information to facilitate informed decision-making during purchases and utilization. Both positive and negative product attributes should be conveyed by manufacturers.

  1. Right to Participation and Representation:

Consumers have the right to be engaged and represented when decisions affecting them are being made. Manufacturers stand to benefit from continued goodwill and patronage by involving consumers in decision-making processes.

  1. Right to Receipt of Purchase:

A valid receipt issued at the point of sale serves as evidence of a transaction. It can also be employed for legal action if sub-standard goods are received.

  1. Right to Satisfaction from Goods and Services:

Consumers are entitled to receive commensurate value for their money when acquiring goods or services. If this expectation isn’t met, consumers can seek resolution through manufacturers, service providers, government entities, or consumer protection agencies.

  1. Right to Voice:

   Consumer ideas and opinions deserve respect and consideration.

  1. Right to Compensation for Unsatisfactory Goods and Services:

   In the event of subpar goods or services, consumers have the right to seek compensation.

  1. Legal Recourse for Rights Infringement:

   If consumer rights are violated, legal action can be pursued.


Entities Safeguarding Consumer Interests

Consumers enjoy protection from various organizations, some of which they may not be acquainted with.

Functions of Consumer Protection Entities:

  1. Setting Standards: Establishing benchmarks for new products.
  2. Certification: Ensuring goods adhere to prescribed standards through proper markings.
  3. Addressing Complaints: Taking appropriate actions based on consumer grievances.
  4. Label Integrity: Ensuring product labels accurately display ingredients and quantities.
  5. Quality Oversight: Monitoring to verify products meet specifications.
  6. Consumer Education: Providing consumers with relevant information.
  7. Collaboration for Quality: Partnering with organizations promoting high standards.
  8. Collaborative Efforts: Engaging with entities focused on consumer education and awareness, such as universities, research institutions, and public law institutes.
  9. Guarding Against Harmful Products: Preventing the entry of unsafe and valueless goods into the market.
  10. Counterfeit Control: Mitigating the presence of counterfeit items.
  11. Ensuring Documentation: Ensuring receipts for sold goods contain required details.


Trade Descriptions Act

This Act assumes the following roles:

  1. Preventing Misleading Descriptions: Prohibiting deceptive descriptions of goods, services, and accommodations provided in trade.
  2. Inspector Authority: Empowering inspectors to acquire product information from manufacturers or traders without prior notification.
  3. Defaulter Prosecution: Granting inspectors the authority to prosecute violators.


Foods and Drugs Act:

This Act serves to safeguard consumers against harmful ingredients in food and drugs. It necessitates clear ingredient labels and expiration dates on products.

Public Health Act:

This Act safeguards consumer health through:

  1. Inspections: Regular inspections by public health inspectors of establishments like hotels, shops, and food outlets to ensure compliance with health standards before and after licensing.
  2. Enforcement: Non-compliant premises are closed, and operators are subject to prosecution.




  1. Business Documents

When business transactions occur, certain documents are drawn up and passed from one person to another. These documents are used to effect transactions between buyers and sellers. The documents are explained below;


This is a publication devoted to a particular branch of retail and wholesale trade. It contains articles on matters of interest to those in the trade.


  1. It contains information on matters of interest to those in the trade.
  2. It shows information about price and other matters.


This is a document sent by the buyer to the supply to find out about the availability of goods, the prices, terms of payment and delivery. A letter of enquiry is considered the first step to be taken by the prospective buyer. It is a request to the supplier to provide information about the product.



Alex Bookshop,

No. 6, Baale Street,


10th of August, 2007


Ambra Bookshop

Iyana Ipaja, Lagos.


Dear Ma,

We require 500 pieces of Sharp Calculating Machines urgently. Please send to us quotation for the above items stating the terms of trade.

Yours faithfully,




A quotation is a statement of the current price and terms of trade of a product or service. Usually, a quotation is an answer to an inquiry and therefore, it is applicable to that specific transaction only.


  1. The current price of the goods to be sold.
  2. Discounts available.
  3. Costs and date of delivery.
  4. Terms of payment.



  1. It is used as a reply to an enquiry.
  2. Shows the current price.
  3. It shows the terms of trade.



Ambro Bookshop

No. 3212 Iyana Ipaja, Lagos.

20th August, 2007


Alex Bookshop,

Baale, Ajegunle.


S/N Description Qty Unit Price Price
1. Sharp Calculating Machine 500 50 25,000


Delivery – Within 21 days

Terms – 5% cash discount


Within 30 days

Trade discount 10% from order.



A catalogue is a document used for pictorial representation of goods available for sale. It contains the photographs, features and price of goods. The booklet enables a prospective buyer to study the samples.


This sent by the seller to the buyer to give information about the current prices of goods.


  1. Catalogues can be used as a reply to an enquiry.
  2. Provides information about the picture or photograph of goods.
  3. They give the current price of products.
  4. Price lists can be used by retailers to wholesalers.
  5. Catalogues help to advertise the products.
  6. They assist the customers to make choices.


This is a document which states the quantity of goods required and all necessary details about the package of the goods. An order will be placed when the buyer is satisfied about the conditions attached to the transactions. The seller can supply it or the buyer can use his printed order form. When it is accepted, a legal contract exists between the buyer and the seller.


  1. Addresses of both parties to the transactions.
  2. Quantity of goods needed.
  3. Description of goods.
  4. Price of each item.



  1. It is used to make a purchase.
  2. Shows the quantity of goods to be purchased.
  3. Acceptance signifies beginning of a contract.



Alex Bookshop

No. 6, Baale Street,


25th August, 2007.

Ambra Bookshop,

Iyana Ipaja.


Please supply the following,

Quantity Description Unit Price Total
500 Sharp Calculating Machine 50 25,000



This is sent by the seller to the buyer showing the full details of goods sold such as quantity, description, price, discount and the total amount to be paid. It shows a comprehensive summary of a transaction, it is issued along with the goods.


  1. Name of the seller.
  2. Address of the seller.
  3. Customer order number.
  4. Description of goods bought.
  5. The actual amount.
  6. The price of the goods.
  7. Discount given.
  8. Quantity of goods purchased.
  9. Abbreviation E & OE (Error & Omission) Excepted.


  1. Shows details of goods sold.
  2. It serves as a receipt.
  3. Used to prepare purchases and sales journal.
  4. Evidence of credit sales.
  5. Shows time of delivery and payment.



Ambra Bookshop

Iyana Ipaja

29th August, 2007.

Sold to Alex Bookshop

Baale, Ajegunle.


S/N Description Qty Unit Price Total
1 Sharp Calculating Machine 500 50 25,000


Terms 2% cash discount within 21 days.

5% Trade discount within 1½% month.

Net 2 months

E & OE



  1. E & OE: Error and Omission Excepted. This means that the supplier has the right to make necessary corrections if it is discovered later that there are errors, mistakes or omissions, in the invoice.
  2. Net 3 Months: This simply means that there will be no discount after three months. The buyer would pay the total amount after three months.
  3. 5% Trade Discount: This implies that a 5% trade discount would be given to the customer when buys in large quantities. It is the reduction of the catalogue price to induce customers to buy more goods because they will pay less.
  4. 2% Cash Discount: This means that a 2% cash discount would be allowed on settlement of the account if buyers pay cash within a specified period. It reduces the amount to be paid.



This is a commercial document, which serves as a polite request for payment when a supplier is not willing to allow his customer credit and it is also used when goods are sent on approval. It is like the ordinary invoice except the expression “proforma” will be written across it.



  1. It is used when goods are sent on approval.
  2. Serves as quotation.
  3. It is a reply to a letter of enquiry.
  4. Polite way of refusing credit.
  5. Gives the agent the idea of the price at which to sell the goods.
  6. As a polite request for payment before goods are delivered.


a. It is sent with the goods. It can be sent without the goods.
b. Used as evidence of credit sale. Used when the seller does not want to sell on credit.
c. Used to confirm sale. Used when the buyer needs information the seller on terms of sale.


This is a document sent to buyer to inform him that the goods ordered have been dispatched. It is basically to give information that the goods are on their way to the customer so that he can receive them. It is normally sent ahead of the goods.


  1. To inform the buyer about the dispatch of the goods.
  2. To show the mode of transport used.
  3. To show the likely time of arrival.
  4. To inform the buyer about the quantity and the type of goods to expect.



This is a document sent by the seller to the buyer for signature when goods are delivered to him and it will serve as evidence that delivery has been made.

Delivery note is used when goods are transported by the seller’s means of transportation. It will show details of all the goods being delivered so that the goods when finally arrived can be checked against goods listed on the delivery note.


  1. Evidence of delivery.
  2. To confirm arrival of goods.
  3. It is used when goods are transported by the seller’s means of transportation.



Ambra Bookshop,

Iyana Ipaja.


Alex Bookshop,

Baale, Ajegunle.


Please receive your order.

S/N Description Qty
1. Sharp Calculating Machines. Received the goods in good condition. 500


Received by                                                                                                                      ………………………………..

Signature & Stamp

Issued by                                                                                                                             ………………………………..

Signature & Stamp




This is a document made out by the sender of goods, handed over to the carrier and countersigned by the consignee on delivery as proof that delivery has been. When goods are transported by an independent carrier a consignment note is to be delivered. It shows details of goods sent.



It is used when the seller engages an independent transporter.

It shows details of goods sent.

It states whether freight has been paid or not.

Evidence of delivery when daily signed by consignee.



This is a document sent by the seller to the buyer to correct an under change in his account or when goods are not changed on invoice.



  1. To correct an under-change of invoice.
  2. Used to correct omission in the invoice.
  3. Used when some items dispatched has not been recorded in the original invoice.
  4. It informs the buyer that his account has been debited.
  5. Used as a supplementary invoice.



This is a document issued by one party to a transaction to the other to inform him that his account has been credited with the amount arising as a result of inadvertent over-change or goods charged have been returned. It is usually printed in red.


  1. To inform the buyer that his account has been debited.
  2. To correct an over-charge.
  3. Used when goods returned have been charged.
  4. Sent when the seller has decided to give allowance to the buyer.
  5. Used to show overpayment by the buyer.



Alaba Enterprise,


1st Jan. 2006.

Garvick Bookshop

Ojora Ajegunle



29th December, 2005 10 Pieces of Casio Calculating Machine 15,000
Less 10% discount 1,500



This is an acknowledgement of receipt of money from the buyer by the seller. It is a document which confirms that payment has been made.


  1. Name of the buyer.
  2. Quantity of goods bought.
  3. Total amount paid in words and figures.
  4. Signature of the sellers and buyers.



  1. Bonifide title to ownership of property.
  2. Confirmation of payment.
  3. Used in auditing processes.
  4. Sources of information for cash book.
  5. States the total amount received.
  6. Shows date in which payment is made.








Date: _________________                                                                       Ms: _________________

Name: _____________________________________________________________

Amount in words: ____________________________________________________

Purpose: ___________________________________________________________

Cash/Cheque: _______________________________________________________

Cashier’s signature: __________________________________________________


Serial No: ICAN RB01



This is a document showing the state of one person’s account with another. It summarizes recent invoices, payments and shows the amount owed at the end of the period to which the statement applies. The seller regularly sends it to the buyer showing detail transactions between them and the amount paid and the outstanding one.



  1. It shows charges commission and interest passed to a customer’s account.
  2. It shows the terms of payment for amount due.
  3. It shows the unpaid balance.
  4. It shows the amount of purchase made.
  5. It enables a customer to have a thorough check of what he has purchased.
  6. It gives the customer an idea as to his financial standing at a given period.


Statement of accounts for the month of July.

System Bookshop,

Baale, Ajegunle.

10th July 2006.

Olayemi Enterprise

Iyana Ipaja



Date Details Debits Credit Balance
# # #
July 1 Bal. b/f 10,000
July 3 Rulers 1, 000 11,000
July 4 Big notes 2,000 13,000
July 6 Cash 6,000 7,000
July 10 Cash 500 6,500




  1. Commercialization


Commercialization involves operating government enterprises with profit motives, transitioning them from a service-oriented approach to a profit-oriented one. The ownership and control of these enterprises remain under the government, and subsidies, grants, or subventions are partially or completely removed.


  1. Enhanced efficiency: Commercialization promotes efficiency in the operation of government-owned enterprises.
  2. Generation of government funds: Commercialization generates funds for the government.
  3. Reduction of government expenditure: Commercialization helps reduce government spending.
  4. Promotion of accountability: Commercialization encourages greater accountability in the management of enterprises.
  5. Self-sufficiency of enterprises: Commercialization aims to make the enterprises self-sufficient.
  6. Increased competitiveness: Commercialization enhances the competitiveness of these commercialized enterprises.



  1. Workforce reduction: Commercialization may lead to a decrease in the number of employees.
  2. Price increases: Commercialization can result in higher prices for goods and services.
  3. Consumer exploitation: There is a risk of consumer exploitation under commercialization.
  4. Uneven wealth distribution: Commercialization may contribute to an uneven distribution of wealth in society.

Reasons for Commercialization:

Commercialization refers to the process of introducing a product, service, or activity into the market with the intention of making a profit. In the context of government or public sector activities, commercialization occurs when entities that were traditionally run by the government are transformed into profit-seeking businesses. This can be driven by several reasons, including the need to improve efficiency, encourage competition, reduce government involvement, and attract private investment. Commercialization can lead to increased innovation, better resource allocation, and potentially reduced burden on public finances.




  1. Privatization

Privatization refers to the process of transferring ownership and control of businesses, companies, industries, or cooperatives from the public sector (government) to private individuals or the private sector.


  1. Enhanced efficiency: Privatization promotes efficiency in commercialized or privatized businesses.
  2. Increased government revenue: Implementation of privatization policies generates more revenue for the government.
  3. Competition, innovation, and improved quality: Privatization fosters competition, encourage innovation and leads to improvements in the quality of goods and services.
  4. Reduction in non-viable public expenditure: Privatization significantly reduces public expenditure on enterprises that are not economically viable.
  5. Deepening/widening of the capital market: Privatization contributes to the expansion and development of the capital market.
  6. Increased consumer choice: Privatization offers consumers a broader range of choices.



  1. Uneven income distribution: Privatization can result in an uneven distribution of income among the population.
  2. Inflationary effects: Privatization may lead to increased prices and inflation.
  3. Mass worker layoffs: Privatization can result in mass retrenchment of workers from government-owned enterprises.
  4. Lowering of citizens’ standard of living: Privatization may contribute to a reduction in the standard of living for the citizens.
  5. Lack of transparency: The privatization process may lack transparency, allowing a few wealthy individuals to take over valuable government businesses.

Reasons for Privatization:

Privatization involves the transfer of government-owned assets, operations, or services to private entities. This is often done to shift the responsibility of managing and funding these activities from the government to the private sector. Reasons for privatization include improving efficiency, reducing bureaucratic inefficiencies, promoting competition, attracting investment, and in some cases, raising funds for the government. Critics of privatization point out concerns about potential loss of public control, increased inequality, and the prioritization of profit over public welfare.



  1. Deregulation

Deregulation refers to the process of reducing or eliminating government regulations and restrictions in a specific industry or sector. These regulations could include price controls, entry barriers, quality standards, and more. Deregulation aims to promote market-driven competition, innovation, and efficiency by allowing market forces to dictate prices, quality, and access to services. However, it can also raise concerns about consumer protection, worker safety, and environmental standards if not implemented carefully.


Reasons for Deregulation:

Deregulation is often pursued to stimulate economic growth, increase competition, and reduce bureaucratic red tape. Some reasons for deregulation include:

  1. Promoting Competition: Deregulation can lead to increased competition, which may drive down prices and encourage businesses to innovate in order to attract customers.
  2. Efficiency: Removing regulatory hurdles can improve the efficiency of industries by allowing them to respond more flexibly to market changes.
  3. Innovation: Reduced regulations can foster innovation as companies have more freedom to experiment and develop new products and services.
  4. Consumer Choice: Deregulation can expand consumer choices by allowing more players to enter the market and offer diverse options.

Advantages of deregulation

  1. Increased Competition: Deregulation often leads to more players in the market, fostering competition that can result in better prices and improved services for consumers.
  2. Innovation: With fewer restrictions, industries might be more innovative and responsive to changing customer needs.
  3. Economic Growth: Deregulation can stimulate economic growth by allowing industries to operate more freely and efficiently.

Disadvantages of deregulation

  1. Lack of Oversight: Reduced regulations can lead to inadequate oversight, potentially harming consumers, workers, and the environment.
  2. Quality Concerns: Some argue that deregulation can compromise safety and quality standards as companies might prioritize cost-cutting over safety.
  3. Monopoly Risk: In some cases, deregulation can lead to the emergence of monopolies or oligopolies, reducing competition and giving companies excessive power.
  4. Unequal Impact: Deregulation might disproportionately benefit certain groups or regions while disadvantaging others.



  1. Indigenization

Indigenization refers to a government policy aimed at promoting and increasing the involvement of Nigerian citizens in the ownership and management of business organizations previously owned by foreigners. The objective is to transfer ownership of certain foreign businesses operating in Nigeria to indigenous entrepreneurs, thereby reducing foreign control over the economy.

In 1972, the Nigerian government introduced the Nigerian Enterprises Promotion Decree, the first step towards ensuring active Nigerian participation in the country’s economic development through enterprise ownership and management. The Decree consisted of three schedules or phases.


Schedule 1

Exclusively reserved small-scale businesses for Nigerians, including cinemas, hairdressing, retail trade, block making, clearing and forwarding, and printing and publishing of newspapers. In total, around forty businesses were reserved for Nigerians, requiring 100% equity participation.

Schedule 2

Allowed foreigners to engage in approximately fifty-seven businesses as long as Nigerians held at least sixty percent equity shares. These businesses encompassed banking, insurance, construction, mining, breweries, and more.

Schedule 3

Permitted foreign investments in businesses open to foreign participation, provided Nigerians held a minimum of forty percent equity shares. The businesses in this schedule included textile, tobacco and drug manufacturing, hotels, airlines, telecommunications, and others. The Nigerian Enterprises Promotion Decree underwent revisions in 1977.


Advantages/Objectives of Indigenization:

  1. Increased participation of indigenous people in the economy.
  2. Reduction of foreign control over the economy.
  3. Encouragement of local retention of profits.
  4. Promotion of industrialization.
  5. Creation of employment opportunities for citizens.
  6. Enhancement of self-reliance and reduction in dependency on foreign powers.
  7. Improvement in the standard of living for citizens.
  8. Economic stability for the country.


Disadvantages of Indigenization:

  1. It discourages foreign investors.
  2. It leads to the concentration of wealth among a few indigenous individuals.
  3. It widens the wealth gap between the rich and the poor.
  4. It may result in economic instability.
  5. It may provoke retaliation from foreign countries affected by the policy.
  6. It may lead to political instability.




Theme 3  Capital Market

Nigerian Capital Market, Stock Exchange (SE) & Second Tier Securities Market (SSM)

Capital Market refers to a platform designed for obtaining medium and long-term loans. Its primary purpose revolves around catering to the financial requirements of industries and the commercial sectors. Within this realm, it encompasses all establishments involved in either facilitating the supply of or catering to the demand for extended-duration loans. The overarching goal of the capital market is to establish a mechanism for distributing investment capital to entities seeking funds to foster their ongoing expansion.

Functions of the Capital Market

  1. Facilitation of long-term lending to investors.
  2. Mobilization of savings for the intent of investment.
  3. Promotion of the growth and progression of merchant banks.
  4. Provision of an avenue for the general public to participate in economic operations.


Primary or First Tier Securities Market:

The primary market signifies a realm where novel securities like shares, stocks, bonds, etc., are either procured or traded. This sphere represents the initial point of trading for these securities. Major participants in this domain include issuing houses, such as stockbrokers, merchant banks, commercial banks, mortgage banks, insurance companies, the Central Bank of Nigeria, and the government.

Investors entrust their resources to these entities for the purpose of investment, with these financial intermediaries effectively mobilizing investor savings and channelling them into investments. Overseeing the primary market’s activities is the Securities and Exchange Commission, which regulates the issuances of public and foreign-participating private companies.


Secondary or Second Tier Securities Market:

The secondary market is a platform where existing securities of companies are bought and sold. It emerged to complement the Stock Exchange Market’s efforts in mobilizing funds for investment. This secondary market functions as an extension of the Stock Exchange, providing valuable support. Key players in this sector include stockbrokers and banks like acceptance houses, investment banks, and issuing houses. The operational model in this market closely resembles that of the primary tier, albeit with fewer limitations.

The focal point of the secondary market is the Stock Exchange, where holders of “quoted” shares looking to sell can connect with potential buyers. Thus, the Stock Exchange dominates the secondary market by furnishing a platform for securities trading—an essential function as many initial securities purchasers eventually seek to resell their investments.


The nucleus of any operational business unit is capital. Sourcing this essential factor becomes a central focus for finance managers. Companies registered as Limited Liabilities entities require substantial funds, necessitating proactive fundraising. Addressing this need, the stock exchange market emerges as a solution.


The stock exchange is a well-structured market where investors can purchase and sell existing securities like shares, stocks, and debentures. It functions as a medium through which companies secure capital for expansion and progress. Transactions within the stock exchange adhere to intricate prescribed rules and regulations. The Lagos Stock Exchange, established in 1960 under parliamentary legislation, is a vital part of the capital market with branches in Abuja and Port Harcourt. All publicly listed Limited Liability companies are featured on the stock exchange.



Brokers and jobbers facilitate transactions at the stock exchange. Only members are permitted to trade directly on the exchange. Jobbers specialize in specific stock types, while brokers act as intermediaries for potential buyers. A broker representing a client will approach a jobber to determine prices. The jobber provides two prices: a higher selling price and a lower buying price, with the difference being the jobber’s profit. Upon the broker’s intent to purchase, necessary documents are prepared.

Well-established company shares are referred to as blue chips, and government stocks are termed gilt-edged. Share prices are quoted as “cum-div,” denoting the right to the next dividend, or “ex-div,” indicating no dividend entitlement.

To expedite transactions, two documents are employed: the contract note and transfer form note.

  1. Contract Note: A stockbroker sends this document to a client, confirming a purchase or sale on their behalf.
  2. Transfer Note: This document facilitates the transfer of ownership of shares.


The stock exchange serves several crucial functions:

  1. It acts as a means of raising capital for business growth.
  2. It generates employment opportunities for various roles such as brokers, jobbers, and clerks.
  3. It provides essential information for informed business decisions to both local and foreign investors.
  4. It offers a benchmark for assessing the performance of quoted companies.
  5. It enables the public to invest idle funds through share subscriptions.
  6. Dividends received by shareholders contribute to improved living standards.



Several entities participate in the stock exchange, including:

  1. Public Limited Liability Companies (e.g., Dunlop Nig. Plc, Access Bank Plc)
  2. Brokers
  3. Jobbers
  4. Speculators (Bull, Bear, and Stag)
  5. Government
  6. Issuing houses



The stock exchange deals in instruments such as shares, stocks, and debentures.

  1. Shares and Stocks: These securities represent ownership and capital contribution in existing industries, entitling shareholders to dividends.
  2. Debentures: Debt instruments that yield interest payments to holders. Debenture holders are creditors, distinct from shareholders.



Development banks are financial institutions designed to provide medium and long-term loans for developmental purposes. They support projects in sectors like agriculture, commerce, and industry.


  1. Bank of Industry (BOI)
  2. Nigerian Agricultural and Rural Development Bank (NARDB)
  3. Federal Mortgage Bank of Nigeria (FMBN)
  4. Urban Development Bank (UDB)
  5. Nigerian Education Bank (NEB)
  6. Nigerian Export and Import Bank (NEXIM)
  7. Nigeria Agricultural and Co-operative Bank (NACB)



Development banks fulfill several functions:

  1. Providing long-term loans for capital projects
  2. Executing government industrial development policies
  3. Project oversight and supervision
  4. Offering advice to both governmental bodies and industrialists
  5. Underwriting securities issuance
  6. Contributing to manpower development and technical support
  7. Conducting extensive research on industrial sectors (feasibility studies)
  8. Monitoring and enhancing general economic development activities




Theme 4  Economic Groupings in West Africa


ECOWAS, the Economic Community of West African States, was established on May 28th, 1975, following the signing of the treaty in Lagos, Nigeria. The member countries of ECOWAS are Sierra Leone, Gambia, Cape Verde, Guinea, Guinea Bissau, Cote d’Ivoire, Liberia, Burkina Faso, Mali, Mauritania, Niger, Nigeria, Senegal, Benin, and Togo.

The Objectives of ECOWAS

  1. Promotion of cooperation and development among member countries.
  2. Elimination of trade restrictions among member countries.
  3. Establishment of a common tariff against non-member countries.
  4. Removal of obstacles to the free movement of goods, people, and capital among member countries.
  5. Harmonization of agricultural policies.
  6. Implementation of infrastructural schemes and joint developmental projects in transportation, energy, and other areas.
  7. Harmonization of monetary policies among member countries.
  8. Harmonization of economic and industrial policies among member countries.
  9. Establishment of a common fund for cooperation, compensation, and development.

Some Achievements of ECOWAS

  1. Expansion of the market for goods.
  2. Reduction in tariffs between member countries.
  3. Execution of joint projects, such as road construction.
  4. Establishment of the ECOMOG to ensure peace and security in the sub-region.
  5. Fostering unity and a sense of belonging.
  6. Enhanced mobility of labor and capital through the free movement of people.
  7. Increased efficiency due to heightened competition.

ECOWAS Faces Several Problems or Failures

  1. Language differences among member countries.
  2. Currency differences among member countries.
  3. Irregular payment of contributions/dues by member states.
  4. Existence of blocs within the organization, such as Anglophone and Francophone blocs.
  5. Affinity of some member states to their former colonial masters.
  6. Constant military coups, wars, and political instability in member states.
  7. Weak national link with the secretariat.
  8. Fear of dominant and unequal development.

Niger Basin Commission (NBC)

it was established in 1964 through the act of Niamey, signed by nine member countries: Nigeria, Niger, Benin, Mali, Guinea, Cote d’Ivoire, Chad, Cameroon, and Burkina Faso. The commission’s headquarters is located in Niamey, Niger Republic.

The Objectives of the Niger Basin Commission

  1. Ensuring the most effective and beneficial use of the waters and resources of the River Niger.
  2. Collecting, evaluating, and disseminating data on the basin.
  3. Recommending plans for the judicious use of the Niger Basin to the governments of member countries.
  4. Guaranteeing the freedom of navigation for all member nations on the river.
  5. Fostering closer cooperation among member nations.
  6. Handling complaints and settling disputes arising from the use of the River Niger by member nations.

Lake Chad Basin Commission (LCBC)

It was established in 1964 and comprises four member countries: Nigeria, Niger, Chad, and Cameroon.

The Aims and Objectives of the Lake Chad Basin Commission

  1. Regulating the exploitation of the Lake Chad resources.
  2. Examining member countries’ plans for Lake Chad.
  3. Ensuring cooperation and mutual benefit in the tapping of resources in the Lake Chad Basin.
  4. Harmonizing the plans and policies of member countries concerning the Lake Chad Basin.

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