CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND OF THE STUDY
The Nigeria economic was basically subsistence’s, depending on agricultural production. It was later subjected to colonial influence with the introduction of commercial capitalism and alien economic institution. During the colonial era, the economics was still basically subsistence with some external trade composed of a few agricultural products exchanged with European manufactured goods. After independence, the Nigeria economy still depended on primary production. The economy is characterized by low income, savings and investment, gross income inequalities, poor and in appropriate technology. It is a mixed economy dominated by the public sector, although efforts are being made now to reduce, this influence through privatization of government owned enterprises.
Because of these economic hardships that Nigeria economy is passing through, government has taken measures to eliminate the situation. Such measures includes structural adjustment programme (S.A.P) introduced in 1986, fiscal policy introduced by the given previous administration which has given rise to new economic environment on both private and public companies and corporations. The objectives of these measures are to reduced technological and economic dependence on foreign countries to ensures efficient allocation of resources, to reduce unemployment, to maintain a favourable balance of payment etc.
These policy are however surrounded by uncertainties. The monetary measures which resulted with mopping up excess liquidity and also to check inflation also have affected industries adversely. Loanable funds from bank and other financial institutions have almost disappeared owning to high rate of interest which raised rapidly. These situations have however given rise to low capital for investment and expansion purposes.
To this end, accountants and managers of Business in our country are people with vision options for industrial survival under the new economic realities of S.A.P. as suggested include business combination.