Economy performance of Nigeria that is not oil-based helped the economy stay out of a significant slowdown in 2009. The economy grew by 4.9 percent, as compare to the growth of 4% in 2008. In April of 2010, the IMF projected growth of 7.3% and 7.3 percent for Nigeria in 2011 and 2010 respectively. And they stated it was growing more quickly than the IMF had expect. Yuri
The forecasts are base in the hope that oil prices will stay relatively stable. While the world economy improves and on the belief that truce was sign with militants of the Niger Delta holds. The attacks by militants on oil infrastructure and kidnapping of oil workers slowed exports dramatically in the past.
The reserves of foreign currency in Nigeria have drop to US$40.67 billion by in March. In comparison to US$42.4 billion by the close of 2009 and US$52.7 billion as of the year 2008. Nigeria paid around US$3 billion of its windfall oil savings to the three levels of the government between March and February of 2010. That led to the loss of its reserves of foreign exchange.
The decline in the economy of Nigeria, particularly over the past 20 years is shown by the reality that the per capita income. It was US $1,000 in the year 1965, fallen to US $300 in 1998. In just of 18 years. Nigeria has gone from being country with a low middle income and was among the 50 richest nations in the world. To one of the 30 countries with the lowest income.
LEGAL SYSTEM
The Nigerian legal system is built upon English common law Islamic Shariah law, as well as traditional law
2.1 CULTURAL CONDITIONS
Business is an integral component of society, and both have an impact on one another. Social-cultural environments refer to the influence of certain social and cultural influences that are not under that of the management unit. These factors consist of attitude to job, household system, faith, languages, behaviours, preferences, practice, value structure, business ethics etc.
Changes in the cultural environment such as education can affect the way of life. And way of thinking of those living in society and consequently. They are having an impact on business activities in this society. Management of the challenges pose by cultural differences is a major factor in the cost of transactions for international business. Therefore, if the there are cultural differences between prospective trading partners are significant. The financial and strategic advantages of participating in business activities have to be substantial enough to compensate for the additional costs associated with doing business’ in a different culture.
But, taking the significance of cultural aspects within the business world in mind, making plans to conduct any business within Nigeria’s Nigerian petroleum and natural gas sector requires a thorough examination of certain cultural considerations.
As Follows:
Family and tradition Gas and oil operations are prevalent in the Niger Delta region of Nigeria, since the largest oil wells are situated in rural regions within the regions. Chevron is the third largest oil company in Nigeria and is among its biggest investors, investing on average $3 billion per year. Chevron as a key player in the sector enters serious negotiations with the traditional institutions of host communities prior to the beginning of oil exploration (Chevron 2011)
The religion of Nigeria includes Christianity as well as Islam as the important religions. But both religions are not a significant influence on the use of oil and gas-related products in the country.
Languages: English is the official language of Nigeria. Nigeria is comprise of ethnic groups that speak many languages. Three major language (Hausa, Ibo and Yoruba) are widely spoken in general terms. But there is a third language “Pidgin English” is prominently use across the country because it is the most effective method for the un-initiate to communicate. This could have a huge consequence for Des Plc as German is the only official language of Germany. Many stakeholders within those in the Nigerian community of host for oil and natural gas know only the “Pidgin English.”
3.1 Trade Pater in Germany
Germany is among the countries that are part of the European Union (EU) and an official part of the WTO. The WTO has one single trade policy. It tends to show that it is possible to exploit its “Collective” nature of the membership of the community to increase pressures on the political system trigger through WTO targeted sanctions. It is also a fact that it has been observed in the community’s trade patterns. However, the final Machiavellian method could be to specifically target states members don’t benefit from the WTO’s incompatible measures of the community and would prefer to remove or altering the rules.
There are changes in the German trade pattern over the past few years. They have been constructive to international usage of the Deutsche mark on a variety of accounts. For one, Germany is now the largest exporter to the rest of the world. Exceeding the USA in 1986 and expanding the possibilities of using this mark in the role of an invoice vehicle. The majority of German imports was the raw materials. Gas and oil coming from Russia and most German exports were manufacture products. Then between the years 1986 and 1989 the proportion of specially manufacture products in the total exports increased between 38 and 47 percent.
3.2 A Trade Pattern in Nigeria
Nigeria has always emphasized its determination to improve its business environment to be more integrated with the international economy. But gas and oil are the main source of exports. In fact, the United States is Nigeria’s largest trading partner, second only to its counterpart in the United Kingdom. Nigeria provides about 11 percent of US imports of oil and 4.5 percent of German imports. Crude Oil and LNG liquefied (LNG) are responsible for many exports and about 80 percent of the government’s revenue.
3.3 The SHAPE of trade amongst Germany and NIGERIA
Nigeria along with Germany can maintain stable trade relationship throughout. In the meantime, trade data (2007) reveal that Nigeria’s exports to Germany total 911,5 million Euro. Which is a drop of 35% when compare to the year 2006. Exports from Germany have grown by 10%, to reach 1083,3 million Euro.
In 2006, the trade number was in favour of Nigeria in the form of exports to Germany totalling 1402,6 million Euro as well as imports to Germany in the amount of 973,9 million Euro. The differences in the trade figures are mostly due to the lower exports of oil to Germany and the higher number of imports of semi-finished products.
3.4 Trade in The Oil and Gas Industries Between Nigeria And Germany
Britain was the main recipient of Nigerian oil during the initial period of the colony’s oil industry. Following the declaration of Independence, Nigeria expanded its export to countries for economy welfare. It includes Western European nations, especially Germany and the United States.
However, Germany’s involvement in the Nigerian gas and oil sector has decrease over time. In 2006, trade figures were in favour of Nigeria with exports to Germany totalling 1402.6 million Euro. However, imports into Germany in the amount of 973.9 million Euro. The difference in the trade figures in 2007 is mostly because oil exports are lower to Germany.
3.5 Protections and Restrictions About Trade in Nigerian
Prior to economic reforms in Nigeria, the trade system was seen as complicate as well as restrictive and opaque. After the introduction of the structural adjustment programme (SAP) that was implement in the year 1988. The adoption of a seven-year tariff plan was adopt that significantly decreased the average tariff.
However, more tariff revisions were implement, mostly due to pressure from lobbyists in the domestic market. In 1978 the federal government implement policies regarding import bans. They prohibit certain items that were crucial to the economy or need protection for infant industries. But prior to the current economic reform. Nigeria maintain a complex tariff structure comprising 5146 lines and 19 bands that had tariffs ranging between 2.5 to 150 percent. Nigeria open its import tariffs in using its Common External Tariff (CET) of the Economic Community of West African States.
3.6 RE-STRUCTIONS in OIL and GAS industry of the NIGERIA
Petroleum and gas exploration began in Nigeria with the start of 1956. The first commercial discovery was made in the year 1956 by the company then called Shell D’Arcy. Prior to this and, in particular, prior to November 1938, nearly all of Nigeria was cover under concessions grant to Shell D’Arcy company to search for petroleum resources. Shell’s dominance Shell as a player in this aspect of the Nigerian oil industry was in place throughout the years, right up to Nigeria’s admission to the Organisation of Petroleum Exporting Countries (OPEC) in 1971. Yuri
Nigeria began to adopt greater control over its resources for gas and oil following the policies of the other countries that are members of OPEC. The time of the transition saw the creation of National Oil Companies (NOCs) across OPEC member nations that were form with the sole purpose to monitor the stake of the oil producing countries in the use of the resources.
In some OPEC member countries, the NOCs had direct control over production however, in Nigeria they were not. Multinational Oil Companies were permit to continue these operations under Joint Operating Agreements. Which clarify it, that the stakes of the firms and their respective stakes with the Government of Nigeria in the business ventures.
