CHAPTER ONE

INTRODUCTION

1.1   THE PROBLEM AND ITS SETTING

        Every industry operates within two sets of constraints. Internal constraints are those problems within the organization and over which the enterprise has reasonable amount of control. Personnel problem, capacity utilization and the techniques or process of production are some of such factors.

        External factors could pose formidable problems to an enterprise. The problems are made more severe by the fact that these problems are caused by factors outside the competence of a given enterprise to control. Examples of such factors are government regulation, traditional or cultural values etc.

        The bakery industry in Nigeria has been a victim of externally imposed constraint. Hitherto, bakers depended on local millers who produced their vital raw materials, flour from imported wheat. Government banned the importation of wheat and wheat product in 1986, thereby, sending shock waves to this very well established and expanding industry. Wheat products has started to consume an unacceptable amount of the nation’s foreign exchange as the table 1.1.1 below clearly demonstrates, as well as figure 1.1.1 in page 3.

Table 1.1.1 Foreign Exchange Spent on Wheat and Food Import 1981 – 1985

Import       1981         1982         1983         1984         1985

                N,000        N,000        N,000        N,000        N,000

Total food  1,820,215  1,642,245  1,296,714  843,246     946,567

Wheat       159,422     79,629       255,717     243,067     327,870

C/o of total    9%         5%           20%           29%          35%`

Source: Federal Office of Statistics, Lagos

        Given the above circumstances, there was a clear need for government action to check the outflow of the nation’s declining foreign exchange earnings through what important.

        Besides, it can also be argued that there were suitable local substitutes of wheat flour for bread baking; rice, cassava, maize and sorghum have been  mentioned as such suitable substitutes. To some people these substitutes were at least as good as wheat as it

FIGURE 1.1.1

FOREIGN EXCHANGE SPENT ON WHEAT AND FOOD IMPORT

1981 – 1985                                                            

Source: Federal Office of Statistics, Lagos

was suggested that local bakers rejecting them were doing so our of ignorance, or out of a slavish preference for imported products or whether one accepts the above arguments or not, what has become clear is that the effect of the ban on the importation of wheat was swift devastating on the bakery industry.

        In Enugu Urban alone, some famous baking houses closed up. Nigerline bakery, St Georges Bakery, many bakeries and Mother’s Pride Bakery all shut down between the middle of 1986 and the end of 1987. As at the time of starting this project, not every  Bakery has resumed operations.

        A far more reaching effect on this ban on the industry as a whole is that it has quite clearly changes the eating habits of many Nigerians.

        Ubiquitous bread on the breakfast table has vanished and the frequent sight of peoples snacking on bread in the afternoon has also disappeared.

        The primary demand for bread products in this country has certainly contracted since then.

1.2   STATEMENT OF THE PROBLEM

Such is the background for this study. Most baking houses are small scale business who face the task of devising survival strategies to deal with major changes in government policy that threaten their very existence.

        Our focus is on suitable survival strategies for the banking industry given their operating circumstances since 1986. We are interested in finding out how those who are still in business dealt with the new condition in which they found themselves. In particular, we will be looking at the organizational changes, financial management strategies, and other operating techniques that they had to adopt in order to survive.

        As for the baking houses that closed down, we shall explore whether there were forces other that the ban on imported wheat that engendered their demise. The study will cover a broad section of the bakeries in Enugu urban.