baking houses in Enuguu urban since 1986

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. See Appendix A.

1.3   OBJECTIVES OF THE STUDY

        In
general, the study hopes to take a close look at the baking houses in Enuguu
urban since 1986. Specifically it is intended to find out the following:

(a)    What changes have those who continue to operate made in their
structure and method of operation in order to cope with the ban?

(b)    What new financial arrangement have they made following rising
production cost resulting from the ban?

(c)    Have they
coped with the sourcing of raw materials?

(d)    What new challenges they now face three years after the ban or
import flour?

        For
completeness, it is also necessary to examine the cases of those baking houses
that were found to have closed down as a result of the ban. Although there may
be problems obtaining information from some of these outfits, whose operating
records may no longer be available, an effort would be made to access the
general operating state of such baking houses before the ban. This should
enable one determine whether such baking houses were already having serious
operating difficulties before the ban or whether their extinction is to be
blamed on the ban.

1.4   SIGNIFICANCE OF THE STUDY

        This
study should be of considerable interest to policy makers in government, to the
bakers and distributors of bread products and consumers and to the public at
large. The study hopefully, will give government some documented information on
the effect of the major policy changes introduced in 1986. The information
should enable government to establish what new measures need to be taken as
well as provide some basis of determining in advance, the likely consequences
of similar measures in future.

        Bakers
should use the study to understand fully the impact of the changes on their
industry. The study will highlight how they have fared; the successful ones
will see what it was that enabled them weather the consequences of the ban on
wheat importation. Those who failed to do and indeed why they have ceased to be
in business. In the end, the industry will be better placed to cope better with
similar situations in the future.

        The
researcher’s understanding on the challenges and the survival strategies of
small scale industries will be greatly impacted.

        The bread
consumers, through this work, shall gain first hand information of the
difficulties the bakers go through to provide them with the bread they love to
eat. They will better appreciate the need to pay a little more for this
product.

        The general
reader will equally find the work a useful contribution to knowledge.

1.5   HYPOTHESIS

        In
this study, the following hypothesis have been formulated:

1.     The ban on wheat importation did not cause any significant
changes in the methods of operation of bakeries.

2.     New challenges faced by bakers are not as a result of ban on
importation of wheat and its products.

3.     The
sources of raw materials for bakeries remained unchanged after the ban on wheat
importation