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Thursday, October 31, 2019

Introduction To Commerce

Commerce is the study if the art of selling and buying together with all activities and services which aid selling and buying. Commerce deals with the selling and buying of both tangible goods and services.
In primitive society every household produced the goods which it consumed. As society developed, it gradually became clear that no household could produce all the goods which it needed for it survival and comfort. This led to exchange. A farmer who has tubers of yam has to exchange some tubers for meat from the Hunter and some for fish from the fisherman, etc. The first commercial activities took the goods for goods. Under trade by barter money is not used as a medium of exchange.
   In modern times, commerce has developed into a complicated art involving many activities and services which directly or indirectly serve as aids to selling and buying. One word for "selling and buying" is trade. Among the various services which aid trade are a advertising, transportation, warehousing, insurance and banking. All these, therefore, come under commerce and they are referred to as auxiliary or ancillary services to trade. The activities of retailers, wholesalers, importers and exporters are also studied under commerce.
         Perhaps the best way for a novice to know what the subject of commerce deals with is to look at the content page of a standard book on Commerce. He or she will then see for himself the type of topics now treated under commerce. This will give him or her the best picture of what commerce is.

Scope of Commerce
Commerce has to deal with selling and buying as well as all the activities which serves as aids or auxiliaries to selling and buying. As mentioned above one word for selling and buying is trade. Anything that aids trade directly or indirectly is under commerce. The scope of commerce is therefore very wide. It covers all forms of transportation and communication. It also covers insurance, banking, warehousing, advertising, importation and exportation.
        A brief discussion of the above areas will give us a clearer idea of the scope of commerce.
1. Trade: Under trade we have domestic trade and foreign trade. Domestic trade is trade within  country. That is, it is the exchange of goods and services between the residents of the country. Domestic trade is also called internal trade or home trade.
     Foreign trade, on the other hand is trade between the residents of one country and those of another. Foreign trade involves the use of foreign currencies. It also involves importation and exportation.

2. Transportation: There are five main ways of transportation and they are land, water, air and by railways and by pipeline. In land transport people and goods are carried from one place to another through the use of foot, (that is trekking), animals (which can carry people and load), examples donkey, ass and camels (in Northern Nigeria) bicycles, motor cycles, trucks and motor vehicles.
          In water transport, canoes, ships and engine boats are used. Floating can also be used, examples for logs of timber in the creeks and rivers.
        In air transport, helicopters, and aeroplane are used.
          In rail transport, trains are used. In Nigeria we have railway lines running from the north to some parts of the South. Railway lines are very good for carrying bulky goods such as cattle, groundnut, rice, beans and coal.
          Only liquid goods such as oil (petroleum) can be transported through pipeline.

3. Communication: Communication is a very wide topic in commerce. It covers all such areas as communication by letters, by telegram, by telephone, telex, and print media.

4. Insurrance: Insurance houses insure individuals and corporate bodies against various types of risks. Insurance houses play an important role in the import trade.

5. Banking: There are various services which banks render that aid commercial activities.

6. Warehousing: These are houses specially built for the storage of goods.

7. Advertising: Advertising is the means whereby the availability and usefulness of goods and services are brought to the knowledge of prospective consumers.

8. Imports and Exports: Imports and exports are major topics in foreign trade and they are the substance of international commercial activities.

Functions of Commerce
  By function here is meant the work which commerce does in a country and it importance. The importance of commerce to the economic life of a country should be compared to that of food to the continued existence of a nation. Without commerce there will be a complete collapse of the economy of any nation.
Below are the main functions of commerce in a country's economic life:
1. Completion of Production: Production of goods and services is not complete until the goods and services reach the hands of the final consumer. No consumer's wants will be satisfied until goods desired reach his hand. It is through commerce that goods and services are transported and brought to the doorstep of the prospective consumer.
2. Change of Ownership: No prospective consumer is allowed by law to consume goods and services which do not belong to him or her. It is through commerce that ownership of goods and services passes from the producers to the final consumers.
3. Encouragement of Production: Commerce encourages producers to produce large quantities of goods. Without commerce producers will produce only for themselves and their families. No one will produce more than he needs if he knows that he will not be able to sell the extra. By encouraging producers to produce large quantities of whatever goods they are engaged on, commerce increases the total wealth of the nation.
4. Mobility of Factors of Production: Through commerce factors of production (labour, raw materials, capital and land) move efficiently and quickly to where they are most needed. For example, raw materials can be transported over long distances to industries where they are needed through commerce, while the industrialist concentrate their time and energy on the actual production process.
5. Division of Labour: Commerce encourages division of labour. The producer has  only concentrate on production. Raw materials which he or she uses are brought to them through commerce. Also his finished products are sold for him through commerce.
6. Funding: Producers and traders are financed through commercial activities of banks, stock-exchange markets and other financial institutions.
7. Reduction of Business Risks: The commercial activities of insurance houses have reduced greatly business risks.
8. Information: Through the commercial activity of advertising, consumers are informed about the availability of goods and services. Producers are also told about the type of goods consumers need and this enables producers to produce the right type of goods in future.
9. Provision of Employment: Commerce is a major employer of labour.
10.  Storage: The storage facilities provided by commercial houses in form of warehouses ensure that goods are preserved over a long period of time.

   Before the year 1807,  subsistence economy was practiced in nearly all parts of the territory now known ad Nigeria. Under subsistence economy each household produces the goods and services needed for it consumption. There was virtually no division of labour or specialization. Each man did hunting or setting traps to kill animals and fishes for the family. He also did farming to produce food crops and tubers for his household consumption. He built his own hut and produced crude seats for himself and family. His wife assisted in the farming work while the more dangerous work of hunting and fishing were seen as man's jobs. There was very little exchange of goods for goods (barter).
       However, there were certain ancient centres where commercial activities of s limited nature had been going on. Some of these ancient centres include Kano, Lokoja, Opobo, Calabar, Onitsha, Aboh, Ibadan, and Enugu. In these ancient centres articles of trade like salt, cloth, brass vessels, copper, book, firearm, were exchanged for local products like fish, cattle, hides and skin, gold, kolanuts and slaves. The Arabs and the Berbers, were among the foreigners in the trade.
        As from the fifteenth century the Portuguese joined this trade. They brought spices, peppers, iron works and tobacco which they exchanged for local products mainly slaves.
The Portuguese were more interested in the coastal towns such as Calabar, Aboh, Benin and Opobo. They also encouraged greatly the native Chiefs along the coasts to catch able-bodied young men for them. In return they gave the Chiefs tobacco, copper coins, jewelry and firearms. Cowries were also used at this time as medium of exchange; that is, as money.
This trade continued without any significant growth until 1807. In that year the British government abolished slave trade. As from this year legitimate trade started growing rapidly with full encouragement of the British Government.
The main article of the trade this time were palm kernel, palm oil, timber, hides and skin, groundnut.
Among the first British trading companies established in Nigeria were United African Company (UAC), The Royal Niger Company and the John Holts.
Later on the British Bank for West Africa was established to mint coins and paper money for British West Africa which then were Nigeria, Gold Coast (Now Ghana), Sierra Leone and Gambia. With this development real money guaranteed by a bank replaced rapidly the of cowries and other local mediums of exchange.
  B 1960 when Nigeria obtained political independence the level of commercial activity was fairly high. Several commercial banks have been established. Several insurance companies were already in the country. Also nearly all the railway lines now in the country were already laid. Several tarred roads, from south to north and from east to west, were already in the country.
      Since 1960 the rate of growth of the commercial activities of Nigeria has been unprecedented. Today, Nigeria's import and export trade is on the increase. The traditional economy is fast giving way to a commercial and industrialized one.

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