Observation

This question was very popular among the candidates, most candidates were able to outline ways by which infant industries can be financed in the (c) part of the question but were unable to give a correct definition of infant industries, state reasons for protecting infant industries in the (a) and (b) part of the question respectively. Candidates were expected to provide the following answer to score maximum marks in this question.

(a)        Infant industries are newly established industries that are at the developing stage and need protection so that their products can effectively compete with the products of long established international businesses.

(b)        It is necessary to protect infant industries for the following reasons:

1. In order that the economy can become self-reliant.
2. To encourage domestic production.
3. To encourage consumption of locally produced goods.
4. To conserve scarce foreign exchange.
5. To create employment for the citizens.
6. To develop the local market.
7. To develop indigenous technology and expertise.
8. To attract more foreign investments.
9. To prevent dumping.
10. To increase the level of domestic income.
11. To improve the balance of payments position.
12. Protection of infant industries encourages industrialization leading to diversification of the economy.
13. If infant industries are protected, with time they will be a source of revenue to government through tax payments.

(c)        (i)         Bank loans.
(ii)        Issuing of shares.
(iii)       Sales of debentures.
(iv)       Ploughed back profit.
(v)       Trade credit.
(vi)       Personal savings.
(vii)      Borrowing from other sources.
(viii)     Assistance from government.
(ix)       Sale of properties/assets.