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AN APPRASIAL OF CORPORATE SOCIAL RESPONSIBILITY OF OIL AND GAS INDUSTRY IN NIGER DELTA FOR SUSTAINABLE DEVELOPMENT

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ABSTRACT

This study appraised the corporate social responsibility of multinational oil companies (MNOCs)
to social economic problems in Niger Delta Nigeria with the following specific objectives sought
to: (i) determine the extent to which MNOCs provide jobs opportunity for graduates from oil host
communities, (ii) ascertain the extent to which oil MNOCs provide job opportunities for unskilled
workers in oil host communities, (iii) ascertain the extent MNOCs empower household through
the award of scholarship to their children and (iv) determine the extent the MNOCs contribute
toward community development of oil host communities. The study had a population size
3,803129 out of which a sample size of 1901 was realised using William kelinger formula of 5%
error tolerance and 95 level of confidence. The method used for the collection of data was
questionnaire. Out of 1901 copies questionnaire that were distributed, 1,775 copies were returned
while 126 copies were not returned. Cross-sectional quantitative research design was adopted for
the study. The hypotheses were tested using correlation coefficient. The findings indicate that
MNOCs to a large extent contributed to the provision of employment to university graduates from
their host community (R = 0.816, f= 3526-223, t=59.382, p<0.05), MNOCs to a large extent
contributed to the provision of employment to unskilled workers in their host communities as a
give back strategies (r. = 0.893, f= 7017-812, t= 83-772, p<0.05), MNOCs to a large extent
contributed to household empowerment through the award of scholarships (r. = 0.852, f=
4707.438, t=68.611, p<0.05) and MNOCs to a large extent contributed to community
development through the provision of some basic infrastructures (r. = 0.853, f= 4721.904, t=
68.716, p < 0.05). the study found that MNOCs to a large extent perform their corporate social
responsibility which also confirm their integrity concept but such community assistance
programmes has not really enhance sustainable development of oil host communities due to the
danger from the persistent gas flare and oil spillage from exploratory activities of multinational
oil companies in host communities hence the need to shift their corporate social responsibility
from community assistance to community development and environmental sustainability by
ensuring that the activity line is merged sustainable measures. Also, it is corporate social
responsibility of Government to ensure that multinational oil companies adhere to sustainable
measures in their activity line even as they perform their corporate responsibility in host
communities hence it will be accounted to her as failure.

 

 

TABLE OF CONTENTS

Title page i
Declaration ii
Approval page iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables vii
Abstract viii
CHAPTER ONE – INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 2
1.3 Objectives of the Study 4
1.4 Research Questions 5
1.5 Research Hypotheses 5
1.6 Significance of the Study 6
1.7 Scope of the Study 6
1.8 Limitations of the study 6
1.8 Operational Definition of Terms 6
References 9
CHAPTER TWO – LITERATURE REVIEW
2.0 Introduction 10
2.1 Conceptual Framework 10
2.1.2 Concept of Oil and Gas industry 10
2.1.3 Oil and Gas in Nigeria Economy 12
2.1.4Concept of Niger Delta 13
2.1.5 Oil and Gas and Niger Delta 15
2.1.6Oil Spillage 16
2.1.7Gas flaring in the Niger Delta 17
2.1.8Concept of Development 18
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2.1.9Concept of Sustainable Development 19
2.1.10 Community Relations/Corporate Social Responsibility 20
2.1.11 Corporate Social Responsibility 20
2.1.12 Corporate Social Responsibility / Multinational Oil Companies 21
2.1.13 The Relationship between SD, Corporate Sustainability and CSR. 23
2.2 Theoretical Review 24
2.2.1 Free Prior Consent 25
2.2.2 Sustainable livelihood Approach 25
2.2.3 Reducing Reliance Theory 25
2.2.4 Unbalanced Growth Theory 26
2.2.5 Big push theory 26
2.2.6 Institutional Theory 26
2.2.7 Social exchange theory 27
2.3 Emperical Review 27
2.4 Summary of Review of Related Literature 31
References 33
CHAPTER THREE – METHODOLOGY
3.0 Introduction 39
3.1 Research Design 39
3.2 Source of Data 39
3.3 Area of Study 39
3.4 Population of the Study 40
3.5 Determination of Sampling Size 42
3.6 Method of Data Presentations 43
3.7 Validity of the Research Instrument 44
3.8 Reliability of the Instrument 44
References 45

 

 

CHAPTER ONE

INTRODUCTION
1.1 BACKGROUND OF STUDY
Human development in almost all countries in Sub Saharan Africa has been so low since
several years (Eyong 2006). Human development index as comparative measure of life
expectancy, literacy, education, standards of living and quality of life child welfare of
countries worldwide (mahbub ul Haq and Amartya Sen 1990) since 2010 adopted new
methodology in categorizing human development of different countries into very high
human development, high human development, medium human development and low
human development. Most of sub Africa countries are categorised under low human
development. As at 2013 report index on human development published in July 2014, the
highest index for sub Africa countries was 0.540. Nigeria stood at 0.504(World Map
2014).
Pitiably, most of these countries are richly endowed with mineral resources and several
other natural resources which are tradable across the continent and the world over but they
largely depend on foreign companies for their exploitation and transformation of which
Nigeria is not an exemption. Nigeria highly depend on transnational and multinational
companies like Shell, Chevron Texaco, Mobil, Total, Elf, etc for the exploration of her
richly endowed crude oil in the Niger Delta region.
Exploration of crude oil in Niger Delta region of Nigeria has indeed made huge
contribution to government revenue (Ayuba 2012). The region oil accounts for 90% of the
nation’s export earnings but still in spite of this generated wealth from the exploration of
oil, the region has remained the least developed region of the country both in physical and
socio-economic terms. Due to oil pollution the area is now characterized by contaminated
streams and rivers, forest destruction and biodiversity loss, in general the area is an
ecological wasteland. This affects the livelihood of the indigenous people who depend on
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the ecosystem services for survival leading to increased poverty and displacement of
people.
The fact that oil industries have contributed to the growth and development of the country
can not be denied (Ayuba 2012) but its unsustainable exploration activities has rendered
the area inhabitable. Its state of under-development, poverty, marginalization and
oppression forms the root of the problems and conflict in the Niger Delta (Kemedi, 2003)
and so the people of Niger Delta see the government and multinational companies as the
bone of contention in this context due to their perceived ethical inconsistencies towards
alleviating the numerous problems of the host communities in disregard to the massive
contribution of the region oil to government revenue.
The corporate response of the multinational oil corporations to the socio economic
problems in Nigeria and Niger Delta, are properly explained through two major concepts,
which are micro and macro corporate social responsibility (Onweazu 2012).. The macro
strategy is the sudden and steep rises in revenue for extractive industries for the host
country and society (Skjaerseth et al., 2004) the effect of this responsibility in developing
country is increase in capital flight, human rights controversies and lack of democratic
progress while the micro strategy encompasses the immediate effects of the intervention
programmes of the multinational oil corporations on the local communities and these
include employment of the host community members in their corporations and provision
of basic infrastructural facilities in their areas of operations to improve their living
condition. Corporate social responsibility does not only enhance community development
but also the reputation of Oil Company.
1.2 Statement of the Problem
In the Niger Delta, the source of livelihood is fishing and farming which is highly
dependent on the environment. Therefore, the people see environmental degradation as a
threat to their livelihood and so the intense protest against oil activities (UNDP, 2002).
The protest by Ijaw and Itshkiri women as against Chevron (INDY Media 2002),
(Okpowe and Adebayo 2002) described the women as angry lions that vowed to strip
themselves naked if Chevron refuse to vacate the premises due to lack of employment,
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infrastructure and environmental despoliation by the oil multinational. Although, the oil
company pleaded with these women that they will look into their plight which centred on
employment of their husbands and children and economic empowerment in the face of
livelihood displacement due to negative effects of oil activities. The oil company in quote
failed to fulfil its promises until the women protested again and took about 700 oil
workers hostage.(Jesudaedsan 2003,1-2). Recently still on oil spillage, one of the oil
communities threaten to cancel shell’s contract due to refusal to compensate the
community on oil spillage. (Guardian News paper 12th August 2014)
Gas flaring in Nigeria and its sustained practice has also become natural problem
(Aghaliwo 2009) based on the argument by the oil companies that they need sufficient
time to acquire the technology that will mitigate flaring. Observation by Ikelegbe (1993)
revealed that the flaring site around Isoko area of Delta state generates heat over average
radius of 0.5; the high generation of heat had led to loss of numerous trees and plants with
their value, loss of biological diversity and constant acid rain in the region. Aghaliwo
(2009) suggestion was made for upward review of tax and charges paid by defaulting
companies and change in property rights in Nigeria in order to focus on sustainable
development and community participation.
Chukwunoyelum(2011) studied the reactions of individuals and communities that were
denied justice when they sought for redress in the court due to oil spillage and found out
that in most cases, the litigants were disappointed due to unfavourable judgment of the
courts which were attributed to passivism, lack of environmental awareness, statutory
provisions and notices. He recommended that the government institute a self-reliance
court system that will improve the expectations of litigants from the courts when suing for
environmental pollution.
Namuyondo (2014) observed that lack of monitoring and enforcement of judicial laws
and regulations that should serve as guide to the operation of oil and gas industries in the
country contributes to the unsustainable exploration activities. She attributed the problem
to weak institutions, lack of public participation, poor communication and unskilled
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labour in the oil industry, absence of crucial policies, poor organization structures and
governance system. She recommended that a robust institution should be established
which could shape activities in the oil industries and evade dreadful conditions that could
affect both inhabitants and environment.
The urgent need for sustainable development in Nigeria especially in oil host communities
as acknowledged by Alabi (2012), Eluka (2013), Namuyondo (2014) and Uzoagu (2015)
requires all stake holders; Institutional authority, Multinational corporations, and
International institution, NGO to play their roles by instituting variety of polices and laws
that will guide how petroleum licensed companies could carry on their activities in a way
to enhance the sustainability of the economy. The impact of oil on Nigeria economy
shouldn’t only be seen on the economic aspect of development alone but also should
foster to social and environmental aspect of development of which it appear that it is as
result of neglect in social and environmental aspect of development especially in the Niger
Delta Region that gave rise to conflict and contention in the country.
1.3 Objectives of the Study
The main objective of this study is to determine the extent to which oil and gas industry
has gone to enhance sustainable development in Niger delta region of Nigeria in terms of
fulfilling their social responsibility. The specific objectives therefore include to
i. Examine the extent to which oil companies provide jobs opportunities for
graduates in their host communities.
ii. Ascertain the extent to which oil companies provide employment to unskilled
workers in their host communities.
iii. Ascertain whether oil companies empower the household through award of
scholarship to their children
iv. Determine the relationship between oil companies CSR and community
development of host communities.
1.4 Research Questions
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i. What extent do oil companies in the Niger Delta provide job opportunities for the
graduates in their host communities?
ii. To what extent do the oil companies in Niger Delta provide employment to the
unskilled workers in their host communities?
iii. To what extent do the oil companies in the Niger Delta empower the household in
their host communities through award of scholarships to their children?
iv. What is the extent of the relationship between oil companies in Niger Delta CSR
and community development of oil host communities?
1.5 Research Hypotheses
H01: The oil companies in Niger Delta do not significantly contribute to the provision of
job opportunities to Graduates in their host communities.
H02: The oil companies in Niger Delta do not significantly contribute to the provisions
of job opportunities for unskilled workers in their host communities.
H03: The Oil Companies in the Niger Delta do not significantly contribute to youth
empowerment in their host communities through award of scholarship.
H04: There is no significant relationship between the CSR of oil companies in Niger
Delta and community development of oil host communities.
1.6. Significance of the Study
This present study will be very useful to the oil companies in that it will help them
monitor the impact of their activities on their host communities. It will also be beneficial
to the government in that it will help them know the impacts of oil and gas activities on
the people and help them remodel or shape the laws which guide the activities of the
industries or oil sectors.
1.7 Scope of the Study
The study will focus on the Niger Delta Region using some selected Niger Delta
communities. The selected Niger Delta communities are Akwa-Ibom state, Bayelsa state,
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Delta state and Rivers state. These states were selected due to the high deposits of oil in
the area of which they served as oil host community to Oil and Gas industry and the
peculiarity of the environmental degradation posed by gas flaring and oil spillage in the
area.
1.8 Limitations of the Study
Some of the constraints faced by the researcher were negative attitude of some
respondents and multinational companies towards giving out necessary information
required for the study but that may be probably due to their ignorance of the main purpose
of the study.
1.9 Operational Definition of Terms
Niger Delta Niger Delta is expressly defined as noted earlier. By these
definitions/boundaries, the states covered by the actual geographical Niger Delta are:
Delta, Bayelsa and Rivers. According to Tamuno (2008), the current political definition of
the Niger Delta to include Edo,Ondo, AkwaIbom, Cross River, Abia and Imo States
GDP: Gross Domestic product which is the total value of goods and services produced by
a country in a year. It also stands as one of the macro economic indicators in Nigeria.
Sustainable development;“Development that meets the needs of the present without
compromising the ability of future generations to meet their own needs(Brunt land, 1987).
This entails that as more focus is given to maximization of profit or economic
development in the country, more concentration should also be given to the environment
from which the profit is ploughed by assess the impact of the activity on the environment
and also the people; how well they have become.
Social development: This is set to achieve equality in social issues as education, health
polities and social infrastructure. Jonathan Harris (2000)
Economic development: This involves achieving balance in all sectors of the
economy.(Todaro and Smith, 2011).
Diversification of the economy: It is the process whereby the economy revenue generation
for the development of its economy is generated from various sectors. It is using resources
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from big push investment like oil and gas industry to develop other sectors like
agricultural, manufacturing industry, etc.
Oil and gas Jaccard (2005) also defines petroleum as a term applied to a group of
materials naturally formed within the upper strats of the earth crust. The minerals are
composed of hydro-carbon together with valid amounts of oxygen, Sulphur, Nitrogen, as
well as traces of metals. Petroleum is found in liquid and gaseous states and less
frequently-as solid in its liquid state it is known as crude oil or crude petroleum, in its
gaseous state, as natural gas and its solid state by a number of terms e.g. asphalt, bitumen
etc.
Oil spillage and gas flare: discharges and explosions both accidental and operational as
well as sabotage –inspired by disgruntled and unhappy rural host communities. (Amnesty
international 2013)
Environmental impact assessment: these are laws and regulation that guide the
environment against environmental degradation and pollutions. (Federal Republic of
Nigeria, 1992). This is the need to assess the impact of a project on the environment and
people to determine both the negative and positive contribution before carrying out in the
community.
TNCs; Transnational Companies includes foreign companies that are involved in the
exploration and exploitation of oil and gas in Nigeria.
CSR; Idumange (2010) views CSR as one of the three key corporate responsibilities that
also include economic responsibility and environmental responsibility corporate social
responsibility is an intervention programmes by businesses which are geared towards
poverty reduction and community development of communities from which they ploughed
their profit.
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REFERENCE
Azaiki, S. (2003). Inequities in the Niger Delta, Yenagoa. Treasure communications
Resource limited.
Adelaja, O. (2006). Oil and sustainable development in Nigeria. Brundtland report,
Oxford University Press, Oxford.
Labara, A. (2009). Petroleum resources accounting oil and gas ISBN 978-8142-29-2,
Abkish Press Josh.
Nwafor, J. (2006). Environmental impact assessment for sustainable development. The
Nigerian perspective
Rodney, W. (1976). How Europe underdeveloped Africa. Washington Howard
University Press.
Sen, A. (1989). Development and freedom. New York anchor books:commission of
the European communities, communication from the commission
to.World commission on environmental development our common future.
UNDP, (2006). Niger Delta Human Development Report.
Uzoagu F., (2015). Corporate social responsibilities of Shell petroleum development
company (SPDC) and Nigeria Agip oil company (NAOC) for socio-economic
development of the host communities in Rivers State. Journal of economics and
sustainable development vol. 6(3)

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