ABSTRACT
The study was carried out to appraise the corporate social responsibility of Multinational Oil Companies (MNOCs) in the Niger Delta. Specifically, the study described the socio-economic characteristics of the respondents, ascertained the respondents awareness of MNOCs CSR activities, assessed the extent to which MNOCs CSR activities were executed, ascertained the perceived condition of the CSR activities , ascertained the extent of host community involvement in the execution of MNOCs CSR projects, ascertained perceived level of contribution of MNOCs CSR towards infrastructural development of host communities, assessed the extent to which MNOCs CSR enhanced livelihood of host communities, determined the effects of MNOCs CSR on socio-economic wellbeing of host communities and ascertained constraints associated with implementation of CSR in the study area. Multi-stage, purposive and random sampling technique was used to select 330 respondents from six communities in the study area. Data for the study were collected from primary and secondary sources, using structured questionnaire and were analyzed using descriptive and inferential statistics such as frequency, percentages mean, the Ordinary Least Square (OLS) Multiple Regression. Three null hypotheses were tested at 5% level of significance. The findings of the study showed that the mean age of the respondents was 37. 06. The study also showed that 56.1% of the respondents were male while 43.9% were females. It was also revealed from the study that 53% were married. Most of the respondents were unaware 53.2% of the CSR activities of the MNOCs; 88.6% of the respondents were educated; the extent MNOCs executed their CSR activities was scored low by the respondent as evidenced by the grand mean 1.8. Also the result showed that the respondents generally have perceived the MNOCs CSR activities to have lowly contributed to the infrastructural development of the participating communities as evidenced by the percentage mean of 34.8% for the projects were initiated and completed (ICO); 34.4% of projects were not initiated (NIN), then 30.8% were initiated but abandoned (IAB). The level of involvement in carrying out CSR activities was 21.08% which is as well low. The level of contribution of MNOCs CSR towards infrastructural development was 1.87 mean which was low. The result indicated that MNOCs CSR activities have little effects on the livelihoods of respondents in the participating communities as evidenced by the grand mean score of 2.01. Furthermore the result showed that political instability 3.44, chieftaincy tussle 3.42, bribery and corruption 2.59 were serious constraints to the implementation of MNOCs CSR in the study area. The ordinary least squares regression analysis result shows that out of 11 explanatory variables included in the model, skill acquisition, bursary scheme, student scholarship, youth empowerment, electricity supply were all positively significant at 1% which indicates that increase in CSR activities by MNOCs will increase livelihood of the host communities. The study recommended that Federal Government should enshrine laws that would compel the MNOCs to adhere to the GMoU and ensure effective implementations, MNOCs should undertake the promotion of livelihood opportunities seriously and ensure the wellbeing of the respondents is given utmost attention especially in health care delivery.
TABLE OF CONTENTS
Title page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables viii
List of Figures ix
Abstract xi
CHAPTER 1: INTRODUCTION
1.1 Background to the Study 1
1.2 Problem Statement 6
1.3 Research Questions 8
1.4 Objective of the Study 9
1.5 Hypotheses of the Study 9
1.5 Significance of the Study 10
1.6 Scope of the Study 10
1.7 Limitation of the Study 11
1.8 Organization of the Study 11
CHAPTER 2: LITERATURE REVIEW
2.1 Conceptual Framework 12
2.1.1 Corporate social responsibility 12
2.1.2 The role of corporate social responsibility in community
development 14
2.1.3 Multinational companies and their host communities 20
2.1.4 Conflict in the Niger Delta 25
2.1.5 Corporate social responsibilities of the MNOCs 30
2.2 Theoretical Literature 30
2.2.1 Theories of CSR 33
2.2.1.1 Social obligations theory 33
2.2.1.2 Friedman’s theory 33
2.2.1.3 Triple bottom line theory 34
2.2.1.4 Stakeholder theory 35
2.3 Empirical Literature 36
2.4 Conceptual Framework 38
CHAPTER 3: METHODOLOGY
3.1 The Study Area 42
3.2 Population of the Study 44
3.3 Sampling Procedure and Sample Size 44
3.4 Data Collection 46
3.5 Validity of the Research Instrument 46
3.6 Reliability of the Research Instrument 46
3.7 Measurement of Variables and Specifications 47
3.8 Data Analysis 50
3.9 Hypothesis Testing 51
CHAPTER 4: RESULTS AND DISCUSSION
4.1 Socio-Economic Characteristics of the Respondents 55
4.1.1 Age 55
4.1.2 Sex 55
4.1.3 Marital status 55
4.1.4 Educational qualification 56
4.1.5 Occupational status 56
4.1.6 Household size 57
4.2 Awareness of Corporate Social Responsibilities of MNOCS in the Host Communities of Niger Delta 59
4.3 Extent to which MNOCS CSR Activities were executed in the Host
Communities 61
4.4 Perceived Condition of the CSR of MNOCS in their Host Communities 63
4.5 Extent of Involvement of Host Communities in Carrying Out Activities
of Corporate Social Responsibilities of MNOCS in the Niger Delta 66
4.6 Level of Contribution of MNOCS CSR towards Infrastructural
Development of Host Communities 68
4.7 Extent to which Corporate Social Responsibilities of MNOCS
Enhanced Livelihoods of Host Communities in the Niger Delta 71
4.8 Effect of MNOCS’ Corporate Social Responsibilities on the
Socioeconomic Wellbeing of Host Communities in the Niger Delta 73
4.9 Constraints affecting the Implementation of MNOCS’ Corporate Social Responsibility in the Study Area 75
4.10 Hypotheses of the Study 77
4.10.1 CSRs executed by MNOC’s do not have any significant effect on the
livelihood of the respondents in the host communities 77
4.10.2 The levels of CSRs executed by MNOCs do not have any significant
contribution to the level of development of the host communities 80
4.10.3 Pooled Results of the Ordinary Least Square Test of the Statuses/
Conditions of the MNOCs CSR facilities do not significantly affect
Socioeconomic Wellbeing of the Host Communities in the Niger Delta 82
CHAPTER 5: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 87
5.2 Conclusion 90
5.3 Recommendations 91
REFERENCES 92
APPENDIX 101
RESEARCH QUESTIONNAIRE 101
LIST OF TABLES
3.1: Population of the indigene household in Niger Delta, Nigeria 44
4.1: Distribution of respondents according to their socioeconomic characteristics in the study area 58
4.2: Percentage distribution of respondents according to awareness of
corporate social responsibilities of MNOCs in the host communities
of Niger Delta 60
4.3: Distribution of mean rating of extent to which MNOCs CSR
activities were executed in the host communities 62
4.4: Percentage distribution of respondents according to the perceived condition of the CSR of MNOCs in their host communities 65
4.5: Percentage Distribution of Respondents according to
extent of involvement of host communities in carrying out activities of Corporate Social Responsibilities of MNOCs in the
Niger Delta 67
4.6: Mean rating of perceived level of contribution of facilities/
activities of MNOCs’ Corporate Social Responsibility towards
development of their host communities in the Niger Delta 70
4.7: Respondents’ Mean rating of extent to which corporate social responsibilities of MNOCs enhanced livelihoods of host
communities in the Niger Delta 72
4.8: Respondents’ Mean rating of effects of MNOCs’ Corporate Social Responsibilities on the socioeconomic wellbeing of host
communities in the Niger Delta 76
4.9: Respondents’ mean rating of constraints affecting the
implementation of MNOCs’ Corporate Social Responsibility in
the study area 76
4.10: The CSRs executed by MNOC’s do not have any significant
effect on the livelihood of the respondents in the host communities 79
4.11: The levels of CSRs executed by MNOCs do not have any
significant contribution to the level of development of the host
communities 81
4.12: Pooled Results of the Ordinary Least Square Test of the statuses/
conditions of the MNOCs CSR facilities do not significantly
affect socioeconomic wellbeing of the host communities in the
Niger Delta 86
LIST OF FIGURES
2.1: The conceptual frame work for the appraisal of corporate social
responsibility of MNOCs on selected host communities in the Niger
Delta 40
3.1: Map of Niger Delta 43
3.2: Selection of respondents 45
CHAPTER 1
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In today economic and social environment, issues identified with social responsibility and maintainability are acquiring and more significance, particularly in the business area. Business objectives are indivisible from the societies and environments inside which they work, while transient economic addition can be sought after, the inability to represent longer-term social and environmental effects makes those strategic policies unreasonable.
The business activities of some organizations and companies sometimes impact on the environment negatively. In fact, in the penchant to maximize profit, other things such as the environment, loyalty, compassion, social welfare etc. are considered subordinates by some organizations (Elegido, 1996). The principle of corporate social responsibility is increasingly improving the way companies and organizations relate with their host communities. It is a tool used by many companies and organizations to give back to their host communities (Ogueri, Nwachkwu and Unamma, 2015). Corporate Social Responsibility (CSR) can be perceived as an administration idea and a cycle by which organizations incorporate social and environmental worries in their business activities and in their associations with the full scope of their partners on an intentional premise, (European Commission, 2001).
Corporate social responsibility can't be over accentuated with regards to its commitments to the prosperity of individuals. Corporate social responsibility (CSR) advances a dream of business responsibility to a wide scope of partners, other than investors and financial backers. Key spaces of concern are environmental insurance and the prosperity of workers, the local area and common society as a general rule, both now and later on.
The idea of CSR is under stuck by the possibility that corporations can at this point don't go about as disconnected economic substances working in separation from more extensive society. Customary perspectives about seriousness, endurance and productivity are being cleared away. Corporate social responsibility (CSR) had been recognized as a basic achievement element of oil and gas creation. Be that as it may, there could be some basic impacts of (CSR) on networks in the Niger Delta of Nigeria. The United Nation (UN) Global Compact, made by previous UN Secretary General Kofi Annan request that organizations embrace, uphold and order, inside their range of authority, a bunch of core esteems in the space of common freedoms, work guidelines, the environment and hostile to corruption.
Many corporate institutions in the developed countries have seen the importance of behaving responsibly towards society. In the United States of America, the San Francisco-based Business for Social Responsibility has been working since 1992 to help companies sustain their commercial success ‘in ways that demonstrate respect for ethical values, people, communities and the environment’ and it already has 1,400 member companies, including American Express, AT& T, DuPont, Ford, General Motors, Johnson and Johnson and Levi Strauss. “Even Wall Street has responded to this trend, with the Dow Jones launching sustainability Group Index (Dow Jones Sustainability Group Indexes, 1999).
As an important source of national wealth, natural resources improve the economic growth of a country. The natural resources of a particular nation are the richness of the forest, the aquatic area, the land, the natural gas, petrochemicals and hydrocarbons etc. Nigeria as the largest natural gas reserve in Africa and the primary oil producer of the African continent has been the target of multinational companies over the years for its Natural resources richness. The Nigeria foreign exchange was generating about 90% of its earning from the oil revenue and funding 85% of the government revenue in the 1980s from the Niger Delta region. The Niger Delta has been a blessing to the country since the inception of oil (Nwachukwu and Kalu, 2016). The Niger Delta region has been the major settlement of the multinational companies because of its estimated reserve of oil and gas. The region embraces one of the world’s largest wetlands and over 60% of Africa’s largest mangrove forests (Idemudia, 2010). The region comprises mainly of a distinguished aquatic environment that holds marine and fresh water ecosystem.
According to United Nations Development Program (UNDP), the region embraces the most extensive fresh water swamp forest in West and Central Africa. In addition to the natural resources in this region, the Niger Delta region is the home of oil and gas reserves and the oil industry.
Niger Delta resources have become a dominant attribute of the control and development of the country’s economy since it was discovered in the 1950s. The petroleum industry is operated by three main actors, these actors are: transnational corporations, indigenous private companies, and the Nigerian National Petroleum Corporation (NNPC). The government plays the regulatory role for all the operations of the multinational companies. The upstream sector is dominated by the multinational companies such as Shell Petroleum Development Company (SPDC), ExxonMobil, and Chevron in charge of exploring and producing crude oil, whereas the native companies such Oando, Forte, Conoil, and the likes are active in the downstream for marketing and distribution to users (Idemudia, 2010).
Despite the rich natural resources, especially the abundance of oil in this region, the Niger Delta region remains flagrantly underdeveloped, beggared, and degraded and a poverty zone at large. Some basic amenities and facilities associated with a modern society like potable drinking water, electricity, health care provisions and facilities, good roads in the main drilling communities, employment and cottage industries are still lacking in those areas. Often times, the host communities are abandoned and the care is diverted to the capital of the state making the community to languish more and more in abject poverty leading to conflicts in some communities. From the deep off shore activities, studies have shown that the residents of the communities where these activities are carried out expects much growth as it is supposed to bring wealth and social developments to the host communities since these activities are responsible for “environmental deterioration” in the Niger Delta region. However 75% wealth derived from oil by the Nigerian federation is not reflected in the socio and economic life of the oil producing communities and their standards of living (Idemudia, 2010). These communities still live in abject poverty despite billions generated from their communities. The rise of the military in power after the civil war de-emphasised the principle of derivation as a revenue sharing formula to other factors like population, need and even development. The implications of this is that what oil producing states got from the federation was increasingly not commensurate with their contribution and sacrifices in producing it, since the bulk of the revenue was derived from the exploitation of oil beneath their land (Idemudia, 2010).
Apart from the increasing marginalization of the oil producing areas in revenue allocation in the federation, there is also the problem of ecological disaster and environmental degradation caused by oil exploration and carbon emissions. Environmental problems like erosion, flooding, land degradation, destruction of natural ecosystem, fisheries depletion caused by dredging: toxic waste into the rivers is a common phenomenon in the region. The local people can no longer take to farming and fishing which are their major occupations (Afinotan and Ojakortu, 2009). The multinationals contribute significantly to the environmental destruction of the Niger Delta through different ways like oil spillage, gas flaring and oil pipe explosions (Ejibunu, 2007). Thus, total neglect and deepening poverty characterizes the Niger Delta communities. A broad section of the elite in the Niger Delta believes that the injustices their people suffer are due to the fact that they are minorities in the Nigerian federation. They accuse the major ethnic groups who control political power at the federal level of using oil wealth derived from the oil producing region to develop their areas at the expense of the area from where the oil is gotten. The growing disparity between the wealthy government and impoverished inhabitants of the region has widened over a period of time. This has generated a feeling of relative deprivation which has generated frustration amongst the minority ethnic groups. This has created a ground for the emergence of various challenges before the political system (Abosede, 2017).
However in the recent years, Multinational oil companies (MNOCs) are becoming involved in a plethora of CSR activities in the Niger Delta and other parts of Nigeria. Corporate social responsibility towards the relevant community and environment is essential for the oil industry as it incorporates sustainability in business development objectives. The multinational oil firms’ CSR initiatives in Nigeria include the building of hospitals, schools, markets and provision of pipe borne water amongst others. These multinational companies have realized that they owe their host communities socially, and thereby made several efforts such as the construction of roads, schools, scholarship awards and provision of borehole, hospital etc (Idemudia, 2010).
1.2 PROBLEM STATEMENT
Since the discovery of oil in the Niger Delta region of Nigeria, which has attracted Multinational Oil Companies (MNOCs) to the region, there has been increase and continuous agitation from the host communities. There was introduction of Memorandum of Understanding (MoU) by the Federal Government to ensure that the multinational companies partake in the development of their host communities through Corporate Social Responsibility (CSR). There are high expectations from host communities that the corporate social responsibility should have immense positive impact to the development of the communities and the Niger Delta region at large. These expectations vary from communities to communities (Idemudia, 2010). The need to identify the community expectation is necessary to align the corporate responsibility of the multinational companies in order to sustain the psychological contract between the host communities and the MNOCs, and since the community expectations are found to influence the decision of the community (Enuoh and Eneh, 2015). There is concern among host communities that the expectations are not being met.
There is also the concern that adequate examination of the forces that drive the community expectations have not been made especially as regards remedying: lack of electricity, lack of pipe borne water, good health care center with available drugs and medical personnel, good road network, scholarships etc of community expectations and it is believed that the proper implementation of CSR in these communities would reposition the livelihood and wellbeing of the entire region (Idemudia, 2010).
There is also the issue of poverty and high rate of unemployment in the region. The host communities are of the view that the CSR programs and activities of the multinational companies should be part of their contribution to the development as well as reduce poverty in the region (Enuoh and Eneh, 2015).
Communities that host multinational oil companies should be well developed to improve the rural wellbeing. The corporate social responsibilities introduced by the MNOCs should bring about infrastructural development to the host communities and not for them to still remain in the living conditions the MNOCs met the communities. However many of the host communities of MNOCs still do not have good access roads, good pipe water scheme, electricity, skills acquisition program, free well equipped schools, good health care centers etc. There are doubts to which the MNOCs have adequately provided these CSR to their host communities (Gallagher, Edimo, Bombom and Adam, 2011).
However, these corporate social responsibilities have been seen as "drops of water in the ocean of the host communities as it may not benefit the people directly affected. Building schools and roads might be very interesting to hear but what about the negative health impact of the people that live in the Niger Delta and experience gas flaring throughout their lifetime. The hospitals built are managed by the government and it is either they cannot afford the bills or the drugs recommended are too expensive for the average resident of the communities. Some of the provisions made by the MNOCs are not maintained or secured after provision, making it ineffective. It is no longer a question of whether the multinational companies are performing their corporate social responsibilities but, it is now necessary to know if the CSR is effective (Nwosu, 2017).
Even with the MoU, there are still lamentations from the host communities. In view of the foregoing, the study is conceived to appraise the corporate social responsibilities of MNOCs in the Niger Delta of Nigeria.
The researcher hope to find out answers to these questions:
1.3 RESEARCH QUESTIONS
i What are the socio-economic characteristics of the respondents in the study area?
ii What are the respondents awareness of CSR activities of MNOCs?
iii What are the extent to which MNOCs CSR activities were executed?
iv What are the perceived condition of the CSR activities?
v What is the level/extent of involvement of host communities in MNOCs CSR projects execution?
vi What is the perceived contribution of MNOCs CSR towards infrastructural development?
vii What are the extent to which MNOCs CSR enhanced livelihood of host communities?
viii What are the effects of MNOCs CSR on socioeconomic wellbeing of the host communities?
ix What are the constraints associated with implementation of CSR in the study area?
1.4 OBJECTIVES OF THE STUDY
The main objective of the study was to appraise the corporate social responsibility of Multinational Oil Companies (MNOCs) in the Niger Delta. The specific objectives were to:
i describe the socio-economic characteristics of respondents,
ii ascertain respondents awareness of MNOCs CSR activities,
iii assess the extent to which MNOCs CSR activities were executed,
iv ascertain the perceived condition of the CSR activities,
v ascertain the extent of host community involvement in the execution of MNOCs CSR projects,
vi ascertain perceived level of contribution of MNOCs CSR towards infrastructural development of host communities,
vii assess the extent to which MNOCs CSR enhanced livelihood of host communities,
viii determine the effects of MNOCs CSR on socioeconomic wellbeing of host communities and;
ix ascertain the constraints associated with implementation of CSR in the study area.
1.5 HYPOTHESES OF THE STUDY
HO1: The CSRs executed by MNOC’s do not have any significant effect on the livelihood activities of the respondents in the host communities
HO2: The levels of CSRs executed by MNOCs do not have any significant contribution to the level of infrastructural development of the host communities
HO3: The conditions of the MNOCS CSR facilities do not have any significant effect on socioeconomic wellbeing of the host communities in the Niger Delta.
1.6 SIGNIFICANCE OF THE STUDY
This research would serve as a source of information for MNOCs CSR projects and activities, the perceived contribution of the activities and its extent of enhancing livelihood activities and wellbeing of host communities. Its outcome will assist stakeholders, NGOs, and policy makers alike to supporting, implementing and improving CSR activities of MNOCs.
The study will help the multinational oil companies to know how well or bad their corporate social responsibilities have been in the Niger Delta and how they can meet the needs of the host communities and residents affected by their activities directly. It will also form as a basis for further researchers who might want to go beyond this scope.
1.7 SCOPE OF THE STUDY
The study focused on the corporate social responsibility of multinational companies in the Niger Delta. The study concentrated on three (3) states in the Niger Delta and one multinational company in each of the state. In River State, TEPNG (Total Exploration and Production Nigeria Limited), Bayelsa State the Nigerian Agip Oil Company (NAOC) and for Akwa Ibom state, ExxonMobil will be used for the study.
1.8 LIMITATIONS OF THE STUDY
The major limitations this study faced were high cost of transportation as the researcher visited the selected host communities and there was language barrier, hence there was need for the assistance of an interpreter. The interpreter required funds because the person did not sacrifice the whole day without any form of benefit from the researcher.
1.9 DEFINITION OF TERMS
Corporate Social Responsibility: is a way the multinational oil companies reach out to the host communities by positively impacting their livelihood, wellbeing and environment.
Appraisal: is to check how far the multinational oil companies have carried out their corporate social responsibility.
Wellbeing: is the improvement of the peoples’ health, happiness and prosperity.
Livelihood: the peoples’ means of supporting themselves.
Multinational Oil Companies: these are companies that operate in more than two countries.
Stakeholder: a person with legitimate interest in a given situation, action or interest.
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