IMPACT OF MULTINATIONAL COMPANIES IN THE DEVELOPMENT OF THE NIGER DELTA ( A CASE STUDY OF SPDC PORTHACOURT)
ABSTRACT
This research work which is on the impact of multinational companies in the development of the Niger Delta ( a case study of SPDC Porthacourt) focused on the determination of the contributions of the Shell Petroleum Development Company (SPDC) on the development of the Niger Delta are (Delta State a Niger Delta State) in the provision of employment and infrastructural facilities such as education, health, electrification, agriculture and others. And also to examine the negative impact such as pollution (water, land, air) on the environment and on the lives of the people. Based on these problems the research examined the role played by SPDC in provision of employment and infrastructural facilities (education, health and others). The impact of SPDC in the communities covered by its operations was also examined and also to investigate how their activities affect the environment and to ascertain whether the objective was achieved or not. Simple percentage and chi-square were used to ascertain if the role multinational corporation in the development of the Niger Delta has a negative effect or a positive effect. The research concluded that the impact of multinational corporations has a negative effect in the development of the Niger Delta area. As such the following were some of the measures recommended by the researchers. First, the company should spread its development activities to cover more communities in the area to ensure even distribution of its activities in the area. Secondly, the federal government should monitor the proper implementation of its policy on the contributions of multinational at companies development of their host community. Thirdly, the number of educational scholarship awarded should be increased can it should not across all levels. Also the oil companies must be go beyond scholarship awards to the integrations of the awards with appointment in the oil service business. Providing farms with the necessary funds necessary funds and providing them with modern farming implement and machines including fertilizers should encourage agriculture. This will go a long way to uplift farming from the subsistence level to mechanized level. This is expected to lead to increase food production in the long run. Finally, a significant portion of the employees of these multinational oil companies should come from indigenes host communities.
TABLE OF CONTENTS
TITLE PAGE - ii
DECLARATION - iii
CERTIFICATION -
DEDICATION - v
ACKNOWLEDGEMENTS - vi
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study - - 1
1.2 Statement of Problem - - 8
1.3 Objective of the Study - 10
1.4 Research Questions- - - - 11
1.5 Statement of the Hypothesis 12
1.6 Significance of Study - 13
1.7 Scope of the Study - - 14
1.8 Definition of Key Terms - 15
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction - - - - 18
2.2 Conceptual Framework - - 33
2.3 Theoretical Framework - - 45
2.4 Empirical Review - - - 50
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Research Design -- 56
3.2 Population of the Study - 57
3.3 Sample Size - -- 57
3.4Sampling Technique - 58
3.5 Method of Data Collection - 58
3.6 Technique for Data Analysis - 59
3.7 Model Specification and Variable Definition -59
3.8 Measurement of Variables - - 59
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Presentation of Data - -- 60
4.2 Discussion of Findings - - 79
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary - - 80
5.2 Conclusion - -- 80
5.3 Recommendations - 93
References - - 95
Appendix - - 98
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
A considerable proportion of the inflow of goods and factors between countries take place within multinational corporations (MNCS). As an operating definition we associate this with firms, which own and control income generating assets in more than one country (Buckley and Cassan, 1985).
The United Nations Organization (UNO) defines Multinational Corporation (MNCs) as enterprise which own control production or service facilities outside the country in which they are based. The multinational corporation (MNCS) is an agency of direct, as opposed to port folio investment in foreign countries. It is not always incorporated or private. It can be cooperative or stated owned entity. Almost every large business organization has some direct or indirect involvement with foreign countries, but only when an enterprise confronts one or more of the problems of designing, producing, marketing, of financing its products and services. Within and among foreign nation does it become truly a multinational.
According to Nwankwe A.A. (1981) multinational corporations is partly designed as a company which has its parent headquarters, located in a developed country and subsidiary operation in a number of other country that is controlled by another, not necessarily a parent company, in another country.
Foreign monopolies adversely militate against all efforts by developing countries to achieve take off into sustained growth. They invest capital in extractive industries. As a result, the large share of the economic surplus generated from the extractive industries goes to the countries of foreign monopolies and because investment is not in productive industries of resources are non-existent. Thus the determination of these developing countries to have industries that will generate forward and backward linkage in economy is frustrated.
Multinational corporations, which are depicted in some quarters as key instrument for maximizing World Welfare are seen on others as dangerous.
Their ability to tap financial, physical and human resources all over the World, their capacity to develop new technologies and skills and their managerial supremacy to translate resources into specific outputs have proven to be outstanding.
In the last decade or two, some economist in developing countries especially those of Latin America have taken a fresh and unbiased look at the sole of multinational corporations in developing. Countries they found a great deal of exploitation and argued that these countries take more from the developing countries than they put in. this revelation forced the United Nations Organization, especially the United Nations Conference on trade and development and the regional economic commissions, to undertake studies on the impact of multinational corporations in the development of the economies of the developing countries.
It may be argued that the oil companies operating in these areas have been doing a lot such as intensification of training programmes for indigenous employees with the aim of improving the productive capability of these employees. Others have argued that there is lack of popularity of the oil compares as regards the concept of social responsibility. It could also be said that most of these multinational companies such as shell have engaged in developmental projects. Apart from the gains from the companies, there are also pains with these communities suffer. Example of such include oil spoilage just like recent oil spoilage in some communities in Gbaramatu clan. Others include pollution of all kings like air, water, land etc.
Which have a negative impact on the environment. This was the view of Aboribo R.O. (2000) in the paper he presented on the National Conference on management of petroleum and energy resources for sustainable development in the Niger Delta. The focus of this research work is on the impact of multinational corporations in the development of the Niger Delta as it lays emphasis on the provision of infrastructural facilitates and impact on the environment.
1.2 STATEMENT OF PROBLEM
The people of the Niger Delta were basically farmers, fishermen, hunter and trader. Before the coming of the multinational oil companies (MOC) such as shell petroleum development company (SPDC), Mobil Producing Nigeria Unlimited (MPNU), Chevron – Texaco Nigeria limited, formerly Texaco Overseas (Nigeria) petroleum company unlimited (TOPCON) and Chevron Petroleum Company of Nigeria limited respectively and others. The activities of these oil companies have affected the social and economic activities of the people in this area. In the past the people of the Niger Delta used to enjoy bountiful harvest from their produce, have large number of catches, which were used for both commercial purposes and for local consumption. The activities of these multinational companies such as Shell Petroleum Development Company, involves the generation of Seismic Waves in the earth by near surface explosion of dynamite. This action produce earthquake which causes rock failure, soil subsistence, structural damages to building and genocide on both land, animals and fish gas flaring cause air pollution, destruction of plants around the flaring areas and also contributes to soil infertility. Also the activities of MOCs affected the water (pipe-borne) in some parts of Porthacourt last year. These multinational oil companies have not done enough to alleviate the suffering of the people, this has resulted in youth restiveness and more recently women restiveness in Porthacourt and the Niger Delta in general.
1.3 OBJECTIVE OF THE STUDY
This research work focuses on the impact of multinational corporations in the development of the Niger Delta. The topic was chosen as a result of the controversy surrounding their contributions to development especially in the areas covered by the operation of Shell Petroleum Development Company.
Therefore the objective of this research work are as follows:
i. To determine the contributions of Shell Petroleum Development Company (SPDC) on the development of the Niger Delta and Porthacourt in particular, with regards to the provision of basic infrastructural facilities such as education, health, vocational training, electrification to mention a few.
ii. To examine the negative impact such as pollution in form of oil spillage on the environment and lives of the people.
iii. To examine the problems being faced by Shell Petroleum Development Company (SPDC) in the course of its activities in the areas covered by its operation in Porthacourt and its environs.
1.4 SIGNIFICANCE OF THE STUDY
The significance of the research work is to examine the negative externalities of multinational companies as represented by Shell Petroleum Development Company (SPDC) being the largest multinational corporating in the Niger Delta on the people of the Niger Delta area covered by its operation such as pollution in the form of oil spillage, land degradation etc. as well as its positive externalist such as in the provision of good roads, hospitals, scholarship etc. This will enable multinational companies to asses whither their impact is felt or not.
1.5 SCOPE OF THE STUDY
The scope of this study is limited to one component of foreign capital inflow, which is multinational corporations investment (MINCI). The activities of multinational corporations have been on the increase over the years in Nigeria. As a result on the increase over the years in Nigeria. As a result more attention should be paid to their activities. Again it is observed that MINCI present a unique opportunity for Nigerians. Because apart from the transfer of capital inflow into the country, foreign investors carry with them the technology of production, technical personnel, managerial services, entrepreneurial innovation in product etc. which are very significant for the development of the country.
This is evident in Japan has been known to achieve high level of development with the absence of natural resources, has turned information into raw materials or new resources worth billions of dollars which she export every year, such as her famous Japanese cars and electronic gadgets.
This was view of Ifidon S.E. in the paper he presented at the National Conference on management of petroleum resources.
1.6 HYPOTHESIS OF THE STUDY
H0: The impact of multinational corporations has a negative effect on the development of Niger Delta.
Hi: The impact of the multinational corporations has a positive effect on the development of the Niger Delta.
1.7 LIMITATION OF THE STUDY
The time available for the research was relatively small, compared to the vast volume of materials I had to digest, interviews to be conducted etc Also financial resources required were much.
It is also important to mention certain limitation encountered in the course of obtaining data for this research work.
Such limitation include having to pass through the department of petroleum resources in the NNPC before getting data from Shell Petroleum Development Company (SPDC). Also the non-challant attitude of some Shell Petroleum Development Company (SPDC) employees acted as hindrances to the research work.
1.8 DEFINITION OF KEY TERM
The following key terms used in the research work are defined as follows:
(i) Multinational corporation or companies: multinational corporations are a spill over from a healthy and cohesive internal (domestic) economy. They do not merely engage in importing and exporting of the products from various regions of the World, but they are directly involved in investment abroad. The impact of multinational corporation (MNCS) on development is very uneven and in many situations, multinational corporation (MNCS) activities reinforce dualistic structures and further widen income inequalities.
(ii) Development: According to Todaro M.P. (1977), Development is seen as a multi-dimensional process involving the reorganization and re-orientation of entire economic and social systems. In addition it is aimed at improving the income and output. It involves radical changes in institutional, social and administrative structure as well as popular attitude and some time even customs and beliefs.
(iii) Niger Delta: The Niger Delta as described by the Henry Wilink minorities commission of 1958 as a swampy country along the coast between Opobo on the “mouth of Benin River”.
(iv) Shell Petroleum Development Company (SPDC): SPDC as the largest multinational oil company operating in the Niger Delta shall be used as a basis for assessing the role and impact of multinational companies operating in the Niger Delta. As such SPDC and multinational companies can be used inter-changeable during the course of the research work.
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