There are many definitions of globalization, some suggesting that globalization is an ideological battleground where power and resources are fought over and won by a privileged few - that power in fact controls globalization (Adesanya, 2011). Theoretically globalization is meant to make possible the democratization of market forces, the breakdown of trade barriers (Adesanya, 2011) and the transformation of a country from one with a primarily extractive economy to one which has a larger manufacturing sector (Subair, 2011).
However in practice this has not proven to work very well, especially in Lower Developed Countries (LDCs). In fact some suggest that globalization has led to an intrinsic bias in the world economic order against LDCs that is making it impossible for them to prosper (Edokpayi, 2004). To explore this issue I wish to analyze the effect o
...f globalization on one of the richest countries in resources in Africa – Nigeria. I want to explore in particular the negative and positive effects that oil prospecting has had in the Niger Delta region of Nigeria, economically, socially and environmentally.
I also wish to analyze the extent to which the Nigerian government is responsible for the region’s lack of economic prosperity. My hypothesis is that the involvement of foreign companies in oil extraction has had a mostly negative impact on the region and its people. The aim of this essay is therefore to explore if this hypothesis is true. It is argued by some that economic policies pursued under globalization, such as liberalization and Structural Adjustment Programs (SAPs), actually had adverse effects on the Nigerian economy.
While liberalization is meant to eliminate trade restrictions
it has in fact enhanced the proliferation of multinational corporations (MNCs) which attempt to control extractive ventures instead of manufacturing ventures in the country (Subair, 2011). MNCs, such as Shell Oil Company, are now seen by some as having replaced colonial powers. This is because in countries like Nigeria, the effects of MNCs have largely been the exploitation of resources, expropriation of their profits and widening of the gap between the rich and poor in the locality (Edokpayi, 2004), effects that colonial powers had on the country only 50 years earlier .
SAPs are meant to diversify the productive base of the economy, yet the immediate effect of SAPs was that the output share of the manufacturing sector in GDP declined all through 1981 to 2001, from 5. 3% to 3. 3% (Subair, 2011). Even though Nigeria used to be primarily an agricultural economy, with the sector accounting for 64% of output, agriculture was largely forgotten about and its development ceased after the late 1960s (Edokpayi, 2004). Instead oil revenue took over and now about 90% of foreign exchange is derived from oil exports (Abergunrin, 2006).
This clearly shows that development of non-oil sectors is being largely ignored due to foreign direct investment being concentrated in the oil and mining sector (Subair, 2011), thus making the economy too dependent on one export product. However, some positive impacts of globalization on Nigeria as a result of the oil sector should also be taken into account. After all, over the past 30 years about $280 billion has been derived by the country from oil revenue which has huge potential for the country’s development (Edokpayi, 2004).
style="text-align: justify">Furthermore oil helped Nigeria’s GDP increased by 28% between 1977 and 1979, a huge boost to the economy (Abergunrin, 2006). Throughout the 1970s there was a strong correlation between domestic health and the prosperity of the Nigerian economy (Abergunrin, 2006). Petroleum was also used by the government as an important tool to pursue foreign policy goals – including nationalizing BP and taking all its assets in 1979 as a protest to Britain’s handling of the Zimbabwean decolonization process (Abergunrin, 2006) – thus proving that oil did make Nigeria more politically powerful to some extent.
It is important also, not to only look at the effects of globalization on the Nigerian economy as a whole, but also the Niger Delta region in particular as that is where almost all of Nigeria’s oil is extracted. Ironically, it must be noted that even though the Niger Delta region is incredibly wealthy - 90% of the total oil and gas output is extracted there (Edokpayi, 2004) – it is also the most underdeveloped geopolitical region in the country, only earning as low as 10% of the oil revenue between 1968 and 1989 (Adesanya, 2011).
One of the reasons is that the presence of MNCs such as Shell Oil Company has systematically excluded the local people from employment in the company, leading to rising unemployment and impoverishment in the region (Ighodaro, 2005). There is a disproportionate representation of local people in the staffing structure at Shell, whereby the bulk of employees are migrant workers from other parts of Nigeria (Ighodaro, 2005). Although the Ogoni people of Rivers State for example produce 50% of Nigeria’s oil wealth, they only
make up 2. 78% of the 1441 junior permanent employees (Ighodaro, 2005).
Ighodaro (2005) argues that this illustrates a deliberate system of exclusion by Shell in order to maintain impoverishment of host communities in the region. He also argues that migrant labor is used as competition to drive down the cost of labor, and migrant workers are less likely to have vested interest in the region and thus less likely to participate in protests against oil companies (Ighodaro, 2005). It may seem from the above information that MNCs are largely culpable for the dire economic situation of the Ogoni region – indeed they greatly contributed to its underdevelopment.
However this analysis would not be complete without some discourse of the government’s role in what Edokpayi (2004) called “internal colonialism”. It must be taken into account after all that the government makes the final decision on the allocation of oil revenue derived from the Niger Delta, and they are the ones not re-investing it back into the oil-producing communities. At the moment only 13% of oil revenue is allocated to oil producing states, down from 45% in 1970 (Edokpayi, 2004).
Edokpayi (2004) explains that the dominant ethnic majority which controls the government (and are numerically superior) ultimately wield political control to structure the revenue allocation formula of oil in favor of their own dominant ethnic groups. The “dependency theory” can be used here to sum up the impact of globalization on Nigeria and its Niger Delta economy. On the one hand minority groups are exploited for their oil resources by the dominant ethnic groups – which also control the government - thus keeping
the Ogoni people for example, always in the periphery of the economy (Edokpayi, 2004).
On the other hand multinational companies hold an exploitive relationship with Nigeria as a whole, having deliberately failed to transfer technology there to bolster its manufacturing sector, and thus making it dependent on the companies for technology and single product export (Edokpayi, 2004). In both cases the minority groups are dependent on the bigger players and unable to better their own economic prospects. Moving to discuss the environmental and social impacts of globalization, as seen in the Niger Delta region in relation to the development of the oil industry, most scholars agree that the impact has been largely negative as well.
When looking at the environmental impact, the adverse effects of oil development are numerous and directly affect the livelihood of the local people. Some common occurrences in the Niger Delta include frequent oil spills, gas flaring, the use of explosive charges, flooding and land grabs by the MNCs (Bello, 2009). This inadvertently leads to problems such as loss of biodiversity and natural resource damage, declining agricultural productivity, water pollution and health problems.
Damage from oil development can be traced to the very early stages of the process; when highly explosive charges are buried in the ground and detonated for seismic testing of oil reserves. These are sometimes left behind, and known to have disfigured indigenous people who return to their lands (Bello, 2009). In later stages, huge areas of primary forest are cleared leading to a stifling in agricultural development and the escape of highly toxic chemicals into the water damages local people’s fishing opportunities (Bello, 2009).
style="text-align: justify">Air pollution is also perpetrated by gas flaring which generates over 35 tons of CO2 emissions per year (Bello, 2009). Furthermore, accidents with badly worn oil transport equipment leads to frequent spills which cause the toxic contamination of land (Bello, 2009). Unfortunately these corporations do not carry out effective cleanups or remediation. All these examples illustrate the negative effects of MNCs – as the symbols of globalization - at a very local level on the environment.
The fact that Shell Oil Company has been found to carry out many comprehensive Environmental Impact Assessment (EIA) schemes when planning to drill in Europe or North America, but does not spend nearly as much effort when drilling in the Niger Delta (Adesanya, 2011), proves that MNCs like Shell are deliberately taking advantage of Nigeria’s weaker position in the world as an LDC. Although in this case the Nigerian government can be said to have tried to implement some laws to protect the environment, they have been largely unsuccessful (Edokpayi, 2004).
This is because the laws do not hold corporations accountable to pay compensation for oil spills, but rather for the land they acquire only (Edokpayi, 2004). Edokpayi (2004) argues that this way the Nigerian government protects its interests as a renter state and not the Niger Delta environment at all. Thus even though it is Shell that is causing incredible environmental damage, it can be argued that they are doing so only because the Nigerian government allows them to (Edokpayi, 2004). However what is even worse is the human price of these developments.
Adesanya (2011) stressed the importance of studying the social impact of
oil development in Nigeria, on whom he perceives to be the most vulnerable group in this situation – women. He argues that when there is no fresh water left (which is often the case) for cooking, washing, drinking or doing any household chores, women are thrown into chaos and must look for alternative means of survival. This often means either migration to other parts of Nigeria to seek menial jobs, or resort to sex work (Adesanya, 2011).
Adesanya (2011) found that where there are foreign companies, there is a higher rate of commoditization of the female body, which is increasingly the case in the Niger Delta. This is reinforced by Ighodaro (2005) who points out that prostitution has become a norm when women weigh the quick economic gains that can be made from selling their body to expatriates. These practices lead to a breakdown of the moral fibers of the community as it deviates completely from traditional values (Ighodaro, 2005).
Furthermore it leads to increased rates of crime and juvenile delinquency among young people, and entire communities are put at further risk when western-born diseases, like AIDS, become more widespread (Ighodaro, 2005). Ighodaro (2005) asserts that the oil industry is to blame for the spread of AIDS in the Niger Delta. Of course besides AIDS, other diseases such as tuberculosis, cholera, measles, yellow fever and cancer flourish in these oil-producing communities (Bello, 2009).
Infant mortality estimates range from 140 to 260 per 1000 births and many more die at preschool age (Bello, 2009). These factors as well as the incredibly high unemployment rate among local people add to the general feeling of
malaise in the community (Edokpayi, 2004). This is in turn increasingly leads to violent clashes between the local people and the government forces or corporations – clashes that local people inevitably loose (Edokpayi, 2004).
Therefore, as well as demonstrating total disregard for the environment in the Niger Delta, oil MNCs have also been found to in fact be the perpetuators of the disintegrating social fabric of the local communities. Nevertheless as Edokpayi (2005) points out, there is an alliance between the multinationals, dominant ethnic groups and government elites who cooperate to maximize the benefits of oil sales for themselves while depriving local minorities of any benefits.
Therefore we have to acknowledge that the Nigerian government is also partly responsible for the negative effects brought about by oil exploitation in the Niger Delta, especially in terms of not implementing effective environmental laws or economic policies. However as Bello (2005) mentions, although we cannot attribute all the social problems mentioned above to oil exploitation by MNCs in the region, a ‘before-and-after’ comparison indicates multinational presence is actually the sole cause of some of them and the major aggravating cause in others. Thus I can conclude that my hypothesis stands mostly true.
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