THE ROLE OF OIL COMPANIES IN RURAL ECONOMIC DEVELOPMENT: A CASE STUDY OF NAOC IN BRASS BAYELSA STATE
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THE ROLE OF
OIL COMPANIES IN RURAL ECONOMIC DEVELOPMENT:
A CASE STUDY
OF NAOC IN BRASS BAYELSA STATE
ABSTRACT
This study
dealt with “the role of oil companies in Brass, Bayelsa State – A case study of
Nigerian Agip Oil Company (NAOC). Both primary and secondary sources of data
were used in this study. The major data analysis techniques applied in this
study was the chi-square test completed with the use frequency tables, simple
percentage methods. We observed from the study that there was a positive and
significant relationship between the investments/establishments of oil
companies and the attainment of rural economic development. That is that, the
magnitude of oil companies’ contributions toward community development
significantly assured their success/survival in their host community. That, oil
companies have important roles to play in rural economic development. Some
suggestions were offered amongst which are: That oil companies should endeavor
to play their roles towards improving the lives good roads network, education
and other socio-economic developments for the host communities. That the host
communities should not be hostile to the oil companies so that the magnitude of
the contributions of oil companies towards socio-economic responsibilities will
be actualized.
TABLE OF CONTENTS
Title
Page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
Table
of Contents vi
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of problem
1.3 purpose and Objective of the study
1.4 Research Question
1.5 Method of study
1.6 Significance of study
1.7 Scope/Limitation of the Study
1.8 Definition of Terms
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction
2.2 Historical Background of Oil Companies in
Nigeria
2.3 The Concept of Rural Economic Development in
Nigeria
2.4 The Problem of Oil Based Community
2.5 Variable of Rural Underdevelopment
2.6 Social and Economic Conditions in the Oil
Producing Communities Today
2.7 Oil Companies and Oil Rural Communities
2.8 Oil Company Relations with Oil Producing
Communities
2.9 The Role of Oil Industry in Economic
Development
2.10 Empirical Contributions of Oil Industry in
Economic Development
CHAPTER THREE: GEOGRAPHICAL AND COMPANY SETTING OF THE STUDY
– NAOC
3.1 Introduction
3.2 The Advent of NAOC Nigeria
3.3 The Key Activities of NAOC and their Impacts
3.4 NAOC Community Development Assistance in
Nigeria
3.5 The Impact of NAOC on Social and Economic
Conditions in Brass Community
CHAPTER
FOUR: PRESENTATION AND ANALYSIS OF DATA
4.1 Procedure for Data Analysis
4.2 Analysis of the Questionnaire
4.3 Testing of Hypothesis
CHAPTER FIVE: SUMMARY, RECOMMENDATION AND CONCLUSION
5.1 Summary
5.2 Recommendation
5.3 Conclusion
Bibliography
Appendix I
Appendix II
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND
OF THE STUDY
The importance of oil
companies in the development of the Nigerian economy especially in the rural
communities of which Brass Community in Bayelsa State cannot be overemphasized.
This is because the investment/establishment of oil companies would not only
earn the country foreign exchange but also enhances the development of rural
communities through the provision of employment opportunities, social and
infrastructural facilities, etc. There is no doubt that effective
implementation of social responsibility by oil companies would assure the
achievement of rural economic development and hence the entire economy at
large.
The oil industry is
one of the largest industries in the world. Through its wide areas of operation,
the industry affects almost every country of which Nigeria and the various
states and communities are not excluded. The industry has bestowed great
financial power on oil producers. Some of which thrive in the third world. This
financial power is now a challenge to the third world oil producers to evolve
and execute development strategies for the various states and communities.
Nigeria’s oil
industry has earned foreign exchange through crude oil exports and had
generated funds for expanding investment in the economy. The discovery of oil
in commercial quantity and its subsequent “oil boom” of the 1970s carried along
with it evidences of structural transformation that brought about rapid source
of revenue, has enabled the Nigerian government to embark on ambitious targeted
development projects. The industry has been very instrumental in the admission
of the nation as a member of the Organization of Petroleum Export Countries
(OPEC) IN 1971. The oil industry has also gone a long way in improving
industrial productivity in various communities. This explains the reasons why
Nigerian leaders both the past and present recognize the dominant role of oil
companies in the Nigerian economy.
However, it should be
noted in spite of the dominant role played by oil companies, people in the
rural enclaves now are apprehensive of its negative effects on the oil
producing communities. They are aware of the fact that the activities of oil
companies render farmers and fishermen inactive without alternative sources of
livelihood. Other effects include oil spillage, pollution, environmental
degradation, etc. Although oil companies often pay compensation to it affected
victims, such compensation is seen by community dwellers as too inadequate.
This has prompted the oil companies to embark on development projects in terms
of providing social amenities such as good roads, electricity, pip-borne water
educational scholarship and employment opportunities to their youths as a means
of ameliorating the problems.
Rural economic
development is the main aim of the rural dwellers, including the petroleum
producing companies. The rural people see it as a means for improving their
standard of living. It is therefore evident that anything-long term and
short-term capital projects would assure rural economic development. Thus the
involvement in rural economic development by the Nigerian Agip Oil Company
(NAOC) is crucial for ensuring rural economic development in Brass.
The Brass community
is an island by sea. Obviously, the Brass community is experiencing
environmental hazards with its attendant environmental degradation and
pollution, oil spillage and other related factors. This is as a result of oil
companies operations. The most serious problem is how to ensure and guarantee
of rural economic development through direct participation of oil companies.
The concern here is the transformation of the living conditions of the people
on a permanently improved basis through the process of rural economic
development strategies.
It is in line with
the above issue that this research study is designed to examine the role of oil
companies in rural economic development with a particular emphasis on NAOC in
Brass community in Bayelsa State.
1.2
STATEMENT
OF THE PROBLEM
It is true that oil
companies do participate in promoting rural economic development but the
magnitude of such contributions shows more evidence of failure rather than
achievement and as such has been ignored by most communities in the areas where
these oil companies operate. Perhaps, this could be attributed to the fact that
most people due to little awareness merely think or see the existence of these
communities purely as a prospect for and produce crude oil.
Based on this
premise, it is fair to conclude that oil companies have created little or no
impact in the host communities. The reliability of this statement holds with
respect to the under-developed nature of most oil-based communities. That is,
there is hardly much effort by the oil companies in improving the welfare of
these local communities. As a result of this, these communities still lack good
drinking water, roads, transportation systems, electricity and other
infrastructures.
It is against this background
that it becomes pertinent to appreciate the scope of the contributions of oil
companies in rural economic development.
1.3
PURPOSE
AND OBJECTIVES OF THE STUDY
The main purpose of
this study is to examine the role of oil companies in rural economic development
using Nigeria Agip Oil Company (NAOC) in Brass community in Bayelsa State as a
case study.
Specifically, the study seeks to
address the following objectives:
i.
To examine the role of oil companies
in rural economic development
ii.
To ascertain the magnitude of oil
companies contributions towards community development.
iii.
To know whether oil companies in
Nigeria carryout effective social responsibilities in the various host
communities in terms of reducing crisis/conflicts
iv.
To highlight the problem encountered
by oil companies as a result of inadequate cooperation with community request.
v.
To identify the problems faced by
rural communities as a result of ineffective social responsibility of oil
companies.
1.4
RESEARCH
QUESTIONS
In the course of
conducting this research study, the following research questions were raised.
i.
What are the roles of oil companies in
rural economic development?
ii.
To what extent does the magnitude of
oil companies’ contributions enhance community development?
iii.
Are the rural development projects
provided by oil companies adequate to offer improvement in the living standard
of rural communities?
iv.
How effective is the implementation of
social responsibility by oil companies in their host communities?
v.
What are the problems encountered by
oil companies in their host communities?
vi.
What are the problems faced by
community dwellers as a result of ineffective social responsibilities of oil
company?
1.4.1
RESEARCH
HYPOTHESIS
Ho1: There
is no positive and significant relationship between the investments/establishment
of oil companies and the attainment of rural economic development.
Ho2:
The magnitude of oil companies’ contributions towards community development
does not significantly assure their success survival in their host community.
1.5
METHOD
OF STUDY
This study combined
both primary and secondary information – questionnaire was designed (structural
and unstructured) and administered to the respondents. Personal interviews are
also conducted. The administration of questionnaire enables the respondents to
contribute their own opinion regarding the issues under study.
In addition, the
secondary data were obtained from textbooks, newspapers, journals and seminar
papers.
1.5.1
INSTRUMENT
OF DATA COLLECTION AND ANALYSIS
The administration
and collection of questionnaire for the purpose of this study is as follows: A
total number of eight questionnaires were administered to the two sets of
respondents i.e. forty to each set – Management/Senior staff and junior staff
of Nigerian Aip Oil Company in Brass, Bayelsa State.
Out of the total
number of the 80 questionnaire distributed only sixty-nine (69) were collected
back. This represents about 86.25 percent of the total number of the sampled
population.
After the collection
of the administered questionnaire, it was imperative that the questionnaire be
edited. Thereafter, it was found out that the questionnaire that could be used
for the analysis were sixty-two (62) in number, that is thirty-one (31)
questionnaire were chosen was from each of the groups. The equal number of
questionnaire chosen was necessary because of the demand chi-square (X2)
statistical tool of analysis.
The statistical tool
used to test our hypothesis is the Chi-Square (X2) instrument. The
chi-square (X2) statistical tool is a non-parametric test, which can
be used for one or more variables
The purpose of this this to determine
how well an observed set of data fits an expected set by chance.
The Chi-Square (X2) has the
formula:
X2 = ∑(0 - E)
E
Where X2 = Chi Square
0 = Observed/actual frequency
E = Expected/Theoretical
frequency
SPECIFICATION
OF THE DECISION RULE
The decision rule for this test
statistics is to accept the null hypothesis (Ho) if the critical (tabulated)
value of chi-square (X2) is greater than the computed (calculated)
value of chi-square. Otherwise, we reject the null hypothesis (Ho) and accept
the alternate hypothesis (HA).
1.6
SIGNIFICANCE
OF THE STUDY
This study is
important because it will critically assess the reasons why some oil based communities
in AGIP area or operation still lack basic infrastructural facilities needed to
improve their welfare.
Hopefully, the entire
work will be of immense usefulness not only to researchers who intend to carry
out further research on this topic, but also to the generality of the people
who may be interested in knowing Nigeria Agip Oil Company’s (NAOC) contribution
toward rural economic development in Bayelsa State.
As well, as the study
would be of benefit to managers in oil companies as it would highlight clearly
the obligations of oil companies to the hos communities.
Finally, the findings
from this study would be of significance to academicians, as it would add to
the existing stock of knowledge in this area of study.
1.7
SCOPE/LIMITATION
OF THE STUDY
Since no research is
exhaustible, therefore this study is no exception; hence, the study has been
limited in terms of scope to Nigerian Agip Oil Company in Brass Local
Government Area in Bayelsa State.
However, the limitations to this study
include:
i.
TIME:
The
time given to the researcher was too inadequate as the researcher had to
combine all other academic activities with the researcher’s work.
ii.
FINANCIAL
CONSTRAINT: The finance on the disposal of the
research work. Certain cost such as transportation, photocopy, typing and
binding also constitute financial constraint.
iii.
SARCITY
OF DATA: Certain relevant secondary data which dealt on
the subject matter where not readily available in the close libraries visited
by the researcher, hence the researcher had to travel far in search for these
data
iv.
POOR
ATTITUDE OF RESPONDENTS: Some of the respondents to this
study discriminate the researcher while some of others were reluctant in
filling the administered questionnaire, notwithstanding the fact that
confidentially in treating their responses is the researcher’s watchword.
1.8
DEFINITION
OF TERMS
The following terms, which are
operational used, are defined for the purpose of clarification:
i.
Oil
Companies: These are companies, whose activities
involve oil exploration, exploitation, refining production and marketing.
ii.
Community
Development: Community development is the process
by which the efforts of the people themselves are united with those of the
government and companies to improve the economic, social and cultural
conditions of the people living in the area.
iii.
Social
Responsibility: This is that obligation the oil
companies owe the people living in the area where they carry out the
operations. These include the provision of good road, electricity, drinking
water, employment opportunity etc.
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