Shell Case Study Geography For Free

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Location of Nigeria

​Nigeria is a country in West Africa. Nigeria borders, Benin, Niger, Chad and Cameroon.  It is almost due south of the UK.  It extends from the Gulf of Guinea in the south to the Sahel in the north.  

Importance of Nigeria

Global Importance

  • Nigeria is a NEE. A NEE is a Newly Emerging Economy. This means that it is experiencing a period of rapid economic development.
  • Nigeria is predicted to have the world’s highest average GDP growth 2010-2015.
  • In 2014 Nigeria became the world’s 21st largest economy.
  • Nigeria supplies 2.7% of the world’s oil - making it the 12th largest producer. Oil revenue has been one of the main factors that has influenced economic growth.
  • Politically, the role of Nigeria is very significant. It is the 5th largest contributor to UN peacekeeping missions around the world.
  • Recently Nigeria’s economy has diversified, which now includes financial services, telecommunications and the media. As with many global cities, the centre of Lagos is an economic hub. 

Regional Importance

  • Nigeria has one of the fastest growing economies in Africa.
  • In 2014, Nigeria had the highest GDP of the continent and the 3rd largest manufacturing sector.
  • With a population of 178 million, it has the largest population of any African country.
  • Despite low levels of productivity and issues over land ownership, Nigeria has the largest farm output in Africa. 70% of the population are employed in agriculture.
    Most farmers are subsistence farmers (a type of agriculture producing only enough food and materials for the benefit of a farmer and their family).
  • Despite Nigeria’s problems with corruption and infrastructure, the country has huge potential. Barack Obama said Nigeria is critical to the rest of the continent’s progress.

Political, social, cultural and environmental aspects of Nigeria

Political aspects

  • The map of Nigeria was drawn at the Berlin Conference in 1883, where the countries carved up control of Africa between them. European countries exploited Africa’s resources, including its people, who were traded as slaves. 
  • Nigeria became independent from the UK in 1960. Nigeria only really gained a stable government in 1999 after corruption issues and a civil war.    
  • Several countries such as China, South Africa and America are now starting to make investments in Nigeria.    

Social aspects

  • Nigeria is a multi-ethnic, multi-faith country. This social diversity is one of Nigeria’s great strengths, but has also been a source of conflict.
  • Economic inequality between the north and south has led to religious and ethnic tensions with rise of Islamic fundamentalist group Boko Haram affecting the economy.
  • In 1967 the Igbo group dominated the south east and tried to separate from Nigeria but were unsuccessful after defeat in 1970.  

Cultural aspects

  • ​Nigerian cinema known as Nollywood is the second largest film industry in the world.
  • In sport the Nigerian football team has won the African cup of nations 3 times.
  • Nigerian music is enjoyed across the continent and beyond.

Environmental aspects

  • Northern Nigeria has different environments. Far north is semi-desert. Further south it is tropical grassland.
  • The Jos Plateau is an upland region which is wetter and cooler than the surrounding savannah.
  • Southern Nigeria has high temperatures and high annual rainfall, much of the area is forest.

Nigeria's changing industrial structure

Industrial structure is the relative proportion of the workforce employed in the different sectors of the economy (primary - acquiring raw materials; secondary - processing raw materials into manufactured goods; tertiary - service industries; and quaternary - information services).
  • Traditionally, Nigeria relied on primary industry such as agriculture (farming) to support its economy. Its main exports included cocoa, timber and cotton. In 1999, almost two-thirds of people in Nigeria worked in agriculture.
  • In the 1950s oil was discovered in the Niger Delta, which resulted in changes in Nigeria’s economy. Today oil contributes 98 per cent of Nigeria's export earnings. Income from oil has helped Nigeria to move from being a low income country to a newly emerging economy. 
  • Employment in agriculture has fallen, as Nigeria has undergone industrialisation and economic growth under a stable government. Employment in secondary industries such as oil manufacturing, motor manufacturing and sugar refining has increased. There has also been a growth in the tertiary sector, particularly in communications, retail and finance.
  • Today Nigeria has a more balanced economy, with roughly one-third of employment being in the primary sector, one-third in the secondary sector and one-third in the tertiary sector.

How is manufacturing in Nigeria affecting economic development?

  • People working in manufacturing industries tend to receive regular paid work. With more secure income, people have increased their spending on items such as cars, clothes and electrical items. Increased spending helps the economy.
  • Growth in one manufacturing industry, leads to growth in other manufacturing industries. For example, companies supply parts for making cars, leading to growth in the supply industries as well as the car manufacturer.
  • As manufacturing industries grow, more people are employed. This leads to more revenue from taxes, helping the economy to grow.
  • Foreign investors have been attracted to Nigeria by its strong industrial sector. Foreign investment helps the economy as it creates new jobs.
  • Oil processing has led to the growth of chemical industries, as by-products from  oil can be used to make soaps and plastics.

Changing political and trading relationships with the wider world

  • In the late 19th century, Nigeria became part of the British empire.  Nigeria was ruled by Britain until 1960. Nigeria and Britain had a strong trading relationship. Nigeria exported raw materials to Britain and in exchange imported manufactured goods.
  • Since becoming independent in 1960 Nigeria has become a member of the British commonwealth. Nigeria’s political role has changed in recent decades. It has become a leading member of African political and economic groups as well as international organisations such as the United Nations. 
  • Nigeria is a major global trading nation. Its main exports are crude oil and refined petroleum, natural gas, rubber, cocoa and cotton. 
  • ​Its main imports are refined petroleum from EU and the USA, cars from Brazil and the USA, telephones, rice and wheat. One of the fastest growing imports is telephones. Imported from China, these are in demand in Nigeria’s growing population and emerging middle class. Nigeria ranks 7th in the world for the number of mobile phones used (the UK is 16th).  
Nigeria's political links include membership of:
  • The United Nations - Nigeria contributes troops to the UN peacekeeping force.
  • Organisation of Petroleum Exporting Countries - OPEC aims to keep oil prices stable and to ensure a constant supply of oil. 
  • African Union - aims to keep peace and encourage economic development.
  • ECOWAS - ECOWAS is a west African trading group with headquarters in Abuja.

Trans-national Corporations

A TRANSNATIONAL CORPORATION (TNC)  is a large company that operates in more than one country.  A TNC usually has its head quarters in one country (usually a HIC) and production plants in several others (usually NEEs or LICs). About 40 TNCs operate in Nigeria, including KFC, Unilever and Shell Oil.

Transnational companies locate in foreign countries in order to take advantage of: 
  • Tax incentives
  • Cheaper labour
  • Less strict environmental laws
  • Access to a wider market

Advantages of having TNCs in Nigeria

  • Companies provide employment and the development of new skills
  • Other local companies benefit from increased orders
  • More money is spent in the economy, bringing money into Nigeria
  • Investment by companies in local infrastructure (roads,  transport) and education (schools)
  • Valuable export revenues are earned

Disadvantages of having TNCs in Nigeria

  • Working conditions are sometimes very poor
  • Management jobs often go to foreign employees brought in by the TNC
  • Much of the profit generated goes abroad (Economic leakage- money made doesn’t always stay in Nigeria. It often gets sent back to the HQ which means that Nigeria doesn’t benefit)
  • Local workers are sometimes poorly paid
  • Grants and subsidies used to attract TNCs could have been used to invest in Nigerian industry

Shell Oil in the Niger Delta

​Shell Oil is one of the world’s largest oil companies. Its headquarters are in the Netherlands. Shell Oil began operating in Nigeria after oil was discovered in the Niger delta in 1958.

Advantages:
  • Making contributions in taxes
  • Providing direct employment for 65,000 people
  • 90% of employees are from Nigeria
  • Providing school and training for Nigeria’s young people
  • Providing health care, e.g. maternity units
  • Supporting growth of small businesses

Disadvantages:
  • 9 million oil barrels have been spilt in the last 50 years.
  • This causes water and soil pollution, 75% of rural areas have no access to clean water. This has resulted in reduced agricultural production and reduced fishing yields.
  • Frequent oil flares send toxic fumes into the air.
  • Poverty is increased due to pollution.

The impact of international aid on Nigeria

Types of Aid

Aid can be defined as assisting people. Aid can take the form of short term emergency aid (e.g. food, water, shelter) following a natural disaster, or long-term development aid, aimed to improve people’s quality of life (e.g. health clinics, water supply, schools). The providers of aid can be individuals, charities, non-governmental organisations (NGOs), governments and international (multi-lateral) organisations, like the EU or UN.

Types of aid include:
  • ​​Short term - Emergency help usually in response to a natural disaster, such as a flood or earthquake.
  • Long term - Sustainable aid that seeks to improve resilience, e.g. wells to reduce the effects of drought, or improvements to agriculture.
  • Multilateral - richer governments give money to an international organisation such as the World Bank, which then redistributes the money as aid to poorer countries. 
  • Bilateral - aid from one country to another (often tied).
  • Tied - aid may be given with certain conditions e.g. that the recipient has to spend the aid money on the donor country’s products.
  • Voluntary - Money donated by the general public in richer countries and distributed by NGOs such as Oxfam.

Why does Nigeria receive international aid?

  • Nigeria has one of the highest death rates from malaria in the world.
  • Many people are still poor despite the rapid economic growth of the country.
  • The people have limited access to services such as safe water, sanitation and a reliable electricity supply.
  • Almost 100 million people (over 60 per cent of the population) live on less than US$1 (£0.63) a day.
  • Some critics argue that Nigeria funds its own space programme so surely doesn’t need aid. However Nigeria only receives about 4 per cent of aid given to African countries. In 2013 aid represented 0.5 per cent of Nigeria’s Gross National Income, a total of nearly US$5000 million. Most came from individual countries such as the UK and the USA, and some from international organisations like the World Bank. Charities and NGOs have also supported projects in Nigeria.

Impacts of aid on Nigeria

  • Birth rates and infant mortality rates are high and life expectancy is low particularly in the north east of the country.
  • Aid has brought many benefits to people living in poverty. The most successful projects are community based, supported by small charities and NGOs. These are often delivered directly to where help is needed. The aid is all used for the project and no money is wasted.In 2014 the World Bank approved a US$500 million to fund development projects and provide long-term loans to businesses. This helps to reduce over dependence on oil exports.
  • Aid from the USA helps to educate and protect people against the spread of AIDS/HIV.
  • The USAID- funded Community Care in Nigeria project provides support packages for orphans and vulnerable children.
  • The UK Department for International Development has funded a health and HIV programme, providing health education in rural areas. The NGO Nets for Life provides education on Malaria prevention and distributes anti-mosquito nets to many households.

​The Aduwan Health Centre
The community of Aduwan in Kaduna State, northern Nigeria did not have a health centre. The few health workers in the area used the community’s only shop as a clinic. The area has a high incidence of HIV/AIDS and high infant mortality. With support from ActionAid they received funds from the World Bank for a new health clinic, which opened in 2010.
The new clinic:
a) Trains local women to educate mothers about vaccinating their children.
b) Tests for HIV and other infections
c) Immunises children against polio

What prevents aid from being used effectively?

Official aid to Nigeria delivered through the government has been less successful than aid delivered directly to communities
  • Donors may have political influence over what happens to aid.
  • There are claims that aid may have been used to build up Nigeria’s navy.
  • Money may be used to promote the commercial selfinterest of the donor.
  • Corruption in the government and by individuals is a major factor in loss of aid.
  • The government may divert money to be used for other purposes.

How does economic growth affect the environment?

Economic growth often has negative economic effects on the environment:

1. Industrial Growth

  • ​Nigeria has about 5,000 registered industrial plants and 10,000 illegal small scale industries. The fast and unregulated growth of industry has led to environmental problems. 
  • 70-80 per cent of Nigeria’s forests have been destroyed through logging, agriculture, urban expansion, roads and industrial development. 
  • Some industries dispose of chemical waste on nearby land, threatening the ground water quality. 
  • Industrial chimneys emit poisonous gases that can cause respiratory and heart problems in humans. 
  • In Kano, Kaduna and Lagos, many harmful pollutants go directly into open drains and water channels. They are harmful to people and damage ecosystems downstream. 

2. Urban Growth

  • As Nigeria has developed, urban areas have grown rapidly. This rate of urbanisation has brought many challenges. 
  • Some green belts and recreational areas are being converted into building sites. The development of Abuja has resulted in areas of rich natural vegetation being replaced by concrete. Extensive bush burning has damaged trees and wildlife species, and biodiversity has been reduced. 
  • Waste disposal has become and major issue with waste being dumped on the street.
  • Services have failed to keep pace with the rate of economic growth. 
  • Traffic congestion is a major problem in most Nigerian cities, leading to high levels of exhaust emissions. 
  • Squatter settlements (illegal slums) are common in most cities. 

3. Commercial Farming and Deforestation

  • ​Commercial farming and inappropriate practices have led to land degradation. There is water pollution due to chemicals, soil erosion and silting of river channels. 
  • Many species have disappeared because of deforestation, including cheetahs and giraffes and nearly 500 types of plant.  
  • The building of settlements and roads has destroyed habitats and added to carbon dioxide emissions. 

4. Mining and Oil Extraction

  • Mining and extraction of raw materials and precious metals- particularly oil- can lead to serious pollution. These can damage ecosystems and affect people’s jobs. 
  • Tin mining led to soil erosion. Local water supplies were also polluted with toxic chemicals. 
  • Many oil spills in the Niger Delta have had disastrous impacts on freshwater and marine ecosystems. Oils spills can cause fires, sending carbon dioxide and other harmful gases into the atmosphere. They cause acid rain, which harms plants and aquatic ecosystems. 
  • In 2008 and 2009 two large oil spills devastated the livelihoods of thousands of farmers and fishermen living in the swamps around the town of Bodo in the Niger Delta. Leaks in a major pipeline caused 11 million gallons of crude oil to spill over a 20km2 area of creeks and swamps. In 2015 Shell agreed to pay £55 million compensation to individuals and to the community of Bodo. The money will be used to build health clinics and improve schools. 

The effects of economic development on quality of life

How has quality of life in Nigeria improved?

Quality of life can be measured using the HDI (human development index. Nigeria is ranked 152 out of 187 countries by its HDI, which puts it in the low category. However, over a long period, since 1980 there have been significant improvements in life expectancy, years of schooling and GNI per capita.

Have all Nigerian's benefited?

Most of the indicators of development show an improving trend, which suggests that since 1990 economic development has improved the quality of people’s lives. This is also shown in the fact that development in Nigeria can now be measured by use of mobile phones and the internet.
 
Despite the clear improvements, many people in Nigeria are still poor. Limited access to safe water, sanitation and reliable electricity is still a problem. Thirty years ago, Nigeria was at a similar stage of development to Malaysia and Singapore. Since then these two countries have moved far ahead of Nigeria, despite Nigeria’s huge oil revenues. Its oil wealth has not been used effectively and the gap between the rich and the poor has become wider.
 
Some Nigerian’s are even migrating as economic migrants, escaping a life of poverty to find jobs in Europe. The aim for most of these Nigerian migrants is to earn enough money to send home to support their families and perhaps, one day return to Nigeria to enjoy a better life with the money they have earned.

Will quality of life continue to improve?

Sixty percent of Nigeria’s population still lives in poverty. An improvement in their lives depends on the country coping with a number of challenges:
  1. Firstly, politically there is a need for a continued stable government to encourage inward investment.
  2.  Secondly, environmental issues need to be resolved. For example the pollution of the Niger Delta by oil spills has devastated the lives of the local Ogeni people.
  3.  Lastly, social tensions need to be resolved. For example historical distrust remains between several tribal groups. There is also a religious divide between the Christian south and Muslim north.

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