ABSTRACT

Crude oil is one of the natural resources that have contributed most to the development of the Nigerian economy, yet it also creates serious environmental and socio-economic challenges. The effects of oil exploration on the socio-economic wellbeing of host communities such as Ogoniland have therefore been a concern for the Nigerian government. Measuring these effects is essential for policy formulation and strategic planning for sustainability. This study measures the effects of oil exploration on the socio-economic wellbeing of the Ogoni community in the Niger Delta region of Nigeria.

Primary data were collected through a survey of 400 households selected by multistage sampling in December 2013 and January 2014. The data were presented using descriptive analysis, and ordinal logistic models were estimated to test the hypotheses. The descriptive results show that about 65 per cent of the households earned an average monthly income of N50,000 or less. About 75 per cent were engaged in agricultural production, and only 37 per cent of these reported losing produce to oil spillage in the previous two years. The ordinal logistic models show that oil spills and air pollution do not significantly affect the health status of the Ogoni community. Household income is rather the main determinant of health status, which suggests that households with higher incomes suffer little or no environment-related disease. Oil spills do not significantly influence agricultural productivity, but land degradation and air pollution significantly reduce it. Oil spills and land degradation have no significant effect on household income, whereas government interventions in the form of employment creation have a positive effect on income.

Willingness to accept payment, or to refuse it, from oil companies as the price of tolerating further oil spills, land degradation and air pollution is determined by three factors: household income, social capital and the perceived level of environmental damage. Three socio-economic factors, namely nationality, household income and social capital, likewise determine the Ogoni people’s marginal willingness to pay, or not to pay, for government intervention programmes. The study concludes that the Ogoni people would be willing to allow further and full-scale oil exploration in their community if their socio-economic wellbeing were assured.

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Economic development, and indeed human survival, depends on the exploitation of natural resources. In recorded history, no natural resource has shaped world civilisation more profoundly than crude oil. Oil has become a decisive element in the politics and diplomacy of states. It keeps the factories of industrialised countries running and supplies the revenue with which oil exporters carry out their national development plans. Governments therefore treat oil as a vital concern and a central factor in their political and diplomatic strategies.

Nigeria’s oil industry was founded in the 1950s, but it came to play a prominent role in the national economy only after the civil war of 1967 to 1970. The country moved from depending on a few primary commodities for foreign exchange to depending almost exclusively on crude oil exports. Oil revenues in the 1970s supplied the funds for basic infrastructure and for developing other sectors. Weak foresight and poor economic management at various times, however, led Nigeria to neglect the development of other sectors, and the legacy of that neglect is a persistent economic vulnerability. Nigeria still shows the paradox described in the literature on resource-rich economies, in which abundant oil wealth coexists with slow economic and human development in the producing region (Nkem et al., 2024).

The Federal Republic of Nigeria lies on the Atlantic coast of West Africa. It is Africa’s most populous country and is home to about 250 ethnic groups speaking nearly 400 languages. Nigeria became independent on 1 October 1960 under a federal system designed by the colonial rulers, which from the beginning was at odds with the aspirations of many minority groups. Scholars of political development have pointed to two flaws in the original constitutional arrangement. The first was the division of the country into three unequal regions, with the population of the northern region alone exceeding that of the two southern regions combined. The second was the political and demographic domination of each region by its majority ethnic group, with the attendant marginalisation of minority nationalities, who made up about one third of each region’s population. The Niger Delta people are the largest group among the ethnic minorities of the South-South geopolitical zone.

The Niger Delta as a political region predates Nigeria’s emergence as a British colony. Britain’s Niger Delta Protectorate and the Niger Delta Coast Protectorate were well established by the 1880s and 1890s, before further British interests led to the formation of Southern Nigeria in 1900. In the decades before the Second World War, many Niger Delta communities had their own local leaders, who served both their people and the British. Regional representation became important in colonial arrangements only after the Richards constitution reforms of 1946.

The states typically considered part of the Niger Delta are Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers. Rivers State, whose capital is Port Harcourt, is bounded on the south by the Atlantic Ocean, on the north by Imo, Abia and Anambra States, on the east by Akwa Ibom State, and on the west by Bayelsa and Delta States. Its population is predominantly Ikwerre, an Igbo subgroup, with Ijaw, Ogoni and other groups in the coastal areas. Linguists group the communities of the region into six major language groups: Ijoid, Lower Niger (Igboid), Ogoni, Central Delta, Delta Edoid and Lower Cross. The Ogoni group includes many dialects that can be grouped into four: Khana, Gokana, Eleme and Ogoi. Together these four groups make up the Ogoni community, also called Ogoniland, and the terms “Ogoni community” and “Ogoni people” are used interchangeably in this work.

Apart from the need for an in-depth and intensive study, Ogoniland was chosen because it was among the first places in Nigeria where oil was found in commercial quantity, and drilling began there in the late 1950s. Its historical experience can therefore be regarded as a good representation of the socio-economic effects of oil company activity in the wider Niger Delta. Nigeria itself joined the oil-producing nations in 1956, when oil was discovered in commercial quantities, and has long ranked among Africa’s leading oil producers. The discovery of oil marked the start of a profound transformation of Nigeria’s political and economic landscape. Since the 1980s, oil has accounted for the bulk of government revenue and for almost all export earnings. Almost all of the country’s oil and gas comes from the Niger Delta, which is occupied by a variety of indigenous nationalities. The delta sustains the largest wetland in Africa and one of the largest in the world. It has a landmass of about 75,000 square kilometres and the third largest mangrove forest in the world, together with extensive freshwater swamp, coastal ridges, fertile dry-land forest and tropical rainforest of great biodiversity. Seasonal flooding and the deposition of sediment over thousands of years made the land fertile, and the creeks and streams once provided habitat for abundant fish and wildlife.

The Ogoni are a distinct indigenous minority nationality who live in an area of about 1,000 square kilometres on the south-eastern fringe of the Niger Delta. Using the 2006 census count of 831,726 and an average annual population growth rate of 2.5 per cent, the study estimates the 2010 population of the Ogoni at about 914,899. Ogoniland comprises four local government areas (LGAs), namely Eleme, Gokana, Khana and Tai.

Before British colonial rule, the Ogoni had a well-established social system that placed great value on their socio-economic wellbeing. They lived on fertile alluvial soil and were surrounded by rivers and creeks, which they used to become skilled farmers and fisher folk. They produced not only for their own subsistence but also for neighbours across the Niger Delta, and Ogoniland was known as the “food basket” of the delta. Their traditional livelihoods supported the sustainable management of natural resources. The Ogoni live in closely knit communities, and their traditions are rooted in nature. Rivers and streams are the source of water for life and are also bound up with the life of the community, so they must not be desecrated. The Ogoni believe in a dynamic interaction among men and women, animals and plants, and they hold that every person must act to protect these natural rights, including rights to land and to nature. Grave consequences follow any conduct that pollutes the environment. These practices ensured the sustainable use of resources and the protection of biodiversity, and many of them survive to this day. This explains why the Ogoni are united on decisions that concern their environment and wellbeing, and why the Movement for the Survival of the Ogoni People (MOSOP) was able to mobilise them in the early 1990s. Oil operations in the region came to an abrupt halt in that period, amid demands from Ogoni leaders for greater political and economic control of resources, for representation and for environmental protection. Tensions escalated into violent clashes with state forces and, in 1995, the arrest and execution of nine Ogoni leaders (Nkem et al., 2024). Today Ogoniland has five major oil fields with 110 oil wells connected by interlinking pipelines to flow stations at Bomu, Korokoro, Yorla, Bodo West and Ebubu, and the pipelines cross Ogoni villages.

1.2 Statement of the Problem

The Ogoni community, the subject of this study, has more than 100 oil wells, together with flow lines, manifolds, flow stations and export trunk lines. Ogoniland and the other communities of the Niger Delta have generated enormous wealth for the nation, and their crude oil and natural gas have contributed more than anything else to the growth of the national economy. Industry has accounted for a large share of Nigeria’s GDP, and crude petroleum and natural gas have accounted for the overwhelming share of industrial output.

Behind this record of financial benefit, oil exploration and production, which includes seismic survey, drilling, production and transport, has had a range of environmental and social effects on the Ogoni community. The United Nations Environment Programme’s 2011 assessment documented extensive contamination in Ogoniland, and it concluded that the remediation practice then in use in Nigeria did not meet international best practice (Sam et al., 2022). The major causes of spills in Ogoniland and elsewhere in the delta include blowouts, pipeline corrosion and equipment failure, as well as sabotage, theft and artisanal refining, which also cause repeated re-pollution of remediated or cleaned sites (Sam et al., 2022). Minor causes include accidental spills, tank overflows, valve failure, overpressure, erosion and engineering error. These spills are believed to have devastating effects on the socio-economic wellbeing of the community. Evidence from other parts of Nigeria points in the same direction. Spatial analysis of oil spill locations shows that farmers located close to spills suffer a measurable fall in agricultural output (Manotas-Hidalgo, 2021). Studies of communities in Rivers, Delta and Bayelsa States find that oil pollution damages forests and biodiversity, occupational tools, financial capacity, income and human health (Odubo & Odubo, 2024).

The wetlands, farmland and waterways of Ogoniland have been seriously degraded. Pipelines that cross farmland and run directly in front of homes are often old and in poor condition, which makes them prone to cracking and leakage, and spills have repeatedly polluted farmland and water sources. Accounts of the causes and the clean-up of individual spills have been contested between operators and communities for decades. The Nigerian Constitution of 1999, in Chapter II, Section 17(2)(d), requires that the exploitation of human and natural resources must not be carried out for any reason other than the good of the community. The community, however, perceives that this principle has not been fully applied in Ogoniland. Leakages from pipelines, the construction of roads and canals, and deforestation have disrupted the wetlands. Fishing has declined, and the quality of drinking water and soil has fallen sharply, which threatens the livelihood of the Ogoni people. Residents also report that damaged livelihoods and falling family incomes have increased their economic vulnerability and reduced their ability to meet basic needs, including paying for health care, while the lack of progress in remediation and non-transparent benefit-sharing arrangements have compounded these exclusionary effects (Nkem et al., 2024).

The arrival of oil, oil workers and oil installations also changed the society itself. Workers migrated into the community, money became more important in the local economy and food prices rose. Temporary employment for a few members of the community also brought disruption, because young men who were relatively well paid for short periods changed their spending habits, and this divided them from their communities. Farmers were affected the most, because their land was taken for oil extraction without adequate compensation or secure employment in return. Oil also brought major industrial projects to Ogoniland, including two refineries, a petrochemical plant, a fertiliser plant, a cement factory and a power plant. To the Ogoni, however, these facilities have been more a source of grievance than a source of benefit, despite federal regulations on local employment and corporate social responsibility.

The Ogoni leaders recognised the harm of oil extraction early. They wrote letters as early as 1970 that described oil activities as seriously threatening the wellbeing, and even the lives, of the Ogoni people. Government and the oil companies have since responded in several ways. These include corporate social responsibility (CSR) units in the oil firms, livelihood support programmes, environmental and related laws, and government monitoring and enforcement agencies. The government established the Niger Delta Development Commission in 2000 to administer the 13 per cent derivation principle, which was enshrined in the Constitution in 1999 and allocates a share of oil revenue to the nine oil-producing states (Nkem et al., 2024). Following the UNEP report, the government also set up the Hydrocarbon Pollution Remediation Project (HYPREP) to coordinate remediation and the restoration of livelihoods, starting with Ogoniland (Sam et al., 2022). Both government and the oil firms have provided social infrastructure such as piped water, electricity, roads, school buildings, scholarships and jobs. Studies of the global memorandum of understanding (GMoU) model of the multinational oil companies find that CSR interventions in the oil-producing communities have made a significant but modest difference to outcomes such as youth migration and electoral violence (Uduji & Okolo-Obasi, 2021; Uduji et al., 2022). Yet the facilities provided are widely regarded as not commensurate with the damage caused by oil exploration. HYPREP itself has been assessed as bureaucratic, with capacity gaps and weak stakeholder engagement, and it has been slow to achieve sustainable outcomes (Sam et al., 2022). Pre-remediation baseline work in Ogoniland confirms that oil pollution has damaged the socio-ecological values and livelihoods of the communities (Sam & Zabbey, 2024).

No commensurate response by government or the oil companies to the adverse effects of oil exploration can be designed without a proper estimate of these effects. The literature on the Niger Delta has expanded considerably, but it leaves a gap. Many studies cover the whole region or other parts of the Niger Delta and not Ogoniland (Manotas-Hidalgo, 2021; Odubo & Odubo, 2024). Studies that do focus on Ogoniland tend to concentrate on environmental assessment and remediation (Sam et al., 2022), on the baseline conditions for restoration (Sam & Zabbey, 2024), or on residents’ qualitative experiences of economic exclusion (Nkem et al., 2024). To the best of our knowledge, little work has quantified, at the household level and across the four LGAs of Ogoniland, the effect of oil exploration, of government intervention and of company intervention on the socio-economic wellbeing of the community, or estimated the community’s willingness to accept or pay for them. The effect of oil exploration on the socio-economic wellbeing of host communities appears to have been crowded out by the large interest in environmental impacts. Yet measuring these socio-economic effects is an essential requirement for policy formulation and strategic planning for sustainable development. It is therefore expedient to estimate the effects of oil exploration on the socio-economic wellbeing of the Ogoni community in the Niger Delta.

1.3 Research Questions

This research addressed the following questions:

1. What is the effect of oil exploration on the socio-economic wellbeing of Ogoni people as a host community?
2. What is the effect of government’s intervention efforts in Ogoniland on the socio-economic wellbeing of the community?
3. What is the effect of oil companies’ intervention efforts in Ogoniland on the socio-economic wellbeing of the community?
4. What socio-economic factors influence Ogoni people’s marginal willingness to accept pay or not to accept pay from oil companies to tolerate negative externalities resulting from the companies’ activities?
5. What socio-economic factors influence Ogoni people’s marginal willingness to pay or not to pay for government intervention programmes in the community?

1.4 Objectives of the Study

The overall goal of this research is to measure the socio-economic effects of oil exploration in Ogoniland. The study aims to raise public and political awareness, and to assist the Nigerian government, stakeholders in the oil sector and the oil-producing communities in implementing the principles of “living with nature, living with risks” within the context of sustainable development. The research therefore provides evidence on the socio-economic effects of oil exploration on host communities. The specific objectives are as follows:

1. To estimate the effect of oil exploration on the socio-economic wellbeing of Ogoni people as host community.
2. To evaluate the effect of the government’s interventions towards mitigating negative externalities of oil exploration in Ogoniland on the socio-economic wellbeing of the community.
3. To analyse the effect of oil companies’ efforts towards mitigating negative externalities of oil exploration in Ogoniland on the socio-economic wellbeing of the community.
4. To determine the socio-economic factors influencing Ogoni people’s marginal willingness to accept pay or not to accept pay from oil companies to tolerate negative externalities resulting from the companies’ activities.
5. To ascertain the socio-economic factors influencing Ogoni people’s marginal willingness to pay or not to pay for government intervention programmes in the community.

1.5 Hypotheses of the Study

Given the above objectives, this research evaluates the following hypotheses:

1. H₀: Oil exploration in Ogoniland has no significant effect on the socio-economic wellbeing of the host community. H₁: Oil exploration in Ogoniland has significant effect on the socio-economic wellbeing of the host community.
2. H₀: Government interventions towards mitigating the negative externalities of oil exploration in Ogoniland do not have significant effect on the socio-economic wellbeing of the community. H₁: Government interventions towards mitigating the negative externalities of oil exploration in Ogoniland have significant effect on the socio-economic wellbeing of the community.
3. H₀: Corporate social responsibility activities of the oil companies towards mitigating the negative externalities of oil exploration in Ogoniland do not have significant effect on the socio-economic wellbeing of the community. H₁: Corporate social responsibility activities of the oil companies towards mitigating the negative externalities of oil exploration in Ogoniland have significant effect on the socio-economic wellbeing of the community.
4. H₀: Socio-economic factors are not significant determinants of Ogoni people’s marginal willingness to accept pay or not to accept pay from oil companies to tolerate negative externalities resulting from the companies’ activities in the community. H₁: Socio-economic factors are significant determinants of Ogoni people’s marginal willingness to accept pay or not to accept pay from oil companies to tolerate negative externalities resulting from the companies’ activities in the community.
5. H₀: Socio-economic factors do not have significant influence on Ogoni people’s marginal willingness to pay or not to pay for government intervention programmes in the community. H₁: Socio-economic factors have significant influence on Ogoni people’s marginal willingness to pay or not to pay for government intervention programmes in the community.

1.6 Significance of the Study

Environmental Impact Assessment (EIA) is a regulatory requirement in Nigeria. Its proper application ensures that adverse impacts are minimised and positive impacts enhanced during oil exploration. This study focuses on Socio-Economic Impact Assessment (SEIA), a major aspect of EIA that identifies and evaluates the socio-economic and cultural impacts of an industrial development project on the lives and circumstances of people, their families and their communities. Crude oil is produced mainly in the Niger Delta and has long supplied the greater part of Nigeria’s government revenue and export earnings. Cautious policies are therefore needed to justify the extraction and exploration of this resource in a few states. It is justifiable to undertake a study that proposes policy solutions to the socio-economic effects of the activities of oil multinationals in producing areas such as Ogoniland, and the results will be a resource for policy aimed at the sustainable socio-economic development of the community.

The findings will also help policy makers working towards sustainable development in Ogoniland to understand, in measurable terms, the socio-economic consequences of oil exploration in the community. Apart from being useful to different units of government and their agencies, the findings will benefit the following groups, among others:

1. Sociologists, who can use them to inform local communities about changes in their wellbeing while encouraging the communities to take part in decision-making.
2. Members of the local community, particularly council leaders and developers, who can use the output to justify proposed development projects within their community.
3. Political scientists, who can use it to persuade bureaucracies to recognise and respond to concerns about socio-economic change.
4. Economists and other researchers, who can use it to identify the externalities of any industrial development proposal and assign monetary values to them for proper costing.

The findings will also contribute to policy debates on economic, employment, social, environmental, education, health and housing policy. In addition, the results will serve as a baseline for further studies in the community.

1.7 Scope of the Study

This work focuses on the socio-economic effects of the upstream sector of the oil and gas industry in the Niger Delta region of Nigeria. Many communities in the region are affected by natural resource exploration, but the research concentrates on the Ogoni community in Rivers State. It identifies the socio-economic effects associated with oil and gas exploration and the installations of the oil firms within the community, how they affect households, and the roles of government and the oil companies in providing for the associated negative externalities. The socio-economic effects examined are based on the perceptions of households. The findings rest on data collected in Ogoniland through a survey conducted as part of this study in December 2013 and January 2014.

1.8 Limitations of the Study

Most of the difficulties of the research arose during the household survey in Ogoniland. They included security constraints and restrictions on access. Because of the political dimension of the community and strong sentiment about oil pollution, the political and traditional leaders would normally require foreign researchers, meaning non-indigenes, to consult them before and after a survey in order to agree on the information to be made public, and this could bias the results. To avoid such bias, the survey was conducted by local researchers under close supervision, and there was therefore no consultation with political or traditional leaders before or after the survey. Because comprehensive baseline data on the Ogoni community were unavailable or hard to access, the research could not measure the impact of interventions by government and oil firms, or of oil exploration activities, in terms of conditions before and after those interventions or activities.

To allow quantitative analysis, the interview schedule used mainly closed-ended questions. This limited respondents’ ability to raise relevant issues that could have strengthened policy formulation. To reduce bias on sensitive issues such as household income, information was obtained through indirect questions. For example, income was estimated by asking each respondent to state household expenditure, including savings. Despite supervision, enumerators may also have introduced bias or error during data collection, and more accurate data collection and more extensive checking of enumerators would help. These limitations appear to be real, given the researcher’s restricted access.

References

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Odubo, T. R., & Odubo, T. V. (2024). Environmental impact of oil pollution on income and livelihood sustainability in rural communities of the Niger Delta region, Nigeria. Ghana Journal of Geography.

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