THE SOCIAL RESPONSIBILITY OF COMPANIES ON THE DEVELOPMENT OF THEIR HOST COMMUNITIES

CHAPTER TWO

REVIEW OF LITERATURE

INTRODUCTION

Our focus in this chapter is to critically examine relevant literatures that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.

Precisely, the chapter will be considered in three sub-headings:

• Conceptual Framework
• Theoretical Framework
• Empirical Review and

2.1 CONCEPTUAL FRAMEWORK

Company Social Responsibilities (CSR)

Company social responsibility (CSR) also called corporate citizenship, responsible business and corporate social opportunity is a concept whereby organizations consider the interests of the society where they operate by taking responsibility for the influence of their activities on customers, suppliers, employees, shareholders, communities and the stakeholders as well as the environment. This obligation extends beyond the statutory obligation to comply with legislation and sees organization voluntarily taking further steps to improve the quality of life for employees and their families as well as for the local community and society at large (Wheeler 2007).

Wheeler further says that CSR is subject to much debate and criticism. Proponents argue that is a strong business case for CSR, in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate short-term profits. Critics argue further that CSR detracts the fundamental economic role of businesses. Others argue that it is more than superficial window dressing; still others argue that it is an attempt to prompt the role of governments as a watchdog over powerful multinational corporations.

Friedman (2006) asserts that businesses have no social responsibility other than to increase profits and refrain from engaging in deception and fraud. He maintains that when business seeks to maximize profits, they almost always incidentally do what is good for society. Freidman believes that businesses should help the community but it may indeed be in the long run self interest of a business to devote resources to providing amenities to the community in order to generate good will and thereby increase profits.

Iranni (2002) sees corporate social responsibility as a new term, but an old concept. There are five basic tenets that he believes in and tried to live by. He states

1. The primary aim of industry should not be to make money. The aim should be to serve customers, other stakeholders and the result would surely be to make money. And pursuing excellence would enable it to create even more wealth.
2. Part of the wealth thus created should be made available for the benefit of the community and the nation.
3. In the creation of the wealth, care must be taken not to only protect the environment, but also enhance it so that the society is left in better shape for the future generation.
4. leadership in business is living by these ideal and leading by example.
5. In today’s world, the only thing constant is change. Leaders must therefore, anticipate change, drive it, make it acceptable to all stakeholders, and turn threats into opportunities through their vision and their actions (Iranni 2002).

Ite (2004) posits that foreign direct investment flowing to developing countries has the potential to make important contributions to the development of local economies, including creating jobs, capacity building, and transfer of technology. Multinational corporations (MNCs) can therefore have a positive impact in developing countries, especially through corporate social responsibilities (CSR) initiative focusing on sustainable development and cooperation with civil society.

Reynard and Fortes (2002) say however that for many MNCs, CSR is an outcome of public pressure arising from their operations in developing countries in relations to human rights, environmental pollution, and labour issues. In other words, it has generally been a pragmatic response to consumer and civil society pressure. He proceeded, CSR is a process driven by globalization. Proponents of CSR are keen to demonstrate that business has responsibilities beyond the production of goods, services, and profit making, and that socially responsible business can help to solve important social and environmental problems. In disagreement to the above, Henderson (2001) counterarguments on CSR attempts to show that CSR distorts the market by deflecting business from its primary role of profit generation. This is seen as potentially dangerous. Such arguments further maintain for example, that the role of business determines its responsibilities, and such, business has no socially responsibility beyond compliance with the law.

Kaliski (2007) posits that one part of social responsibility is being responsible to people, for the actions of people and actions that affect people. Social responsibility is about holding a group, organization or company accountable for its effect on the people around it people within the company, the community and those who buy from the company. Social responsibility would nearly be the opposite of what goes on in the business world today, a company taking the blame and doing what is needed to fix the problems rather than committing more crimes to cover up the first one.

In many countries by law a corporations only responsibility is to make as much money as possible for share holders (economic responsibility) and to obey the law (legal responsibility). In practice, social responsibility holds companies or organizations responsible for the people they affect; it also holds a company responsible for inaction, or indecision. Basing on the idea that company or organization has the power to help people or, at least, not harm them, it has the moral responsibility to do so. Social responsibility is a doctrine that says that every being whether it is a village, town, state, corporation, organization, government or individual has responsibility to society.

Kaliski went further to say that social responsibility is voluntary; it is about going above and beyond what is called by law (legal responsibility). It involves an idea that it is better to be proactive towards a problem rather than reactive to a problem. Social responsibility means eliminating corruption, irresponsible or unethical behaviours. He proceeded to say that, social investment looks at what the business is doing for the community. Does the business work with the community to fix outstanding issues and social problem? How much of an investment does it make? What issues are they addressing? (What is the depth of the problems that they are working on?) Are they trying to fix major issues like drug addiction in impoverished area or are they providing recreational activities for the youths? Is the problem they are working on a large social problem with far reaching consequences? Or is the problem a localized one? In today’s society a business must maintain ethical principles in order to be successful.

Swift and Zadeck (2002) posit that the rhetoric on business case for CSR has without doubt outstripped understanding, let alone practice. Although there is powerful potential for CSR to make a positive contribution to addressing the needs of disadvantage communities, there are ways in which CSR could, whether by mistake or design, damage the same communities. The potential of a micro-level shift in the role of business in society remains to be adequately explored, as well as its policy implementations. For the success of such MNCs in their area of production brings a lot of disadvantages to the environment where they operate. Without enough sustainable social responsibilities, conflict is inevitable. In comparison with other developing countries, the proactive promotion and widespread adoption of CSR as a business strategy is emerging in Nigeria. Currently, the key practitioners of CSR in Nigeria are the multinational oil firms and large national business organization.

Cason (2003) asserts that the fundamental notion underpinning the case for CSR practices is a sense of morality. The failure of Nigerian government to meet its responsibility makes it morally untenable to accuse corporations of moral bankruptcy when they fail to meet CSR obligations. This loss of moral leverage by the Nigerian government over oil companies, for example, implicitly undermines CSR by negating the ability of government to apply to the conscience of these corporations to meet their ethical obligations.

Okafor (2003) captures this dilemma when he questioned how the Nigerian government could regulate itself against corruption. Besides, can government regulate corporate conduct over deliverables that fall within its traditional role that it failed to provide. A time has come for the village, town, state, corporation, organization, government and individual to be responsible enough for sustainability of the society in general.

Community Development

A sustainable initiative is said to be sustainable when its objective is realized and the effect of its outcomes become, not only enduring, but regenerative. This is a development that meets the needs of the present generation without compromising the ability of the future generation to meet theirs. (Onyeozu 2007). Some development projects are here today and gone tomorrow owing perhaps, to improper planning, poor funding or use of low quality materials (in the case of building projects). Such projects are not sustainable because the objectives for which they were conceived, and the purpose which they were expected to serve have not been continuously; realized.

Regeneration of resources used and continuity of services rendered are therefore the main characteristics of meaningful sustainability.

Onyeozu continues that consequently, corporate bodies operating in local communities are expected to ensure that their activities in the communities are expected to ensure that their activities in the communities do not hinder the development of such communities. The need to exploit resources should not lead companies to operate in such a way as to compromise real development in the area. There is an overriding need to keep our societies sustainable, in the interest of continuity of humanity.

Wheeler (2002) says that the concepts of a “sustainable community” does not described just one type of neighbourhood, town, city or region. Activities that the environment can sustain and that citizens want and can afford may be quite different from community to community. Rather than being a fixed thing, a sustainable community is continually adjusting to meet the social and economic needs of its residents while preserving the environments ability to support it. A sustainable community uses its resources to meet current needs while ensuring that adequate resources are available to function over time by minimizing waste, preventing pollution, promoting efficiency and developing local resources to revitalize the local economy. Decision making in a sustainable community stems from a rich civic life and shared information among community members. A sustainable community resembles a living system in which human natural and economic elements are inter-dependence and draw strength from each others.

Wheeler continued giving examples of sustainable community development which include car co-operative to reduce the cost and necessity of car ownership (sustainable employment plans to create jobs, spur private spending and reduce pollution through public investment. Manufacturers to develop environmental friendly products through municipal assistance, increasing affordable housing supply through zoning cards that promote a variety of housing type, including smaller and multifamily homes. Experimenting with local self reliance by establishing closed-loop, self sustaining economic network. Community supported agriculture to preserve farmland and help farmers, while making fresh fruits and vegetable in city neighbourhoods, a local ownership development project with a revolving loan fund to encourage employee over the long term and more likely to hire, train and promote local residents, and a community beverage containers recycling depot which employs street people, dumpster, drivers and provide them with skills, training, and self esteem.

The world commission on environment and development (1987) defines sustainable development as development that meets the needs of the present without compromising the ability of future generations to meeting their own needs. It requires meeting the basic needs of all and extending to all the opportunity to satisfy their aspirations for a better life. This implies that despite increasing human needs, population and economic growth, resources such as forest pastures, waters, wildlife, fish and others, have to be utilized on sustainable basis if they are to provide annual benefits for living and continuous period.

Coopes and Palmers (1992) opines that our global future depends upon sustainable development. The willingness and ability to dedicate our intelligence, ingenuity and adaptability and our encify to our commons future may lead to sustainability.

Special report by Christian science monitor on agenda 2000 (1988) identified twelve priorities for concern in sustainable development, to include;

1. slow population growth
2. reduction of poverty-inequality and the world depth.
3. make agriculture sustainable
4. protect forest and habitant
5. protect freshwater quality
6. increase energy efficiency
7. develop renewable source of energy
8. limit air pollution
9. reduce waste generation and increase recycling
10. protect the ozone layers
11. protect ocean and coastal resources and shift military spending to sustainable development.

Bullem (2002) posits that sustainable development incorporates the following:

1. sustainable development is dynamic not static
2. it satisfies the needs of present and future generations respecting the integrity of the ecosystems upon which development rests.
3. it relaxes production constrain of ecosystems and diversifies its productivity base without degrading it.
4. it marries economy to ecology.

Concept of felt Needs

Armstrong and Davies (1975) asserts that “felt need” is the corner stone whereby community work derives its whole legitimacy. Community, whether it is defined as a movement, a process or a method, generally has its ultimate central concern, the development of a man as a member of the community. Therefore the expressed felt need of the people of a community must be the bases for community development action in the first place in their community.

In general terms, felt-need means something sincerely desired or something craved for. It also means a strong object of inner wish or an object of heart felt prayer or some thing aimed at. The idea of felt needs of community arises from lack of something which in the opinion of members of that community is crucial for the well-being or improvement of the community. Following this view points, Collins (1983) defines felt-need as something which could be impossible or difficult to do without.

Anyanwu (1992) conceptualizes felt needs in terms of what is and what ought to be in a community, to him, a need represents a psychological, social, economic or cultural; imbalances, or lack of adjustment between present situation and a change set of conditions assumed to be more desirable. It is therefore, remain the major force that could propel the individual member of a community to want to join hands with others of like mind to seek and provide solution to problems identified as obstacles to community improvement and welfare. Felt-need is a catalyst that motivates human action.

Mao (1972) argues that all work done for the masses must start from their needs and not from the desire of any individual however well intentioned. The individuals democratic right to choose his priorities as he sees them justifies and stimulates the spirit and practice of self-help and the participation of all groups in community development activities, both sexes, all age grades inclusive, whatever their religion, economic, social and cultural background.

Onyeozu (2007) argues that indeed, community development also paves the way to personal freedom and to economic and social justice for every man and woman of the community. Abiding faith in democracy in the practice of community development activities should spring from the following;

1. Belief in the dignity of man
2. respect for the individual and especially, respect for the individual’s freedom of choice and his right of free expression of opinion.

Amirize (1998) reports on the New Approach to sustainable Rural community development. The Nigerian Participatory Rural Appraisal Network (NIPRSNET)( was established in 1995, and their aim was to address the problems of misguided development for needy communities. It has a status as non-governmental organization (NGO), a sort of federation of individuals and organization. A situation where government and organizations embark on community development projects without consulting the people whom such projects affect directly often results in project failure. Even when the intentions are good, it is wrong not to consult and involve the people of the community where a project is sited in the planning and execution. Rather than first learn before applying knowledge to development, facilitators still behave in the same old top-down manner. This old approach stem of domination does not allow for participation of the people, resulting in failures and cases of unwanted and rejected development.

Unless people themselves analyze their problems identify what to do and actually implement action plans rural development is not provision of machines and implements but solving the immediate felt-needs of the communities be they snake bite in plateau, soil erosion in Nanka or pollution of water and devastation of farmlands in oil producing communities. Development is what any people see as a step forward in their aspirations and desires. The people must do their own analysis of their problems and needs, aspirations of what well-being is to them and how to tackle it. (Onyeozu 2007). He concludes by saying that projects should be the result of a process where the people of a community have or fell a strong need for such project. For oil producing communities, it would be appropriate to assess the impact of oil production activities on the communities in a comprehensive manner to establish how fair and just projects executed in the area have been in relation.

Concepts of Self-Help

“Self-help” is a short phrase expressing the notion that people could help themselves for their own good, was established by a mid-nineteenth century philosopher and writer, Smaule Smiles.

Smiles (1975) notion of self-help is based on the early protestant ethic that it is better to look up to yourself for your own betterment than hope on someone’s help. Ho made efforts to popularize the notion with the aim to illustrate and enforce the power of perseverance.

Smiles asserts that the most important result of daily life is to be obtained, not through the exercise of extraordinary powers such as genius and intellect, but through the energetic use of simple means and ordinary qualities with which nearly all human individuals have been more or less endowed. Smiles expresses a familiar human experience. “Heaven helps those who help themselves” and asserted that the spirit of self-help is the root of all genuine growth, growth in the individual, and when exhibited in the lives of many, it constitutes the true source of national vigour and strength.

Self-help means helping yourself to achieve an objective. Smiles (1975) maintains that help from outside is often enfeebling where as help from within is invigorating, and that to do something for men is to take away the stimulus and necessity of their doing it themselves.

He further contends that the most stringent laws cannot make the idle man industrious or drunkard sober, but that reforms can only be effected by means of individual actions, self denial and better habits. He argued that the progress ofa nation is the sum total of the energy, the industry and uprightness exhibited by individuals who make up the nation. Likewise, he insists that the decay of a nation is brought about by the idleness and selfishness of the individuals who make up the nation.

The idea that heaven helps those who help themselves underscores the expectation that the individual should work by himself, initiate effort to provide for himself before expecting assistance.

Onyeozu (2007), opines that self-help in community development is a plural concept and should not be understood in the sense described above. It is concerned with the people in a group rather than with activities of an individual person. Its concern with an individual is only in recognition of his roles as participant in group action. If the community has the spirit of self – help, it will create good background on which the corporate can work hand in hand to create sustainable development within the community ; self–help creates self-confident and enhances economic survival. Self-help within a community is great power to such community. Where this power exists the people use such position to see that they get what is due for them. Where there is self-help power, the fear complex is done away with, and they can approach companies, organization or even government to come and see the effort they are making and help them out. Once a community has a spirit of self-help in them selves, that goes a long way to ensure a success in the struggle for sustainable development.

Concept of Participation

Participation is one of the constituent elements of community development. The other two are felt needs and self-help which have been discussed. The element of participation is equally important in community development, in that any group activity which does not include an aspect of participation by members of the group in its programme cannot be regarded legitimately as community development.

Onyeozu (2007) asserts that felt needs and self-help alone does not make community development. A community self-help effort, for instance does not constitute community development until the element of participation is evident in the activity embarked upon. Participation is all about the channeling of individual actions into collective forms. Here, stress is laid on mutual aid and the building of “collaboration relationship” and co-operation, as the importance of mutual co-operation cannot be overemphasized in community development.

In the same vain he continues that every human achievement so far made in the universe is strictly proportional to the degree to which there has been cooperation towards it, and that similarly, all failures can be traced only to one sources trend towards lack of cooperation between the elements that constitute life and activity. The desire of an individual for action through self-help must be channeled into joint enterprise with others in the community. Through such joint enterprises the individual is helped in working and living cooperatively with other members of the community to realize common goals and to improve his welfare. People join together initially because of the recognition that when an action is taken by a group, such action is undertaken through an organization. For this reason, organization is seen as a vehicle that brings about desired change.

Anyanwu (1992) asserts that the active participation or involvement of people in development programmes which are of course the crux of mobilization has under listed merits

1. it enables the people to learn to help themselves and grow in the process.
2. it makes it possible for them to define and determine their own objectives.
3. it enables them to identify their needs and work towards the satisfaction of such needs.
4. it helps them to use their resources to execute their plans and evaluate their result.
5. it helps them to define new goals and to formulate the ways and means of achieving them.
6. it enable them to view situations comparatively other than their own.
7. it enables them to appreciate their need to change towards better life and their capacity for effecting such change through their purposive actions.
8. it gives them the deliberate intent to study and act in such limiting circumstances of life as poor education, poor housing, ill health, poverty, inadequate employment and impoverished environment.
9. it helps the people to make their change for better living more significant and meaningful by enhancing their control of the change through popular involvement in the change process.
10. it enables them to see that self imposed change is meaningful, more permanent and better than any change imposed from outside, no matter how well intended.

The community has to be part and parcel of their development programme. The company or organization need to work hand in hand with their host community. Where the community is allowed to participate fully such project being their felt-need with contribution of self help, will be highly appreciated and sustainable. The community would work hard to protect such project. The corporate organization should try as much as possible to involve their host community in the project that affects them.

Amirize (1998) asserts that people oriented community development projects should also serve as means leading to the conscientization and education of the people. concientization refers to a process of bringing about an increased awareness of a people and a deep concern about the need of justice and equity in human affairs and interactions.

According to Paulo Freire (1970) nothing can work effectively and satisfactorily in a society without conscientization and, in that sense, development without conscience and involving the social justice and human well being is mere pretense. Similarly, education in the sense of community development has nothing to do with the acquisition of certificate but, a positive change and transformation of people’s wrong concept, habits, perceptions as well as imbalances in the society. There is no better way to empower a people than to make them aware of events which affect their lives now and in the future, and to direct them on how to bring about positive changes by themselves. When projects are managed and executed by people outside without the participation of the community involved, its sustainability is not guaranteed.

2.2 THEORETICAL FRAMEWORK

For the purpose of this study, relative deprivation theory has been adopted as one of the theoretical framework.

Gurr (1986) set out to establish the conditions under which the propensity to commit violent acts are maximized and those conditions under which such violent acts are directed at the state. The relative deprivation model posits social conditions as precondition for violence. They influence the precondition for violence and they influence the probabilities of the occurrence of violent acts of a collective nature. Through such variables are socialization, tradition, and legitimacy of the system will influence the probability of shape of violence. The critical factors exist in the minds of individuals. Collective violence has a necessary condition the existence of a gap between the “value expectation” that is what people feel they are entitled to by virtue of their membership in a collectivity, and their “value capabilities” or what they expect the future to bring to them given past experience. Gurr (1986) sees this gap as a continuous variable defined as relative deprivation. It exists in all societies at all times. However, its rapid acceleration signals problems for the maintenance of social order.

Relative Deprivation (RD) theory is based on the frustration – aggression hypothesis, which states that when goal directed behaviour is interfered with, subjects who are frustrated in successful achievement will increase their propensity to resort to violence. Gurr sees the frustration – aggression hypothesis as reflecting a basic truth about human nature. The frustration aggression mechanism is analogous to the law of gravity: men who are frustrated have an innate disposition to do violence to its sources in proportion to the intensity of their frustration.

According to Ronnfeldt (1997), the term “Relative” should be perceived in a fourfold sense, referring to either a comparison with a situation in the past, to other groups to what the actors feel they expected, or to a mix of the proceeding three. The mix of the preceding three captures succinctly the situation in the Niger Delta. Political and economic marginalization means that the people of the region felt worse off than people from the majority ethnic groups. The environmental change in the Niger Delta makes sustaining livelihoods via traditional means untenable with no ready alternative, while the failure of the oil boom to provide modernization means their wide spread expectations were not met. Gurr (1986) noted that the greater this community, the more likely and severe the civil strife will be. Hence, while political and economic factors provide a fertile ground for conflict formation by inciting a feeling of relative deprivation via marginalization, environmental factors altered the opportunity structure for violence by distributing the cost of violence and social factors provided the tools for violence. It is this inter-play among these factors that has lead to the conflict in the Niger Delta Region (Rivers state).

Social Factors

The contribution of social factors to conflict in the Niger Delta include proliferation of the sense of relative deprivation, mass youth unemployment, and increased awareness that oil is finite resources. Since independence, the number of educated people in Nigerian rural communities has been on a steady increase.

Ibeanu (2000); Ukeje (2001), with an associated increase in awareness of the sense of relative deprivation, more people in the Niger Delta now realize that they are living in the worst conditions than people from majority of other ethnic groups, (that Yoruba and Hausa).

Ibeanu (2000) asserts that political rallies such as the one organized by Abacha in 1998 graphically showed participating unemployment from the Niger Delta, the stark contrast between opulence in cities like Abuja, funded by oil revenue, and the pervasive squalor in their home communities. Thus spawned a deep sense of related deprivation, frustration, and feeling of rejection that are expressed at the slightest opportunity through violence.

The realization by the communities that oil was finite resources given the experience from Oloibiri where oil was first explore also brought a sense of urgency to act.

According to Okoh (1996), the inhabitants of Oloibiri whose town was once a major hob of oil production now live a solitary and depressed life. Electricity, good roads and pipe-born water are non-existent in Oloibiri. Two things remind the people that oil exploration equipment at the numerous sites that serve as oil wells and flow stations. The second legacy is the infertility of their land. This situation has led many people in the Niger Delta to ask the question: What will be the fate of their community when oil wells finally dry up?

Okoh (1996) says that, obviously, the answer to this question is not far-fetched, most people believed that history is bound to repeat itself. However, the Niger Delta people increasingly opted to take their future into their hands making confrontation with the Nigerian states and oil companies and inevitable outcome. The problem of unemployment in the region has also been another social factors accentuating conflict in the region. Ibeanu (2002) asserts that youth unemployment in Niger Delta is the highest in the country. As a consequence, a huge number of youths roam the streets feeling alienated and powerless-waiting to get even with the large polity at the slightest opportunity.

Jike (2004) posits that unemployment made youth activism, militating and rebelliousness a common phenomenon in the Niger Delta. In addition, these jobless youths become a useful tool for political elites pursuing self-seeking interest, which often result in clashes between different groups. Joblessness and militancy have made oil pipeline bunkering a professional occupation for many youth in the region. Proceeds are used to buy weapons that effectively help them in carrying out their operations.

Environmental Factors

The political and economic factors are partly responsible for environmental degradation within the Niger Delta.

Libiszewitki (1992) says that the vulnerability of the people on their environment for livelihood sustenance are the basis for explaining and understanding the contribution of environmental factors to conflict. The environmental dimension to the conflict can be understood in terms of an environmental-political nexuses. Environmental change may take any of three forms; overuse of renewable resources, overstrain of the environment sink capacity, i.e. pollution, and the impoverishment of the space of living. This environmental degradation allows for a much broader understanding of the role of environmental changes in fostering conflict in the Niger Delta, which goes beyond the narrow focus of most analysis that focus exclusively on oil pollution and gas flaring. Ojeti (2004) asserts that issues of oil pollution and gas flaring have frequently been cited as the most formidable challenge confronting the people and environmental sustainability in the Niger Delta region. This is not surprising given that between 1976 and 1996, there were a total of 4835 incidences of oil spillage of at least 2,446, 322 barrels, of which an estimated 77 percent were lost to the environment.

Jike (2004), argues that most other causes of the environmental change become insignificant when pitched against the consequence of oil spills and gas flaring that occurs on a daily basis in the Niger Delta, economic terms for community members.

Olojedi (2000), says oil spills jeopardize the occupation and means of livelihood of community members, and directly fuel competition for scarce farm land among community members. Studies have shown that areas that are constantly exposed to repeated or consistent spills or leaks like the Niger Delta, frequently exhibit long term environmental problems as oil spills cause permanent damage to both Faura and Flora. In contrast, Moffat and Linden (1995) argued that no scientific evidence has been found to support these claims. However, they fail to take into consideration the politicization.

Over 40 years oil wealth has brought nothing to the people of Niger Delta, except ecological catastrophe, social deprivation and political marginalization. (Olojedi 2006). The economic environmental nexus to the conflict relates to the role of poverty, the geography of oil and the economic impact of environmental degradation on host communities. As Obi (2001), points out, the location of oil in the region of the ethnic minority gave the people leverage provided by economic power to adapt in oil owing identity and claim special right. Hence, oil minority rights reserved the perceived political and economic insignificance of the Niger Delta people by increasing the bargaining power of the people vis-à-vis the state.

The sense of ownership of oil strengthened the people’s resolve and provided the impetus for the people to demand political inclusion and for the state to meet its social responsibility of them.

Marxist Political Economic Theory

The Marxist political economy approach has been adopted as the third theoretical framework. The approach emphasizes the dynamic character of social reality and recognizes the unequal economic status of actor in industrial settings or organizations as basis of conflict.

The political economy approach is a Marxist methodological framework based on “Dialectical Materialism”. Dialectical materialism assumes that a society’s social and political institutions grow out of this economic infrastructure or power base and that it is from the dialectical conflict between social classes which opposes economic interests that social change takes place. (Girigiri, 1998).

In analyzing social phenomena, this approach accords primacy to material conditions, particularly economic factors. It sees economic needs as the most fundamental of man’s needs. Marx described the economic infrastructure as the ultimate determinant element in history”. (Haralambos and Head 1980). The implication of this is that the economic structure of society should take pre-eminence and serve as a point of departure in the analysis of any social phenomena. For not only does economic advantages tend to be reproduced in other aspects of social life, it also guides the alignments of interest in the existing social life, it also guides the alignments of interest in the existing social order. Again economic inequality also carries with it unequal power relations, and therefore, the tendency for the preservation of the morality of values of the privilege economic groups in society.

Political power in Marx theory is clearly presented as a consequence of economic position, one or a group of people enjoys in society with that society’s mode of production. From the above it becomes clear that among other things there is a better class struggle in which those (few in number) who own and control the means of production maintain stronghold on the rest of the society. All this is as a result of their status in society which has given them tremendous power. In this regard therefore for state is conceptualized as an instrument of oppression and exploitation.

Haralambus and Heads (1980) posit that the only way out of this woods for Marx and the Marxist is revolution organized and controlled by the exploited class. The history of human society is a process of tension and conflict social change is not a smooth orderly progression which gradually unfolds and harmoniously builds into society which are a source of tension and ultimate the source of open conflict and radical change.

Marx (1977) also posits that any process of change involves tension between incompatible forces. Dialectical movement therefore presents a struggle of opposites, a conflict of contradictions. Conflict provides the dynamic principle, the source of change. The struggle between incompatible forces grows in intensity until there is final collision.

Marx (1977) sees economic need as the most fundamental of man’s need. This is because for men to exist, he must eat and ensure that he must work. This, man is seen first and foremost as a worker, a producer of his material needs. It therefore, follows that productive activities are crucial aspects of social existence. The phase has been extended to the actions of the communities that play host to oil industry. The genesis of community strike/burning pointing the relationship between oil industry and their host communities has been linked to the recurring agitation of communities that play host to industrial establishments over the years. There had existed a perception of marginal conception of marginality which led to the formation and emergence of various ethnic groups resident in Niger Delta. These movements claim that Niger Delta is marginalized socially, politically, economically and even exploited. The social movement said that, going by the magnitude of environmental degradation consequent upon the operations of oil companies in the region, residents of the communities have been described as “Marginal” who live in shanty towns, villages, Bariados and who are not integrated into the main stream of the socio-political-economic structure of Nigeria society.

The Niger Delta crisis in recent times has assumed an unprecedented dimension. Specifically, within the last decade, no geographical region has witnessed as much turbulence as the Niger Delta. The area can unequivocally be referred to as flash point in geographical map of Nigeria. In the face of this persistent crisis, the fates of Nigerian economy hang in the balance.

The Rentier State Theory Yate (1996)

The theory of the rentiers state is useful for examining the patterns and problems of development specific to petroleum-rent-dependent states in the developing world. The theory posits that the conditioning factor of economic stagnation and political authoritarianism in oil-dependent states is the corrosive effect of external rent. In order words underdevelopment in the oil producing states is caused by their condition of dependency. (Yates 1996).

The theory broadly regards rentier states as countries that receive on a regular basis substantial amounts of economic rent. As such, the external rent liberates the state from the need to extract income from the domestic economy. The rentier state is often characterized by authoritarian, arbitrary and extractive rule. Power is highly personalized, emphasis is on connections and loyalty rather than merit and efficiency, loyalty is rewarded and opposition is repressed. (Obi 1997).

Khan, (1994), Yates (1996), Ikein (1998) posit that Nigeria has been a rentier state since the 1970s. The economy is heavily dependent on the oil sector, which accounts for nearly 80 percent of government revenues, 90-95 percent of export revenues, and over 90 percent of foreign exchange earnings.

Obi (1997) notes that the term “rent” captures the non-involvement of the state in the actual process of oil production and its dependence on a share of the proceeds from oil sale to global market. Not only is state vulnerable to the fluctuating fortunes of a single commodity: the rentier economy has over time undermined the real sectors of the Nigerian economy. With every little productive activities taking place, power calculations in Nigeria revolves around the control and distribution of oil rents by a small hegemonic group. Khan (1994) Subero (2001) sites an example in support of the statement that political leadership in Nigeria has been mainly provided by a succession of military government.

2.3 EMPIRICAL REVIEW

Prior to 1995, Shell CSR strategy in Nigeria focused on risk and reputation management. For the purposes of contributing to the socio-economic development of the Niger Delta communities, Shell adopted the community assistance (CA) approach to development which emphasized corporate philanthropy. It was essentially about (giving things) to the communities in the following areas:

1. Water and Sanitation: Community Water Project.
2. Health care: Community hospitals and health care.
3. Voluntary training: basic skills in welding, plumbing, masonry, carpentry, auto engineering and electrical engineering.
4. Education: programme of scholarship University and Secondary schools, building of classroom blocks.
5. Agriculture: agricultural extension advisers to support farmers and corporative.
6. Micro-credit and business development income generating projects (e.g. water, land, transport and fishing) and
7. other infrastructure are: roads, rural electrification projects, land reclamation for community expansion.

With its community assistance (CA) approach to development, shell placed emphasis on one time (gift) rather than support to sustainable development programmes. The initiative of a set of adhoc projects rather than co-ordinated plans. It focuses on what Shell felt the communities lacked or on Shells perception of poverty within the communities. SPDC (1997).

Okunmodewa (2002) finds that Shell’s long history of assisting the communities in the Niger Delta, and its communities development programmes dated back to the 1960s in Ughoton, the Shell Petroleum Company (SPDC) was ranked the number one institutions by a group of elderly men and women, reflecting the importance of the company’s activities for the development of the community. SPDC build a paved road to connect the villages with the hinterland, and the company also provided funding for building secondary schools and for training village youths.

Ite (2002) indicates that as a result, the communities were perceived as helpless victims of circumstances rather than capable actors in the development of infrastructure provided by Shell not as charity, but as a term of rent for Shell’s use (and abuse) of the environment and resources. In effect, the community groups were the passive recipients of Shell’s donations. This is typical of the top-down approach to development which has been found to be largely an ineffective approach for poverty alleviation.

With changing times and strategies, Shell has now placed itself in a leadership position among MNCs in Nigeria by moving beyond simplistic nations of license to operate which is the lowest tier of CSR models. Shell has recognized the need for cultural change, and more sophisticated attitude to political questions of human rights, environmental responsibility and CSR has emerged.

Boele (2002), posits that Shell has changed its CSR strategy from risk and reputation management to the integration of sustainable development in its general business principles. Shell’s current socio-economic development effort in Niger Delta is more than a public relations exercise.

Firstly Shell has departed from the Community Assistance (CA) mode to the community development approach. The CD approach places emphasis on the improvement of communities with a view to significantly reducing dependence on Shell for socio-economic development. The new approach embodies the social capital of various communities including their traditional knowledge, skills and adaptive strategies, and seeks to ascertain changes and adjustments that people often make.

Since 1998, several communities in Niger Delta have been empowered to produce community development plans (CDPs) with the full participation of population segments of the communities (SPDC, 1999).

Ogwezi (2002), posits that these coordinated plans, rather than a set of adhoc projects, offer a unique opportunity for synergy, rational planning and cost-efficiency. The CDPs are designed to solve their most pressing economic, environmental and social problems, and provide a comprehensive development programme covering all sectors (e.g. gender, health, income generation), which donors usually address in isolation from one another. As such, the most significant predicator of the success of Shell CD programme remains the facts that these CDPs are the results of the bottom-up and not the top-down approach of development.

SPDC (2002) mentions that in the process, it has been successful in attracting further foreign direct investment and international organizations to the Niger Delta. One such initiative is the establishment of a US$30 million revolving credit facility by International Finance Corporation, Shell and Diamond Bank, Nigeria.

Bird (2002) notes that businesses are expected to collaborate and support activities that are in some ways beneficial to the communities. Shell is increasingly taking the right steps in this direction.

Secondly, Shell has assumed more responsibility for major socio-economic development initiatives within the Niger Delta since 1995, and has a better job than many Nigerian government development agencies. Accordingly Shell’s social investment budget has been increasing steadily to support the wide variety and range of community development projects in the region.

Kalengo (2002) notes that in the process of providing services to the communities, Shell has become some set of quasi-government and humanitarian organization in Niger Delta, and in some communities Shell is more visible than the Nigerian government.

Boele (2001), notes that Shell does not hold he solution to community demands for more amenities, development, employment and control over oil revenues. These are primarily a government responsibility. From Shell’s perspective, the Nigerian government has failed to deliver development right to the Niger Delta region.

As such, Shell has gone beyond what was necessary and delivered benefit to the communities precisely because of government failure. By choosing to deliver these development projects, Shell is recognizing its obligation to the communities in which it is operating.

Thirdly, Shell now places significant emphasis on transparency and social accountability in its operations in Niger Delta. The spirit of openness and transparency has been encouraged by several factors and supported with practical initiatives including the publication of an annual report on the company’s social and environmental performance (i.e. the SPDC people and the environmental report) as well as a yearly stakeholders consultation workshop to review SPDC’s programmes and performance.

Thornton (2001) asserts that to demonstrate its commitment to accountability, Shell commissioned in 2001 an independent evaluation of its community development projects in the Niger Delta (Shell international 2002). The evaluation report criticized the project for being too centralized, and for essentially buying of the local communities with gifts. Overall, it was judged that less than one third of the projects were successful. Although the criticisms were probably justified, they hardly reflect badly on Shell. As Thornton further argued, the failure of development projects undertaken by Charities, NGOs, and governments are usually covered up in self-congratulatory reports and results followed by demands for yet more money. However, it is evident that some MNCs (such as Shell) are more interested in the results of their efforts and are brave to submit themselves to such independent and critical reviews.