Choose one African country or society and critically assess both the positive and negative consequences of one aspect of globalization that is affecting this society.

The International Monetary Fund defined globalisation as ‘the growing economic interdependence of countries worldwide through the increasing volume and variety of cross border transactions in goods, services and international capital flow’ (IMF, 1997). There was an increasing importance of an integrated economic platform in this new era. Nigeria made significant progress since it was first introduced into the globalisation process with Structural Adjustment Program, marking with a shift from protectionist policies to promoting free trade and economic growth. This essay will illustrate the pros of GDP growth and Foreign Direct Investment (FDI) manifested in economic globalisation of Nigeria, but evaluation will be made on the societal impact into the economy, such as income inequalities and labour exploitation.

Capital inflows into Nigeria had grown immensely over the last decade in the process of economic liberalisation. It was considered as the 120th freest economy in the 2013 Index (Index of Economic Freedom, 2013). The FDI reached 11billion USD in 2009, ranking Nigeria at 19th to receive the most FDI in the world. Most prominent investors include USA Chevron Texaco and UK Shell penetrating the oil sector. China was becoming an important source of FDI recently, seeking to expand trade relationships, and Chinese investment reported worth 6billion USD. These investments were injections to enhance the capital of Nigeria, bringing about foreign expertise and technology, and also encouraged job creations, raising standard of living.

Economic globalisation implied free trade that brought definitive advantages to Nigeria economy, particularly in the aspect of GDP growth. Although Nigeria’s overall score was below world average, but it was second largest economy in Africa behind South Africa. From 2005 to 2012, Nigeria GDP growth rate averaged 6.82%, reaching an unprecedented high of 8.60% in December 2010. Nigeria established its status as the major exporter of crude oil in Africa to developed countries like US and UK, reaping huge revenues for its strong surge in oil production. However Nigeria failed to support its rapidly growing population with its own crops production, creating an influx of imports which overshadowed the export growth. Nonetheless, the government had actively imposed economic reforms to improve efficiency of business regulations and made robust contribution in developing the non-oil sector. Globalization could be of benefit to Nigeria to export non-oil products if its domestic production was successfully diversified and its productive capacity was further expanded. There were still major economic problems unresolved, such as the high unemployment rates and dilapidated state of infrastructure (African Economic Outlook, 2010), but Nigeria government was trying to tackle these issues and Nigeria had a lot of potential to rise to become a strong economy in the future.

However economic liberalisation had brought negative impacts to the Nigeria economy and society, primarily the economic inequalities between Northern and Southern Nigeria. The oil wealth and economic activities were disproportionately located in the South, so the Southern region was more adept in making money than its Northern counterpart, leading to larger wealth disparity within the country (Mazrui, 2005). For example, only 18.9% of the total industries in Nigeria were located in the North and the combined industries of all the 19 northern states only accounted for 1/3 of the industries in Lagos state alone (Adamu, 2003). This huge difference resulted in the deviation of income levels and apparent intensification of imperialism common in developing countries. Nigeria suffered from a ‘resource curse’, the ‘coexistence of vast wealth in natural resources and extreme personal poverty’ (Wikipedia, 2012). The GINI index, measuring the distribution of income with index of 100 for perfect inequality, was reported to be 48.8 (Worldbank, 2010).The poor get poorer and the rich get richer, creating a crippling society which moral standards and political reforms failed to balance with rapid economic development on the whole, like the widespread corruption that hindered economic progress. Furthermore, Nigeria had an unnatural over dependence on oil industries with inadequate infrastructure outside the energy sector. Since gas and oil exports accounted for over 90% of export earnings, Nigeria’s foreign exchange earnings were subjected to the instability of the world oil market, therefore large fluctuation in exchange prices (Onwuka & Eguavoen, 2007). The oil sector had destroyed local ecological system and in need of governance to regulate the multinational corporations.

As the private sector began to flourish under economic globalization in Nigeria, it inevitably leads to exploitative tendencies of capitalist employers for cheap labour, especially within the oil industry where profit maximization matters most. This form of exploitation, namely casualization, had existed for years as the phenomenon that exported to developing economies. It can be defined as ‘contract labour in the form of involuntary servitude for a period of time’ and usually found within ‘work occupations in which the demand for employment is highly variable such as port work, farm work, farm migratory work and other jobs of unskilled intermittent nature’ (Okougbo, 2004). The companies employing this kind of unethical business strategy manipulated the large supply pool of labour to lower costs in order to increase profit margins, since there are those willing to accept very low wages in order to support their big families. Unfortunately, underdeveloped economies like Nigeria had large proportions of households living below poverty line, around 45% of the population.

This kind of labour contracts, also referred as ‘body shop’, held labour terms that undermined human rights and violated multiple business principles of respect to human labour. The unethical terms include but not limited to very poor wages, no job security or promotion, no leave allowances, no medical allowances, no accident insurance for work and no negotiation on contract terms (Okougbo, 2004). In addition to these slavery terms, the working conditions tended to be disastrous. Employers would not put any effort in maintaining the working environment since minimal wages already showed their indifference to the workers’ welfare, and costs might incur from improving the work conditions. For example, Asian manufacturing companies in Nigera locked up their contract workers in their factories so that they could not access any external bodies and vice versa. (Okafor, 2007) Moreover, contract workers do not only consist of unskilled workers, as multinational companies wished to gain a cost advantage by offshoring production to Nigeria where incomes were comparatively lower than developed economies like US. This was apparent in certain oil and gas companies; keeping contract staff on a slave wage despite the fact they qualified as permanent staff, so as to rip supernormal profits at the barest minimum labour cost. An example would be Mobil Oil Plc. decreasing from 110 permanent employees in 1991 to none by 2002. Another example was in Nigeria National Petroleum Corporation, a major employer in Nigeria economy, where some doctors and engineers were contract staff earning the bare minimum to feed themselves for several years (Okafor, 2007). These management schemes would promote poverty instead of reducing it in Nigeria, also enlarging income equality gap.

Apart from casualization of labour, aversion of unionism manifested itself in these practices since a strong trade union could lead to labour strikes and protests for better working conditions and treatments. Some companies forced the casual staff to sign a compulsory ‘yellow dog contract’ once employed, which was to make sure they would not join any union during employment. This was a clear encroachment to International Labour Organisation’s conventions on freedom of association, ensuring basic union rights of any employee to bargain collectively in any union of his or her choice. Studies found that unionization of labour were common in the banking sector in Nigeria but this problem coupled with casual labour, was found very evident in the oil and gas sector (Okafor, 2007). There were also no member from Mobil Oil Plc present in the National Union of Petroleum and Natural Gas Workers (NUPENG) (NUPENG, 2003).

Nonetheless there were attempts to unionise these contract workers, such as the mobilisation of labour movement by NUPENG in 1992 to demand de-casualization which they continued to fight for workers’ rights now. However, their efforts were met with strong resistance from oil multinationals like Shell Petroleum Development Company and Texaco Overseas because they were very buoyant in the Nigerian oil and gas industry, allowing them to escalate the conflict by adopting extreme measures to oppress the protests (Adenugba, 2004).

Child labour was a by-product from exploitation of cheap labour, and had serious implications for the children development and overall impact to the society. Although universal legislation prohibited child labour, however it was still prevalent in the Nigeria economy. According to statistics, 29% of children aged 5-14 engaged in the child labour in Nigeria (Unicef, 2007) with the average age of 7.9 years, and this was a significant number for an illegal practise. The employment of children deprived them of their childhood, preventing them from attending school which could be harmful to their wellbeing. Child labourers were subjected to low wage rates and often found working in hazardous conditions that could lead to long term health problems. Moreover, child labour could perpetuate poverty because as adults, they are likely to have low earning prospects given low educational attainments and capacity to work, hindering the societal development of Nigeria economy on the whole.

Despite a several reasons, poverty remained as the major drive into child labour in Nigeria. Children’s earnings to household income can reach up to 38% depending on the wages and location because children contributions were relatively high in Southeast and Northwest Nigeria (Okpukpara & Odurukwe, 2006). However, most child labourers were exploited, unpaid or with little remuneration in spite of being exposed to the mental and physical risks in work. Moreover, rural parents tended to have limited educational horizon, therefore might lack enthusiasm to send their children to school since they saw education in Nigeria was a ‘business with a long gestation period and low return’ (Okpukpara & Odurukwe, 2006). This was supported by findings that more children in non-poor households were enrolled in school than poor families (Nielsen, 1998). Further research showed that children from the North were paid less, yet spent more hours in economic activities than those in Southern Nigeria, a likely reflection of the income difference of these 2 areas. Another reason of child labour could be insecurity about the value of diplomas and marriage strategies are among the reasons girls in Lagos, Nigeria spend much out of school time acquiring street trading skills (Nieuwenhuys, 1996). Child labour is a vicious cycle in which many families sent their children to supplement household income, but this will undoubtedly damage the children’s future prospect, eliminating opportunities to get out of poverty. The whole Nigeria society could not advance if its population remained largely uneducated and over exploited by unethical business practices.

To conclude, economic globalisation had led to better utilization of the plentiful resources in Nigeria, incurring large export revenues from oil and gas industries. However, this also led to the over-exploitation of human labour and growing income inequalities, which could cause social unrest if these problems went unnoticed by the government. In spite of promising economic growth, Nigeria is still burdened with inadequate economic infrastructure and societal problems to foster further economic growth, especially these problems were escalated by political instability and corruption. On the other hand, it could be argued this is a stage all developing countries have to go through, since labour costs will subsequently increase if most productions are moved to Nigeria, similar to the case of China. Higher living standards will be inevitable as the economy grows. Nigeria government should monitor economic progress carefully and implement policies to tackle problems in the social and political aspects of the country, not limited to economic growth; otherwise Nigeria will reach its limit for economic development due to hindrance from governmental inefficiencies.
(1943 words)
References
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