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Back | Programme Area: Markets, Business and Regulation (2000 - 2009)

Corporate Partnerships and Community Development in the Nigerian Oil Industry: Strengths and Limitations

The volatile nature of corporate-community relations, which has meant significant loss in oil revenues for governments and a decline in profits for oil transnational corporations (TNCs), has shifted the acquisition of a “social licence to operate” from the periphery to the heart of strategic business thinking within the Nigerian oil industry. Oil TNCs are responding to this challenge with partnership strategies—as a means of contributing to community development, building mutually beneficial relationships with local communities, and reinventing themselves as a force for good in their host communities.

This paper examines the strengths and weaknesses of different community development partnership (CDP) and poverty reduction initiatives for the Niger Delta, Nigeria, in the corporate-community relations strategies of Shell, Exxon Mobil and Total.

The first section describes the study area and the methodology that informed data collection, and clarifies the various concepts used in the analysis.

The second section engages critically with the corporate social responsibility (CSR) strategies, particularly those for community development, adopted by oil TNCs over the years. This section identifies “partnership” as the emerging dominant CSR practice in the oil industry in Nigeria, highlights the various factors that have led to this change in CSR strategy, and discusses the various forms such partnerships have taken.

The third section assesses oil TNCs’ community development partnerships and their contributions to community development, in order to identify the strengths and limitations of partnership as a vehicle for local development. This section is divided into two subsections. The first highlights the strengths and weakness of oil TNCs’ efforts to address their affirmative duties (that is, to pursue social good by contributing to development without any prior wrongdoing on their part), and the second examines the consequence of oil TNCs’ failure to avoid and correct any social injury that results from their operations.

The fourth section discusses the emerging implications for partnership, community development and business-society relations in developing countries. Analysis suggests that CDPs that are bottom-up have a more positive impact on the development of host communities than those that are top-down in nature. However, neither approach has had any real impact on how the core business activities of oil TNCs are undertaken, nor has either served to ameliorate the negative social and environmental impacts of oil production on host communities. Consequently, the paper argues that while partnerships do have the potential to contribute to community development, the failure of oil TNCs to avoid and correct social injury that results from their operations undermines the ability of their partnership initiatives to contribute to community development.
  • Publication and ordering details
  • Pub. Date: 2 Mar 2007
    Pub. Place: Geneva
    ISSN: 1991-9921
    From: UNRISD/UN Publications