Rapid Economic Development in LICs/NEEs (AQA GCSE Geography)

Changing Industrial Structure

Case study on economic development in Nigeria – a newly emerging economy (NEE)

• Nigeria is important regionally and globally and is a multi-ethnic, culturally diverse federation

• Nigeria borders 4 countries: Benin, Chad, Niger and Cameroon in West Africa, just north of the Equator

• Three tribal groups dominate Nigeria, the Hausa in the north and Igbo and Yoruba in the south

• There are a number of different ethnic groups in Nigeria who have religious differences as some are Christian and others Muslim

• The religious conflict in Nigeria has led to the rise of the Boko Haram terror group

Table of Regional and Global Importance of Nigeria

Nigeria’s economy

• The 1950s discovery of oil in the Niger Delta, led to economic change and a transition from LIC to NEE

• Oil accounts for 14% of the country’s GDP and is of better quality than Middle East oil

• Often referred to as “Sweet Oil” due to the low amount of sulphur

• Present production rate of 2 million barrels each day gives roughly 50 years of supply left

• Nigeria's dependence on oil is vulnerable due to world oil prices and the rise in renewable energy technologies

• Nigeria’s economy is becoming more balanced with a shift from primary employment to growth in secondary and tertiary industries

Manufacturing sector

• Manufacturing accounts for 10% of Nigeria’s GDP

• Australia and Indonesia are the biggest customers of Nigerian cotton

• Cocoa and rubber are exported to Barbados

• It also manufactures processed foods, textiles, leather goods, soaps and detergents

• The growth of the manufacturing industries has led to economic development

• For example:

  • Regular paid work provides a secure income

  • More people are employed

  • Revenue from taxes increase: providing education, healthcare and infrastructure

  • A thriving industrial sector attracts foreign investment

  • This stimulates further economic growth

Transnational Corporations

• Transnational Corporations (TNCs) operate in foreign countries individually and not through a centralised management system

• TNCs and countries are the two main elements of the global economy

• Governments and global institutions set the rules for the global economy, but the main investment is through TNCs

• TNCs involve themselves in all economic sectors and impact the global economy with the largest TNCs representing the biggest percentage of total global production

• TNCs directly invest in one country and later expand to other nations (usually developing countries) to take advantage of lower labour costs and incentives 

• They may not be loyal to the operating country's values and will only look to the expansion of their business as they have no connection to the country they operate in

• It is the process of moving manufacturing around the globe that has resulted in the development of emerging countries such as China, India and Nigeria

Shell in Nigeria

• Shell is an Anglo-Dutch company with its headquarters in the Netherlands

• It is one of the world’s largest oil companies

• Since the discovery of oil in Nigeria, its operations in the Niger Delta have been controversial

• Shell has bought a number of benefits to Nigeria’s economy by:

  • Gives 91% of its contracts to Nigerian companies

  • Making major contributions to taxes and export revenue

  • Providing direct employment for 65,000 workers and a further 250,000 jobs in related industries

  • Supports the growth of Nigeria’s own energy sector

• The cost of oil has created tensions and environmental issues:

  • Most people who live in the area depend on either farming or fishing to make a living

  • Oil spills have polluted the surrounding waters; harming biodiversity and fish yields

  • Caused soil degradation, which has reduced agricultural production 

  • Militant groups disrupt the oil supply in the delta by destroying well heads

  • Frequent oil flares send toxic fumes into the air to burn off the gas from the oil

  • This affects people’s health and contributes to global warming

  • Oil theft and sabotage are big problems costing TNCs and the government billions

  • Oil pollution from tankers off-shore also damages the marine ecosystem and kills fish and other marine wildlife

• The Nigerian government set up the Nigerian National Petroleum Corporation (NNPC) to join with the TNCs and monitor the oil industry

• This ensures that part of the money and profit gained from the industry, stays in Nigeria

Changing Political & Trading Relationships

Political and trading relationships:

• Nigeria’s development from a LIC to a NEE has changed its global political position

• Nigeria belongs to several trading groups including the Economic Community of West Africa (ECOWAS), a trading alliance with its headquarters in Abuja, and the Organisation of Petroleum Exporting Countries (OPEC)

• Religious faith is divided between Muslims (54%), who live mostly in the north, and Christians (45%), who live mostly in the south; the traditional religions (1%) of the tribal groups are in the minority

Table of Relationships 

International Aid

• There are many different types of international aid

• International aid can be given as advice, technology, food and money

• It is important that aid is appropriate meaning that it fits the needs of the developing country

• For example, aid in the form of tractors may not be appropriate if the community cannot afford the diesel or have the skills needed to maintain them

The many types of international aid

Disadvantages of international aid

• It does not always reach the people who need it due to corruption and mismanagement

• It is not always appropriate: large scale projects such as dams can end up creating more poverty for some people

• Countries may become dependent on aid and development may stall

• Aid is often tied: Meaning a country has to spend the money on economic strategies rather than on social development 

• The donor country can apply political or economic pressure

• Food and water can cost more

Nigeria's aid:

• Despite economic growth, there is a development gap within Nigeria 

• Poverty and infant mortality is high and life expectancy is low, especially in northeast Nigeria

• 4% of all African aid goes to Nigeria which is about US$5,000 million

• Aid comes from organisations such as the International Development Agency / World Bank (medicines), the EU, UINCEF, and individual countries including the USA, the UK and Germany

• Aid has benefited many people, particularly through community based projects supported by small charities and non-governmental organisations (NGOs)

• Projects have included the following:

  • The Aduwan Health Centre in Northern Nigeria, supported by ActionAid and the World Bank, which provides vaccinations and general healthcare, particularly for mothers and babies

  • Anti-mosquito nets provided by the organisation ‘Nets for Life’

  • Support for orphans and vulnerable children comes from Community Care in Nigeria, funded by USA AID

  • Aid from the USA helps educate and protect people against AIDS/HIV

• Corruption within the government and individuals has seen some aid money failing to get to the people who need it most

Environmental Impacts of Economic Development

• Rapid industrial growth in Nigeria has led to environmental impacts

• Urban growth has seen a rise in squatter settlements, waste disposal, traffic congestion and vehicle exhaust emissions

  • Lagos has seen large areas of its countryside swallowed up by industrial developments and squatter settlements

  • There is a lack of sanitation and inadequate waste disposal which cause land and water pollution

  • The fumes caused by traffic congestion contribute to climate change

• Mining and oil extraction 

  • The Niger Delta in southern Nigeria is one of the most polluted places on Earth

  • Oil spills have damaged marine and land based ecosystems and polluted water supplies

  • Fires are destroying plants, creating soil erosion, and contributing to acid rain 

  • Tin mining has polluted local water supplies and resulted in soil erosion

  • In 2008/09, two massive oil spills devastated 20km2 of natural swamps close to the town of Bodo on the Niger Delta

  • In 2015, Shell agreed to pay compensation to the community and to clean up the affected area

  • 75% of spills since 2016 are due to theft and sabotage, mostly by militants and organised crime groups

  • Shell has publicly reported 1,010 oil leaks since 2011, amounting to 17.5 m litres of oil spilled into the region

• Industries releasing chemical waste onto nearby land, poisonous gases released

  • 70-80% forests are destroyed through logging, burning, agriculture, urban expansion, roads and industrial development

  • Burning forestry, releases carbon dioxide (a greenhouse gas) into the atmosphere and forest removal results in serious soil erosion

  • In Kano, Kaduna and Lagos, toxic chemicals are discharged into drains and open sewers, posing dangers to human health and natural ecosystems

  • Chimneys emit poisonous gases that can affect people’s respiratory tract and contribute to global warming

  • Waste disposal can contaminate the land  and poison rivers and groundwater supplies

• Commercial farming has led to land degradation and desertification

• Desertification is through poor land use, unsustainable grazing, deforestation, and increased demand of a growing population

• The buildings of settlements and roads have destroyed over 500 species of plants

Effects on Quality of Life

• Reliable and better paid jobs provide security and enable people to spend money on home improvements, accessing health care and education

  • Although many people in Nigeria remain poor, especially in the rural areas of the north, a lot of people have benefited from economic development

  • A higher disposable income to spend on food, clothes, and leisure activities

  • Nigeria’s Human Development Index (HDI) has increased steadily since 2005 from below 0.47 to 0.539 today

• Improved living conditions provide better performance at work and school

  • Adult literacy rate is estimated to be 62% among Nigerians aged above 15 years and years of schooling is 9 years an increase from 6.7 years

• Better quality healthcare: Easier access to doctors and better equipped hospitals increase life expectancy and reduce infant mortality

  • Life expectancy has increased from 45.66 in 1980 to 55.02 in 2020

  • The number of doctors available per 1000 people is just 0.4 (UK is 3.5 doctors per 1000)

• Improvements to safe drinking water and sanitation increase the overall health of people

  • In rural areas, 39% of households lack access to at least a basic water supply, while only half have access to improved sanitation and almost a third (29%) practice open defecation 

  • In urban areas 48% of people have access to basic drinking water sources, and 33 percent have access to sanitation but only 3% of people have piped water and sanitation to their homes

• Reliable electricity supplies that provide lighting and heating 

  • Over 70% of Nigerian’s now have a mobile phone

  • 38% have internet access

• However, individual and government corruption is still a problem

• 60% of Nigerians live in poverty of less than US$1 a day

• Basic services provisions need to be a priority

• Ethnic and religious conflicts need to be addressed and carefully