Country Case Study

The biggest economy in Africa

Nigeria lies in West Africa on the Gulf of Guinea, covering around 924,000 square kilometres with a population of over 200 million, the largest in Africa. It has been independent from Britain since 1960, spent much of the period between 1966 and 1999 under military government before returning to civilian rule, and in 2014 its economy became the largest on the continent. Around 250 ethnic groups live within its borders, with the three largest being the Hausa and Fulani in the north, the Yoruba in the south-west and the Igbo in the south-east, and the country is broadly Muslim in the north and Christian in the south. Oil was found at Oloibiri in 1956 and production began in 1958, and it has shaped everything since. Oil and gas supply something in the region of 90 per cent of export earnings and a large share of government revenue. Here is the part that matters for this case study: they account for only about a tenth of the economy and employ very few people directly. So Nigeria can be simultaneously the largest economy in Africa and a country where the majority of people see very little of that money, and the two facts are not in tension. They are the same fact. That gap, between the size of an economy and the reach of its benefits, is the frame for the whole topic. It explains why the industrial structure is changing, why transnational corporations are argued about so fiercely, why aid and trade are both part of the picture, and why improvements in quality of life have been real but uneven. Keep it in mind and the case study organises itself; ignore it and it becomes a list of facts about a country.

Five terms for a country case study

The first two are what Nigeria is and who operates in it; the last three are how you judge whether growth is reaching anyone.

Order the Nigerian timeline

These six events shaped the country the case study describes. Put them in order.

• Oil is discovered at Oloibiri in the Niger Delta
• Nigeria becomes independent from Britain
• A civil war begins after the south-east attempts to secede
• The capital is moved from Lagos to a new, centrally located city
• Military rule ends and civilian government returns
• Nigeria overtakes South Africa to become the largest economy in Africa

Why has oil wealth reached so few?

Nigeria earns the overwhelming majority of its export income from oil and remains a country where most people have seen limited benefit. Which answer explains that?

• Oil is capital-intensive rather than labour-intensive, so it generates enormous revenue while employing very few people directly, and it accounts for only about a tenth of the economy despite supplying around ninety per cent of export earnings. Much of the value leaves as profit returned to foreign shareholders, the extraction is concentrated in one region while the population is spread across the whole country, and an economy dependent on a single commodity has its government revenue rise and fall with a world price it does not control, which makes long-term planning extremely difficult.
• The money has been wasted by those who received it.
• Nigeria does not actually produce very much oil.
• Production began too recently for the benefits to have spread.

Transnational corporations, weighed

This is the heart of the case study and the specification note is explicit that both sides must be argued and a judgement reached. Read the rows across, because several of them are the same fact seen from two directions, and note the criterion in the final row of each column.

Match each fact to what it shows

Weigh it, then decide

The specification note for this node is blunt: an answer on transnational corporations must give both the advantages and the disadvantages and must reach a judgement. A balanced list is not a judgement, and it is where most answers stop. The way to get past a list is to name the criterion you are judging by, because the two sides of this argument are not measuring the same thing. Judged by what would exist otherwise, the case for these companies is strong: the infrastructure, the technology and the route to world markets would not have appeared on their own. Judged by how much of the value stays in the country and who decides what happens next, the case is much weaker. Say which of those you are using and the conclusion writes itself; leave it unstated and you are summarising. Use the same fact from both sides wherever you can, because it demonstrates judgement in a single sentence. An operation employing thousands is a benefit; the same operation employing far fewer than its revenue would suggest is a limitation. Infrastructure built for an export terminal serves the country afterwards and was built for the terminal, not for the country. Two things about how you write this one. Explain circumstances rather than allocating blame: an answer that attributes a country's position to the failings of the people living there has stopped doing geography. And avoid writing about a population as though things simply happen to them; the protests, the growth of domestic industries and the move of the capital are all decisions taken within the country, and mentioning them is what keeps an answer from reading as though the story belongs to somebody else.

Complete the Nigeria facts

Nigeria has been independent since _____ and has the largest population in Africa, at over 200 million, drawn from around 250 ethnic groups. Oil was discovered at Oloibiri in 1956, and today it supplies roughly _____ per cent of export earnings while making up only about a tenth of the economy and employing comparatively few people. That combination is why the country became the largest economy in Africa in 2014 without a matching improvement in living standards for most of the population. The single biggest disadvantage of investment by a transnational corporation is profit _____, which means the value earned leaves the country rather than circulating in it. Against that, wages paid to local workers who then spend locally generate a _____ effect. A United Nations assessment of pollution in the Niger Delta, published in _____, recommended a clean-up expected to take twenty-five to thirty years.

Spot the three sound statements

Select the THREE statements that could stand as they are in an answer.

• An economy can be the largest on its continent while most of its population sees limited benefit, because the size of an economy and the reach of its benefits are different measurements.
• The same operation can be cited on both sides of the argument, since employing thousands of people is a benefit while employing far fewer than its revenue suggests is a limitation.
• Industries that grew domestically, such as Nigerian film-making, keep their earnings inside the country and employ large numbers, which is a useful contrast with extraction.
• The main reason the wealth has not spread is that those receiving it have not used it properly.
• Transnational corporations bring no benefits to a host country at all.
• Because investment creates jobs, the arrival of a transnational corporation always closes the development gap.

A 9-mark judgement, marked

"Transnational corporations bring more advantages than disadvantages to a lower-income country or newly emerging economy." Using a case study, assess this view. [9 marks] Nigeria has produced oil since 1958 and transnational companies such as Shell, present in the country since 1937, have operated there throughout. The advantages are substantial and would be difficult to reproduce domestically. These companies employ people directly in extraction, processing and support, and the wages they pay generate further employment through the multiplier effect as that money is spent locally. They have built infrastructure, including roads, port facilities and power supply, which remains available after the work it was built for. They bring engineering expertise and equipment that a country without an established oil sector would otherwise lack, and they provide access to world markets and a flow of foreign currency, along with taxes and royalties to government. Judged by what would exist in their absence, the contribution is considerable. Against that, the value largely leaves. Profits are returned to shareholders abroad rather than circulating in Nigeria, which is why the country can supply around ninety per cent of its export earnings from oil while that sector makes up only about a tenth of its economy and employs comparatively few people. The environmental cost has fallen on the Niger Delta, where decades of spills led a United Nations assessment published in 2011 to recommend a clean-up expected to take twenty-five to thirty years, and the disputes over that damage have at times been severe, including the protests in Ogoniland that ended with the execution of their leaders in 1995. I partly agree with the statement, and the answer depends on the criterion. Judged by what exists that would not otherwise, the advantages outweigh the disadvantages. Judged by how much of the value generated remains in the country and who decides what happens next, they do not, and it is worth noting that industries which grew domestically, such as Nigerian film-making, employ large numbers and keep their earnings at home. The most defensible conclusion is that transnational investment has built a great deal in Nigeria while retaining the decisions and most of the returns elsewhere. What earned the marks: both sides developed with specifics and dates rather than listed; the same facts used to argue in both directions; a named criterion doing the judging rather than a balance of opinion; a domestic contrast introduced so the country is not written about only as a recipient; and sensitive material stated factually without embellishment.

Find the two that reach a judgement

Five sentences from answers about transnational corporations. Three of them state a fact or a balance without deciding anything. Tap the TWO that actually judge.

• Judged by how much of the value generated stays in the country, the disadvantages outweigh the advantages, even though the infrastructure built would not otherwise exist.
• There are advantages such as jobs and infrastructure, and disadvantages such as pollution and profits leaving.
• The same operation counts on both sides: it employs thousands, which matters, and it employs far fewer than its revenue would suggest, which matters more when the question is whether the gap is closing.
• Transnational corporations bring employment, technology, infrastructure, tax revenue and access to markets.
• Oil accounts for around ninety per cent of Nigeria's export earnings.

Build the size-and-reach sentence

Assemble the sentence that gives this case study its frame.

Four decisions about one country

You advise on development policy. Each choice is real and each has a cost.

• A transnational company proposes a major new facility. It will employ several thousand people, and as drafted the raw material would be exported unprocessed, the senior technical posts filled from abroad and the profits returned to shareholders overseas.
• Government revenue rises and falls sharply with a world commodity price you do not control, which makes planning beyond a single year almost impossible.
• The resource is concentrated in one region, while the population and the political weight are spread across a much larger and very varied country.
• A student writes that the country is still poor because the money has been wasted by the people who received it, and asks whether that will score.

Assess the corporations

Using a case study of a lower-income country or newly emerging economy, assess the advantages and disadvantages of transnational corporations. [9 marks]

• A date shows the examiner this is a real case study
• Advantages: employment, infrastructure, and skills or market access
• Profit repatriation is central, not an afterthought
• Arguing a single point in two directions demonstrates judgement quickly
• Circumstances rather than blame, throughout