AN ASSESSEMENT OF THE IMPACT OF OBAJANA CEMENT FACTORY ON THE SOCIO-ECONOMIC DEVELOPMENT OF OBAJANA, KOGI STATE, NIGERIA

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AN ASSESSEMENT OF THE IMPACT OF OBAJANA CEMENT FACTORY ON THE SOCIO-ECONOMIC DEVELOPMENT OF OBAJANA, KOGI STATE, NIGERIA

Abstract

Cement factories in Nigeria need development and expansion as a result of high prices in cement product as well the benefits from the factories to the host communities. The study assessed the impact of Obajana cement factory on the socio-economic development of Obajana, Kogi State, Nigeria. Data was collected through administration of questionnaire among 361 households that were systematically sampled. Also, three sections of Focus Group Discussion (FGDs) were held with groups consisting of male, female and youth in the study area. The data was analyzed using both descriptive and Principal Component Analysis techniques. The result from the analysis indicated that only 7% earn above N80,000 per month while 25.2% earn below N20,000 monthly. It was also perceived that the establishment of the factory has generally improved the income of the residents because most residents have diversified their income base from agriculture to other more profitable businesses hence, more than 70% earn above than the N18,000 minimum wage monthly. The standard of living of the people of Obajana have also been improved. This is because more health, education and other social facilities have been established as a result of the influx of people into the area. About 24% are now living their personal houses while 42.7% live in rented apartments. About 94% of the respondents agreed that the population of the community has now constituted a market for local agricultural produce, farmers no longer travel to Kabba or Lokoja markets to sell their products as what they produce is barely enough for the consumption of the reside. It was also discovered that about 21.3% were employed in the factory and other jobs have also been created indirectly in the community as a result of the movement of diverse people into the area. However, about 44% of the respondents claimed they lost their farmlands as a result of the company which in turn, affected their income. Infrastructurally, as a result of increase in the population of the study area 83% of the health facilities, 93% of educational facilities, 92% of the water facility and 100% 0f the commercial Banks came to existence after the establishment of the company. On the other hand, the company has not been able to provide the basic social amenities for the community such as street roads, drainages, health facilities etc. The result of the principal component analysis revealed that the social impact that positively loaded included the award of scholarships to indigenous students, increase in social vices, supply of electricity as well as displacement of the original land owners accounted for the cumulative eigen value of about 38.8%. This is an indication that the establishment of the factory has impacted socially both in positive and negative ways. On the basis of the findings, the study recommended that Obajana cement factory should execute projects such as building schools, construction of roads, provide health facilities, potable water and ultra modern market in collaboration with community stake- 47holders and government. The company should also initiate a well monitored credit facility programme to the indigenes of Obajana who are not working in the company in form of soft loans. This will enable them to go into private businesses which will in turn improve their live.

CHAPTER ONE: INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Industrialization is a term that is mostly associated with the development experience of countries in Western Europe and North America during the 19th and 20th centuries (Purma, 2001). According to Perkin, Radalet, Snodgrass Gillis, and Roema,(2001), Industrialization refer to a part of a wider modernization process where social change and economic development are closely related with technological innovation, the application of science to the problems of economic production leads to industrialization, urbanization and improved quality of the population. Consequently, a high premium is placed on the development of the industrial sector of developed economies. Quite often, it is argued that the developed countries of the world attain this level of development because of the technology that increases the number of industries within their economies.

Industrialization broadly refers to the transformation of agrarian-rural societies to industrial- urban societies that are dominated by manufacturing and services (Maddison, 2007). The beginning of this transformation often referred to as the industrial revolution, is conventionally traced to the late 18th Century England. Industry is also more narrowly equated with manufacturing and industrialization is specifically associated with the growth of manufacturing with the so called factory system that began to proliferate at this time (Angus, 2001). In this early sense, it refers to a marked departure from a subsistence economy that is largely agriculture towards a more mechanized system of production that entails more efficient and more highly technical exploitation of natural resources in highly formal and commercialized economic settings

(John, 1997). Industrialization is a process of social and economic change whereby a human society is transformed from a pre-industrial to an industrial state (Nove, 2005). In the early sense,

it was referred to as a marked departure from a subsistence economy that is largely agricultural towards a more mechanized system of production that entails more commercialized economic settings (John, 1997). Industrialization was understood purely on economic terms particularly the physical presence of industrial plants that were involved in manufacturing capital goods as well as processing raw materials into finished goods either for industrial use, general commercial use or purely for domestic use or purposes (Todaro, 1989). Further definition of industrialization during

the later part of the 20th century expanded to refer to a process of development that is balanced

and sustained as far as the economic as well as socio-economic realm of any society is concerned (Oyenga, 1988). Industrialization is a critical key to economic growth that calls for improvement in systems, technologies and processes that utilizes natural resources more effectively. Interestingly, about a fifth of global income is generated from manufacturing industry and nearly half of household consumption relies on goods from industrial processes (Ibbih and Gaiya, 2013)

Mineral exploration has supported the social and economic development of many developed countries (Akande and Idris, 2005). For example, the uranium mining in Canada and iron ore extraction in Germany have helped the two countries to develop infrastructurally as well as quality jobs creation invariably improving the countries standard of living. More so, the impact of industrialization on socio- economic development cannot be overemphasized (Aribigbola, Fatusin and Fagbohunka, 2012). In developing countries, it will continue to produce technological development and employment. According to Imasiku (2008), large scale mineral exploitation has contributed to over 90% of all foreign exchange earnings, 60% of Gross National Domestic Product (GNDP), 50% of total government revenue and 30% of total employment in some southern African countries. Similarly, small scale mineral exploitation provides a source of livelihood in rural and semi-urban Nigeria in particular and Africa in general.

Exploitation of mineral resources has assumed prime importance in several developing countries including Nigeria. Nigeria is endowed with abundant mineral resources which have contributed immensely to the national wealth with associated socio-economic benefits. Mineral resources are important sources of wealth for nation but before they are harnessed, they have to pass through the stages of exploration, mining and processing (Ajakaiye, 1985; Adekoya, 2003).

The intention behind the encouragement of industrialization according to Ofori-Cudjo (2009), Endashaw (2009) and Boakye (2010), lies in the development of a diversified economy that could propel the achievement of stable and sustainable societies. Since the agricultural sector is the main economic activity, sub-Saharan Africa countries cannot provide enough employment and income to the growing population.

Few years after Nigeria‟s independence, the major economic policy emanating from the new government was that of import substitution (Oyebanji, 1983). Consequently, several large scale industries were built by various levels of government and individuals that were desirous of quick industrialization. One of such is Ewekoro Cement Plant by Ogun State government, Sokoto Cement by the Sokoto State Government and that of Obajana cement plant owned by Dangote in Kogi state. One of the often touted solutions to the problem impacting development in the third world countries is the emphasis on industrial enterprises (Aribigbola, Fatusi,and Fagbohunka 2012).

After the Second World War, political leaders in the third world favoured developmental strategies based on rapid industrialization. Raw material production was regarded as a legacy of the colonial era and industrialization was regarded as essential to raise the living standard of the masses. Over the last seventy years, there has been a shift away from the advanced capitalist or

first world. Until the late 1920s Western Europe, North America and Japan accounted for over 90% of the world industrial production (Jenkins, 1992).

The efforts of the government to use mineral deposits to promote national economic growth have been matched by similar attempts to base the development of peripheral regions upon investment in mining (Afeni, Cowood and Isiaka , 2008). The gold resources of the Witwatersrand were discovered in 1886 and were responsible for rapid growth of Johannesburg which remains the economic core of South Africa. Similarly, the forty miners attracted by john Sutter‟s chance discovery of gold were the catalyst in California‟s rise to economic importance and the population of San Francisco rose from just 450 in 1847 to more than 55,000 by 1860 (Warren, 1998) This experience demonstrates the operation of process on the circular and cumulative causation based on the initial advantage provided by mineral resources (Chapman and Walker, 1998). It could be glaringly seen that, the most significant impact of exploitation of minerals has caused the migration of thousands of foreign and non-local employees to the area occupied by a mine, concomitantly upset the social balance of the local communities, impacting on local water supplies and the available resources.

Nigeria and other less developed countries are said to be economically backward because their economic pattern is based on supplying raw materials to industrialized countries and importing manufactured products in return. An attempt to reverse the trend has led to formulation and implementation of many policies on industrialization (Nove, 2005). For instance, the Nigerian government at a time had created agencies for the purpose of industrial development (Teriba, 1977). For obvious socio-economic factors, industries are usually established in urban centers even though raw materials are sourced from rural areas. However, the low level of socio- economic transformation in many rural areas, has led development experts to perceive rural

industrialization as a way out. Repeated calls have been made in support of rural industries, especially, those using bulky materials found in rural environment. Examples of these, include, iron smelting industries, cement factories, vegetables and fruit canning industries and so on. However, in spite of the natural resources available in the rural and urban areas of the country, the nation can only attain her development plan if she efficiently manage and direct the use of these resources well. The full potential of the resources have to be properly exploited.

With reference to cement factories, the federal government had in the early 1950s explored the possibility of establishing a cement factory in Nkalagu. This followed the discovery of large quantity of limestone deposits in the area. But this plan was not completed, nor was the Nigerian Cement Company incorporated until 1954 (Ugoh, 1977). After this period, more cement factories were established. They include West Africa Portland Cement Company at Ewekoro, Cement Company of Northern Nigeria in Sokoto, Bendel Cement Company Plc at ukpella, United Cement Company Plc, Calabar, Ashaka Cement Company Plc, Benue Cement Company Plc, Gboko and Dangote Group Cement Factory Obajana.

The establishment of Cement industry in the above mentioned communities is expected to have heavily impacted on the people, both physically and socio-economically. These impacts can be both positive and negative. Cement industries all over the world create dusts thereby giving room to lungs related diseases. On the other hand, it will create jobs, develop infrastructure thereby improving on the livelihood of the people of the community. The main challenge presently trailing the Obajana community is the impact of the factory on the overall wellbeing of the inhabitants and that is exactly what this study is poised to find out.

The contribution of industry to local and national economy in all facets is not in doubt as it is one of the key drivers of economic growth and development. The impact of industrial activities is felt in a variety of ways. The presence of industries in any community most especially large scale industries such as textile, automobile, cement confer external benefits in the area of employment generation, infrastructure provision and boost in the residents‟ social-economic status, population upsurge, expansion of local market, increased demand for accommodation, vibrant real property development and consequently increase in property value. In terms of land use, while these industries may produce goods and services that are beneficial to a segment of the population, the property values of others may diminish (ling and Archer, 2005). This leads us to the principle of Corporate Social Responsibility (CSR) which is also referred to as corporate conscience, corporate citizenship or corporate social opportunity. CSR is described as an attempt at instilling discipline and the integration of self regulation into business principles and ethics of Multi- National Corporations (MNCs). It functions basically as a build –in self regulating mechanism whereby business organizations monitor and ensure active compliance with the spirit of the law, ethical standard and international norms (Ojo and Akande, 2013)

In Nigeria the quest for formalized CSR practices started during the military administration of the 1990s as typified by Shell Nig. Plc- Ogoni imbroglio to the sudden realization that one cannot continue to take so much without the restoration of a little. According to Ikein (1990), CSR focused business would promote the public growth and development as well as voluntarily eliminating sharp practices that can harm the public interest regardless of legality.

Most of the Multi National and locally owned companies in Nigeria have failed to measure up to the standard of international norms and ethics of the corporate social responsibility. The give and

take approach of the companies to their host communities is far from what is obtainable in the Europe and other developed countries where standard is insisted on. It has been alleged that business practices are destroying life on earth and are responsible directly or indirectly for the most dramatic human impact on the ecosystem.

Obajana Cement Factory was incorporated by the Kogi state Government in 1992. It was however, acquired by Dangote Industries Ltd (DIL) in 2002. The Obajana Cement Factory was initiated in 2003 and the construction started in 2004. It was later commissioned in 2007 with a capacity of 5million metric tones of cement annually but today, the company can boast of producing about 13.25 million metric tones of cement per annum and this gives the company the number one position in Africa as the largest cement producer. Therefore, it is expedient to check if this company is actually giving back to its host community as part of its CSR.

1.2 STATEMENT OF THE RESEARCH PROBLEM

Industrialization is often seen as the basis for the economic development and growth of any nation. Nigeria like many other countries aspiring to attain economic growth and development has long embraced the concept of industrialization and has since been concentrating her effort toward achieving it. The location of industries in areas where they are not existing before have been seen to have some effects on such places.

Several studies have thus, been carried out on the prospects and effects of cement industrialization on most of Africa‟s populace. Winmore, Nyashadzashe and Thomas (2012) maintained that cement is a basic construction ingredient. Its demand is high due to extensive infrastructural

development taking place across the globe. Global consumption of cement has been increasing at an alarming rate. According to Hannah (2011), cement production in Africa rose from 1.2 billion tonnes per annum in 2005 to 2 billion tonnes per annum at the end of 2010. In Africa, persistence rise in the price of building material and constant importation of cement has led to the speedy development of cement factories (Afeni, Cowood and Isiaka, 2008). However, Harley (2007) noted that whilst cement manufacturing industries bring so many benefits in form of markets for local goods, local people normally failed to harness these opportunities.

The production of cement is known to have multiple negative impacts on the surrounding environments and human health, in both developed and developing countries (Harley, 2007). Akande and Idris (2005) revealed that cement manufacturing also has a myriad of socio-economic impacts on the surrounding communities. Such impacts include land use dispute between the host community and the manufacturing company, health problems, increase in crime and infrastructural development. Studies by Hilson (2002) and Samuel (2002) further observed some of the effects as pollution generation, land degradation, destruction of wildlife and crops, disruption of traditional values and even relocation of the local people. These disrupted family ties and community life and sometimes caused economic inequalities as evidenced in Bangladesh where the villagers were displaced from their agricultural land which was their primary source of livelihood (Hilson, 2002).

Afeni, et al (2008) assessed the socio-economic impact of quarrying and processing of limestone in Obajana, Kogi State. In order to achieve their objectives, questionnaires were administered to get information from respondents and both descriptive and inferential such as chi Square were used to analyzed the data. They indicated that generally, lifestyles of people around cement manufacturing plants was poor and characterized by poor education and subsequently, high

percentage of illiteracy. This clearly shows that establishment of lucrative cement manufacturing ventures in rural communities does not guarantee improvement in their living conditions. However, they did their research when the cement factory was still at its infant stage. As at the year 2008, Obajana cement factory has the production capacity of about five million metric tones of cement per annum but by 2014, the production capacity has increased to about 13.25 million metric tones per annum., Therefore, between these periods, a lot of developments must have taken place both socially and economically which their work did not capture or indicate and this makes this work an important one. While their work was based on how the quarrying and processing of limestone has impacted on the people. The researcher will conduct his research holistically on how the factory at large has impacted on the community both socially and economically.

Musa and Kpanache (2014) carried out a research on the impact of Obajana as a growth pole in Obajana. The study examined the regional extent of the multiplier effects induced by the cement company in the region. It also assesses the socio-spatial and economic development within and around the host community before and after the establishment of the cement industry. Data sourced through personal observation of the researcher, questionnaires and oral interviews were analyzed with the use of descriptive statistics. The finding of the study shows that the region is experiencing spatial growth and development. Therefore, the researcher will focus on social and economic development the company has brought to the community.

Aribigbola et al (2012) assessed the health and environmental challenges of cement factory on Ewekoro community residents in Ogun State. Interviews were conducted, Questionnaires were randomly administered to both residents and staff of Ewekoro cement factory. The data were analyzed through descriptive statistics. The study confirms extensive incidence of land, air and noise pollution over and above recommended limit. It also discovers lack of substantial

compliance with the principle of environmental integrity sustainability and National Environmental Standard Regulatory Authority (NESRA) in terms of environmental resource protection. This study will focus on the social and economic aspect rather than the physical and environmental impact of the factory on Obajana.

Aigbedion and Iyayi (2007), also researched on the environmental effects of mineral exploitation in Nigeria and came out with a conclusion that mineral exploitation causes different types of environmental damages which includes ecological disturbances, destruction of natural flora and fauna, pollution of air, land and water, instability of soil and rock masses, landscape degeneration and radiation hazards. They went further to state that the environmental damages have in turn resulted in waste of arable land as well as economic crops and trees. While their work was based on mining generally, this study will look into an aspect of mining which is Cement production and how if impact on the people of the study area.

Mojiminiyi, Merenu, Njoku and Ibrahim (2008), examined the effect of cement dust exposure on haematological and liver function among cement factory workers in Sokoto. Experiments were conducted on 23 staff and 46 unexposed persons who served as the control. The results pointed out that occupational exposure to cement dust may perturb haemopoietic function while preserving liver. This study will involve both the cement factory workers who are resides in Obajana as well as other residents.

From the foregoing however, majority of the researches focused only on environmental and health impacts of cement factories on the populace. Only a few focused on the socio-economic implication on the people holistically. It is expedient to note that the cost of development could be detrimental on the short run but beneficial on the long run. It can be seen from the previous studies reviewed

above that limited research were carried out on Obajana cement factory especially on the socio- economic aspect. Hence, it became imperative for the researcher to focus in assessing the impact of the cement factory on the socio-economic development on the Obajana community. In order to fill this existing gap in knowledge, this study will address the following research question:

1 What are the factors responsible for the establishment of Obajana Cement Factory in Obajana?

2 What are the social-impact of the Obajana factory to the immediate community?

3 What are the economic-impact of the Obajana Cement Factory on Obajana residents?

4 What is the impact of Obajana cement factory on the infrastructural development?

1.3 AIM AND OBJECTIVES OF THE STUDY

The aim of this study is to assess the impact of Obajana Cement Factory in Obajana on the socio- economic development of Obajana community. However, the specific objectives are to:.

i. examine the factors responsible for the establishment of the cement factory.

ii. analyze the social impact of Obajana Cement Factory to the people of Obajana.

iii. examine the economic impact of Obajana Cement Factory to the people of Obajana.

iv. assess the impact of Obajana of Obajana cement factory on the infrastructural development of Obajana community.

1.4 JUSTIFICATION FOR THE STUDY

Although various scholars and researchers have dealt with the impact of industrialization in developing countries in various aspects, this study shall however take another dimension in the assessment of industrialization. It highlighted how industrial activities have encouraged development in rural areas.

A cement factory is an establishment that exploits human and material resources in an area. This is believed to usually result in increase in population, urbanization and rapid economic development.

The presence of Obajana Cement Factory in Obajana and the role it plays in the industrial development of Nigeria made it appropriate to study the organization. This will deepen our knowledge and provide ideas which will help in sustaining industrial activities towards making Nigeria an industrialized society.

This work shall be of benefit to researchers, economists, geographers, policy makers, industrialists, planners and inhabitants of the study area in terms of planning and policy making.

1.5 SCOPE OF THE STUDY

The scope of this study is to assess the impact of Obajana Cement Factory on the socio- economic development of Obajana, Kogi State. Obajana is in Lokoja local government area of the state. Obajana district covers about nine (9) villages (Musa and Kpanache, 2014). As a result of the wideness of the study area, only Obajana community was picked out of the villages in the district. This is because Obajana is the largest in terms of human population and residential houses among

other neighboring communities in the district. Besides, Obajana is the hub of economic activities being the location of the giant industry. In achieving this goal, the demographic characteristics such as age, gender, number of children were examined. The study also examined the socio- economic determinants of respondents such as income, level of education, religion, occupation etc. Heads of households in the study area will be interviewed. This enabled the researcher to ascertain what was obtainable before the establishment of the cement factory and how the company has been able to impact on the Obajana community between 2004 and 2014, that is ten

(10) years after its commencement. Special attention was paid to how the factory has impacted on the Obajana community socio-economically as well as the infrastructural development. Obajana cement factory was a green-field cement plant that was initiated in 2003, while the commencement of the construction of the first phase of the cement plant was in 2004 and it was commissioned in 2007 (Vetiva, 2010). Therefore the production of cement started after the commissioning of phase one in 2007.

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