EFFECTS OF OIL EXPLOITATION ON THE EFFICIENCY OF ARTISANAL FISHING HOUSEHOLDS IN THE NIGER DELTA REGION, NIGERIA

ABSTRACT

This  study  presents  the  empirical  analysis  of  the  effects  of  oil  exploitation  on  the efficiency of artisanal fishing households in the Niger Delta region, Nigeria. The selection of respondents  was  multi-staged  and  involved  purposive  sampling  as  well  as random sampling methods. A structured questionnaire and interview schedule were used to elicit information from a randomly selected sample of 160 artisanal households from Delta and Bayelsa  States,  Nigeria.  Descriptive  statistics,  stochastic  frontier  production  and  cost function models, inefficiency effects model and multiple regression analysis were used in analyzing  the data. Among the major  findings  were that 84% of the respondents  were male-headed households. Fifty percent were between 41-50 years. Sixty three percent were illiterates while 87% were married. The average household size was 7 persons. About 49% of the respondents had  fishing experience of above 16 years with a mean experience of approximately  15  years.  The average  annual  income  per household  was N96, 386.00. About 85%, 6%, 6% and 4% used different fishing gears such as nets, trap, longline and hooks, and fence fishing, respectively. The mean technical efficiency was 73%. The Cobb- Douglas stochastic frontier model showed that labour, quantity of bait used  and capital inputs had positive signs and were highly    significant at 1% level of probability. Age, access to credit and gender had significant inverse relationship with technical inefficiency while fishing distance, membership of co-operative society, fishing experience, number of trips and oil spill had significant positive relationship with technical inefficiency.  Model showed that wage rate, price of baits and output adjusted for statistical noise had direct relationship  with  the  total  cost  of  production  and  were  significant  at  1%  level  of probability. The mean economic  efficiency was 68%. The factors influencing economic efficiency showed that Age and household size had a negative relationship with economic inefficiency while access to credit, membership of co-operative society, number of trips and oil spill had significant positive relationship with economic inefficiency. Ninety seven percent of the households confirmed that oil exploitation activities had serious effect on their socio-economic life.   Variables such as fishing equipment, non-fishing income and household  size were significant  at 1%, fishing experience  was significant  at 5%  while micro-credit and compensation received were significant at 10% probability levels. The overall regression result was statistically significant at 5% level of probability as 86% of the total variation was explained by the socio-economic  variables. Therefore, the study calls for policies that could reduce the level of oil pollution and increase their technical and economic efficiency.

CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

The  search  for  oil  in  Nigeria  started  in  1906  when  the  Nigerian  Bitumen Corporation (NBC) drilled fourteen wells in Lagos area (Pearson, 1970).   This move was however called off due to the outbreak of World War I.  Pearson (1970) stated that Shell made Nigeria’s first commercial oil discovery in 1956 at Oloibiri located in Bayelsa State. This according to Pearson (1970) and Ozobia  (1998) led to the discovery of numerous other oil fields and subsequently to the development of various terminals. Oil spillage and pollution are some of the negative by-products of the petroleum industry and its effect on socio-economic  life  of  the  artisanal  households  is  a  source  of  major  concern.    The exploration and exploitation have had impacts on the environment through frequent spills, pipe explosions, pollution, sabotage, gas flaring and effluent emission.   Other sources of oil pollution to the environment include transportation, effluent water from oil refineries, lubrication  oils  and  other  wastes  in  the  form  of  sludge,  bitumen,   slops  and  oil sand/sediment present in large amount within oil flow stations, storage terminals and tanks (Ogri, 2001;  Nwilo  &  Badejo, 2005).

Oil production and consumption has probably brought both the best and worst of modern civilization in Nigeria.  It has contributed enormously to the country’s economic growth  and  on  the  other  hand,  has  left  profound  adverse  impact  on  the  natural environment. Nigeria is currently the largest producer of crude petroleum in Africa and sixth largest in the World. Estimates of Nigeria’s oil reserve range from 16 billion to 22 billion  barrels,  mostly  found  in  small  fields  in  the  coastal  areas  of  the  Niger  Delta (Chindah  & Braide,  2000). Agriculture  is  however  the major economic  activity in the

Niger Delta region. The Federal Office of Statistics (F.O.S, 1995) stated that crop farming and fishing account for about 90% of all forms of activities in the areas.   However, the level of agricultural production in the Niger Delta is somewhat low  given the abundant resource endowment. In the 1960s, Nigeria relied heavily on the  agricultural sector for economic  development,  contributing  over 70% of the Gross  Domestic  Product  (GDP). Nevertheless, with the oil boom of the 1970s, the contribution of agricultural sector fell drastically to the extent that the nation became an importer of fish for instance.

Fish  production  makes  immense  contribution  to  agricultural  development  as recognized in Bada (2005); Bene and Heck (2005). In terms of Gross Domestic product (GDP),  the fishery  sub-sector  has recorded  the  fastest  growth  rate  in  agriculture.  The contribution of the fishery sub-sector to GDP at 2001 factor cost rose from N76.76 billion to N162.61 billion in 2005 (CBN 2006).Fish is an important source of protein to a large number of fishing households in Nigeria. It is consumed in a variety of forms, including smoked, dried, fried or steamed. Fish provides  40-50% of the dietary intake of animal protein of the average household  in Nigeria  (FDF, 2007).   According to Adekoya  and Miller (2004), fish and fish products constitute more than 60% of the total protein intake in adults especially in rural areas of Nigeria. Amiengheme (2005) enumerated the importance of fish in households Nutrition as follows.

a. Fish has a nutrient profile superior to all terrestrial meats (beef, pork and chicken, etc)

being an excellent source of high quality animal protein and highly digestible energy;

b. Fish is a good source of sulphur and essential amino acids such as lysine,  leucine, valine and arginine.  It is therefore suitable for supplementing diets of high carbohydrates contents,

c.  Fish is also a good source of thiamine as well as an extremely rich source of omega-

3polyunsaturated fatty acids, fat soluble vitamins (A, D and E) and water soluble vitamins

(B complex) and minerals (calcium, phosphorus, iron, iodine and selenium);

d. It has a high content of polyunsaturated (Omega III) fatty acids, which are important in lowering blood cholesterol level and high blood pressure.  It is able to mitigate or alleviate platelet   (cholesterol)   aggregation   and   various   arteriosclerosis   conditions   in   adult populations;

Nigerians are large consumers of fish with demand estimated at 1.4 million metric tonnes per annum. Moreover, the recent concern is that the demand is out- stripping the supply as explained in Kapadia (2002).  The annual state of economic report by sector published by Central Bank of Nigeria shows that, Nigeria imports over US$ 200 million worth of frozen fish per annum to offset the gap in the domestic demand in the country (CBN, 2006). Food and  Agricultural  Organization  (FAO)  categorized   fishing  types  as  artisanal  fishing, aquaculture  and industrial  fishing (FAO, 2004).  It is worthy of note that the artisanal fishing households supply the greatest percentage of Nigeria’s annual fish output as shown in Table 1.1. The table shows  that the relative  contribution  of artisanal  households  to domestic fish production ranged between 83.0% in 1985 to 81.7% in 2007 with an annual average of 86.1% (FDF, 2007).

Table 1.1: Domestic fish production in Nigeria by sectors (metric tonnes)

Years	Artisanal	%	Aquaculture	%	Industrial	%	Total
1985	201,383	83.0	15,000	6.2	26,142	10.8	242,525
1986	267,136	87.0	14,881	4.8	25,042	8.2	307,059
1987	248,987	86.1	15,221	5.3	24,900	8.6	289,108
1988	297,624	85.1	15,764	4.5	36,549	10.4	349,937
1989	303,500	83.7	25,607	7.1	33,645	9.3	362,752
1990	283,534	89.6	7,297	2.3	25,529	8.1	316,360
1991	291,286	84.8	15,840	4.6	36,226	10.6	343,352
1992	283,943	82.8	19,770	5.8	39,365	11.5	343,078
1993	201,176	78.7	18,703	7.3	35,644	13.9	255,523
1994	234,601	82.8	18,104	6.4	30,488	10.8	283,193
1995	320,955	86.5	16,619	4.5	33,479	9.0	371,053
1996	309,200	86.9	19,490	5.5	27,244	7.7	355,934
1997	360,220	87.2	25,201	6.1	27,703	6.7	413,124
1998	433,069	89.6	20,299	4.2	29,955	6.2	483,323
1999	426,786	89.0	21,578	4.5	31,139	6.5	479,503
2000	418,069	89.5	25,689	5.5	23,308	5.0	467,066
2001	433,537	89.1	24,414	5.0	28,378	5.8	486,329
2002	450,965	88.1	30,651	6.0	30,091	5.9	511,707
2003	439,317	88.8	26,493	5.4	29,154	5.9	494,964
2004	451,760	88.9	27,247	5.4	29,003	5.7	508,010
2005	513,537	85.2	56,355	9.7	32,595	5.6	602,482
2006	513,537	81.3	84,533	13.3	33,778	5.3	631,848
2007	504,227	81.7	85,087	13.8	28,193	4.3	617,507
Total	8,188,349	86.1	629,842	6.6	697,550	7.3	9,515,741

Source: Federal Department of Fisheries; Fisheries Statistics of Nigeria, various editions

According to Mathew (2001), “traditional”, “small-scale” or artisanal fisheries are used to characterize those fisheries that were mainly non-mechanised  with low  level of production. The fisheries sector is almost entirely dominated by small scale, poor fishing households  who  produce  95%  of  total  marine  catch  in  Nigeria  (Mathew,  2001).    In Nigeria, the coastal artisanal households  use the traditional  dug-out canoes or pirogue, ranging from 3-18 metres  in length while the gears  used  include  cast nets, handlines, basket traps, longlines,  set gillnets and beach and  purse seines. The operating range of small-scale  fisheries  is around  the 20 metres  depth contour,  with operations  extending occasionally  to  a maximum  depth of 40  metres  (Inoni  & Oyaide,  2007).  In artisanal fisheries, individual and household groups used labour intensive gears (Coates, 2000). For a long time, fishing has been regarded as one of the most important activities, which form the basis of livelihood of households living along the coast.

The household is normally made up of a father, his wife and children; leadership and responsibility for the wellbeing of the entire household is vested on the head of the family. Omonona (2000) defined artisanal household as a unit consisting of people eating from the same bowl and sharing the same catering services. Grosh and Munoz (1996) in their view defined the household as a group of people who share a roof and a cooking pot. In  addition,  Agbola,  Ikpi  and  Kormawa  (2004)  defined  a  household  as  a  group  of individuals who contributed to, shared a common economic resource base, and relied on the income from that base for the greater part of their food acquisition and utilization. The artisanal household is a concept similar to the model of the peasant studies and economic history in Europe  and Latin America.  The artisanal household  is perceived  as a major decision making unit in fish production. In practice, the term artisanal fishing household is used interchangeably with the fishing family.

The  capacity  of  artisanal  fisheries  to  play  its  triple  role  of  food  supplier, employment provider and income earner for the artisanal households in the  Niger Delta depends  on  the  adoption  of  appropriate  management  strategies  that  will  ensure  their sustainability in the face of intensive  oil exploitation  activities.  Fishing has substantial social  and  economic  importance.  It  was  estimated  that  12.5  million  households  were employed in related fishing activities in Nigeria and value  of fish traded internationally was estimated at US $ 40 billion per annum for the early 1990s. The total production from capture  fisheries  and aquaculture  during  the  same  period reached  a total mass of 100 million tonnes in Nigeria (FAO, 1995). The Federal Department of Fisheries (FDF) (2007) reported that the bulk of fish supply in Nigeria comes from the artisanal fishing subsector. Recent  accounts  show that  domestic  demand  for fish in Nigeria  could  not be met by dependence on artisanal fisheries, which experts say is fast depleting (Nwosu, Oguoma & Ohajianya 2007;Ojo  & Fagbenro, 2004 ). Available statistics show that Nigeria’s inland water  bodies  are  producing  less  than  13%  of  their  estimated  fishery  potential  (Sule ,Ogunwale & Atala 2002).These water bodies have been reported to have over 200 species of fish, 14 species of reptiles, 7 species of mammals, 59 species of amphibians and 72 species of water-associated birds (Ita, 1993). Inoni and Oyaide (2007) noted that fishing in African rivers, lakes and associated wetlands are usually haphazard. This may however not be unconnected with the oil exploitation activities by oil companies.

The environmental consequences of oil pollution on the artisanal households are enormous.  Aghalino  (1998)  observed  that  the  impacts  of  oil  exploitation  on  the  oil- producing communities are three fold: first, it leads to environmental pollution, second, it destroys  the  ecosystem  and  the  ways  of  life  of  the  households;  and  third,  it  further impoverishes the oil producing communities. Anderson, Nelf, Cox, Taken and Hightower (1974) reported cases of oil spillage in Sangana, Koluama, Akassa and Brass Communities

in Bayelsa  State,  in which tremendous  damage  was  done to  fisheries  in the wild.  In Nigeria, in particular, the Niger Delta, problems related to oil spillage have caused severe financial  losses and implication  for economic  development.  The financial  losses to oil spillage  run  into  billions  of  dollars  therefore  affecting  the  economy  of  the  nation (Adebowale, 1996). Government, aware of this discouraging trend, has since put in place various  policies  and  programmes.  These  measures  and  programmes  include,  National Accelerated  Food  Production  Programme  (NAFPP),  Fisheries  Extension  Programmes, Fishermen Co-operatives and Fish Exploitation Reforms. These policies and programmes were aimed at raising the productivity and the efficiency of artisanal fishing households.

However,  Ite (2007)  asserted  that the emergence  of a petroleum  sector  in  the Nigerian economy has been of great benefit to the agricultural sector of the rural economy because  of the  agricultural  developmental  activities  of oil companies  operating  in the country. For instance, Shell Petroleum Development Company as part of her commitment to the development of the host communities,  ventures into  agricultural support services with a sole mission of contributing to the sustainable development of these communities. This is because over 70 percent of the households are directly involved in artisanal fishing as their  primary occupation.  The various  SPDC  Agricultural  Projects  and services  are aimed at helping fishing households improve their mode of operation and quality of life. The Shell community’s assistance programmes can be classified into agricultural practices, infrastructure, education,  health services and vocational training. The Nigerian Agip Oil Company (NAOC) Ltd is also involved in farming and fishery projects in some of the rural areas covered under its concessions.

Thus, if the oil industry is considered  in view  of its enormous  contribution  to foreign exchange earnings, it has achieved a remarkable success. On the other hand, when considered  in respect  of its negative  impact on the socio-economic  life of  the  fishing

households  and  the  environment  of the  immediate  oil producing  communities  and  its inhabitants,  it  has  left  a balance  sheet  of ecological  and  socio-physical  disaster.  This rightly provides a framework to analyze the effects of oil exploitation  on the  artisanal fishing households in the Niger Delta region.

1.2       Problem Statement

Fishing activities remain low, production  costs remain unacceptably  high,  thus, adequate  quantity  and  quality  of  fish cannot  be afforded  by many poor  rural  fishing households (Maduagwu, 2000). This situation is aggravated by losses that occur because of environmental problems such as oil spillage and gas flaring in the oil-producing region of Nigeria especially Delta and Bayelsa States. The exploitation activities have adversely affected the artisanal fishing households by reducing aquatic lives, economic, social and environmental benefits. Oil exploration and exploitation has at least over the last decade (2000-2010)  influenced     the  socio-economic  wellbeing  of  artisanal  households  and physical  environment  of  the  Niger  Delta  oil  producing  communities,  threatening  the subsistent  economy  and   their  entire  livelihood  (Babatunde,  2010).  It is obvious  that domestic demand for fish in Nigeria has never been met by dependence on output from available aquatic sources. Supply of fish from capture fisheries by artisanal household is decreasing due to oil spills. FAO (1995) maintained that the World fish catches appear to be leveling off  below the estimated  maximum  sustainable  yield  of 100 million metric tonnes per  annum. For example, it was projected that developing countries like Nigeria needed  an  additional  22.5  million  metric  tonnes  of  fish  by  the  year  2000,  which highlighted the need to increase fish production by artisanal households.

Although, the importance of fishing to households welfare in oil producing areas has often been raised in policy debates on coastal resources and oil spill management, little empirical evidence is available on the validity of such arguments (Sesabo & Tol, 2005).

This implies that there is a need to understand the nature of artisanal fishing operations and fishing households’  level of technical and economic efficiency in the face of oil  spills. This  will  enable  policy  makers  develop  efficient  policies  targeting  coastal  resources conservation and households’ welfare. It is pertinent to note also that when oil spills occur, they cover the surface of the water. This reduces oxygen exchange thereby causing death of fishes because the oil coats the gills of the fishes preventing them from inhaling oxygen. In  addition,   oil  spills   endangers   fish   hatcheries   in   coastal   waters,   contaminates commercially valuable fish and oil slicks prevent sunlight from reaching deeper levels of water where coral thrive, thus limiting food production of plants (photosynthesis). It also brings a setback to households whose main source of survival is fishing and consequently a decrease in their income earning capacity, exacerbating hunger and poverty on fishing households. This has also increased the spread of different types of diseases among the fishers and their household, which include conjunctivitis, cholera, dysentery etc (Okonta & Douglas, 2001; Edwin-wosu & Kinako, 2004). As intensive oil exploitation activities takes place,  the  issue  of  having  enough  artisanal  households  labour  for  fishing  becomes  a problem in the Niger Delta area of Nigeria as many rural dwellers now prefer working as temporary staff in oil related contracting firms around the villages instead of fishing. This has  led  to  labour  shortage,  underemployment  for  many  fishing  operations  and  has resultantly caused fish shortage. The main challenge for the growth of artisanal fisheries is how to improve production performance while at the same time ensuring sustainable level of  fisheries  resources  for  artisanal  fishing  households.  Therefore,  measurement  and analysis of artisanal fishing households’ performance become important.

In realization of the adverse effects of oil exploitation on agricultural productivity, the oil companies have embarked on agricultural development activities in areas covered under their concessions.  For instance,  Shell Petroleum  Development  Company (SPDC) and Nigeria  Agip Oil Company (NAOC) Ltd are involved  in infrastructure,  education, health services, construction of road, provision of micro-credit, provision of materials and implements aimed at facilitating the development of agriculture within their concession areas. The aims of the oil companies are to: increase agricultural  productivity,  prevent further  deterioration  of the economic  life of artisanal fishing  households  by equipping them with better fishing techniques, improve the incomes of fishing households, and make them more self-sufficient (Okpara, 2004). Despite the efforts of the oil companies and the Federal  Government  to  improve  sustainable  fish  production  and  living  standards  of households in the crude oil producing communities, fish productivity, output and income in these areas have tended to  dwindle over the years. Finally,  some studies have been conducted  on oil  exploitation  in the crude oil producing riverine areas of Niger Delta. Gbigbi   (2008)  studied   socio-economic   implication   of  oil  exploitation   on  farming communities in oil producing areas of Delta State. The result showed that crop farmers in the affected  areas recorded  comparatively  lower output per hectare and  lower earnings than their counterparts in those areas that were not polluted. Nwosu  (2007) also studied economics  of  resource  use  by  farmers  in  crude  oil  and   non-crude  oil  producing communities  of  Imo  State.  The  result  showed  that  there  were  dissimilarities  in  age, education, farming experience and income level of food  crop farmers, except in marital status. In addition, Inoni, Omotor and Adun (2006) investigated the effects of oil spillage on crop yield and farm income in Delta State. The result showed that oil spill reduced crop yield, land productivity and greatly depressed farm income.    However, nothing has been documented  for artisanal  fishing  enterprises,  particularly  with respect  to their  level of efficiency under intense oil exploitation. These studies centered on crop production with no attempt  made at examining  artisanal  fishing households’  efficiency.  Examining  the efficiency of these households will help provide information on their level of performance under oil exploitation and equip policy makers with the necessary and empirical basis for intervention in their case. It is against this background that this research is being carried out. The relevant questions are: what are the socioeconomic characteristics of the fishing households?  what  are  the  artisanal  fishing  systems  in  the  area?  What  is  the  fishing households’ level of technical and economic efficiency? What factors drive these indices? What  is the effect of oil companies  relief programmes  on their  income? What are the general constraints faced by these households in the course of fishing?

1.3       Objectives of the study

The broad objective of this study is to examine the effects of oil exploitation on the efficiency of artisanal fishing households in the Niger Delta region, Nigeria.

The specific objectives are to:

i.         describe the socioeconomic characteristics of artisanal fishing households;

ii.        describe the artisanal fishing systems of artisanal fishing households;

iii.        determine  factors  affecting    technical  and  economic  efficiencies  of  artisanal fishing households;

iv.       estimate the technical and economic efficiencies of  artisanal fishing households;

v.      describe from the perception of the respondents, the general effects (environmental, social and economic) of oil exploitation on the households;

vi.     determine   the   effects   of  relief   programmes   on  household   income   and   the socioeconomic characteristics of the household heads.

.

1.4       Research hypotheses

The following hypotheses were tested;

i.         Artisanal fishing households in the study area are technically efficient.

ii.        Artisanal fishing households in the study area are economically efficient.

1.5       Justification of the study

Nigeria  is  endowed  with  abundant  natural  and  human  resources  and  weather, which support agricultural production throughout the year. Despite the availability of these resources, the artisanal fishing households are plagued with problem of low fish output and  productivity  (Abowei,  Akankali,  Tawari  &  George  2008).  To  turn  the  situation around,  there  is  need  to  step-up  the  rate  of fish  production  by improving  the  living conditions of the artisanal households and encouraging the fertility of artisanal fishing and water environment.  The prevailing  situation in the communities of   Delta and Bayelsa States as major oil producing communities whereby the subsistent peasant economy and the environment are being threatened as well as the entire livelihood by oil spillage can neither  guarantee  increased  productivity  of  fish  catch  nor  better  living  condition  for artisanal  fishing    households.  This  situation,  which  makes  fishing  households  of  oil producing communities impoverished, has often resulted in violent conflicts between the affected communities and oil companies.

This study will provide up-to-date information that will guide artisanal households in  crude  oil  producing   communities   in  decision-making   and  the   governments   in formulating  appropriate  policies towards the solution of fishing  problems  in the Niger Delta region. The study will present a guide for future  studies on oil exploitation  and artisanal households’ vis-à-vis environmental sustainability and protection and a baseline document that can be updated from time to time. It will equally provide a suitable basis upon which future comparative studies can be undertaken. Besides, the results of the study will arm the NDDC to formulate  environmentally compatible strategies to increase fish production and productivity of artisanal households.

1.6       Limitations

A key limitation was inadequate finance. Again, high cost of transportation and speed  boat  availability  was  generally  problematic.  The  distance  to  travel  from  one community to another was a serious constraint since they were far from each other. Some trained enumerators were employed to solve the problem.  There was observed apathy and general  indifference  of  the  respondents  to  questionnaire  and  interview  in  terms  of objectivity and sincerity. Hence, a lot of persuasion was used to obtain as much of these information  as  possible.  However,  these  limitations  did  not  in  any  way  impair  the reliability of the findings and could therefore be taken to represent the true situation in the study area.

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