32
3 Literature Review: Social Investment …
creates community dependency and enclave beneficiaries.
2 As noted in Chapter 2,
enclave beneficiaries may generate intergroup jealousy and conflict within the host
community (Ackah-Baidoo, 2012).
In-active and/or re-active social investment harms the host society if it is used
to bribe the host government to gain operational advantages (Ackah-Baidoo, 2012).
One example of O&G social investment is explored by Frynas and Wood (2001) who
investigated the impacts of oil revenue and activities on the war in Angola. Their
study found that social investment in Angola was used as a way of channelling money
to the government to meet the (1) government’s aspirations of winning a civil war,
(2) gaining a license to operate and (3) keeping the host communities away from the
operation facilities.
O&G social investment in Angola included charitable donations, weapons deals
and other forms of assistance to finance the civil war (Frynas & Wood, 2001). This
type of social investment is both in-active and re-active. It is in-active because it is
exclusively aimed at obtaining operational advantage to achieve profit maximisation
and it is re-active because it involved using bribes in exchange for political legitimacy.
The O&G approach to social investment in Angola was aimed at solely satisfying
O&G companies’ business interests, irrespective of any ethical code of conduct. O&G
social investment harmed the Angolan society. Specifically, it financed a corrupt and
authoritarian regime that supported decades of civil war (Frynas & Wood, 2001)
that killed over 20,000 people and generated years of suffering and civilian turmoil
(James III, 2011).
3.1.3 O&G Social Investment Used to Benefit
a Few Individuals
As already mentioned, solely business-oriented social investment can create enclave
beneficiaries as a way of achieving short-term business goals. This type of social
investment harms host communities because it addresses the interests of a few (Cash,
2012; Frynas, 2009b; Frynas & Wood, 2001; Hilson, 2012; Idemudia & Ite, 2006).
According to Gilberthorpe and Banks (2012, p. 186) social investment that creates
enclave beneficiaries “often lead[s] to ill-conceived and highly inappropriate development programmes that contribute little to, and achieve a divisive effect on, the
social and economic security of local communities”.
O&G social investment that lacks transparency often involves the allocation of
resources to benefit a few individuals, rather than a whole community. This is because
social investment programmes with low levels of transparency and accountability are
2 As mentioned in the previous chapter, enclave beneficiaries emerge when heavy flows of foreign
capital prompted by petroleum activities, such as social investment and oil royalties, increase the
revenue concentration merely in one segment of the population. This non-redistribution of income
to others widens the nation’s revenue inequality (Ross, 1999).
3 Literature Review: Social Investment …
creates community dependency and enclave beneficiaries.
2 As noted in Chapter 2,
enclave beneficiaries may generate intergroup jealousy and conflict within the host
community (Ackah-Baidoo, 2012).
In-active and/or re-active social investment harms the host society if it is used
to bribe the host government to gain operational advantages (Ackah-Baidoo, 2012).
One example of O&G social investment is explored by Frynas and Wood (2001) who
investigated the impacts of oil revenue and activities on the war in Angola. Their
study found that social investment in Angola was used as a way of channelling money
to the government to meet the (1) government’s aspirations of winning a civil war,
(2) gaining a license to operate and (3) keeping the host communities away from the
operation facilities.
O&G social investment in Angola included charitable donations, weapons deals
and other forms of assistance to finance the civil war (Frynas & Wood, 2001). This
type of social investment is both in-active and re-active. It is in-active because it is
exclusively aimed at obtaining operational advantage to achieve profit maximisation
and it is re-active because it involved using bribes in exchange for political legitimacy.
The O&G approach to social investment in Angola was aimed at solely satisfying
O&G companies’ business interests, irrespective of any ethical code of conduct. O&G
social investment harmed the Angolan society. Specifically, it financed a corrupt and
authoritarian regime that supported decades of civil war (Frynas & Wood, 2001)
that killed over 20,000 people and generated years of suffering and civilian turmoil
(James III, 2011).
3.1.3 O&G Social Investment Used to Benefit
a Few Individuals
As already mentioned, solely business-oriented social investment can create enclave
beneficiaries as a way of achieving short-term business goals. This type of social
investment harms host communities because it addresses the interests of a few (Cash,
2012; Frynas, 2009b; Frynas & Wood, 2001; Hilson, 2012; Idemudia & Ite, 2006).
According to Gilberthorpe and Banks (2012, p. 186) social investment that creates
enclave beneficiaries “often lead[s] to ill-conceived and highly inappropriate development programmes that contribute little to, and achieve a divisive effect on, the
social and economic security of local communities”.
O&G social investment that lacks transparency often involves the allocation of
resources to benefit a few individuals, rather than a whole community. This is because
social investment programmes with low levels of transparency and accountability are
2 As mentioned in the previous chapter, enclave beneficiaries emerge when heavy flows of foreign
capital prompted by petroleum activities, such as social investment and oil royalties, increase the
revenue concentration merely in one segment of the population. This non-redistribution of income
to others widens the nation’s revenue inequality (Ross, 1999).