UK Nigeria comparison Essay

Submitted By ppietro
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Pages: 8
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The following notes explain how the economic environment may influence the business activities of Shell in the two countries, UK and Nigeria.
The variables chosen to analyze the situation are: government stability, infrastructure, education, natural resources and GDP per capita.
At the end, a table will be enclosed to summarize the main differences.

Government stability
The simplest definition of a stable political system is one that survives through crises without internal warfare. Stability means also a predictable political environment, which attracts investment, both internally and from outside. The resulting virtuous circle of poverty reduction, job creation, increased state revenues and investment in welfare and education bring benefits to all in society.
In the case of UK, a democratic system is in place since a long time, with democratic elections and alternate governments, while the situation is different in Nigeria. Although there is a governmental system in place, similar to the European ones, with regular elections and a parliament, the situation is instable due to the multi ethnicity of the population and ancient rivalries, which do not contribute to a smooth path for progress.
Shell activities in this country need to be carefully considered in the light of the potential risks coming form the political instability.

Infrastructure
Infrastructure forms the economic backbone of the UK. It is the fabric that defines the UK as a modern industrialised nation. The standard of infrastructure in the UK is pretty good and has a direct relationship to the growth and competitiveness of the economy and also the quality of life. Approximately £150 billion has been invested in economic infrastructure in the UK over the last five years. Increased levels of investment will be required to renew and maintain existing infrastructure and meet the new challenge of setting our economy on a low-carbon trajectory. A new five year investment plan will be soon put in place.
Coming to the situation in Nigeria, Infrastructures made a net contribution of around one percentage point to the country’s improved per capita growth performance in recent years, in spite of the fact that unreliable power supplies held growth back. Raising the country’s infrastructure allocation to that of the region’s middle-income countries could boost annual growth by around 4 percentage points. Among its African peers, Nigeria has relatively advanced power, road, rail, and ICT networks that cover the national territory quite extensively. But challenges persist. The power sector’s operational efficiency and cost recovery has been among the worst in Africa, supplying about half of what is required, with subsequent social costs of about 3.7 % of GDP. The water and sanitation sector has inefficient operations, with low and declining levels of piped water coverage. Irrigation development is also low relative to the country’s substantial potential. In the transport sector, Nigeria’s road networks are in poor condition from lack of maintenance, and the country has a poor record on air transport safety.
While doing business in the UK could be fairly easy for Shell, it is not the same in Nigeria. Despite the huge potential in terms of oilfields, transports need carefully to be considered, as, for instance, it could be difficult to transport oil from an operational field to a port, hence raising the transportation costs dramatically.

Education
The level of literacy in the UK is more than 95% while in Nigeria is about 72%.
It’s not a problem in the UK to get hold of qualified workers, like engineers and technicians. In Nigeria is a little more difficult, as it is not frequent for people to continue in the education path after having received the base education due to the poor conditions of the country.
In this case, if Shell wants to develop its presence in the country has to be ready to select key personnel to be relocated in Nigeria and start a local
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