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The paper discusses the importance of a proper alignment of corporate social responsibility (CSR) strategies and programmes with operating context if ‘real’ sustainable development as a key aspect of CSR is to be achieved in Africa. The question of whether or not companies have the responsibility of taking care of stakeholders other than shareholders has been a highly contested one for many years. Perspectives have been equally divided between the Adam Smith-informed ‘business-of-business-is-business’ agency model (2) and the stakeholder model, with the latter arguing that, beyond shareholders there are several other stakeholders with an interest in the actions and decisions of companies.
However, owing to the accelerated rise in the notion and practice of sustainable development, the popularity of the classical agency theory suffered a gradual decline and today CSR is undoubtedly seen as an integral part of doing business globally. Consequently, the CSR question has since shifted from whether companies have a responsibility towards other stakeholders to what constitutes an important stakeholder. The answer to this new question is the focus of this discussion paper. It is the argument of this paper that, in CSR matters, the identification of a stakeholder, including the relative importance thereof, cannot and should not be universal. The answer should rather be contextually determined if CSR is to advance the notion of sustainable development as proposed by the United Nations (UN) Global Compact. In fact, failure to acknowledge context apparently makes ‘life’ unsustainable for all parties to development including the company itself.
The 1987 Brundtland Report’s definition of sustainable development as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”(3) also implies the continuation of the company as a going concern apart from serving society and natural capital. A company cannot realise the full economic value of doing business, both now and in the future, if the operating environment is not environmentally, culturally, legally, politically and socio-economically conducive to doing business in the first place. Arguably, in many developing countries, particularly in Africa, a company’s deep commitment in areas such as infrastructure development, local capacity building, education, health, job creation, disaster relief and more can serve as far more than philanthropy.(4) These efforts can address aspects of the societal context that are lacking or insufficient, that is, voids which can seriously impact on a company’s ability to operate, compete and thrive.(5)
The paper therefore discusses the fundamentality of the consideration of operating context if companies’ CSR strategies are to be of real benefit to all relevant stakeholders including companies themselves. It is the position of the paper that contextually misaligned CSR models, apart from failing to address priority developmental needs as dictated by context, also harms the ‘business case’ for embarking on CSR programmes. Either way, failure to consider other stakeholders and inability to prove a business-case for embarking on CSR can each potentially hurt business sustainability in the long-run. The paper calls for corporations operating in Africa to scale up their efforts in drawing their CSR policies and subsequent programmes closer to operating contexts.
Context and Africa’s non-financial stakeholders
Companies, just like people, are citizens of a country and as such, should behave in a manner that conforms with the requirements of responsible citizenship, voluntarily or involuntarily so. Every citizen of a country who is able should, at least out of a sense of responsibility, complement Government efforts to ‘move the nation forward’, in all possible meanings of the phrase. In Africa today, social responsibility should not be treated, and indeed is no longer being treated, as that voluntary ‘nice to have’ activity on the side-lines of the mainstream activity of making money. It is an imperative, ’must have’ governance principle contained in the purpose and conduct of any successful African business enterprise.(6)
Indeed, this business for development (7) role has the blessing of the UN Global Compact which urges companies to take action and engage in partnerships to advance broader UN development goals, particularly the eight millennium development goals (MDGs). Because they have a CSR trajectory, from a company’s perspective, the partnerships, according to the UN Secretary-General (2003), are voluntary and collaborative relationships between various parties, State and non-State alike, where the common purpose is that of undertaking specific tasks and to share risks, responsibilities, resources, competencies and benefits.(8) Companies and the Government need each other and neither of the two can do without the other. Without the two working together, there will be no development to speak of, at least not one that is sustainable.
In Africa, the importance of corporate citizenship through CSR has developed rapidly in recent years, with South Africa leading the pack by some distance. Addressing the question of whether what is reported corresponds with what is happening on the ground is beyond the scope of this paper. Let it suffice to say that the pressure to report itself is testimony enough of how CSR has become an important part of doing business in Africa. Even small, unlisted (and sometimes struggling) companies still find space for a CSR section on their websites. Interestingly, in South Africa, some of the aspects of CSR like Broad Based Black Economic Empowerment (BBBEE) compliance, are not voluntary but are either directly required by law or indirectly through the Johannesburg Stock Exchange (JSE) which has King III Report compliance as a key listing requirement.
BBBEE is a strategic initiative turned Act (2003) of the South African post-apartheid Government fundamentally aimed at promoting economic transformation through ensuring meaningful participation of historically disadvantaged groups, particularly Africans, Indians and Coloureds in the economy.(9) The King Reports (I, II and III), on the other hand, are a series of progressive corporate governance guiding documents for organisations operating in South Africa. The reports, particularly the two last ones (2002 & 2009), emphasise accountability, fairness, discipline, transparency, independence and social responsibility as key pillars of good corporate governance.(10) Although they are not legally binding documents, the King Reports’ principles are widely accepted by various stakeholders both in South Africa and globally as necessary in the drive towards good governance. Consequently the JSE, in February 2010, made it compulsory for all listed companies to comply with King III.(11) The BBBEE Act and the King Reports have good alignments with the international sustainability reporting standards, in particular the Global Reporting Initiative (GRI), a non-profit organisation that promotes economic, environmental and social sustainability. GRI provides all companies and organisations with a comprehensive sustainability reporting framework and implementation guidelines that are widely usable around the world.(12) Critical sectors like mining which normally have a huge impact on economy, society and the environment also have special GRI Sector Supplements to complement general guidelines.
Despite the apparent universality of CSR practices among multinational companies operating in Africa, stakeholders’ CSR expectations of corporations are not uniform. Critical sectors are usual suspects,(13) understandably so, and companies within these sectors cannot afford to be found on the wrong side of the CSR expectations bar. The South African mining industry and the Nigerian oil industry are cases in point, where the nature, frequency and magnitude of industrial action, violence, public demonstrations and heavy Government penalties for non-compliance are a testament to the high level of stakeholder expectations of these sectors. Although mining is no longer the biggest contributor to gross domestic product (GDP) (6% in 2011) in the now knowledge-driven South African economy, minerals still represent 60% of the country export value and the industry is among the biggest employers, especially of the unskilled to semi-skilled end of the labour market. This in itself is reason enough for the Government to expect more responsible behaviour from the sector in terms of tax compliance, BBBEE compliance (in terms of both labour and raw materials acquisition), good labour practices, and environmental management among others.
Apart from the Government, the mineworkers and communities around mines have their fair share of concerns with the mining industry with regard to poor working conditions, low wages, lack of socio-economic development and environmental problems among other issues. The bloody Lonmin mineworkers’ strike of August 2012 (14) sparked by a demand for better wages is but one of many cases demonstrating particularly the long-standing rift between the labour feeder communities and mining companies even before the new post-1994 democratic order. On a broader scale, the strike and the unfortunate outcome is just a manifestation of a general dissatisfaction of the majority of the people, particularly within the labour feeder catchment, at the slow progress of socio-economic transformation 18 years into the new democratic dispensation.
The Nigerian oil industry case, in many respects, is not too different from the South African mining industry scenario. Just as is the case with the various South African mining communities, the local imperatives of acute poverty in the Niger Delta oil region of Nigeria have put a number of demands on oil companies operating in the area.(15) Although oil companies undertake numerous development activities targeted at oil rigging communities, such as construction of hospitals, roads and schools, provision of potable water, electricity, sponsorship and scholarships among others, the public largely view the level of activity as insufficient considering the massive profits companies derive through their lucrative operations.(16)
Further to that, the public also accuses the Government, at best, of subrogating its regulatory power towards companies, or at worst, as serving as a companies’ economic ally. According to a Nigerian independent report,(17) most of what multinational companies claim to be doing in terms of CSR is simply doomed but well-publicised charitable and philanthropic activity aimed at placating the abused public. More so, for years the same companies have simply been signing agreements with Governments without consideration of host communities affected by their operations.(18) The often violent mechanisms used by the public to express dissatisfaction with what they perceive, firstly as defective CSR policies by multinationals, and secondly as corrupt and ineffective Government-business partnerships creates an environment which is not conducive to conducting business,(19) consequently choking general economic development. The potential debilitating effects of this on national economic growth and concomitantly, on social development, are significant given that Nigeria is a mono-cultural economy, with the mainstay of the national economy being crude oil found in the Niger Delta.(20)
Arguably, the real developmental ramifications of the volatile Niger Delta situations can be better understood if viewed from two interrelated realities. Firstly, the Niger Delta, made up of nine states and having an estimated population of about 28 million, is home to 16.7% of the Nigerian population. Secondly, oil revenues account for about 95% of Nigeria’s foreign exchange earnings and 95% of federal revenue.(21) The volatile situation, if untamed through proper business-government-people partnerships can potentially harm, and is indeed harming, close to a quarter of the country’s population and threatening the ‘hand that feeds the nation’: the oil industry.
CSR, sustainable development and context: Why is CSR in Africa frequently insufficient?
The South African and Nigerian cases demonstrate that a CSR programme can never be effective in achieving its principal objective of being an object of sustainable development if it is divorced from national development priorities; just as a typical African Government cannot fully deliver on its development promises without both the voluntary and involuntary contributions of business. Apart from being contextually aligned to the broader framework of the host country’s development policy, an effective CSR policy also has to be sensitive to different local circumstances within a country, as the Niger Delta case demonstrates.
Indeed there is an abundance of CSR activity going on in Africa particularly from extractive industries with so much of it reported daily in the media and annually in the companies’ sustainability reports. However, the large amount of CSR activity often against the backdrop of increasingly burgeoning business operations have, on many occasions, failed to match with an agenda for the development of African nations in general and host communities in particular. This is predominantly troubling as Governments are not reaping the full benefits of having the corporate fraternity as a mutual partner in development. Notwithstanding other possibilities, the solution seems to lie in the effective closure of the gaps that currently exist between the aspects of CSR, development and context.
The big question, however, is on how the CSR-development-context gap can and should be narrowed in Africa. It is imperative before outlining ways of achieving this, to reiterate that an effective CSR policy is one that attempts to effectively address the bona fide development needs of the host society and protects the developmental aspirations of future populations whilst remaining relevant to the company by supporting the ‘business case’ for engaging in CSR.
Broadly, there are some criteria that companies can and indeed should use to gauge the extent to which their CSR programmes serve the intended stakeholders without threatening business viability now and in the future. The effectiveness of any CSR policy in a country and/or region within a country can easily be determined by the extent to which the policy allows the society-economy-environment programme priorities of CSR to be dictated more by local (internal) pressures but without necessarily losing global relevance. The internal critical fundamentals include cultural tradition, political reform, socio-economic priorities, governance gaps and crisis response among others.(22) It is very unfortunate and indeed regrettable that CSR programmes in Africa have been driven mostly by global concerns (external drivers), which mostly tend to be of international origin. Some of these include market access, international standardisation, investment incentives, stakeholder activism and supply chain integrity among others.(23)
Sustainable development: Present vs. future; environment vs. socio-economic issues
Perhaps the problem with the global drivers of CSR is that they place disproportionate emphasis on the future and environment aspects of the 1987 Brundtland Report definition of sustainable development. Most companies operating in Africa have joined into the conveniently popular global chorus of environmental sustainability in order to fulfil the requirements of the global value chains especially in the wake of the emergence of lucrative business-to-business (B2B) contracts. Most B2B agreements come with stringent international CSR standards and practices mainly in the area of environmental management (climate change adaptation) which companies tend to implement without due consideration of how well they correspond to the local terrain as dictated by the local socio-economic circumstances, cultural traditions, political drivers, evident governance gaps and pertinent local crises.
The reality of the matter is, aside from being viewed as window-dressing by local public stakeholders, a CSR model that is globally appealing but locally inconsistent with reality and therefore unpopular domestically chokes the viability of the business itself in the long-run as demonstrated by the violent public protests in the Niger delta (24) and South African mining industry.(25) Corporations are critical actors in the nexus of development in Africa and without their real support of Government development efforts, economies will stagnate, populations will struggle and natural capital will deplete. If businesses cannot be sustained future development will suffer, threatening the ability of Government and industry to allow people to meet their present needs as well as their needs in the future. CSR that fits the operating context is thus a crucial component of sustainable development.
This assertion, however, is not in any way intended to imply that environmental sustainability is not important in Africa and that companies should ignore environmental considerations. It rather aims to suggest that CSR policies and practices that are contextually sensitive to peculiar African circumstances, whilst remaining globally relevant, are likely to advance development in a more sustainable manner without losing the equally important ‘business case'. The important questions that should drive CSR in Africa are: What are the more pressing development issues facing the continent and who are the most important stakeholders? In addressing these questions, it is worthwhile, especially for multinational companies, to always appreciate the fundamental fact that for Africa, unlike the developed world where the needs of the present have for the most part already been met,(26) socio-economic issues are more present and pressing than tomorrow's undoubtedly plausible but distant environmental worries. Rather than focusing disproportionately on future needs, the ability to meet the needs of the present, as enshrined in the Brundtland definition, should be evident in companies’ sustainability policies and CSR practices on the same scale as the aspect of not “compromising the ability of future generations to meet there own needs.”
There has been, in recent years, a realisation that CSR is an important aspect of development and that companies can be, and indeed are, pillars of sustainable development in Africa. This is a shared understanding in Africa, among Governments, corporations and the public alike, with increased CSR activity going on across the continent.
However, it is also a shared reality that the real benefits of CSR’s contribution to sustainable development are yet to be realised and will not be realised as long as there is lack of proper alignment between CSR initiatives and country development needs as defined by the local contexts. State of socio-economic development, political histories, cultural traditions, governance gaps and bona fide environmental risks are among the key local circumstances that companies need to pay particular attention to. More importantly, circumstances are also not homogenous within countries, with provinces, regions or states differing in terms of cultural traditions, socio-economic development, politics and governance problems. For a multinational company operating in different African countries, the stakeholder differentiation process should, therefore, also take into consideration local differences within countries apart from those across countries. Arguably, country states, provinces or regions also most often differ in terms of the same circumstances that differentiate countries and those differences should be reflected in the CSR programmes within each country.
In conclusion, it is perhaps important to reiterate the fact that whilst accepting that CSR drivers in Africa should be different from those of other regions of the world, it is also imperative to appreciate the fundamental fact that Africa itself is also a diverse region. There are evident country differences in socio-economic development, political histories, cultural traditions and environmental risks which all call for companies to closely study circumstances and make attempts to ensure that CSR programmes reflect, as far as possible, the operating terrain of each particular country. Again, the unique circumstances within the Nigerian Niger Delta and South African mining communities serve as good examples.
Written by Tendai Mariri (1)
(1) Contact Tendai Mariri through Consultancy Africa Intelligence's Industry and Business Unit (email@example.com).
(2) Branco, M.C. and Rodrigues, L.L., 2007. Positioning stakeholder theory within the debate on corporate social responsibility. Electronic Journal of Business Ethics and Orgnizational Studies, 12(1), pp. 5-15, http://ejbo.jyu.fi.
(3) ‘What is Sustainable Development?’, International Institute of Sustainable Development, 2012, http://www.iisd.org.
(4) ‘Business for Development: Sustainable Development’, United Nations Global Compact, 12 January 2012, http://www.unglobalcompact.org.
(6) Roodt, A.K., ‘Corporate Governance and Social Responsibility’, Paper Presented at the CIS Corporate Governance Conference in Johannesburg, Witwatersrand University, Johannesburg, 10 - 11 September 2009, http://www.icsa.co.za.
(7) ‘Business for Development: Sustainable Development’, United Nations Global Compact, 12 January 2012, http://www.unglobalcompact.org.
(9) ‘Broad Based Black Economic Empowerment’, Republic of South Africa Department of Trade and Industry, September 2012, http://www.dti.gov.za.
(10) ‘The King Report on Corporate Governance’, South African Institute of Chartered Accountants, 12 July 2010, https://www.saica.co.za.
(11) ‘South Africa leads the way in integrated reporting’, South Africa.info, 26 January 2011, http://www.southafrica.
(12) ‘What is GRI, Global Reporting Initiative’, Global Reporting initiative, 3 September 2012, https://www.globalreporting.org.
(13) Nazari, M., ‘Sustainability Reporting Using GRI: Lessons Learned’, MINING.com, November 2009, http://magazine.mining.com.
(14) ‘South Africa's Lonmin Marikana mine clashes killed 34’, BBC News Africa, 17 August 2012, http://www.bbc.co.uk.
(15) Alabi. O.F, and Ntukekpo, S.S.,2012. Oil companies and corporate social responsibility in Nigeria: An empirical assessment of Chevron’s Community Development Projects in the Niger Delta. British Journal of Arts and Social Sciences, 4(2), pp. 361-374,http://www.bjournal.co.uk.
(17) Aderemi, P.J., ‘Governance and Corporate Social Responsibility in Nigeria’, The Nigerian Observer, August 2012, http://www.nigerianobservernews.com.
(19) Alabi. O.F., and Ntukekpo, S.S.,2012. Oil companies and corporate social responsibility in Nigeria: An empirical assessment of Chevron’s Community Development Projects in the Niger Delta. British Journal of Arts and Social Sciences, 4(2), pp. 361-374,http://www.bjournal.co.uk.
(22) Visser, W., ‘What Drives the Business Case for CSR?’, 3BL Media , 10 April 2012, http://3blmedia.com.
(24) Alabi. O.F., and Ntukekpo, S.S.,2012. Oil companies and corporate social responsibility in Nigeria: An empirical assessment of Chevron’s Community Development Projects in the Niger Delta. British Journal of Arts and Social Sciences, 4(2), pp. 361-374,http://www.bjournal.co.uk.
(25) ‘South Africa's Lonmin Marikana mine clashes killed 34’, BBC News Africa, 17 August 2012, http://www.bbc.co.uk.
(26) Bridgman, G., ‘How Sustainable is Sustainable Development in Africa?’, The South African Institute of International Affairs, http://www.polity.org.za.