Address by the Deputy Minister of Social Development, Dr Jean Swanson-Jacobs at the Corporate Social Investment (CSI) Congress

Programme director
Congress Ambassador, Ms Felicia Mabuza-Suttle
Distinguished guests
Esteemed speakers and panellists
Ladies and gentlemen

It is an honour and privilege for me to participate in the conference of this nature especially on discussion of the role that business can play in consolidating the gains of the democratic South Africa. Coincidentally, this conference is held at a time when we have witnessed the private sector response to the needs of the multitudes of displaced fellow Africans and South Africans who are displaced by the recent violent attacks around the country.

It gives me great pleasure to join you in these discussions because historically, discussions of issues pertaining to development often concentrate on the role of government and civil society, ignoring the increasingly crucial impact of the business sector.

Our Constitution enshrines the rights of all people in our country to dignity, equality before the law, freedom and security. The Constitution commits government to take reasonable measures, within its available resources, to ensure that all South Africans have access to adequate housing, healthcare, education, food, water and social security. However, fourteen years after South Africa's first democratic elections, apartheid's social and economic legacy remains and visible throughout the country.

The majority of our people continue to live in conditions resembling those of a decade ago. The bulk of the country's wealth remains in the hands of a small percentage of the population. These and many other socio-economic challenges prevalent in our country present opportunity for public private partnerships in addressing the development challenges.

For business to thrive, it relies on balanced, healthy and educated children to eventually progress into work place to ensure economic sustainability. The social responsibility of the business sector concerns the relationships of a company not just with its clients, suppliers and employees, but also with the needs, values and goals of the society in which it operates. Consequently, the world at large is now increasingly seeking more commitment from business by demanding sound reporting on not only their financial status but also reporting on their commitment to the environment and commitment to social issues. This is what is commonly referred to as corporate social investment and internationally; such reporting is referred to as the triple bottom line.

Ladies and gentlemen, it goes without saying that the 'bottom line' for any business is making profit. This is essential because sustainable development must start from within.

Corporate Social Responsibility as a global trend

According to KPMG Survey (International Survey of Corporate Responsibility Reporting, 2005), 52% of the 250 biggest companies in the world issued separate reports on their corporate social responsibility.

This is an indication of the growing importance within the business community of corporate responsibility as the key indicator of non-financial performance, as well as a driver of financial performance. South Africa was one of the countries with the highest increase in corporate social responsibility reporting.

Corporate Social Responsibility in South Africa

According to Corporate Social Investment (CSI) consultancy, Trialogue, there has been significant increase in CSI activities in South Africa. In the first year of democracy, corporate South Africa spent over R1 billion on CSI projects.

Programme director, the hosting of the conference is recognition of the crucial role that South African business sector as an active player in the global economy, can make in addressing socio-economic challenges in this country. For this reason, I would like to take this opportunity to applaud the innovative leadership of the Johannesburg Stock Exchange, who in 2006 introduced the Socially Responsible Investment (SRI) Index.

The 2004 CSI Handbook indicates that as of 2003/04, CSI funds have gone predominantly to education and training (46 percent) and health and social development (24 percent), with the remainder going to a combination of job creation, sports, environment, arts and culture, safety and security, and housing.

The JSE Annual Report (2006) indicates that JSE-listed corporations spent about R2, 4 billion on corporate social investment (CSI), with an equal amount contributed jointly in kind and worth of staff time. This suggests that every South African receives on average R100/year from corporate social spending. This is encouraging; however most of these activities are urban-biased.

In 2003, two-thirds of CSI spending was targeted towards urban and peri-urban areas, with only 34 percent targeted towards rural communities. Given the high levels of poverty in rural areas, this funding pattern is in almost inverse proportion to need. It also means that the communities who have little or no connection to corporate South Africa are badly underserved. With the broadly defined unemployment rate at over 40 percent, CSI is not reaching those who are most marginalised with least access to resources and information.

I applaud the initiatives, interventions and strategies implemented by Corporate South Africa, through their individual and collective corporate social responsibility programmes. Through these initiatives, many individuals and communities who have been trapped in abject poverty are gradually being drawn into the mainstream of economic activity. The stories of the Kaelo Miracle Mini Series on SABC bear evidence to this. However, the stark reality that we still have a long way to go is glaringly obvious. Corporate South Africa must recognise that they co-exist in an environment where many of the country's citizens disturbingly remain on the fringes of society's economic benefits.

Programme director, allow me to reflect on some of the national development priorities and at the same time indicate how business, no matter its size can partner with government and other key partners to ensure that those priorities are achieved.

HIV and AIDS is a major development challenge for South Africa and is becoming an important part of the corporate agenda. Recognising the impact of HIV and AIDS, there has been a significant increase in funding for health and social development activities by the corporate sector. However, much more still need to be done in channelling funding and providing capacity to community based organisations that are in the forefront of providing services to orphans and vulnerable children. Years of discriminatory policymaking and neglect by the former apartheid regime have resulted in high levels of inequality, characterised by extreme wealth on the one hand and desperate poverty on the other. This is more evident among people with disabilities who have not yet enjoyed the fruits of the democratic South Africa. There is a dire need to provide infrastructure for people with disabilities to ensure their integration into the economic mainstream of society.

Ladies and gentlemen, South Africa has a large social assistance programme which offer social protection to many vulnerable individuals and households. The provision of social security is a life line to many people trapped in poverty. The number of beneficiaries has increased from about 3, 5 million in 1999 to 12 million today. Over eight million children now have access to social assistance.

These include 7,9 million children benefiting from the child support grant, close on 412 000 benefiting from foster care grant and over 98 000 benefiting from the care dependency grant. More than 2,1 million older persons receive the old age grant and 1,4 million people receive the disability grant. Expenditure on social security increased from R36,9 billion in 2003/04, that was 2,9 percent of Gross Domestic Product (GDP) to a projected R73 billion in 2009/10, constituting 3,1 percent of GDP).

However, the provision of social security grants on its own is not adequate. Most of the beneficiaries on social assistance would prefer to be linked to economic opportunities to enable them to become self reliant. One such initiative is a project in Dutyini which seeks to link the beneficiaries of social grants to economic opportunities through the establishment of community co-operatives which focus on food production and income generating activities. The opportunities for public private partnerships are abundant in the social development field and I therefore call on all members of the business sector to partner us in our endeavour to create a better life for all.

Strategic partnerships can bring together the complementary skills and inputs of the public sector, the private sector, and civil society in tackling complex social and environmental problems. The shift from a welfarist to a social development approach offer many opportunities for partnerships between government, the business sector and civil society.

The government has promoted the concept of public-private partnerships to address social needs and implement national priorities. The King Report on Corporate Governance (King II) launched in 2002, provides a South African voluntary code of conduct, which embraces the corporate social responsibility programmes and the 'triple bottom line' concept. Major corporate organisations in South Africa have since established foundations such as Telkom Foundation which seek to redress the legacy of underdevelopment.

Over the past few years, our country and the business sector in particular, has seen major economic growth. The onus is on every one of us to ensure that this growth is translated into real benefits for vulnerable South Africans and Corporate Social Investment (CSI) is one of the vehicle through which we can contribute to nation building.

Ladies and gentlemen, the challenges of sustainable development are many, and it is widely accepted that the corporate sector equally has the responsibility to bring about positive change in the lives of vulnerable South Africans. The United Nations Millennium Development Goals - which include the eradication of extreme poverty and hunger by 2015 - have created a platform for public private partnerships and will require large-scale alliances among corporations, governments, and non-governmental organisations to achieve results.

In closing, I would like to express my gratitude for the organisers of this conference for extending the invitation to me and hopeful that the discussions here will enrich the role of the private sector in addressing the national development priorities.

I thank you.

Issued by: Department of Social Development
15 July 2008