South Africa’s private sector-led social investment work is carried disproportionately by the mines, as has been the case since corporate social investment (CSI) started on the diamond fields of the Cape Colony in the 1880s.
Latterly this is work that is shrinking its scope from a national range, to focus mainly on mining-linked communities. The effects on community development in other parts of the country have yet to be fully felt, but there it will hurt.
Looking at SA’s largest 100 corporates, social investment analysts Trialogue note that they spent just over R9-billion on CSI on 2017, up in nominal terms from R1,5-billion twenty years ago. But CSI spending – that part of community development that is external to core business interests – has declined marginally over the past four years.
For some companies that will be because profits are down, where CSI typically enjoys 1% of net profit after tax (NPAT). For others, it may be because they’re more invested in the scorecard of the Department of Trade and Industry’s Broad-Based Black Economic Empowerment codes, where the rewards are far greater for spending on skills development, preferential procurement and enterprise development than on CSI-type work (“socio-economic development”).
CSI is anyway mostly a voluntary thing that is easily avoided, except for the mining and alternative energy sectors where it falls into operating licence conditions. This, along with tradition and pressure from employees, helps explain why mining and quarrying businesses contributed one in every three CSI rands spent last year.
And, for reasons best known to God and geologists, minerals are often found in geographically obscure places. There, mines are often the only source of non-state community development work. Indeed, they’re often the reason communities are there in the first place, for most mines aren’t alien impositions. They are part of, the reason for, and because of, local communities.
Thus, despite the 2010 Mining Charter requiring mining houses to spend the private sector standard 1% NPAT on CSI, the Minerals Council of SA (formerly the Chamber of Mines) reports that they spent three times that in 2017. And even though 16 out of 66 operations in 28 mining companies reported financial losses, those still put R180-million into community development.
Company reports show that 2016/17 saw increased CSI spending by AngloGold Ashanti (sometimes wrongly thought as part of Anglo American), Assmang, BHP Billiton, Glencore Xstrata, Harmony Gold, Impala Platinum, Lonmin, and Goldfields. But unsurprisingly, it wasn’t a one-way street, with decreased CSI spending by African Rainbow Minerals, and Sibanye Gold.
A big clanger came from the granddaddy of South African CSI, Anglo American, which reduced community development spend by fully 45% in one year, according to their 2016 Transformation Report. Of the R583-million Anglo American spent that year, only R100-million was committed to projects outside its mining areas, the rest reserved for home turf, mainly on licence-linked Social and Labour Plan commitments.
Yet too great a focus on expenditure can be misleading, and Anglo American is a good example of how. Working through different South African provincial and mining realities, the Group (Anglo American SA, Amplats, Coal SA, De Beers Consolidated Mines, Kumba Iron Ore) runs what is possibly the world’s most sophisticated and complex social investment operation of any company, and the effects of this can’t always be monetised.
In a programme called “the social way”, Anglo American social performance teams assess operational impact on neighbouring communities using a unique, almost 300-page, socio-economic assessment tool. These guidelines are part of a broader sustainability strategy that tries to mitigate the company’s decreasing footprint in the country.
It does this in work that looks at the environmental effects of mining and operational closures, brings labour and other human rights issues to the fore in supply chain management, aims to create five external community jobs for every one on the mines, continuously surveys community perceptions of company activities, brings emerging suppliers up to speed through the company’s Zimele enterprise development programme, takes lifeskill messages to 11-million listeners in radio broadcasts, signals a refocussing of social investment energies to particularly the Limpopo province, and now includes an ambitious educational rollout near mines there and in Mpumalanga and the Northern Cape.
Working off partnerships with other funders, NPOs, and state departments, this education programme builds on others that Anglo American has managed since it began its Rural Schools Programme in 1975. Looking to the full life-cycle of schooling, the new programme targets 100 early childhood centres and 100 schools with financial, infrastructural and management support. It aims to get these secondary schools into the 20% of top achievers by 2022, with a 90% matric pass rate, with half these children having university entrances, and more besides.
It’s ambitious, not least because the cause-and-effect line in social investment is seldom direct, with a myriad factors at play that are beyond any single partner’s control. But like much of Anglo American’s community development endeavour, it’s well worked-through and doable, especially if the programme resists adjusting itself willy-nilly in reaction to surveys of fickle community perceptions. Solid developmental work is rarely the result of focus groups, however conceived.
Indeed, social investment is a tricky business. For just as mining companies aren’t in full control of any development programme’s chances of success, nor is anyone else, whether funder or doer.
Apart from the contextual realities that differ place-to-place, mining companies are also pulled hither and thither by legacy CSI relationships, by the needs of labour-sending areas of today and of yore, by trade union wants at home, by local and provincial political pressures that are formalised in the social and labour plan commitments, and always by the vagaries of social investment fashion - perhaps especially for those mining companies faced with interested head offices based abroad.
A big consequence of trying to navigate all these must be a withdrawal, at first gradual and then quick, from that part of mining CSI that has had a broader focus on the “national good”, to that which is more closely “business-aligned”.
For hundreds of NPOs, schools, universities and other developmental institutions of excellence, based far from any mine, but long reliant on mining’s largesse, a bell tolls louder.
Written by By Paul Pereira, a Policy Fellow at the Institute of Race Relations (IRR) – a think tank that promotes political and economic freedom. If you agree with what you have just read then click here or SMS your name to 32823.
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