Saturday, 7 December 2013
Corporate Social Responsibility In Africa: Effective Tool Or Convenient Escape By Kayode Oladele
Africa remains one of the most blessed continents but unfortunately also represents the most pathetic in numerous ways and as a commentator recently noted: "Africa remains a land of paradox". Though the continent is blessed with fertile land, thousands still survive on food aid. The continent is blessed with natural resources but rather than using such natural resources to occasion the much needed human and economic developments, some of these resources have led to series of violent conflicts as witnessed in the notorious tales of Liberia's blood diamond and the contestations over Sudanese oil.
Consequently, rather than transform its large population into a competitive market, majority of Africa's toiling population have remained impoverished and (sometimes) stereotyped to be the worst humans in the world.
Meanwhile, apart from the holocaust and other senseless destruction of human lives elsewhere, Africa has witnessed disturbingly high cases of systematic destruction of human lives and property. For instance, while the 1994 Rwanda genocide still remains in global memory, there have been the Jos crises, the Niger Delta militancy and recently, the Boko Haram menace in Nigeria, the Janjaweed's string of violence in Darfur and the post-Darfur conflicts in Sudan and South Sudan. Even if the conflicts in Angolan and the Ivory Coast conflict seem to be simmering, there still remain the Congo and Somali crises. Students of recent African history will also have to comprehend the short and long term implications of the Arab Awakening as it relates to Libya, Egypt and Tunisia. It is perhaps a reflection of the earlier phase of socio-economic and even political plight of the toiling masses of Africa that a magazine had declared Africa in a screaming headline as "The Hopeless Continent" (Economist, 2000).
However, Africa is not hopeless. The challenge is just "getting it right." Even the Economist magazine that had labeled the continent "hopeless" in 2000, about 11 years later, noted that "Africa's economies are consistently growing faster than those of almost any other region of the world" (Tunehag, 2011). In spite of these mounting potentials of the continent, human development indicators in Africa have remained low. Consequently upon the foregoing, contemporary commentaries on the political economy of Africa has remained bifocal: on the one hand is pessimism, on the other hand is optimism.
Therefore, this presentation aims to achieve two things. First, it situates Africa's political economy within a particular context of the private sector. Second, and in a bid to understand the workings and expectations of the private sector, it will also attempt to identify the realities of corporate social responsibility (CSR) in Africa as a function of and reflection of state capacity. In other words, it will engage two interrelated questions. First, what informs the argument for a private-sector-led growth in Africa either as private sector or public-private partnership (PPP) and what logic guides this slant of argument? Second, what has been the role of the state in terms of CSR and can they meaningfully contribute to the advancement of the continent in this regard?
While my presentation looks at CSR in Africa, a holistic study of CSR in Africa is not honestly possible within the ambits of this discourse for a number of reasons. This is because, like most socio-realities, the concept of CSR is highly dynamic and susceptible to situational and location changes. By this, I mean that a single Corporation could display a predisposition that ranges from an active interest to low interest for issues of CSR depending on the situation and location of the Corporation including the attitude of the governments to CSR in such locations. In addition, different incentives (such as compulsion, completion, partnership and competition) influence the behaviors of companies. Again, just as African governments differ in terms of their practice of good governance so also do they have a varying capacity to regulate and provide the needed legal and institutional frameworks for CSR. Simply put some state actors are more alive to their responsibilities than others.
Since this paper speaks to Corporate Social Responsibility (CSR) in Africa, it is pertinent to briefly but carefully define the concept. CSR, like most concepts in the social and management sciences, has a problem of definition. As such, there have emerged numerous definitions of CSR ranging from developmental to institutional definitions. Thus, CSR has been defined as that aspect of business that speaks to ethical issues and environmental sustainability. For some, CSR is a model of business that explains the behavior of companies outside of the core profit motive. From this perspective, it means that CSR is guided by ethical rather than commercial considerations. From a developmental perspective, it is often argued that through CSR, companies contribute their quota to the advancement of society. To others, "it conveys the idea of a legal responsibility or liability" or "charitable contribution" (Garriga and Mele, 2004: 52). In the simplest sense, CSR is geared towards showing that though the business of business is profit, there is also a realization that part of the profits should be invested back into the social and physical environment that sustains and ensure that business continue as usual. It is a model that encourages responsible business practices by firms.
It must however be stated that while CSR is internally-driven in some companies, it is externally-driven in other companies. Michael E. Porter and Mark R. Kramer in an article entitled "Strategy and Society: The Link Between Competitive Advantage and Corporate Social Responsibility" published in the Harvard Business Review captures the externally-driven CSR thus:
Heightened corporate attention to CSR has not been entirely voluntary. Many countries awoke to it only after being surprised by public responses to issues they had not previously thought were part of their business responsibilities. Nike, for example, faced an extensive consumer boycott after the New York Times and other media outlets reported abusive labor practices at some of its Indonesian suppliers in the early 1990s. Shell Oil's decision to sink the Brent Spar, an obsolete oil rig, in the North Sea led to Greenpeace protests in 1995 and to international headlines. Pharmaceutical companies discovered that they were expected to respond to AIDS pandemic in Africa even though it was far removed from their primary product lines and markets. Fast-food and packaged food companies are now being held responsible for obesity and poor nutrition (Porter and Kramer, 2006: 2).
Therefore, if CSR can be an involuntary decision by CEOs in more developed economies, then Africa's case is worth of note. But what justifies CSR? Why CSR? There are numerous justifications but I elect to adopt the five identified by Porter and Kramer (2006: 3-8). First is the moral obligation which is that companies need to be seen to be doing the right thing. Second, is the sustainability justification which locates the need for CSR in terms of the need to ensure "environmental and community stewardship." Simply put: companies need to be seen to be responsible to the environment that sustain their business. Third is the license-to-operate approach which is most pragmatic in the sense that CSR is a license to engage in certain businesses. Fourth is the need to maintain a particular reputation. Companies often aim to protect the brand name and reputation. Both Porter and Kramer suggest a fifth justification which is hinged on the interdependence of business and society. By this, they note that "a broad understanding of the interrelationship between a corporation and society while at the same time anchoring it in the strategies and activities of specific companies" (Ibid: 5). Having said this, how should CSR be located within the political economy of Africa? What is the role of the state in CSR? What should be the role of CSR?
The African Experience
`CSR has become a huge phenomenon in global economic relations and Africa has not been left behind. In fact, not only do various companies have their different CSR schemes and projects but there is even a functional and daily-updated website that reports issues of CSR in Africa: The CSR Africa Daily. The CSR Africa Daily website (http://csrdaily.csrafrica.net/). For some of the activities of African companies as far as CSR is concerned, the website is informative. It would therefore be extremely frivolous to argue that private companies in Africa do not engage in CSR. In fact, in addition to CSR Africa Daily the media and companies' websites have been lavished with some of these projects. For instance, just as oil multinational corporations operating in Nigeria are quick to publicize their community development projects so also do mining companies in Zambia, hotels in Zimbabwe, telecommunications companies in Ghana, and even oil companies in Sudan (and South Sudan) amplify their commitment to CSR.
Therefore, rather than ask the question "Is there CSR in Africa?," the relevant issue should be "how does the state structure promote or discourage CSR?" This question attends to a different focus. The former question will lead to an endless list of CSR projects but the latter question will highlight the failures of the state. The former question will patronize the multinational corporations (MNC) but the latter will critique them. Most importantly, while the former question will be cosmetic and meaningless in the face of environmental degradation, death and demeaning of Africans, the latter question is fundamental, somewhat difficult but futuristic.
It is against this background that I ask: How does the state structure promote or disregard CSR? In engaging this question attempts will be made to highlight some of the loopholes and what I term "tragedies of governance" through a few examples. In spite of the numerous CSR projects, state-craft in most African states have been weak, hijacked, domesticated and controlled by a cabal whose goals are not fundamentally developmental. In other words, though development may be mentioned at every given opportunity but in reality, there are little efforts to purse development as a policy.
To this effect, CSR is a concept that gains its widest expression in a capitalist economy where the sole business of any business enterprise is profit. In the immediate years of independence in most African states, there had been a movement towards the limited state. Africa's developmental projects started with the implementation of Import Substitution industrialization (ISI) and Export Promotion Strategies (EPS). These developmental policies were soon met with other initiatives such as the United Nations Economic Commission for Africa's (UNECA) "Africa's Strategy for Development in the 1970s," the "African Declaration on Cooperation, Development, and Economic Independence" (or the Addis Ababa Declaration) in 1973, the "Revised Framework of Principles for the Implementation of the New International Economic Order in Africa" adopted in Kinshasa by the OAU Council of Ministers and Heads of States in Libreville in December 1976 and July 1977 respectively; and the Monrovia Declaration adopted by OAU Heads of States and Governments in July, 1979 in Monrovia, Liberia. Later came others such as: "Lagos Plan of Action for the Implementation of the Monrovia Strategy for the Economic Development of Africa" (LPA) of 1979; African Priority Programme for Economic Recovery (APPER); United Nations Programme of Action for African Economic Recovery and Development (UNPAAERD); and the IMF and World Bank foisted Structural Adjustment Programme (SAP).
SAP advocated that for Africa to develop, it must embrace a 'limited government' that would withdraw its hands from the economy and allow the private sector to function as the engine of development. To achieve this, the state must deregulate, devaluate, liberalize, privatize or at least commercialize its interest in business. The thinking then and in most contemporary African economies is that African states were not meant to take active part in the economy. Even when some leading African scholars had articulated an Alternative framework to SAP, their voices were drown by the international financial institutions (IFIs) who felt that the SAP compact was the only solution to Africa's economic crises. It is in this context that I also locate contemporary initiatives such as the New Partnership for Africa's Development (NEPAD) and Western-backed development initiatives such projects as US' African Growth and Opportunity Act (AGOA) and the Millennium Challenge Account (MCA), the European Union's Economic Partnership for Africa (EPAs), the Britain African Commission, the Japanese Tokyo International Conference for Africa's Development (TICAD) of Japan, and China's Forum for China-Africa Cooperation (FOCAC).
It is therefore expected that with the private sector that is perceived to be more prudent and proactive, CSR will serve as a further to Africa’s development. However, not only has the SAP failed to engender the expected development but African states have also remained weak. I will cite the example of Nigeria. The Nigerian state is a rent-seeking one and at a point up to 80 percent of its GDP was derived from crude oil sale. But not only had the state historically sided with oil multinationals but a renowned poet, Ken Sarowiwa and his eight kinsmen were murdered by the state under General
Sani Abacha for daring to complain about the environmental degradation in Ogoni land in Nigeria's Niger Delta caused by Shell and its allies.
In the Niger Delta, thousands of families are exposed to polluted gases as well as benzene-polluted water. As the toxic chemicals are released into the atmosphere, the ecology is continuously destroyed. A society that is naturally a fishing society has been clearly disempowered by the activities of the oil multinational Corporations (MNCs). Yet even the transition to civil rule in 1999 has not changed the character and attitude of the state towards ensuring that the multinational Corporations comply with best practices. While the former President Olusegun Obasanjo regime shifted the deadline for gas flaring, in spite of its much publicised statement of ending gas flares, post-Obasanjo administrations have continued to dilly-dally with stopping gas flaring thereby ostensibly given state support to the environmental pollution of the Niger-Delta communities. Unfortunately, the decision of the state to take the issue of environmental degradation in the Niger Delta with kids gloves have in turn generated both "real" and "fake" militants who have made the exploitation of crude oil a difficult task particularly before the amnesty regime. Some of the officials of the oil MNCs have also fallen victims of kidnapping and violent attacks.
It would be recalled that when there was an oil spill in the Gulf of Mexico, BP was really falling over itself to address and reduce the ecological implications within days. While BP faces billions of dollars in civil and criminal penalties from the April 20, 2010, explosion aboard the Deepwater Horizon rig, which unleashed 4.9 million barrels of oil that soiled the shorelines of four Gulf Coast states, the US government has recently passed a new law called the "RESTORE Act" which directs that 80 percent of Clean Water Act penalties paid by BP be placed in a new trust fund for restoration efforts in the five coastal states damaged by the worst U.S. offshore oil spill namely Louisiana, Alabama, Mississippi, Florida and Texas.
Whereas, according to the United Nations Environment Program (UNEP) report which conducted an assessment of the environmental and public health impacts of oil contamination in Ogoniland, in the Niger Delta, and options for remediation , "the environmental restoration of Ogoniland in Nigeria could prove to be the world's most wide-ranging and long term oil clean-up exercise ever undertaken if contaminated drinking water, land, creeks and important ecosystems such as mangroves are to be brought back to full, productive health", it is unfortunate to note that instead of the multinational Corporations coming up with a clear cut program for clean up and payment of compensation to the affected communities, Shell and other multinational corporation that have unleashed the most inhuman environmental degradation on the Niger-Delta communities have consistently engaged in blame game while acquitting themselves from responsibilities for the heinous crimes against humanity. Yet, these are the same multinational oil Corporations that have always ranked themselves high in CSR in Nigeria.
In a paper entitled "Multinational Corporations: The New Colonisers in Africa''", Lord Aikins Adusei posits that " it is no secret that Shell Oil Company colluded with the corrupt Abacha regime to steal oil, pollute the rivers, wells, creeks and soil and render millions of famers and fishermen in the Niger Delta jobless. Shell admitted that it inadvertently fed conflict, poverty and corruption through its oil activities in the country. Nigeria contributes to about 10% of Shell's global production and is home to some of its most promising reserves, yet the country is steeped in poverty and conflict. So Shell in addition to stealing Nigeria's oil and polluting rivers, wells, soils also promote corruption, poverty and conflict".
Sadly though, this situation is not restricted to Nigeria alone. In Zambia, mine workers often work in the most hazardous environment. The tragedy that led to the death of Zambians in the Chinese mine is in point. Even in a relatively sophisticated South Africa, several miners were recently fatally shot for daring to protest for increase pay and better work environment. Again, while it is unquestionable that the Chinese have brought-in massive investment into Africa, the numerous Chinese state-owned companies have not always been responsible in their dealings. How can Chinese firms justify the selling of arms to Zimbabwe or the building of arms plants in Sudan when the international community laments genocide or near-genocide in both countries respectively? (AFP, 2005; Brookes and Shin, 2006; Campell et al, 2012; Rogers, 2007). The issue of counterfeit, adulterated and substandard (CAS) products from China is also a challenge. Meanwhile, businesses have not also been in total support of the fight against corruption. In spite of the Global Compact Anti-corruption principle derived from the United Nations Convention against Corruption, businesses such as foreign banks have helped corrupt African leaders to loot the treasury of the toiling African masses.
According to Adusei, "Africans know that these (multinational) corporations are making fortunes but see no benefits from these fortunes. Ghanaians know gold and diamond are being mined at Obuasi and Akwatia but they do not know where it goes, who buys them and where the proceeds go and the same is true of the oil in Nigeria, Gabon, Cameroon, Algeria, Angola, Equatorial Guinea and DRC a nation with one-third of world's natural resources".
Nevertheless who takes the blame for underdevelopment of Africa? If the western countries and China in conjunction with the multinational corporations have their African Policies that undermine growth and development in Africa, why can't African states initiate their own policies to engender African development and promote CSR on the continent? Again the issue of tragedy of governance is at the core of this problem as everything rises and falls on leadership. And just like a commentator has suggested, bad leadership in Africa is no longer a political phenomenon but a cultural challenge.
Though private sector CSR is a veritable tool to advance the development of society since it tends to be immune from red-tapes and allows for innovativeness and efficiency devoid of bureaucracy, it cannot fill-in the role of the state. CSR cannot substitute the state in any sense. The African state has a role to play in the development project; rather than an uninterested regulator, the state must play the role of a major stakeholder by setting the example for growth and development. societal development. To do this however, African leaders must have the requisite political will to set the standards and ensure that multinational Corporations operating on the continent observe the best practices even if they want to pay lip service to CSR. Otherwise, and as it were, CSR will remain nothing but an escape route for government's ineptitude and a facade for the multinational Corporations who want the whole world to see them as being responsible to the African local environments that sustain their business.
The views expressed in this article are the author’s own and do not necessarily reflect the editorial policy of SaharaReporters