New York City, New York, April 21-22, 2004

International Conference on Corporate Social

Responsibility in China

Columbia University, The China-International Business Project

April 21-22, 2004

New York City, New York

Dr. Delwin A. Roy

Partner and Secretary, The Loita Group of Companies and

President, The Eric Edward Roy Fund

Trends in Global Corporate Social Responsibility Practices

The Case of Sub-Saharan Africa

“Look at the recent history of Asia. It wasn't charity that built those economies up to world-class status. It was private enterprise, intelligently applied.” Michael Maren , The Road to Hell: The Ravaging Effects of Foreign Aid and International Charit y, stated to Anne Fisher, Fortune, Nov. 10, 1997.

  “…there remains much suspicion among the non-business community of business motivation and value when it comes to addressing social issues.” Chris Marsden, former Head, Community Affairs, British Petroleum, in, “Competitiveness and Corporate Social Responsibility,” alli@nce (March 1997).

Introduction

Africa, particularly the sub-Saharan Region, suffers from the lack of corporate social responsibility investments. Governments in many nations have not sought to grow the private sector, relying instead on socialization of the economies in which highly inefficient public enterprises languish.

Multinational corporations are not always welcome either, though there is significant foreign investment to be found in nations such as Angola, Nigeria, South Africa, and increasingly, in the West African nations. The major foreign investments historically and in the contemporary sense are found in the extractive industries, precious metals and diamond mining as well as other minerals and oil. Foreign investment is also prominent in the tourism industry. Accordingly, one is most likely to find those multinational corporations engaging in CRS programs in such industries.

There are some outstanding examples of excellent CSR actions to be found: Anglo-American (South Africa), Rio Tinto, owned by GTZ, operates mines in several African countries; and, Chevron Texaco (Angola) to mention but a few. However, two important characteristics regarding foreign investment are observed:

•  In 2002, less than 3 percent of global foreign investment flows were destined for African countries and 3 African nations, Morocco, Chad, and Nigeria, accounted for bulk of such investments; and,

•  There are many African nations that have serious deficiencies in their ability to attract any kind of private investment, foreign or local. These countries have relatively small markets, few resources, low personal income, and poorly educated populations.

Indigenous private sector growth is showing some significant signs of increasing. Historically, much of the local private sectors activities were mostly small scale and involved limited capital investment. Part of the colonial hangover in Africa is to be found in the very limited number of Africans, particularly Black Africans that have been able to assume investments of scale and have the requisite contemporary entrepreneurial and management skills necessary to succeed. Needless to say in local private business situations where capital investment is in short supply, and business operations often hold a tenuous position in the market, it is difficult for a social responsibility agenda to enter the business equation. There are clear exceptions to this observation, but I do not consider the practice of CSR by local firms to be extensive.

Even if foreign and local investment in Africa was vastly increased, is it reasonable to assume that private business can effectively address the major issues that plague most African nations? Widespread poverty, corruption, inadequate resources, poorly trained labor supplies, wars and other forms of civil strife such as ethnic cleansing, pandemic diseases such as HIV/AIDS and malaria, tribal tensions, and ruinous economic policies have led to problems of such scope and dimension that it is only governments, African and international, that can mobilize the necessary capital to begin to make headway on these enormous issues. Or so it might seem.

I do not subscribe to this line of thinking, for when the waste that is so prevalent in massive schemes to address large-scale social and economic problems is taken into account; other avenues of problem resolution obviously need to be fomented. The private sector, whether through multinationals or local business operations or a combination therein, can bring entrepreneurial and management skills to the resolution equation. It is often the smaller-scale innovative approach that provides workable solutions to the much larger social or economic problem. I agree that private companies do not have the resources or experience to fully remedy these massive problems. However, I contend that they necessarily must have a creative role in defining possibly new ways of addressing these problems.

This work looks at the ways in which corporations are rethinking the “strategic business value” of corporate social responsibility (CRS), wherever and whenever a company decides it must be active. In this analysis, I take at face value the major rationales a business might adopt in undertaking CRS initiatives. Two themes, rather dichotomous, co-exist in most corporations a purely philanthropic approach “of giving back to the community” with minimal concern for any business gain and , CSR programs that have at their core a strategy that impacts favorably on business interests such as profitability and product sales. There are variations in CSR practices that combine elements of both corporate motives to be found between these seemingly disparate poles of corporate giving behavior.

Two cases drawn from Africa are presented. Both cases involve support of innovative solutions to major economic and social development problems, and both involve a mid-size, pan-African corporation. In looking at the sub-Saharan Africa region, it is important to fully understand the thrust of contemporary corporate social responsibility strategies and the implications of the emergence of a global economy upon these strategies. For many reasons, it is clear that corporate philanthropic giving in Africa—purely charitable or more decidedly business-oriented—whether from multinational corporations or local businesses is rather more under-developed than is the case elsewhere. To understand more clearly why this is the case, factors that are driving current CSR practices, particularly those of the multinational corporations, must be considered.

Review of Global Trends in Corporate Social Responsibility Practices

Changing technology, the emergence of the global economy and the homogenized character of competition, and the rapid growth of capitalism all have served to radically change the landscape of contemporary corporate social responsibility practice. Where once the United States private corporate sector was considered the most advanced in CSR thinking and practice, global economic changes and in general, the collapse of communism as a workable economic and social ideology, have resulted in significantly altered private corporate sector views in other major regions of the world. While U.S. corporate sector, in monetary terms, remains the largest contributor to CSR programs and projects, both multinational and local companies in many other countries are more inclined to consider the need to adopt a CSR strategy.

CSR practice in the U.S. is changing in another dimension. Unless one is able to clearly demonstrate to management how a corporate responsibility program benefits company interests, and the many stakeholders involved, it is unlikely that whatever investments are being made in the community will be taken seriously. In many companies, there now exists a clearly stated policy to seek direct and favorable impact on business interests through CSR-funded projects. Companies still recognize that benefits can come from community investments that are purely altruistic in intent, seeking no business advantage whatsoever. However, there is a growing belief that benefits can also come from community investments that are patently linked to business strategies.

As a result, more corporations are concluding that by linking business concerns, indirectly or directly, to what now are called social investments in no way serves to detract from simultaneously realizing high moral purpose and meeting public needs. In fact, what this linkage can do is increase the effectiveness of such investments, and the seriousness with which the company views the needs being met. I should note here that the logic of linking business goals and purposes to CSR programs is not the special province of only U.S. firms. This strategy is to be found in the halls of corporate social thinking in other parts of the world, especially in Western European multinationals.

Is this change which some believe is a move away from the altruistic and true purpose of giving necessarily negative? If a business is at its best when it is “strategic” in thinking through the growth scenarios that lead to expanding markets and sales growth, increases in productivity, lower production costs and higher product quality, and becoming the “employer of choice,” can it not then be presumed that being “strategic” about its community involvement—and deriving business benefit from this—is consistent and ought to be acceptable. One can believe that being strategic is inconsistent with the “spirit of giving,” but then this may not be the most effective way of truly engaging businesses in the fabric of change and finding solutions to tough social issues and problems.