Is Corporate Social Responsibility Effective in Reducing Poverty in Africa?

Corporate Social Responsibility (CSR) is a potent force for social change – and poverty alleviation. The key though is that what passes today as CSR, or calls itself as such, is no such thing. Rather it is really just corporate philanthropy, which has no real, deep or lasting impact on the societies it purports to be helping.

We define CSR, which can and does make a difference, as the holistic framework in which a business operates. This takes into account the needs of those involved in or affected by the company, beyond simple profit seeking.

 So true CSR works in Africa by producing and offering services that improve the lives of users of those services, and communities in which these companies operate. This can happen in a number of ways: by providing jobs and enhancing workers’ quality of life, developing a strong network of suppliers and business partners and ensuring financial viability. This in turn will provide resources for improvements and innovations in the company concerned. Ultimately this returns profit to investors.

Other characteristics of a true and effective CSR policy in a company is diversity in talent acquisition and sensitivity to the environment.

My colleague Judy Muthuri – an expert on CSR at Nottingham University in the United Kingdom – also suggests that companies who ensure they are paying their workers a living wage (rather than sticking to the basic rate) do much to alleviate poverty and can be said to practice at least one aspect of a good CSR policy.

All this underlines our belief that businesses have the opportunity to make the world better through ensuring the sustainable impact of their corporate operations.

Do companies have the capacity to make the world better? Yes. Here are examples. If a cellular company gives thousands of dollars in cash to, for example, a children’s home situated in a region in which it operates, it may have some short-term benefit. However, there will be a much bigger impact if the donation is the supply of broadband for a year to access paediatric care online. This is more sustainable – and even cheaper for the company concerned. Some are trying to follow this principle. Kenya’s Equity Bank is making a huge impact by offering its network of branches to the Mastercard Foundation to administer a $50 million donation for the provision of scholarships. This ensures that the whole amount goes where it is needed most – to underprivileged youths. This is sustainable because the return on such an investment in education for organisations like these is invaluable. In fact, Equity Bank offers internships to those who have completed the scholarships.

And Huawei, a telecommunications company, is currently sponsoring a competition across a number of Kenyan universities to design applications for use on Android mobiles. The lesson again being that a company is investing in a partnership that creates sustainable value -– for both the organisation and its market – by imparting core skills to those in software engineering.

Muthuri also cites Coca-Cola as an example of good CSR practice in Africa. She says that although the company has been criticised for its water-management practices, and their effect on rural communities, in one aspect at least the company is getting it right.

Coca-Cola seems to have made a conscious decision to change its supply management chain, in order to work more with local businesses – not just as sources of goods and services but as partners in the business.

Coca-Cola also tries to improve its environmental impact by importing its product using containers that are then converted into stalls by local distributors in Africa.

These are some examples, but part of the challenges we face is finding the means to measure how companies are doing in fulfilling the objectives of a true CSR programme. Measuring impact in the Kenyan market, at least, is still difficult because very few companies issue sustainability reports, and it is not compulsory to indicate how much they give under the banner of CSR. No legislation exists to compel them to do so. A company’s accounts probably indicate ‘charitable-donations’ but – again – this is not true CSR.

However, the Global Reporting Initiative remains a good international standard and, in fact, some businesses use it, such as the Kenya Commercial Bank.

Our current research into the CSR practices by companies listed with the Nairobi Stock Exchange will shed more light on this.

The economist Milton Friedman’s statement that “the business of business is business” is quite telling. But a new kind of capitalism does seem to be emerging, spread by the likes of Microsoft founder Bill Gates, which has a place in the social economic transformation of Africa.

Businesses on the continent will probably need a shift in mind set if they are to start creating value for society at large. But we think there are gains for businesses that adopt a corporate strategy that has CSR at its heart – and not just one-off philanthropy.

Source: CSR Africa.Net – 11 Jan 2012

3 COMMENTS

  1. I think all efforts are valiant. However, a majority of the references you seem to make as good practice involve high-tech solutions. This leaves me wondering if a hybrid is not required. Corproate donation of technology must indeed bring benefit, but corporate philanthropy in education especially in rural areas (where there is no broadband, or well trained teachers for that matter), microfinance for small businesses and health initiatives in hard to reach and poor areas has value too, especially if backed up by policy and governemnt advocacy for investment to support sustainability. This hybrid delivered by organizations with ability to deliver at scale and collaborate with government to achieve sustainability must be a prefered route rather than saying corporate philanthropy has no value.

  2. Interesting article, thank you. Looking at csr in a social & economic context is so important. I’ve heard it said that it is not wrong to create wealth but those that do need to use that wealth wisely. I do hope many more companies explain their csr approach (like puma do) & integrate it in daily business activities.

  3. Thanks for a meaningful article. I agree wholeheartedly that CSR is mostly done for the bragging and marketing rights, with little real intent to secure sustainable change.
    I am a firm proponent of internships and would like to suggest that in applicable industry, rather than simply throwing money at projects in a relatively random manner, interested students be afforded the opportunity to learn on the job in a clerkship manner; or entrepreneurial knowledge be shared at no cost in seminars available to interested parties.
    Interns can be paid low wages so that the project is viable from the corporate perspective, while those interested parties can complete their internship with genuine, valuable experience rather than a meaningless qualification from some substandard tertiary educational institution (this is particularly applicable where I live, South Africa).
    Expectations of graduates will be more realistic; corporate values such as time-keeping will be gathered along the way; and interns will take out from it only in line with what they put in.

Comments are closed.