Africa and corporate social responsibility.

"It would be a sad outcome, in my opinion, if efforts to make businesses operate more responsibly in regions such as Africa were neglected because of the global credit crunch," says Daniel Litvin (pictured), author of Empires of Profit: Commerce, Conquest and Corporate Responsibility. A senior research fellow at Chatham House in London, Litvin is also the founder of Critical Resource, a London-based consultancy specialising in social and environmental issues facing big corporations. Sean Carey interviewed him for New African.

Q: We hear a lot about corporate social responsibility (CSR) nowadays, but what exactly is it?

A: CSR is a voluntary effort by companies to behave well--it is motivated not just by ethics but also by the belief that this will help them make more profits over the long run. The theory is that using CSR initiatives will make companies more popular or at least more trusted in the eyes of stakeholders such as customers, employees and investors.

Q: What are its origins?

A: As a term or phrase, CSR is only a few decades old. But as a concept, it is much older than this. The first large companies of the modern era that invaded different parts of the world - the British South Africa Company, for example - were often brutal and headed by rapacious imperialists who would happily wage war on local people; but sometimes they also made significant efforts to win over the locals, for example by building roads, schools and hospitals.

Of course, thankfully, modern companies no longer use machine guns to get their way. But they do use CSR as a means to keep both local communities and host governments on their side, as well as for less self-interested ethical reasons.

Q: Bring us up to date - which companies operating in Africa are keen on CSR?

A: There is a whole range of different companies involved in CSR initiatives in Africa but it is particularly important in the oil and mining sectors. It is true to say that it is often the long-established companies that have faced the most criticisms over the years (whether these criticisms are fair or not) that now have the most sophisticated CSR policies. So you will find that companies operating in different parts of Africa like Shell and Rio Tinto are very active in terms of CSR. Anglo American, one of the powerhouses of the South African economy, is also committed to various CSR initiatives including in education and healthcare - for example, the treatment of HIV/Aids for employees.

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Q: But overall CSR is more the province of larger rather than smaller companies?

A: Yes, CSR is much more associated with large companies like Shell or Anglo American which have a high profile and are very conscious that they need to protect their brands. These companies tend to have relatively well developed procedures in relation to the environment or to human rights, for example.

Q: Have pressure groups been important in changing the behaviour of large multinationals operating in Africa?

A: Yes, the normal pattern is that local opposition to a company comes to the attention of international NGOs - such as Human Rights Watch or Friends of the Earth. A good example of this was when the Nigerian author and broadcaster, Ken Saro-Wiwa, led a campaign in the 1990s against the environmental and social impacts of oil companies, including Shell, in the Niger Delta. His calls for action got the support of dozens of NGOs and the result was a high profile global campaign against Shell.

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Further, the execution of Saro-Wiwa by the Nigerian government in 1995 meant that the company, rightly or wrongly, was seen to be complicit. This episode I think caused soul-searching for many people within Shell - they had assumed they were working for a decent, upright organisation but were now surprised to be accused of being an accessory to Saro-Wiwa's murder. So, whatever the rights or wrongs, this event was one of the catalysts for the rise of CSR within Shell.

Having said that, I should emphasise that there are still major issues in terms of civil unrest and violence in the Niger Delta which illustrates the fact that there are limits to what CSR can achieve. The bigger context is quite properly the role of the local and federal governments.

Q: Is CSR primarily the domain of Western multinationals or has it also been taken up by Chinese companies working in Africa?

A: This is a hot topic. Over the last few years, a number of Western-owned companies as well as many Western NGOs have voiced concerns that Chinese firms operating in Africa are not taking CSR seriously enough. The suspicion is that the reason why Chinese oil companies are prepared to operate in Sudan, for example, is that they are less explicitly concerned with human rights than their Western equivalents. In this way, some Western multinationals think that Chinese companies gain a competitive advantage by operating to lower ethical standards than they do. That's one side of the coin.

The other side is that Chinese investment in Africa has often been accompanied by significant spending on infrastructure, often paid for by the Chinese government - building airports, roads and power stations. This is a form of corporate responsibility and has clearly greatly benefited some African countries, although there have also been complaints that not enough local labour is employed by the Chinese in constructing these projects.

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Overall, I think there is a legitimate debate to be had as to what type of investment is to be preferred - the Chinese model which provides a lot of infrastructure or the Western model which on balance probably operates to higher standards especially in terms of human rights.

Q: Is CSR having an impact in the African agricultural sector?

A: One interesting development over the last year or so is the move by investors from wealthier countries such as the US and South Korea to acquire huge tracts of land in a number of African countries, including Ethiopia, Sudan and Madagascar. To my mind, this raises questions in relation to corporate social responsibility and whether or not the local people are being consulted properly. It would be easy to make a case that the emerging scramble for land in Africa is a new form of imperialism. Among the things that need to be discussed, for example, is whether the food that is being produced to benefit consumers in Western markets and elsewhere will have a negative impact on production for local markets. What lies behind all this, of course, are concerns about food supply and the recognition that Africa might, in the future,

become one of the world's breadbaskets. This is something that is just beginning, but the scramble for land has all the hallmarks of being just as controversial as the issues that have traditionally surrounded the mining and oil sectors.

Q: Western consumers now have access to a large number of ethically-sourced products, including pepper from Uganda, cocoa from Ghana, coffee from Ethiopia, raisins from South Africa, sugar from Malawi and Mauritius, and honey from Zambia. How important is the Fair Trade movement in providing small African producers with a good income and decent working conditions, and what are its long-term prospects?

A: The Fair Trade movement is growing although it is important that no one should get carried away with all the hype. It has to be recognised that the volume of ethically-sourced agricultural exports from Africa to places like Europe and North America is relatively small and likely to remain so for the foreseeable future. What would be of real benefit would be the opening up of Western markets to mainstream African agricultural producers. I'm not one of those people who think that small is always beautiful. In my opinion, there is often a lot of naivete and romanticism about the merits of small-scale agricultural production amongst many Western consumers. In agriculture, large-scale production is often required to boost supplies sufficiently and also to generate significant wealth.

Q: This raises an important question about whether CSR initiatives by Western multinationals are always good for Africans.

A: Indeed. One of the problems with the application of CSR in the West, to give one example, is that over the last few years there has been an increasing demand for food to be sourced locally. The idea is that this reduces the number of food miles, and carbon emissions are cut. But an ethical initiative that is good for the environment from a Western point of view obviously discriminates against and damages agricultural exports from Africa.

Q: Do you think that the current global economic downturn will have an impact on the development of CSR programmes of companies working in Africa?

A: Mining and oil companies have already made huge cuts in investment budgets in a number of African countries, so this will almost certainly affect money allocated to CSR. But I think the danger of slashing CSR programmes in any sector is that it must be in the long-term interests of companies to continue to develop sound relationships with host governments and local communities.

Business leaders need to bear in mind that the current downturn is just part of the normal economic cycle and that it won't last forever. It would be a sad outcome, in my opinion, if efforts to make businesses operate more responsibly in regions such as Africa were neglected because of the global credit crunch.

Finally, do you think President Obama's recent comment that companies (and individuals) should behave more responsibly will boost CSR initiatives in Africa?

A: It is already clear that Barack Obama thinks that big business is less unquestionably benign than his predecessor, George W. Bush, did.

So in that respect there may be some additional pressure on large US companies with an African presence to be seen to be doing the right thing and strengthen their partnerships with governments and local communities. Firms like the Citigroup or Exxon might feel a bit more pushed in this respect, though they already have fairly active CSR programmes and see this as in their own interest.

A separate issue is that in the recent past, a lot of US companies, not just in Africa but around the world, have struggled with a sometimes negative perception of America as a global power, too aggressive, or somehow neo-imperialist. In this respect, the companies have been tarred by association with the American government, whether that was fair or not.

My guess is that this perception is likely to soften under President Obama and that this will soon begin to work to the advantage of US companies operating in Africa.