Corporate social responsibility in the African context: interest in African energy resources used to focus almost entirely on North and West African oil, but while oil still attracts the lion's share of investment, natural gas is steadily catching up in terms of importance. Neil Ford reports.

Corporate social responsibility is not a term which resonates in much of Africa. Encouraging the growth of African companies and creating employment can be difficult enough without placing any restrictions on the approach of business. Yet despite the need to encourage foreign direct investment (FDI) and local enterprise, it would be wholly wrong to promote Africa as the bargain basement of the international political economy, where companies can set up inefficient operations, pay low wages and pay little heed to the social and environmental impact of their actions.

Corporations, therefore, need to be held to account for the wider impact of their operations by governments, civil society and the international community. It is simply not good enough to measure their contribution to GDP and other raw economic data when their effect on the societies within which they operate is so much greater.

It may be something of a vague term, that means everything and nothing, but corporate social responsibility, or CSR as it is sometimes known, is the umbrella term that has been designed to highlight such responsibilities.

In brief, CSR can be explained as a combination of sustainable development and treating employees and the society within which companies operate with respect. The environmental impact of any economic activity should be weighed against the economic benefit and any measures that could mitigate the negative impact should be taken if they are at all economically feasible.

At the same time, workers should be entitled to fair and reasonable treatment at work, a fair wage for the job under-taken within the local market and minimum health and welfare benefits.

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In practice, however, it is very difficult to separate environmental and social factors. For example, various international companies, including oil firms, have been criticised for the impact that their operations have had on local Africa communities.

The problems of the Niger Delta in Nigeria have been well documented in this magazine as elsewhere: vast natural wealth is being tapped for profit but local people have seen little benefit from the industry, although an environmental legacy has been left in the form of water and land pollution.

At the same time, the contrast between wealth and poverty has helped to create a backdrop against which corruption, crime and social unrest has been able to flourish. This has been demonstrated most starkly over the past 18 months by the spate of hostage taking and armed activity in the Niger Delta, although the underlining causes have been plain to see for many years.

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Many companies respond to criticism of their activities by setting up philanthropic schemes to provide money and equipment for schools, medical services, water supplies or power sector infrastructure in the areas where they operate.

Yet such an approach can also have detrimental affects, as evidenced by the history of the Niger Delta, where some ethnic groups have been favoured more than others from such funding sources. This creates resentment and can encourage some groups to increase the intensity of their protests against oil industry operations in order to gain financial support.

This approach could also be regarded as a form of bribery rather than a serious attempt to tackle the social and environmental problems of the Delta.

Some argue that CSR should not be an important consideration for investors or companies. Madsen Pirie of the Adam Smith Institute in the UK says: "CSR may make a firm's directors feel good to give money to local charities, but a company's responsibility should be increasing profits and adding to a nation's wealth."

However, this appears to be a minority view as the concept of CSR has taken hold globally and so the concept is likely to become of increasing importance within the African continent.

The amount of literature and research focusing on CSR in Africa is certainly growing. In a paper on Southern African mining, the Society for International Development (SID) argues that CSR is an "increasingly prominent discourse also in southern Africa, particularly among mining companies due to mining's potentially significant negative social and environmental impacts".

According to SID, emphasis should be put on supporting the most vulnerable, but it argues that there is still a significant gap between mining companies' practices and their official policies of accountability and fairness.

This is a common criticism of companies' CSR policies and is perhaps to be expected. Often termed "greenwashing", firms attempt to present the image of a more socially responsible approach, while making few substantive changes.

It is perhaps no surprise that, in terms of Africa, CSR has received most attention in South Africa, given that the country has the most developed economy on the continent but also because of the ongoing process of black empowerment. Each industry has its own empowerment charter but both public and private companies are required to ensure that a certain proportion of their workforce at all levels comprises black South African workers.

But there have been several cases of "keeping up appearances" where private firms have used a black employee to act as chief executive or a member of the board, in an effort to convince customers and the government that they have either satisfied their responsibilities or even fulfil the necessary criteria to quality as a black empowerment enterprise.

Kenya and Zambia

A joint research project by three NGOs--the UK's International Institute for Environment and Development, The Partnership Forum of Zambia, and Kenya's Ufadhili Trust--have sought to examine CSR in Kenya and Zambia. The two African NGOs participating in the project were specifically set up to promote the benefits of CSR. Other NGOs also work in the same field, although they may not apply the term CSR to their efforts. Human rights, environmental and sustainable development campaign groups all fall under the CSR umbrella.

Kenya and Zambia have very similar problems that could lead to CSR being overlooked: they have GDP per capita of just over $400 each, and the project report concluded that one of the main priorities of all international organisations operating in the two countries, including the World Bank and IMF--poverty reduction--would benefit from greater emphasis on CSR.

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"If we are to maximise the potential contribution of the private sector to poverty reduction and sustainable development," the report argued, "these are two of the countries in which this is most needed. Although the concept of corporate social responsibility is gaining some prominence within policy debates in Kenya and Zambia, it is not applied widely and is usually associated with philanthropy."

However, the report points out that there are many private sector initiatives and business activities in both countries that could be regarded as expressions of CSR. "The private sector contribution to sustainable development in both Zambia and Kenya," the report said, "could be strengthened by tackling capacity constraints among public and civil society institutions, building the drivers for responsible business, nurturing socially oriented companies and encouraging local business linkages.

"Creating space for national dialogue between government, business, civil society and donors on the role of the private sector in development can help to localise the CSR agenda, and to build trust and mutual understanding of the potential--and the limits--of businesses' contribution to development," the report added.

The notion that business is an important and viable part of society, and therefore it has certain responsibilities to the country within which it operates is highly important. Some firms have sought to explain away the negative impact of their activities on African societies by attempting to draw a line between the business world and the rest of the country. Yet companies cannot operate within a vacuum and their contribution to national life--positive or otherwise--is highly important.

Although management consultants across the world may argue otherwise, there is little new in CSR, it is merely the latest manifestation of a concept that originally appears to have been developed by the Quakers during the 17th and 18th centuries.

Their philosophy was that the main aim of companies was not profit but the need to add value to society in general. The European Union's green paper on CSR also follows this line, arguing that "CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis".

On balance, voluntary CSR schemes and policies by companies are at least a step in the right direction. They are a recognition that workers deserve a decent wage and reasonable working conditions, with time for rest and support when ill. They are also a recognition that environmental considerations are of some importance.

But CSR policies can also be a sign of failure. The very fact that firms feel the need to publicise their social and environmental concerns indicates that these cannot be taken for granted.

With regard to the behaviour of many companies in Africa, the need for CSR policies highlights the weakness of domestic environmental, social and employment legislation in various countries.

There will always be unscrupulous companies, so in the long term the only way in which fairer working conditions and a more sustainable approach to the use of land, water and other resources can become universal is through legislation.

Many African governments are reluctant to impose too much regulation on foreign investors for fear of deterring investment. Yet most foreign firms object to unnecessary red tape and slow bureaucracy far more than social and environmental legislation that would not look out of place in the rest of the world.

While it takes days to register a company in many industrialised nations and months in parts of Africa, foreign investors will continue to decry the obvious disincentive to investment. Regulations and legislation that force responsible corporate behaviour are a much smaller disincentive.

However, it is vital that sufficient monitoring and inspection is carried out of any social regulations--employment legislation that is not enforced has little impact.

In conclusion, it is therefore best to see CSR as part of a longer trend of reaching a balance between the needs of the state, of the private sector and of individuals. Socialist and communist governments believed that the best way of curbing the worst excesses of capitalism was to bring most economic activity under state control. This has been shown to curb enterprise, economic growth and therefore living standards.

But the apparent victory of capitalist over socialist ideology should not be taken as an excuse for the world's poorer citizens to be forced to accept poor working conditions or any detrimental environmental affects. Balance is everything: in society, in the environment, and in the relationships between companies and the societies within which they operate.