Multinational Businesses and their Social Awareness in Sub-Saharan Africa
The economy of Sub-Saharan Africa is expected to shrink upto 30% by 2011 according to a study by the International Red Cross Federation & Red Crescent societies if corporate hands are tied. On the other hand there is an understanding today that western management models aimed at social welfare exported to countries like Africa are not always very successful.
This essay discusses the need for CSR initiatives in Sub Saharan Africa and whether or not Multinational Corporations based outside Africa should become socially aware when doing business in the region with the help of a few illustrations.
The Red Cross estimates that USD 253 million is needed to cover the needs of Sub Saharan African Red Cross societies in spite of governments of African countries, the United Nations and Embassies having pledged to help. If this need is not met there will be a decline in productive workforce, children would leave schools and turn to trafficking and prostitution for survival and child headed households will be the norm. Every minute a child under 15 dies because of AIDS in Africa. These are not just numbers but we are talking about the misery that children who care for and accompany their parents to death undergo.
There has never been a greater need for corporate social responsibility in Africa than now. Most MNC's just focus on raising the bar for profits and sales and do not give a thought to social welfare. The examples illustrated below prove that CSR initiatives can benefit both the society and the business in various ways and thereby reminds us of the need for companies operating in Sub Saharan Africa to be all the more socially aware.
* 'Celtel' has emerged to become one of the top notch telecommunications companies in Africa due to their brand image and name recognition primarily as a result of CSR initiatives that it had taken namely:
- The school Furniture Project
- The Breast Cancer Project in the Niger Delta
- Provided 500 boreholes across the 6 geo-political zones
- Has constantly tried to live its promise "making life better" for its customers thereby increasing its consumer goodwill.
* 'Glo Mobile' initiated per second billing making more return on investments and increasing its customer loyalty.
* Under the motto 'Advertising with a purpose', 'Adopt a light' invited businesses to adopt and rehabilitate a street light. In return, the business could place advertisements on the street lights.
According to the United Bank of Africa, working on CSR in the region has resulted in closer relationships with community leaders and officials, brand awareness, leadership development opportunities for employees and increased positive name recognition that can serve a company in a time of crisis.
However, "It is difficult to measure direct benefits to both recipients, other CSR beneficiaries and to our company" says Alessandro Benetton, Executive Deputy Chairman of Benetton Group SpA during the launch of the project 'The new face of Africa'. Golas Telecom, Somalia stated that the implementation of the 'Safety Road Project' between Garowe and Tukaraq district had resulted in unhappy shareholders due to decline in profits. Brooke Bond Kenya Limited had to incur heavy social costs related to products, activities and services due to their HIV/ AIDS policy initiated in May 2002, as a result of which typical business response to HIV/ AIDS in Kenya showed an attitude of denial and unwillingness.
CSR can be wrongly administered for selfish benefits. One significant example was when Hart Securities implemented the 'Coast Guard Training Programme' for the general public, where as in reality these men were being trained to become pirates on the Somalian Coast. Richard Bethell, CEO of Hart Securities claims that ethics are not a priority during these trying times.
One of Friedman's famous phrases was "the business of business is business". The third CSR Questionnaire conducted in July 2008 by the South African German Chamber of Commerce and Industry showed that out of 37, 16 companies have a CSR programme and 21 do not. The latter had the following arguments.
- The sole purpose of the business would be lost.
- 20% of the companies said that they were too small to sustain an independent program.
- Very high technical and Human Resource costs.
There is also an argument by certain NGO's that involvement in social programmes gives businesses too much power.
The assumption from the evidence above is that 'an ideal socially responsive organization is one that meets its social responsibilities without wasting organizational resources in the process.'
In my opinion, ethical attitudes must be institutionalized within MNC's operating in Sub-Saharan Africa to tackle the negatives of the programme and achieve both organizational and societal goals. An ethical stance helps corporations in Africa continue to be ethical when it faces competition, provided CSR operates with inputs from the society and open disclosure to the public. In short, Business Institutions in Sub Saharan Africa as citizens have the responsibility to be socially involved in problems that are outside their normal areas of operation.