Seasoned CSR managers of multinational companies have learnt that in determining their corporate policy for achieving constructive impact in every community, a one-size-fits-all approach is not always successful.
The individual needs of communities must be analysed across international borders, based on their socio-economic history. For multinational companies, differences in CSI legislation are also key considerations in policy making.
South Africa and Zimbabwe, both still burdened with largely unresolved historical socio-economic deficits, have seen the plight of their disadvantaged people exacerbated by the impact of Covid-19. The South African government, faced with the mammoth task of redressing the country’s apartheid legacy years ago, made CSI an obligatory practice by introducing legislation requiring a minimum annual contribution of 1% of net profit after tax. This mandate of the 2004 Broad-Based Black Economic Empowerment Act also carries an incentive in the form of certain tax exemptions.
In Zimbabwe, no such legislation exists, beyond some provisions of the Environmental Impact Assessment Policy of 1994, and the Indigenisation and Economic Empowerment Act of 2007, which requires certain profitable companies to give back to society. The country also has a youth policy which encourages, but does not mandate, financial input from private organisations.
In Zimbabwe, CSR is not an obligation, but a voluntary charitable action. The result is that CSI from the corporate sector is negligible, except in the mining, manufacturing, retailing and agricultural sectors. Multinational companies with representation in Zimbabwe have, largely, focused on financing community projects through private partnerships without any real involvement of the beneficiaries. The lack of legislation has further resulted in inconsistent reporting and allocation of funds.
Post lockdown, the number of poverty-stricken people in Zimbabwe has grown by 1,3 million as a result of increasing unemployment and food insecurity. Short-term programmes such as food aid are therefore as critical as longer-term sustainability projects. The country also needs to restore the delivery of health, education and social protection services disrupted during the pandemic. Legislation would help move the CSI focus from ad hoc philanthropy to poverty reduction and sustainable community development programmes.
In South Africa, our history has meant that CSI priorities generally differ from global priorities, and some large companies have opted to focus on programmes involving sustainable development, governance issues and partnerships. CSI is often aligned with the core business of contributors, as they incorporate impactful environmental and social issues into their business activities.
Given the complexities of their CSI mandate, how can multinational companies ensure that their efforts effectively address critical needs – whether in South Africa or in other African states?
Firstly, they should seek alignment with their host countries’ national development plans through providing support in prioritised socio-economic development areas such as health, education and training, housing, infrastructure, job creation and youth development.
Secondly, companies should work out a separate CSI policy for each country, each with its own strategies, mission statements and codes of ethics. Ideally, these are steered at board committee level, through a dedicated foundation. CSI should regularly feature on the executive and board agendas to ensure the involvement of senior members and effective alignment with corporate needs and issues. Equal consideration should be given to the benefits that the business would reap and the gains intended for the beneficiaries, including the positive effect of community relations on company performance. These are huge considerations, and worthy of board attention.
Involving the beneficiaries or their representatives in the process of needs assessment is key in determining felt needs and also reflects the African concept of ubuntu, in terms of mutual support and respect, interdependence, unity, collective work and responsibility. This is an area in which South African society, as a whole, is somewhat more advanced than many others; most of our NGOs have a long-established modus operandi that involves a process of working with, and not delivering to, communities. By and large, corporates still need to master this aspect!
Companies also need to bear negative business impacts in mind as, for example, shareholders may receive fewer dividends, as some profits are spent on CSI, and some may withdraw their support from the business. Boards may need to consider whether long-term gain in terms of community support and enhanced public image might outweigh temporary losses.
Various country specifics should be borne in mind when drawing up CSI policies. In Zimbabwe, for example, more proactive community involvement with a view to poverty reduction and sustainable development is called for. Multidimensional youth development is key to development in Zimbabwe, as many are marginalised in both urban and rural areas.
As in South Africa, it is essential that corporates considering CSI in Zimbabwe or in any other African state do their due diligence and thoroughly research any NGO they may consider supporting. All NGOs are by no means the same in terms of value offered.
Lastly, the extent of black land ownership is not the same in South Africa as in Zimbabwe, and CSI approaches need to take this into consideration.
CSI contributes significantly to socio-economic development in sub-Saharan Africa and fully justifies insightful design and application of comprehensive policies, especially for multinational companies.