Will COVID-19 Change Corporate Philanthropy In Africa?, By Kenneth Amaeshi
…the dominant view of CSR as corporate philanthropy amongst most African businesses needs to be seriously challenged. And there is no better time to do that than now. The crisis should not be allowed to waste, as they say!
In the wake of the COVID-19 pandemic, businesses and their leaders are falling over each other to demonstrate their care and support for people and communities. Globally, there is a concerted effort by the private sector to find creative ways of contributing to tackling the pandemic. Some businesses are adapting their manufacturing systems to produce some of the essential materials and equipment required, such as sanitisers, ventilators, testing kits, et cetera. Others, especially those in the biochemical and pharmaceutical industries, have intensified their research and development (R&D) efforts towards a solution. It is literally all hands on deck!
The corporate sector in Africa is not left out. Given the paucity of manufacturing and R&D capabilities in the continent, local businesses are crowding in their capabilities in different forms through donations of funds, construction of isolation centres, and collaboration with governments and third sector organisations, amongst others. It is literally a matter of life and death and a race against time!
Whilst these good deeds are appreciated, they call for some reflections. Why does it take a crisis of monumental proportion for businesses to truly appreciate that they are part of society and need to contribute positively to it? Why are businesses willing to conveniently ignore their negative impacts on society and the environment, in their quest for money and profit, outside a crisis? Why is it unattractive for businesses to collectively contribute to national institution building, instead of spending energy on ad hoc, in some cases tokenistic, individual corporate philanthropic initiatives?
Many more questions could be asked. However, one thing remains unquestionable – the reality that businesses love one thing in particular: more money! And even better when it comes with a good reputation. Business leaders understand this and often do their best to protect this interest, in season and out of season. Anything that makes money is good; throw in an extra reputational gain and you find yourself a successful and celebrated business. This understanding and philosophy is at the heart of the corporate social responsibility (CSR) industry and practice.
Consequently, many CSR managers are pressed for the business case – i.e. how CSR initiatives impact on the proverbial bottom line, directly or indirectly – to justify investments in the causes they present to their organisations. The business case here may include an opportunity to access a favour from a powerful actor (e.g. the government or local communities) or even an opportunity to unlock new business deals dressed in the toga of philanthropy. Any project that fails this business case litmus test rarely sees the light of day. CSR managers understand this game and unashamedly stick close to it. Anything short of that is dismissed as theoretically academic or out-rightly naïve. This is usually the case where CSR is mainly seen as voluntary corporate philanthropy – especially in Africa.
…corporate philanthropy is mainly an act of giving back to society at large… Whilst these are laudable corporate activities, they appear to distort the true and broader meaning of CSR. The emphasis on corporate philanthropy gives the broad CSR agenda a poor characterisation and invariably an underserved negative reputation.
In a survey I conducted with some colleagues about 15 years ago (Amaeshi, et al., 2006 ), we found that CSR was largely understood as corporate philanthropy – also known as corporate community investments or corporate giving – in Nigeria; and that understanding persists. As the name suggests, corporate philanthropy is mainly an act of giving back to society at large. This has included donations to schools, hospitals, local communities, prisons and orphanages; construction of roads and decoration of public spaces; economic empowerment and poverty alleviation. Whilst these are laudable corporate activities, they appear to distort the true and broader meaning of CSR. The emphasis on corporate philanthropy gives the broad CSR agenda a poor characterisation and invariably an underserved negative reputation.
The other side of the equation that is not often explored in the CSR debate is the idea that CSR should be a business philosophy, which takes the private governance of externalities seriously. Externalities here connote the positive and negative impacts arising from corporate entrepreneurial activities that are borne by some third parties who are unconnected to the business. This could be at the production, sale or consumption points.
A good example of a negative externality is the pollution arising from a production plant, which causes some health hazards to residents not involved in the business transaction. Another negative externality could be the impacts of binge drinking on society, which is not factored-in in the production and sales costs of alcohol products. In such instances, the social costs (including health costs arising from the use of alcoholic products) are borne by society. These negative impacts on society are hardly accounted for in the profit and loss statements of most companies, and neither do they have such in their balance sheets. In other words, the firms have externalised some of their costs by free-riding on some public or common resources.
Other possible negative corporate impacts on society as a whole include: child labour, bribery and corruption, corporate connivance with oppressive government regimes to sell their products and services (companies involved in arms and ammunitions are often accused of such deals), human rights abuses, et cetera.
Agreeably, businesses do not only generate negative impacts. They also create many positive externalities, which include jobs, tax contributions, contributions to economic development, and investments in human capital development, production of quality goods and services, profits, et cetera. In some cases, firms voluntarily incur some extra costs to go beyond the minimum expected by regulation or fill public service gaps to provide education and other social infrastructure through philanthropic or other citizenship activities.
…corporate social responsibility, as corporate philanthropy, needs to become collective or collaborative social responsibility, where businesses will need to work with each other, and other possible partners, to addresses the weaknesses in the system.
Traditionally, the burden of governing corporate externalities has always been borne by the state. In order to curtail negative externalities, the state uses such regulatory mechanisms as taxes, subsidies and quotas. But institutions in many African countries are weak, hence the inefficiencies in the system. A classic case is the apparent revelation of the poor health system in many African countries, in the evolving face of COVID-19. As the rich and poor confront their common demons, it makes much sense to now appreciate that we are all victims of the system. Unsurprisingly, these institutions need to be strengthened; and this is where true CSR comes in. This will require more than isolated corporate initiatives. It will require collective action.
Post-COVID-19 CSR will need to be radically different. It should focus on addressing the root causes of many of the inefficiencies in Africa, which are strongly linked to bad governance and weak institutions. To meet this goal, corporate social responsibility, as corporate philanthropy, needs to become collective or collaborative social responsibility, where businesses will need to work with each other, and other possible partners, to addresses the weaknesses in the system.
In my opinion, the focus should primarily be on strengthening the public service in most African countries to function effectively and efficiently. For example, instead of a business building a local school without teachers alone, businesses in a region can pull resources together to support the ministry of education to do its job. The same applies to health and other issues. This will surely require a new mindset and competence.
From experience, one of the things that has stood in the way of collective action is the zealousness to protect corporate brands, as well as extract reputational value from traditional corporate philanthropic initiatives. Businesses will have to learn to overcome this challenge and find new ways of extracting value from collective or collaborative social responsibility.
By implication, the dominant view of CSR as corporate philanthropy amongst most African businesses needs to be seriously challenged. And there is no better time to do that than now. The crisis should not be allowed to waste, as they say!
Kenneth Amaeshi is a public philosopher and professor of business and sustainable development at the University of Edinburgh Business School. He tweets @kenamaeshi and can be reached on firstname.lastname@example.org