Divergent views in debate over relevance of CSR

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By Princewill Ekwujuru

The practice where Nigerian companies spend  billions of naira as Corporate Social Responsibility (CSR)    to   impact on their operating    communities has elicited divergent views from stakeholders and marketing experts.

The World Bank defined CSR, as the commitment of business to contribute to sustainable economic development, working with employees, their families, the local community and society at large to improve their quality of life, in ways that are both good for business and good for development.

However, shareholders and CSR experts, who spoke to Vanguard  Companies and Markets, expressed divergent  views on whether businesses should be involved in CSR.

While    stakeholders  argue that CSR is a distraction from    the major objective for engaging in business, which    is to make profit. Marketing experts however stressed the importance of CSR in uplifting welfare of the people in the host communities especially in a developing country like Nigeria.

They stated that in their pursuit of CSR initiatives, companies sometimes neglect other business objectives such as customer satisfaction, high quality products and service delivery.

The  stakeholders complained that  CSR which incidentally contradicts the primary objectives of the business, affects the profit of the companies.

Some of the stakeholders said that CSR reduces the profits earned by the firms, with no tangible contribution from the communities towards the production of goods and services.

Others say it reduces the dividends due to investors, profit sharing and salaries to staff, tax to government and remuneration to directors and other stakeholders.

Furthermore, consumers believe that businesses after discharging their social responsibility tend to recover what they paid by inflating sales prices. In so doing, the incidence of such cost is borne by the host communities if they buy the products.

C&M   also observed that social responsiveness of businesses to communities in which they operate has led governments of some countries  (Nigeria not included) to  make it mandatory by an extant law that one percent of the profit realized by the business is ploughed back into the communities to enhance the living condition of the people.

The non existence of this law in Nigeria has been the reason advanced by some of the stakeholders who said it is not obligatory for firms to spend such huge amount on CSR.

It is in this regard C&M  examined the relevance of CSR of businesses in the modern economy generally and in particular to developing economy like Nigeria, where basic infrastructural amenities are lacking and the peoples’ welfare and needs are neglected by government and agencies designated for that.

Stakeholders speak

Mr. Akinola Benjamin, a stakeholder, said CSR is affecting tax payment to government and dividend of Shareholders,’ adding    that involvement of companies in CSR is diversionary. “They should face the business of profit making”, he said.

Another stakeholder who simply gave his name as Mr. Udoka, a shareholder in one of the multinationals said that in the international market, with intensive competition, prices are low in countries where social responsibility is non – obligatory and high in countries where it is strictly observed. The effect is that companies operating in countries where it is not observed are  at advantage.

Another stakeholder, Julius Igbalode argued that social responsibility makes a business influential and powerful within the community. With this, he said, “”firms could influence law makers to be lenient on them even if  they violate the laws of the land.”Some stakeholders claim that CSR decreases profits earned by firms, with no tangible contribution of the communities towards the production of goods and services.

Experts’ response

Programme Officer for Integrated  Water Resource Management/Private sector, Eyong Sunday, said: “Every company that is operating in the country in whatever they are doing in terms of profit making should have an impact on the lives of the people.

While shareholders are seen as wealthy, who are empowered, who  have money to invest in communities that are highly vulnerable,  people who lack basic   infrastructure, people who do not have access to government presence,    these companies through corporate share responsibility try to reach out to   provide succor. For example, the kind of partnership Oxfam is having with Guinness is in    position of access to water which you know will impact the lives of ordinary Nigerians.

The government in impacting the lives of Nigerians cannot do everything, the government right now  is not able to do anything talk less  of helping the people. So when these organisations come up to invest part of the profit they make in impacting the lives of Nigerians,    it should be something that they should be encouraged to do rather than saying it affects their dividend earnings and profit sharing.

The stakeholders have right to their investment. The companies also can look beyond the stakeholders  and say  we have collected so much from the people we have to give back, the monies they are getting, they are not getting it from the shareholders, they get it from the generality of the people who patronize them, beyond giving to the shareholders, if the company has a mind of giving out to people who are impoverished, helpless, I think it is a good step in a right direction.”

Timothy Adesiyan, President, Nigeria Shareholders Solidarity Association, NSSA, said: “CSR should not be stopped.   It is something that fuels the relationship between the company and the local people so that the local people just don’t see the companies as just taking goods from their soil without giving back to them.   It is the only way they can get close to the people.

For example, some companies rebuild or build schools for communities where they operate. Some even give the communities part of the electricity they use.   Should that stop.?

Some of this companies go as far as constructing boreholes to provide water for the communities and when the communities see this kind of thing they laud the companies  and co-operate with them  along some other areas. For instance, the communities help arrest youth restiveness, because the elders in the community will educate the youths on why the company should not be disturbed.

Let me give example of Lafarge, in Ewekoro, it assisted them with electricity and water. I am opposed to people who said companies should not undertake CSR, they  just want to create problems. There will be hostility if the people do not have the feeling. Look at Ashaka cement for instance, the people mine the stones in Ashaka to produce cement, should they (Ashaka) be taking all the profits like that without giving back. Ashaka has been building schools and providing facilities;    they are partners in progress.

“A vast majority of business social responsibility contributions are targeted towards community development. The developed community generates growth and commerce thereby creating need for commodities produced by businesses and so it turns the process into a virtuous circle, according to Mike Uwandu a marketing expert with WideZone Marketing.

According to  Igbokwe Ahurunwa, a business analyst with O’farm Industries Limited, Lagos, “As soon as a big firm is cited within a locality, good roads are built to ensure that their products enter the market without obstruction.

Imperatively, the new firm comes in with electricity usually as source of power for the operation of the machines. In addition to all these developmental projects, the community expects donations, cash and others as voluntary support to assist the growing village. While these grants and donations are not mandatory, they all have moral backing from the government.”

Continuing he stated: “In this process, businesses partner with government to provide essential infrastructural amenities necessary for industrialization.

By so doing, business operation is facilitated and the welfare of the people is up lifted. It is established that most successful businesses in Nigeria like banks and multinationals perform their annual social corporate responsibilities.”

His words: “This practice is considered necessary especially in developing economies like Nigeria where despite the lengthy years the country has spent as an independent nation, it still struggles to survive through industrialization and many are still living in abject poverty without good drinking water, electricity, good roads and other good things that make life comfortable.”

Analysis by C&M showed that the Coca Cola Foundation which was established in 1984, has given back over $820 million to enhance sustainability of local communities worldwide. The company says it’s committed to giving back one percent of her annual operating income.

On its part, Nigeria Breweries Plc, established an education trust fund with a take-off grant of N100 million, to fund educational and research activities in higher institutions of learning. Aside education, it supports sports programs.

Unilever Nigeria Plc is engaged in women empowerment, and education. It has made a quantifiable contribution to health, education, sports, children welfare, portable water and sanitation, and reached over 25 million Nigerians.

The oil and gas sector has been among the leading industries in championing CSR.  Global spending by oil and gas and mining companies on community development programs was estimated at over $500miliion in 2001, but the figure is certainly much higher today.

Businesses are established to make profit in other to survive and expand, its continuity is a matter of concern to the government, because government is interested in job creation and tax realization from the businesses.

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