Speeches

International Conference On Corporate Social Responsibility: CSR For Sustainable Development In Sub-Saharan Africa

Dec 13, 2011 - I am much delighted to be part of this unique gathering. I must therefore start by thanking the duo of University of Lagos and Kansas State University for inviting me. I consider the gathering unique and delightful for two main reasons.

First, it is a collaborative effort of two universities, one based in Africa and the other in America.

Considering the growing disparity between the two settings, in terms of funding, infrastructure, equipment and other educational facilities, I think collaborative efforts, such as this, are a necessary pre-condition for the restoration of balance and spread in academic endeavours, which are essential factors for the well-being and advancement of civilisation.

In my view, the scope, depth, validity and utility of learning in all fields are largely enhanced by the extent of geographical coverage and the disparity of phenomena which are studied, compared and concluded upon.

In other words, I am convinced that the advancement of human society will be more rapidly and evenly achieved if, by working together in this way, all regions of the world attain fairly commensurate facilities and opportunities for research and development. Civilisation will surely be richer and more sustainable when the efforts that keep it going are evenly undertaken across the world.

The second reason for my delight is the chosen theme of this event: 'Corporate Social Responsibility (CSR) for sustainable development in Sub-saharan Africa.' By adopting this theme, you promote a very positive, even indispensable, force for development in all parts of the world, most especially in sub-saharan Africa.

If we take education as an example, much reliance is placed on the public purse which, unfortunately, does not contain enough to cater for various competing needs. Also, unemployment, underemployment and low wage levels, all of which are quite prevalent in sub-saharan Africa, make it difficult or impossible for a large segment of the society to pay for the education of its children.

As a result, governments struggle along, quite unsuccessfully, to shoulder the burden and we see a gradual and depressing degradation of our educational institutions. Undoubtedly, education is key to social and economic development.

Thus the degradation I speak of is indeed depressing, not only of spirit but also of our socio-economy circumstances.

For this and other reasons I will presently elaborate upon, CSR offers a very vital and viable option for reversing the disturbing trends, especially if we consider its acclaimed accomplishments and role in other societies.

The goals of this conference, 'to raise awareness of CSR in Nigeria, to provide a forum for dialogue and current research and to promote the role and knowledge of private, public and academic enterprises on effective CSR practices' are therefore goals to which I whole heartedly subscribe.

CSR is itself a controversial subject, especially in Nigeria where an attempt was recently made in the National Assembly to make it a legal obligation.

This approach may have stemmed from the misconceived notion that CSR starts and stops with a company donating to good causes or making money available for the development of its immediate or extended community.

Regarded in this way, CSR becomes at best an additional tax or an act of self-promoting philanthropy. It appears more or less as a tool for propagating the company's image and developing its market, obviously with a view to boosting its business prosperity.

In my view, this unfortunate trend is, in fact, a corruption of the concept or, to put it mildly, a deviation from the intended purpose of CSR. It limits CSR to a system whereby companies work with local communities to better themselves.

In its original conception, to which I would urge a return, CSR connotes corporate conscience, corporate citizenship, or doing business in a wholesome, responsible and sustainable way.

It expects of companies the same sense of civic responsibility or community as is expected of an ideal member of the human society.

As stated by the Department of Trade and Industry in the U.K., CSR represents "the integrity with which a company governs itself, fulfils its mission, lives by its values, engages with stakeholders, measures its impact and reports its activities."

Thus, a good CSR policy should compel businesses to comply with the letter and spirit of the law, to adopt fair trading practices, and generally to maintain high ethical standards in their relationships with shareholders and the general public in accordance with accepted norms.

For every corporate organisation, CSR should be an in-built mechanism that moderates business practices and shuts out the notion of profits at all costs. This is what gave rise to the view that CSR distracts from the economic role of business, but I think a closer look will reveal that it does not.

Indeed, I believe that any Chief Executive of a business who intends to prosper must pay the same if not a higher level of attention to its CSR compliance as he does to the company's balance sheet.

In reviewing the concept of CSR, especially in this part of the world, I think the overarching thought should be that companies must be just before they are generous.

For instance, a company must first pay its due taxes before venturing to philanthropy. No amount of voluntary community service should properly replace statutory tax obligations.

Thus, CSR should not be a means of assuaging the conscience or looking good in the society, while the corporate donor is busy filing false accounting returns.

A flurry of so called CSR activities would certainly not do, when the same company is killing or harming the people through uncontrolled pollution or substandard products.

This observation alerts us to the fact that destructive and unethical practices are not incompatible with public philanthropy or the so called good causes.

The importance of this requirement and the need to pay attention to CSR as is done to the balance sheet is that to do otherwise and prosper through sharp or unethical practices only serve to erode the growth of the community in which the business prospers.

Ultimately, the market is damaged, prosperity is reduced and business growth is diminished.

Our experiences during the era of Finance Houses, improperly regulated stock trading all point to a subsequent diminution in business share, economic growth and job losses in which we are all collectively poorer.

Following from this, we must, at gatherings like this find ways of purifying the concept of CSR and preserving its use exclusively for wholesomely good business practices that impact positively on the host community.

I speak only of actions that further some social good even beyond the interests of the firm and the requirements of the law.

In a community like ours where poverty and unemployment are big issues, it will take vigilance on the part of all regulatory and law enforcement agencies, the press, civil society organisations and indeed the general public to draw this distinction between CSR and mere advertisement.

Where companies are obviously unwilling to make the necessary trade-offs between short term profitability and social or environmental goals, they should not be allowed to lay claim to CSR.

Governments and its regulatory agencies have perhaps the biggest role in this. We have seen, for instance, that international companies that act ethically in areas that are highly regulated, such as North America, do act in opposite manner in other parts of the world where they bribe officials, use child labour, evade taxes and even produce sub-standard goods. This underscores the role of strict regulatory compliance as a concomitant factor to CSR.

Having said that, I must nevertheless emphasise the importance of CSR in Nigerian communities, especially in a place like Lagos.

For various reasons, tax effort in Africa is very low and Nigeria is no exception. Nigeria's tax to GDP ratio of 6.1% may be compared with UK's 39% and Canada's 33.4%.

Low tax effort impacts negatively on national economic development, because it simply means that the amount available for public spending is much lower than what is required even by the most modest of governments. This situation in turn breeds low economic development, unemployment and even a lower tax effort.

In these circumstances, there is obviously a limit to the tax rate increase or tax collection drive that any government can embark upon. It therefore behoves business organisations to step in by assisting government to cater for their host communities.

In my view, this assistance should stand over and above the existing tax and other statutory or regulatory obligations. I therefore find it very difficult to endorse the notion that CSR should be compelled by law, as that would indeed amount to a stealth tax.

In Lagos State, we have witnessed very laudable CSR efforts in the area of security, with corporate organisations contributing billions to the Security Trust Fund. The Fund has consequently made significant contributions to the reduction of crimes and enhancement of safety in Lagos State.

We have also had similar assistance in the area of education with companies adopting schools and engaging in other types of partnership with government for the construction and equipment of educational institutions.

In the area of healthcare, we have companies making various contributions, like the establishment and equipment of renal care facilities.

Similarly, over the last few years and particularly in the past few weeks, we have seen corporate interventions in road construction which have been most impactful in adding to the efforts we make on a daily basis to reduce the deficit of life sustaining public infrastructure that our economic direly requires.

Activities such as these can only foster a better community and social development which will definitely affect the participating companies positively.

Indeed, there is a sense in which all CSR efforts benefit the participating companies in the, short, medium and long term.

Efforts to combat crime, reduce poverty, promote quality education, create jobs, uplift the host community or protect the environment must indeed benefit the participating companies in some ways.

In a manner of speaking, they are like the quality of mercy; they benefit the giver in much the same way as they benefit the receiver.

At the very minimum, to the extent that those efforts translate to economic development, they give us a society where corporate organisations can thrive progressively and sustain their businesses well into the future.

However, the point must be made that extra statutory efforts should not and must not be taken for granted. The gesture of doing good flows from conviction rather than coercion. Since it is voluntary, CSR may not always appeal to shareholders or company management.

This is especially so when government does not meet public expectations and is perceived as wasteful or non-performing. I would therefore strongly suggest that governments have a big role to play in the promotion of CSR.

If government is seen to be playing its part, despite the obvious constraints of public resources, companies will be more easily persuaded to assist. However, the opposite is assured when people see government as wasteful or imprudent.

If I am permitted to say so, I think the commendable level of CSR initiatives that Lagos has benefitted from must be taken as proof of the perception the Lagos State Government has been seen to play its part and has remained active to its responsibilities.

Distinguished ladies and gentlemen, I look forward to this international gathering of intellectuals elaborating on these and other issues, and pointing us all in the right direction regarding the definition, role and potentials of CSR, especially in the promotion of business ethics, corporate governance, human rights, environmental practices, community development, safety and welfare of workers, etc.

While eagerly awaiting your conclusions and suggestions, I thank you very much for your attention this morning.

Babatunde Raji Fashola, SAN
Governor of Lagos State