Corporate Social Responsibility in Nigeria

Chief Fassy Adetokunboh O Yusuf
Africa Liaison Officer, Corporate Social Responsibility Committee
Chief F A O Yusuf & Co, Lagos
cfaoyusuflaw@yahoo.com

Corporate Social Responsibility (CSR) is a form of self-regulation, conscious attempts and self-efforts undertaken by organisations for self-preservation and enhancement of their operations. CSR is usually integrated into a business model for an organisation to be able to live in harmony with its operating environment. Corporate social responsibility policy functions as a built-in, self-regulating mechanism for a business entity to monitor and ensure its adherence to laws, ethical standards, and norms and nuances of its environment. CSR when proactively undertaken promotes the public interest by encouraging community growth and development, and by voluntarily eliminating practices that harm the public sphere, regardless of legality. It is the deliberate inclusion of public interest into corporate decision-making and the honouring of a triple bottom line known as People, Planet and Profit.

In the interest of its business and its environment, an organisation needs to relate its operations and policies in ways that are mutually beneficial. The models of CSR encourage businesses to actively and voluntarily contribute to community development. An important element of Corporate Social Responsibility in businesses is taking responsibility for its impact on society or their activities on the environment, consumers, employees, communities, stakeholders, and all other members of the public sphere.

Orlitzky, Schmidt and Rynes found a correlation between social/environmental performance and financial performance. A CSR programme can be an aid to recruitment and retention, particularly within the competitive graduate market. CSR also helps to improve the perception of a company among its staff, particularly when employees become involved through donations, fund raising activities, and community volunteering. For global companies or corporations, also known as multinationals, a critical success factor will be to respect other cultures and workforce environments and the formation of a globally acceptable profile of social consciousness. Recognising cultural and ethical differences, vis-à-vis development needs with a sound corporate consciousness that includes the preservation of the environment increases shareholders value, boost employee engagement and increase brand recognition.

The global socio-economic climate has developed an emergent system, which responds to corporate and commercial necessities within a defined state or outside of it. The field of international corporate responsibility has assumed an important subfield of business ethics in response to increasing concerns about the ethical conduct of international businesses. It includes business conduct for multinational enterprises, corporate responsibility and environmental issues in developing economies.

The recurring demand is that multinationals that site operational companies within communities outside their home base should not operate below the standards set by the authorities of their parent companies, and should ordinarily have conducted research and investigations of the needs of the host communities. This issue goes beyond extending humanitarian assistance or the establishment of resource centres in those communities.

The foregoing brings to the fore, Corporate Social Responsibility in Nigeria vis-à-vis the CSR Bill before the National Assembly. The most active sector in Nigeria is the oil industry and it is where the Nigerian Government derives over 70 per cent of its revenue. The Nigerian oil sector is dominated by big players such as Shell, Chevron-Texaco, Exxon Mobil, and Agip that have extended business interests across the seas into the geographic confines of the country. While the Nigerian state has a strong challenge of abuses of rights by multinational corporations over the years, recent interventions by international advocacy groups and the unrelenting struggles of victims of the operations of these oil companies are making them to be more socially responsible. This of course is still not within the acceptable range. The environmental protection laws have been largely neglected as government lacks the political will to enforce its own laws.

Many companies operating in Nigeria argue that they perform better in their responsibilities to the society and that government should gather its loins to perform optimally. They contend that it is the failure of government to discharge its responsibilities that have made the various communities to be turning the heat on them.

The discourse on corporate social responsibility raises the question of how social performance can be evaluated. A social impact assessment is a reasonable yardstick. It consists of a regular, independent, systematic, documented and objective evaluation of the environment performance of an organisation. It is imperative however to have these procedures not only on paper but transparently undertaken.

The perceived infrastructural dearth and inequities in the Niger Delta prompted government to establish the Niger Delta Development Commission (NDDC) and recently the Niger Delta Ministry to cater for the needs of the Niger Delta Area. Established in 2000, NDDC was to facilitate ‘the rapid, even, and sustainable development of the Niger Delta into a region that is economically prosperous, socially stable, ecologically regenerative and politically peaceful’. The performance of NDDC to many observers is conjectural, and cynics and sceptics are not willing to give the new Ministry of the Niger Delta a chance as it is seen as one agency too many.

While the struggles of the freedom fighters cum militants, and those agitating for resource control in the spirit and letters of Federalism expose the region as the hottest battlefield in the country, it has succeeded in crippling the economic expectations from oil sales in the face of daunting global challenges.

In the midst of the cacophonous buck-passing, a Bill on Corporate Social Responsibility is now before the National Assembly. The Bill is for an Act to create the Corporate Social Responsibility Commission, which will be charged with providing standards, integration of social responsibility, and international trade issues. The bill seeks to establish a supervisory organ that will mandate corporations and companies to spend 3.5 per cent of their profit before tax on Corporate Social Responsibility (CSR).

The role of the Commission will include:

• publishing the annual report of the social and environmental impact of the activities of firms;
• developing policies to encourage corporate organisations to undertake community engagement as part of CSR;
• ensuring that companies sponsor cultural and educational activities that offer added value to Nigeria’s socio-political and technological development;
• promoting statutory labour standards and collective social governance in the context of globalisation; and
• ensuring that companies are accountable not only to employees and their trade unions but also to investors, consumers, host communities and to the wider environment.

Nigeria is in dire need of development. Most of its public infrastructure is collapsing. The business climate is inclement and many business entities are going under. Many companies are relocating to outside of Nigeria. With an array of graft agencies, one would think corruption and nepotism would be at their lowest ebb. Unfortunately, corruption, tribalism, and electoral malpractices are now systemic. So it is vital that the contributions of companies which would be strategic to the growth of the society are encouraged. Thus, social, economic and environmental progress should be the panacea and expectation when companies are sited in a defined location.

However, the prospective and sensitive business climate of Nigeria currently does not permit companies to accede to the compulsory remittance of 3.5 per cent of profit to the authorities for social development. It is contended that if companies are to contribute to the community, it should be from the voluntary spirit of benevolence and philanthropy.

In fact many policy analysts are concerned about the extent to which a new CSR law would actually change lives in the communities in which the companies operate. Unless there is a radical regeneration of the society and a social rebirth, the law if passed and assented will soon become unenforceable. The issues include the practicability and enforcement of such a law, the creation of another avenue for corruption, and has any other country put in place the type of CSR law Nigeria is contemplating. It is also believed that such a law may detract from the real issues at hand since companies have practised CSR for years but still problems are rampant not only in the Niger Delta area but in every part of the country.

While government is expected to make laws for the good governance of the society, it appears to this writer that the CSR bill contradicts the whole notion and concept of CSR. CSR is enlightened self-interest. Government should enforce the existing laws on taxation, management of resources, anti-graft, and plug leakages. Above all, government should fix all the infrastructures including energy, roads, rail system, waterways, and social services (education, security, unemployment, housing, and agriculture). It is doubtful if an enactment on CSR will achieve the purpose being canvassed. There is the likelihood of more companies moving out of Nigeria if CSR law becomes a fait accompli. Instead, an establishment that functions in an advisory capacity will achieve much more than an explicit legislation. A law on CSR negates its voluntary spirit.

If government is looking for ways to improve CSR activities in Nigeria, it could do so through policies, persuasion and complementary activities. The addition of CSR tax to profit tax, education tax and VAT will be most damaging to business interest. As the CSR bill continues to make progress through the National Assembly, corporate Nigeria may remain sceptical of its real value.

Corporate Social Responsibility is in the interest of every business entity, but Nigeria should approach it in the context of global practices.