From South Africa With Love Exporting Corporate Social Investment

funding donors CSI CSR
Wednesday, 31 August, 2011 - 09:29

South African companies continue to invest in neighbouring countries, especially after 1994. However, they are not doing enough to uplift communities through their corporate social investment initiatives. 

From 1994 to 2008, the trade of South Africa with the rest of Africa experienced a rapid and major growth, but little is known about the extent of the social responsibilities and investments of large South African companies in host African countries. Human Sciences Research Council’s Diana Sanchez reports on some preliminary research on the social investment approach of five large South African companies operating in Swaziland and other countries in the Southern African Development Community region.

In Swaziland, as in other neighbouring countries, South Africa has exercised a long-standing economic footprint and is the leading investor, particularly through medium-sized investments.

The primary position of South African capital in this economy is especially visible in the far and wide presence of South African supermarkets, fast-food stores, banks and cellular service providers. Not surprisingly, this has resulted in some describing Swaziland as a periphery of the South African economy.

While South Africa is increasingly playing a vital role in many African economies, and South African companies subscribe to corporate social responsibility (CSR) codes, little is actually known about the extent of the social responsibilities and investments of large South African companies in host African countries.

As pressures arise worldwide for companies to behave in a socially responsible manner, new studies of such behaviour are likely to be launched. These studies will usefully consider some variables in how companies are, for instance, designing and implementing CSR and corporate social investment (CSI) initiatives on the African continent.

In an effort to start filling this knowledge gap, the South Africa in Africa (SAiA) project, with the support of the RLF, conducted some preliminary research on the social investment approaches of five large South African companies operating in Swaziland and other countries in the region.

While assessing the real impact of the CSI initiatives of these companies was beyond the scope of this study, a central concern driving the research was to unveil whether companies that have highly structured CSI programmes in South Africa are applying a similar approach to their African operations.

To shed some light on this subject, the CSI and African expansion experiences of FNB, MTN, Pick n Pay, Sun International and Standard Bank were analysed. Data was primarily collected through interviews with managers of these companies in both countries.

Long-term vision needed

In post-apartheid South Africa, companies have been expected to assist with the social transformation of the country, behave in a socially responsible way and invest in the country’s social development. Thus, CSI has become a distinct concept which is broadly used to describe the social spending and role of companies in communities. While most South African companies started some sort of CSI programmes to support community initiatives in the mid 1980s, the establishment of similar initiatives in their African operations has not been a straightforward process. On the whole, a comparative analysis of the CSI approaches of these companies in South Africa and Swaziland illustrates a number of things that are relevant to debates on the role of the private sector in African development.

Firstly, preliminary findings indicate that, in contrast to South Africa, in Swaziland and else-where in Africa, CSI seems to be limited to charity or loose social spending aimed at positioning the company within a market, but without a long-term vision. Indeed, while most companies in Swaziland embrace the South African CSI discourse, which is highly structured, interventions are mainly short-term and primarily aimed at improving companies’ brands and relations with consumers, employees or communities.

Secondly, the experiences of these companies indicate that CSI is likely to be more structured in contexts where both regulation and market forces impel companies to behave in a socially responsible manner. Therefore, even if all of these companies have structured CSI policies and approaches to social investment within South Africa, this was not the case in their other African operations.

Within South Africa, with the pressures for a socially-engaged private sector, companies have found in CSI a useful tool to be perceived as socially responsible while also benefitting from this.

By contrast, in Swaziland and the rest of the continent, where pressures through regulations or market forces are not explicit, companies limit themselves to a basic social spending approach.

The study also suggests that companies with highly centralised business structures seem to be better positioned to advance long-term CSI interventions, and that aligning CSI to the core business facilitates the promotion of social spending within companies.

The experience of Standard Bank, which follows a distinctive business approach to CSI, is illustrative of these findings. Indeed, the bank stands out from the other companies for its CSI business discourse, long-term CSI goals and for clearly integrating CSI as part of its business strategy in South Africa.

This approach has seemingly encouraged the ‘buy-in’ from managers and executive boards, who are ultimately the ones driving CSI.

Furthermore, as the bank was the only company that reported to be moving towards a global approach to CSI, it seems that the application of CSI principles and structures beyond South Africa is largely linked to this instrumental approach to social investing.

Standard Bank is already taking steps to apply the same CSI policy in Swaziland and the rest of the continent, and this seems to be driven by its interest in positioning the bank in emerging markets like Africa and using CSI as an important element of this process.

Companies must be more socially aware

Findings also suggest that even if there was an interest in exporting CSI to African operations, companies with a decentralised business model (like Pick n Pay and FNB) are in a weaker position to influence the CSI agenda of their subsidiaries or franchises on the continent.

In general, it seems that structured CSI approaches in the South African style are only likely to be exported to African operations when this makes business sense, when market expectations are pushing the CSI agenda, and when the business model and structures are conducive.

Therefore, expectations of South African companies to apply similar CSI approaches when expanding into Africa are not likely to be fulfilled in the forthcoming future.

However, the CSI experiences of these companies in Swaziland illustrate that the very existence of a CSI discourse (which is government- and consumer-driven) is helping to infuse some sort of social awareness in companies.

Therefore, in Swaziland, and perhaps on the continent at large, the arrival of this South African discourse has seemingly pushed CSI higher up on the corporate agenda as managers perceive the benefits of being active CSI players and are trying to align their local programmes to the South African style.

While the highly instrumental approach to CSI followed within South Africa needs to be revisited, and the actual impact of CSI programmes remains an unexplored area, placing CSI high on the African corporate agenda is creating some social awareness within companies and this is on its own a positive development.

On the whole, while this study sheds some light on this subject, it has underscored the need for further research on the broader elements influencing the potential developmental role of the private sector in societies, as well as the need to carefully look at the social and cultural impact of South African investments in African societies.

- Diana Sanchez is a researcher in the Democracy and Governance Research Programme at the Human Sciences Research Council. This article appeared in the Human Sciences Research Council (HSRC) Review - Volume 9 - No. 2 - June 2011. It is republished here with the permission of the HSRC

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