CORPORATE SOCIAL RESPONSIBILITY IN TANZANIA

By Ben K. Gwamaka – Art in Tanzania internship

Introduction: Corporate Social Responsibility in Tanzania:

•           Corporate social responsibility (CSR) is a topic of increasing importance in studies of business operations, not only in developed countries but also in developing countries.

•           In Tanzania, Corporate Social Responsibility (CSR) is widely understood as philanthropy (doing well with part of the profit) and thus refers to charitable community support projects in most cases.

•           In the contemporary global business environment, CSR generally refers to sustainable business performance, i.e., the principal to generate profit itself in a socially and environmentally responsible way. Community involvement and development is part of this, but other aspects such as labor practices/human rights, environmental friendly production methods and fair and transparent operating practices are equally important.

•           CSR serves as an important strategy in which a modern business is built. We hear that big companies are adopting more communally accountable behavior towards their environment, i.e., the society at large. Firms should sometimes engage in activities that benefit employees, suppliers, customers and society at large, even if those activities reduce the present value of the cash flows generated by the firm.

Positive impacts of implementing CSR in corporations:

• CSR assists the business in adapting to its business environment and other surrounding changes. These changes incorporate CSR-related business drivers and risks, such as socio-economic paths, eco-technological innovations, consumer and NGO pressures, and internet-fuelled awareness of CSR issues amongst mass populations worldwide.
• CSR offers partnering, networking and coalition-building advantages for business. This includes relationship-developing, trust enhancing and expertise-sharing business advantages through participation in cross-sectoral multi-stakeholder initiatives involving governments, NGOs and business.

• Meeting employee and customer needs has multiple business benefits, such as attracting and retaining good employees and customers, developing customer brand awareness and loyalty, and broadening management and staff perspectives and expertise.
• CSR can also be aimed at improving governmental, regulatory and community relations, as a means of forestalling societal demands for extra business regulation as well as securing political and legal advantages over competitors. This includes enhancing links with local communities and governments in home and host countries of operations, and building community trust and goodwill, both generally and with a view to facilitating community support for particular business activities.
• As corporate reputation and brands are increasingly affected by external assessments from shareholder representatives, investment institutions and analysts, corporate ratings and advisory bodies, and NGOs, another benefit for business lies in meeting CSR-related investment decision-making, project financing, corporate rating and public interest criteria.

Challenges that are faced by the companies in the implementation of CSR:

• Management of Funds

The companies have been experiencing mismanagement of funds of the funded projects, especially when local contractors are hired. This is due to the fact that many contractors take it that the donor is a multinational company and hence refunding is easy since the company has a lot of capital.

• District Contribution

The companies have been experiencing little support, especially in project inspections as it is taken for granted that since the company funds the projects, the company has enough to spend and refund the projects, and hence that is taken as a chance to save money for these districts.

• Financial borrowing institutions

The companies noticed that the established small scale borrowing from financial centers (VICOBAs), suffer from non-return of finances on a timely basis and some suffer from no return. This is due to the fact that many borrowers from these communities have a perception that the money is a giveaway charity.

• Parents’ support

 The companies have been experiencing a decline in class performance of the sponsored students due to very little support from the sponsored students‟ parents. This is due to the fact that the parents alienate themselves from their previous supervisory roles and leave most of the load to be carried by the company.

• Dishonesty and corruption

The company has been experiencing a number of tenders and projects being awarded to local contractors and service suppliers on the basis of corruption (10% kickbacks) and this has resulted in a number of projects being substandard as there is a close conspiracy between the District Executives and the Local Contractors.

• Construction works

The company has been experiencing a number of constructions based on community projects being overpriced by the local engineers, and some of the buildings have not been up to standard

Measures taken to overcome the challenges:

After the companies faced a number of challenges in the implementation of its CSR, it came up with a number of solutions to the challenges to make sure that their strategy becomes more successful.

• Educational training to the small-scale borrowers.

The companies managed to avoid the challenge of non-return of borrowed money from the “VICOBAs” by facilitating training and providing facilitation to seminars to these borrowers on the proper management of money and profit and avoided giving them direct money as they did previously.

• On the Construction works

As the companies have been experiencing a number of construction works not being up to standard, it has come up with a solution of inspecting these community development construction based projects through hiring independent engineers to carry out an inspection and also using their own engineers to get a report on the quality and standard of the projects.

Possibility of Missed Opportunities if there was no CSR in the Companies:

The companies would have missed a number of opportunities had there been no CSR in their company, which includes the following

1. Environmental Improvement.

In 2013 and 2014, the groups and projects that were funded by the companies to create environmental awareness and conservation wouldn’t have been there, and as a result, there would probably have been more environmental related cases resulting from degradation, pollution and lack of environmental awareness education.

2. Poverty reduction

 Had the companies lacked a CSR policy, it would have missed the opportunity of lifting up the livelihoods of the people who live in the communities where the companies conduct their business.

3. Health Service Improvement

Had the companies not had a CSR policy; the marginalized communities would have had a health crisis that could have resulted to an increase in mother to child deaths.

4. Education improvement

A number of schools wouldn’t have been renovated, constructed and students wouldn’t have been given scholarships, and this would have resulted in a decline in education in the communities that were once regarded as marginalized.

5. Employment of Locals

The locals that have been employed to work in the companies and in the projects carried out under the name of “Community Development Projects” wouldn’t have been created and their livelihood wouldn’t have been improved.

Conclusion:

• The fact that national and multinational companies determine strong impacts on society and the environment implies that they must consider the sustainability of their business approaches. In the present scenario, customers and other stakeholders are increasingly responsible and sensible toward environmental and social issues and so take greater account of sustainability concerns in their purchase choices. In order to establish long lasting relationships with their stakeholders in general and their customers in particular, companies must interpret and manage the growing stakeholder awareness and align business activities accordingly. Thus, it is important for companies to compare their declared CSR commitment to the degree of CSR efforts that customers (or other stakeholders) perceive and expect from the company.

References:

• Abdellatif, M., & Othman, A. (2011). Partnership for integrating the corporate social responsibility of project stakeholders towards affordable housing development: A South Africa perspective. Journal of Engineering and Technology, 9(3), 273–2
• United Republic of Tanzania. (2009). Review of productivity and competitiveness profiles of the sector across productive sectors in Tanzania. Dodoma, TZ: President’s Office Planning Commission.
• Anwar, F. (2013), Corporate Social Responsibility: Profiting with Conscience, http://csrc.org.pk/wp-content/uploads/2011/08/csr-profiting-withconscience.pdf retrieved on Wednesday, 28 February 2013