Corporate Social Responsibility in the African Context: Interest in African Energy Resources Used to Focus Almost Entirely on North and West African Oil, but While Oil Still Attracts the Lion's Share of Investment, Natural Gas Is Steadily Catching Up in Terms of Importance. Neil Ford Reports

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Corporate social responsibility is not a term which resonates in much of Africa. Encouraging the growth of African companies and creating employment can be difficult enough without placing any restrictions on the approach of business. Yet despite the need to encourage foreign direct investment (FDI) and local enterprise, it would be wholly wrong to promote Africa as the bargain basement of the international political economy, where companies can set up inefficient operations, pay low wages and pay little heed to the social and environmental impact of their actions.

Corporations, therefore, need to be held to account for the wider impact of their operations by governments, civil society and the international community. It is simply not good enough to measure their contribution to GDP and other raw economic data when their effect on the societies within which they operate is so much greater.

It may be something of a vague term, that means everything and nothing, but corporate social responsibility, or CSR as it is sometimes known, is the umbrella term that has been designed to highlight such responsibilities.

In brief, CSR can be explained as a combination of sustainable development and treating employees and the society within which companies operate with respect. The environmental impact of any economic activity should be weighed against the economic benefit and any measures that could mitigate the negative impact should be taken if they are at all economically feasible.

At the same time, workers should be entitled to fair and reasonable treatment at work, a fair wage for the job under-taken within the local market and minimum health and welfare benefits.

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In practice, however, it is very difficult to separate environmental and social factors. For example, various international companies, including oil firms, have been criticised for the impact that their operations have had on local Africa communities.

The problems of the Niger Delta in Nigeria have been well documented in this magazine as elsewhere: vast natural wealth is being tapped for profit but local people have seen little benefit from the industry, although an environmental legacy has been left in the form of water and land pollution.

At the same time, the contrast between wealth and poverty has helped to create a backdrop against which corruption, crime and social unrest has been able to flourish. This has been demonstrated most starkly over the past 18 months by the spate of hostage taking and armed activity in the Niger Delta, although the underlining causes have been plain to see for many years.

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Many companies respond to criticism of their activities by setting up philanthropic schemes to provide money and equipment for schools, medical services, water supplies or power sector infrastructure in the areas where they operate.

Yet such an approach can also have detrimental affects, as evidenced by the history of the Niger Delta, where some ethnic groups have been favoured more than others from such funding sources. This creates resentment and can encourage some groups to increase the intensity of their protests against oil industry operations in order to gain financial support.

This approach could also be regarded as a form of bribery rather than a serious attempt to tackle the social and environmental problems of the Delta.

Some argue that CSR should not be an important consideration for investors or companies. Madsen Pirie of the Adam Smith Institute in the UK says: "CSR may make a firm's directors feel good to give money to local charities, but a company's responsibility should be increasing profits and adding to a nation's wealth."

However, this appears to be a minority view as the concept of CSR has taken hold globally and so the concept is likely to become of increasing importance within the African continent. …