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Opinion & Analysis

Why every firm should give back to community

Safaricom CEO Bob Collymore drinks from a tap as Shofco founder Kennedy Odede watches when they unveiled a partnership  to expand water piping in Kibera in 2016. Safaricom spent Sh2.3 billion on charities last year. PHOTO | DIANA NGILA
Safaricom CEO Bob Collymore drinks from a tap as Shofco founder Kennedy Odede watches when they unveiled a partnership to expand water piping in Kibera in 2016. Safaricom spent Sh2.3 billion on charities last year. PHOTO | DIANA NGILA 

In 1970, the economist and Nobel Laureate Milton Friedman called corporate social responsibility (CSR) “hypocritical window dressing” saying that business people inclined toward it “reveal a suicidal impulse”. He was dead wrong.

These days not only are CSRs acceptable, they are indispensable to doing good business. Thankfully, a staggering number of local companies have embraced this new world order; capitalism with a soul.

Last year, top seven listed companies by market capitalisation (61 per cent of market cap) gave a total of Sh3 billion or an equivalent of 0.45 per cent of their total revenues to charity. At the top, Safaricom #ticker:SCOM led both in percentage terms (1.18 per cent of its total revenue) and in hard figures (Sh2.3 billion). Bravo.

That said, much can be talked about today’s corporate philanthropy. It may seem the giving by most corporates is becoming both more strategic and more self-interested. But who am I to judge any corporates intentions? So, far from its variation of shade, in today’s article, I only seek to give philanthropy a good push. And here’s why and how more Kenyan companies should contribute more. 

To address the why, it’s pretty obvious. Kenya is a highly unequal society. Recently, the Human Development Index (HDI) 2016 ranked the country at position 146 out of 188 countries – one position above countries categorised under the low human development bucket. Nationally, 42.5 per cent of the population lives below the poverty line (2009 estimates).

Further, statistics indicate that 38 per cent of the wealth remains in the hands of 10 per cent of the population, leaving 90 per cent of the citizens to share out the rest.

The poorest 10 per cent of the population control only 1.8 per cent of the national wealth. For these reasons, giving back to communities is not only good corporate citizenship, it’s an important undertaking in rebalancing the “wealth equation”.

On the how, companies can stick to the proven model – take a cut out of annual earnings and give to chosen projects.

But philanthropy can only be firmly institutionalised if it’s part of companies’ strategic plans. Big-picture issues such as job creation, healthcare, education, housing and environment can form part of these long-term plans.

For some, this may force a re-conception of what business really is – a company may need not to be profitable to be benevolent. Others may be forced to experiment and innovate. Imagine banks with credit policies debt-forgiving 3 per cent of their most vulnerable defaulters? 

Without a doubt, to solve today’s burning issues, corporates may need to act as “closet socialists”. But don’t get me wrong, I love capitalism and free markets.

I believe in capitalism in as much as history has yet to show a more efficient way of allocating resources and rewarding effort.

But to believe only in capitalism as an end-in-itself, is spiritual death. If capitalism is to bring about the aspirations espoused both in our National Anthem – “Plenty be found within our borders” and the Vision 2030 – “A globally competitive and prosperous Kenya”, businesses may need to do more in giving back to the community.

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