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CORPORATE SOCIAL RESPONSIBILITY CORPORATE SOCIAL RESPONSIBILITY

AND SOCIAL POLICY IN ZAMBIAAND SOCIAL POLICY IN ZAMBIA

BY BY

NDANGWA NOYOONDANGWA NOYOO

Presented at the Conference on Business, Presented at the Conference on Business,

Social Policy and Corporate Political Social Policy and Corporate Political

Influence in Developing Countries, 12Influence in Developing Countries, 12--13 13

November, 2007, Geneva, SwitzerlandNovember, 2007, Geneva, Switzerland..

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THE PURPOSE OF THE DISCUSSIONTHE PURPOSE OF THE DISCUSSION

�� This paper maps out corporate social This paper maps out corporate social

responsibility in Zambia since 1964 and responsibility in Zambia since 1964 and

highlights its critical imperatives, under highlights its critical imperatives, under

successive political regimes and ideologies. successive political regimes and ideologies.

�� It also attempts to establish the manner in which It also attempts to establish the manner in which

corporate social responsibility has influenced the corporate social responsibility has influenced the

development of social policy in the country from development of social policy in the country from

the colonial times to the present. the colonial times to the present.

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COLONIAL RULECOLONIAL RULE

�� The driving force behind the colonisation The driving force behind the colonisation

of Zambia was the discovery of mineral of Zambia was the discovery of mineral

wealth, especially copper. The first mineral wealth, especially copper. The first mineral

deposits of copper were discovered in deposits of copper were discovered in

1903.1903.

�� Henceforth, the copper industry would Henceforth, the copper industry would

dominate and define the countrydominate and define the country’’s s

development prospects in years to come.development prospects in years to come.

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�� The mining conglomerates of the Roan Select The mining conglomerates of the Roan Select

Trust (RST) and the AngloTrust (RST) and the Anglo--American American

Corporation (ACC) greatly influenced colonial Corporation (ACC) greatly influenced colonial

social welfare policy by directly investing in social welfare policy by directly investing in

human wellhuman well--being. being.

�� However, However, a welfare system that favoured a welfare system that favoured

persons of European descent over other racial persons of European descent over other racial

groups was in place in colonial Zambia. Racial groups was in place in colonial Zambia. Racial

classification was also designated in the classification was also designated in the

following manner:following manner:

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�� (a) People of mixed(a) People of mixed--race origin or race origin or “Coloureds” were accorded social services “Coloureds” were accorded social services a notch lower than those of Europeans; (b) a notch lower than those of Europeans; (b) Asians or Indians were located below biAsians or Indians were located below bi--racial people; and (c) lastly, on the social racial people; and (c) lastly, on the social ladder were the Africans who received ladder were the Africans who received minimal or no state attention at all. minimal or no state attention at all. Colonial Zambia’s social interaction was Colonial Zambia’s social interaction was premised on the racist settlers’ ideology premised on the racist settlers’ ideology known as the cknown as the colourolour--bar systembar system. .

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�� In this setting, corporate social In this setting, corporate social responsibility had racial biases.responsibility had racial biases. Europeans Europeans had far much better services both in had far much better services both in quality and quantity than their African quality and quantity than their African counterparts. The mines had become counterparts. The mines had become responsible for the provision of housing responsible for the provision of housing and and ““hygienehygiene””. This form of patronage also . This form of patronage also extended to wages and food, various other extended to wages and food, various other social services, recreation clubs and social services, recreation clubs and cinema shows for the workers. cinema shows for the workers.

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POSTPOST--COLONIAL ZAMBIA COLONIAL ZAMBIA –– THE 1960sTHE 1960s

�� In spite of the fact that Zambia was a In spite of the fact that Zambia was a leading copper producer and exporter leading copper producer and exporter -- the the profits were not reprofits were not re--invested into raising the invested into raising the quality of life of Zambians or development quality of life of Zambians or development of infrastructure.of infrastructure.

�� There were high poverty levels at There were high poverty levels at independence and political freedom did independence and political freedom did not initially translate into human wellnot initially translate into human well--being being for the majority of Zambians.for the majority of Zambians.

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�� The government began to tilt the mining The government began to tilt the mining

industry in the favour of development from industry in the favour of development from

the said period. the said period.

�� By 1969, Zambia was classified a middleBy 1969, Zambia was classified a middle--

income country, with one of the highest income country, with one of the highest

GDPs in Africa, three times that of Kenya, GDPs in Africa, three times that of Kenya,

twice that of Egypt, and higher than Brazil, twice that of Egypt, and higher than Brazil,

Malaysia, Turkey and South Korea. Malaysia, Turkey and South Korea.

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�� The new Zambian government had tried to The new Zambian government had tried to convince big business to come to the fold convince big business to come to the fold and be a partner in the development of the and be a partner in the development of the newly independent nation. However, the newly independent nation. However, the mining giants were only interested in mining giants were only interested in expropriating profits overseas.expropriating profits overseas.

�� Consequently, on 19 April 1968Consequently, on 19 April 1968 all all foreign foreign and expatriate enterprises were and expatriate enterprises were nationalised.nationalised.

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STATESTATE--LED CSRLED CSR

�� From 1968From 1968--1991, the state was the key actor in 1991, the state was the key actor in shaping the economic and social development shaping the economic and social development agenda of the country. agenda of the country. Nationalisation of foreign Nationalisation of foreign firms also paved the way for the creation offirms also paved the way for the creation ofparastatalparastatal organisations which became major organisations which became major catalysts in the area of social investment. catalysts in the area of social investment.

�� These organisations were also channels, These organisations were also channels, through which government could begin to through which government could begin to increase the scope of social welfare provision, increase the scope of social welfare provision, raise employment and reorient economic activity raise employment and reorient economic activity in various ways. in various ways.

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�� Firms were compelled by the State to engage in Firms were compelled by the State to engage in

CSR in fundamental ways. CSR was no longer CSR in fundamental ways. CSR was no longer

targeted (i.e. only focusing on employees of targeted (i.e. only focusing on employees of

particular organisations) or particular organisations) or ad hocad hoc, but was , but was

redefined in a more comprehensive way. redefined in a more comprehensive way.

�� From 1973 onwards, the government marshalled From 1973 onwards, the government marshalled

a lot of resources for social investment from the a lot of resources for social investment from the

nationalised mining firms and the newly creatednationalised mining firms and the newly created

parastatalsparastatals. .

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�� In pursuance of the vision of an egalitarian In pursuance of the vision of an egalitarian

society that was guided by Humanism, the society that was guided by Humanism, the

government, invested heavily in education and government, invested heavily in education and

health infrastructure such as the University of health infrastructure such as the University of

Zambia (UNZA), the University Teaching Zambia (UNZA), the University Teaching

Hospital (UTH) and thousands of schools, Hospital (UTH) and thousands of schools,

colleges and district hospitals which did not exist colleges and district hospitals which did not exist

in the colonial era. These facilities opened up in the colonial era. These facilities opened up

sociosocio--economic opportunities for many economic opportunities for many

previously disadvantaged Zambians.previously disadvantaged Zambians.

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�� The mining conglomerate The mining conglomerate -- the Zambia the Zambia Consolidated Copper Mines (ZCCM) Consolidated Copper Mines (ZCCM) –– that that materialised from the nationalisation of the Roan materialised from the nationalisation of the Roan Selection Trust and the AngloSelection Trust and the Anglo--American American Corporation became a major player in CSR in Corporation became a major player in CSR in the country thereafter.the country thereafter.

�� ZCCM mirrored the stateZCCM mirrored the state’’s developmental s developmental philosophy and supplied social amenities much philosophy and supplied social amenities much wider in scope than those offered during the wider in scope than those offered during the colonial period, including free education for colonial period, including free education for minersminers’’ children, alongside subsidised housing children, alongside subsidised housing and food, electricity, water and transport. and food, electricity, water and transport.

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�� ZCCM literally operated a ZCCM literally operated a ““cradle to gravecradle to grave””

welfare policy, even subsidising burial welfare policy, even subsidising burial

arrangements for the deadarrangements for the dead. . Emphasis of CSR Emphasis of CSR

was on the provision of free or subsidised social was on the provision of free or subsidised social

services as a way of reducing poverty. Their services as a way of reducing poverty. Their

scope covered: agriculture, education, health scope covered: agriculture, education, health

care and sports, and recreation activities.care and sports, and recreation activities.

�� The overarching thrust of CSR in this era was The overarching thrust of CSR in this era was

employment creationemployment creation and and job securityjob security..

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POST 1991 POST 1991 –– ECONOMIC COLLAPSEECONOMIC COLLAPSE

�� Zambia which had created a Zambia which had created a

comprehensive welfare system could no comprehensive welfare system could no

longer guarantee services to its citizens. longer guarantee services to its citizens.

Companies that offered heavily subsidised Companies that offered heavily subsidised

social services were operating below par social services were operating below par

and merely became drains on the and merely became drains on the

economy.economy. The downturn of the economy The downturn of the economy

had effectively began after 1974. had effectively began after 1974.

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�� By 1991, there was a regime change and a By 1991, there was a regime change and a resultant liberalisation and deregulation of the resultant liberalisation and deregulation of the economy. Many stateeconomy. Many state--owned firms were owned firms were privatised. There were also resultant privatised. There were also resultant retrenchments of workers in line with the retrenchments of workers in line with the IMF/World BankIMF/World Bank’’ss SAPsSAPs..

�� There was a considerable reversal of ZambiaThere was a considerable reversal of Zambia’’s s fortunes as regards corporate social fortunes as regards corporate social responsibility with the onset of the privatisation responsibility with the onset of the privatisation programme. It can be noted that there was a programme. It can be noted that there was a swing from one extreme position to another in swing from one extreme position to another in this matter.this matter.

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�� The economic reforms had increased The economic reforms had increased

poverty levels in the country as well as poverty levels in the country as well as

social dislocation. Privatisation did not social dislocation. Privatisation did not

provide the envisioned solutions to the provide the envisioned solutions to the

Zambian government and CSR was Zambian government and CSR was

virtually nonvirtually non--existent during this period. existent during this period.

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2002 to the present2002 to the present

�� A new government was elected in 2001 and A new government was elected in 2001 and adopted a cautionary approach towards adopted a cautionary approach towards privatisation. From 2002, Zambiaprivatisation. From 2002, Zambia’’s economic s economic prospects changed for the better. The countryprospects changed for the better. The country’’s s GDP grew by an estimated 5.8 per cent in 2006. GDP grew by an estimated 5.8 per cent in 2006. The country also exhibited a single inflation rate The country also exhibited a single inflation rate of 9.3 per cent in decades (as of September of 9.3 per cent in decades (as of September 2007)2007)..

�� In spite of the positive outlook the benefits have In spite of the positive outlook the benefits have not trickled down to the rest of the population. not trickled down to the rest of the population. The living conditions of the majority of Zambians The living conditions of the majority of Zambians are still very unsatisfactory. are still very unsatisfactory.

1919

�� About 70 per cent of the population are living About 70 per cent of the population are living below the poverty line. New mining firms have below the poverty line. New mining firms have been reaping huge profits and paying very low been reaping huge profits and paying very low corporate tax of 25 per cent as well as royalties corporate tax of 25 per cent as well as royalties of 0.6 per cent (which are one of the lowest in of 0.6 per cent (which are one of the lowest in the world). the world).

�� Presently, there is no clear legislative framework Presently, there is no clear legislative framework governing CSR in Zambia. There are no tangible governing CSR in Zambia. There are no tangible guidelines for firms on how to implement CSR in guidelines for firms on how to implement CSR in the country. In 2006, the government made the country. In 2006, the government made proposals for the development of a policy on proposals for the development of a policy on PublicPublic--PrivatePrivate--Partnerships (Partnerships (PPPsPPPs). ).

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�� There remains little consensus on the meaning There remains little consensus on the meaning

of the term, or indeed on its usefulness, and it is of the term, or indeed on its usefulness, and it is

not widely employed.not widely employed.

�� For some it is simply charity activities, ranging For some it is simply charity activities, ranging

from regular sponsorship of sport, especially, from regular sponsorship of sport, especially,

football, to irregular and onefootball, to irregular and one--off approaches, for off approaches, for

example, giving out presents on Christmas day example, giving out presents on Christmas day

to hospital patients or donations to orphanages, to hospital patients or donations to orphanages,

widows.widows.

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POLICY PROPOSALS/IMPLICATIONSPOLICY PROPOSALS/IMPLICATIONS

�� CSR should be linked to the governmentCSR should be linked to the government’’s broad s broad

development agenda and more specifically, its development agenda and more specifically, its

social development goals (i.e. poverty reduction). social development goals (i.e. poverty reduction).

CSR will then become a public policy issue. CSR will then become a public policy issue.

�� Government has to create an environment Government has to create an environment

where clear and meaningful partnerships are where clear and meaningful partnerships are

established with the private sector and civil established with the private sector and civil

society organisations. The latter can used to act society organisations. The latter can used to act

as implementers of firmsas implementers of firms’’ CSR programmes, CSR programmes,

especially at community levels.especially at community levels.

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�� In the context of Zambia, a strong intellectual In the context of Zambia, a strong intellectual

orientation to CSR is needed and in this paper orientation to CSR is needed and in this paper

the the Community DevelopmentCommunity Development tradition is tradition is

advocated. Therefore, the startingadvocated. Therefore, the starting--point for point for

corporate social responsibility would be the corporate social responsibility would be the

community.community.

�� There are valuable lessons to be learned from There are valuable lessons to be learned from

the first postthe first post--colonial Zambian government colonial Zambian government

which can be modified for contemporary times. which can be modified for contemporary times.