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Between global economic meltdown and CSR legislation
Written by IHEANYI NWACHUKWU & NGOZI UCHEThursday, 28 May 2009 01:12
At a recent conference in Lagos, business leaders and other participants moved against a billwhich aims to create a commission to oversee the implementation of CSR by businessesThese are trying times for businesses across the world. Many otherwise formidable corporategiants have crumbled like a pack of cards sincethe global economic meltdown set in. Not even the best of analysts know precisely how manyheadstones will be standing where some of the world’s most prominent corporate bodiescurrently sit by the time the crisis blows over.Here in Nigeria the outlook is just as gloomy, if not more so. The meltdown met a prevailingdifficult business terrain. Intractable power crisis, decaying basic infrastructure, rising cost ofrefined petroleum products, escalating crime, high interest rate, chaotic ports and multipletaxation are among numerous other factors constricting business growth in the country. Andwith the meltdown shockwaves, the business sector has been shaken to its foundation.The crash of the Nigerian Stock Exchange and the Nigerian naira has altered the fortunes ofmany hitherto prosperous businesses, leaving many of them vulnerable. The Nigerian StockExchange All Share Index fell 40 percent this year, the world’s worst-performing equityindex, according to Bloomberg data.There is some genuine apprehension over the yet-to-be-seen effect of the crisis on all sectors ofthe economy, including banking, which has so far remained one of Nigeria’s bestperforming sectors. New York-based research, firm Eurasia Group says banks in Nigeria mayhave as much as $10 billion of toxic assets, equivalent to about half of their capital.Recently, the Airline Operators of Nigeria (AON) raised alarm that many Nigerian airlines mightnot survive the next couple of years considering the gloomy situation of the domestic airlinebusiness. The majority of the airlines are indebted to banks and various aviation authoritiesincluding FAAN, NAMA, NCAA and Bi-Courtney Aviation Services. Passenger traffic is goingsouth as people cut cost by opting for road transportation.Many businesses in other sectors face very grim prospects, which was why the Nigerian Guildof Editors at its 5th All Nigeria Editors Conference (ANEC) held in Kaduna recently called on theFederal Government to take proactive steps to ameliorate the impact of the global financialcrisis on local businesses in the overall interest of the economy.In the midst of all these, would it be a good time for the National Assembly to be thinking offorcing corporate bodies to implement social projects? Participants at a CSR roundtable inLagos recently think the answer is a resounding No!The roundtable with the theme, ‘Understanding the Concept of CSR and the Implications ofLegislating it’ held at Protea Hotel, Ikeja drew participants from all sectors of the economy.The breakfast roundtable featured key presentations from the promoter of the controversialCSR bill, Senator Uche Chukwumerije, the Dean of the Lagos Business School, Professor JuanElegido, the sponsors of the meeting, Promasidor Nigeria and MTN Nigeria.Chaired by former Nigerian Bar Association (NBA) President, Olisa Agbakoba (SAN), the
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Between global economic meltdown and CSR legislation
Written by IHEANYI NWACHUKWU & NGOZI UCHEThursday, 28 May 2009 01:12
discussions were kicked off by Senator Chukwumerije, who presented what he called a revisedbill based on the feedback he got from the consultation he held with the business community inLagos and the public hearing on the bill held in Abuja in January. The bill will create acommission to oversee the implementation of CSR by businesses. It will have power to punishdefaulters.He contended that the bill was meant to protect the interest of the society, because according tohim, only 18 percent of the businesses operating in Nigeria implements any form of CSR. Heargued that unless there was such a law as being proposed, the overwhelming businesseswithout any form of commitment to CSR would not change their ways.Senator Chukwumerije further argued that the bill was not seeking to supplant government bycompelling businesses to take over government’s traditional role, but that it was beingpresented in the interest of the section of the business community which had been faithfullydischarging their responsibility to the communities.Professor Elegido disagreed with Senator Chukwumerije that the bill would serve the interest ofthe society. If anything, the proposed law, he noted, was capable of hamstringing businessesfrom performing optimally, as it would saddle them with avoidable burden. Professor Elegidoqueried the clause in the bill that empowers the proposed CSR commission to suspend theoperations of a company for 30 days for non-compliance with the CSR law. This, according tohim, is a potentially dangerous clause that would not benefit the economy.The Managing Director of Promasidor, Keith Richards, in his own presentation said theproposed bill would ultimately hurt the poor as many of the products and services priced withintheir reach might become unaffordable to them when companies begin to make adjustments toaccommodate some of the social burden being imposed on them by the government.“We support CSR. We are committed to it. But this CSR bill is a wrong way to go,†saidRichards, who added that there are existing laws that can be refined and many governmentagencies doing what the proposed commission is expected to do. He stated that the proposedcommission would be a waste of taxpayers’ funds.The general manager, Corporate Communications, MTN, Funmi Omogbenigun who presenteda formal submission earlier made to the Senate by MTN on the issue stressed that it is globallyagreed that CSR is a voluntary initiative that emanates from companies which seek to positivelyimpact their immediate sphere of influence beyond the demands of law.She argued that legislating CSR eliminates the very essence of CSR being a voluntarysocio-economic commitment to society, adding, “the thrust of the bill implies that theNigerian Constitution has failedâ€.She said the premise upon which the proposed CSR Commission is to operate leads to anassumption that Nigeria intends to manipulate the business community which has beenresponsible for wealth creation. She said this could send wrong signals to the internationalcommunity, particularly would-be investors.Corporate icon and former High Commissioner to the United Kingdom, Christopher Kolade, saideven though the senator meant well, the bill would create more problems than it was meant tosolve. He said government always made the mistake of creating a commission any time aproblem arose, pointing out that creating a CSR commission as the bill seeks to do wouldmerely create another avenue for some government officials to corruptly enrich themselves.Speaker after speaker spoke against the bill, with many condemning the timing and asking theNational Assembly to focus on devising creative solutions to the myriad of problems besettingthe economy. Confronting the struggling entrepreneurs with one more impediment, many
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