Integrative Case 1

Vodafone: Africa Calling

The Vodafone Group started as a small mobile operator in the UK and in 25 years has grown into

a global business giant and the one of the most valued brands in the world. With almost 400

million customers across Europe, Asia, Africa, North America and the Middle East it is now the

world’s largest mobile telecommunications company by revenue. 1

CSR at Vodafone

Vodafone has generally been regarded as one of the CSR leaders in a sector which faces a

number of CSR opportunities and threats. On the one hand, mobile telecommunications

companies have been criticised for high mobile phone tariffs, including excessive roaming

charges and opaque pricing structures. Similarly, critics have raised concerns over potential

health threats from the radiofrequency fields emitted by handsets and base stations. Mobile

companies have also had to manage the risks faced by their young consumers in terms of access

to adult content, phone bullying, and other forms of potential abuse. On the positive side,

providing access to mobile telecommunications can be a boon to social and economic

development in emerging economies, it promotes digital inclusion, and can provide the basis for

a raft of socially beneficial services to a wide range of customers across the globe.

Vodafone has taken a two-pronged approach to these CSR opportunities and challenges. Its for-

profit businesses and subsidiaries deal with CSR through the lens of the Vodafone sustainability

1
strategy which emphasizes three themes, namely: “responsible, ethical, and honest behaviour”,

“eco-efficiency” and “creating sustainable societies”. These themes take on a different

complexion in the different areas in which the company operates. With around two thirds of its

customers now in emerging markets, the group sees significant opportunities to develop its

business in lower income countries while also creating a positive social impact. Therefore, in

these markets, the company has focused significant energy in building CSR-related initiatives in

health, food distribution, financial services, and agriculture, often with a view to growing new

revenue streams. In more mature markets, however, needs are different, and hence CSR

initiatives there tend to target issues such as privacy, health concerns, tax avoidance, and energy

efficiency. In New Zealand, for example, the company intends to use its network for developing

services in remote monitoring of electricity, gas and water, thereby enabling its consumers to

save energy and reduce carbon emissions.

The second way that Vodafone approaches CSR is through its charitable wing, the Vodafone

Foundation, along with some 26 country-level Vodafone foundations. According to its website,

the Foundation is based on “the belief that our mobile communications technologies can address

some of the world’s most pressing humanitarian challenges and our responsibility is to utilise our

innovative mobile technology in mobilising social change and improving people’s lives.” The

Foundation provides funding of around US $30m annually through social investments to

communities in need across the world. This includes donations to disaster relief, projects that use

mobile telecommunications to address humanitarian problems, and its World of Difference

programme which mobilises people to take time out from their jobs and pays them to work for a

charity of their choice. 2

2
Vodafone in Africa

Africa represents an important frontier for Vodafone’s CSR practice. The company has two

major holdings within the continent: a 40% stake in Safaricom3 and a 65% stake in the Vodacom

group4. Through these two companies Vodafone offers its services in South Africa,

Mozambique, Lesotho, Tanzania, Kenya and the Democratic Republic of Congo.

Across Africa the group’s business strategy aligns well with its social goals since it looks to

expand its operations into underdeveloped communities and leverage its infrastructure to offer

innovative products for medical, financial and agricultural services. The company believes that

by providing access to telecommunication and making connectivity affordable, it can create

better living standards and help communities flourish. Vodafone’s mHealth solutions and its M-

Pesa initiative are two examples of how the company is simultaneously seeking to build new

business and meet its CSR objectives in Africa.

mHealth. mHealth is the application of mobile communications and network technologies for

healthcare.5 With the intent to bring hospitals to home, Vodafone’s mHealth solutions represent

the company’s attempt to use its information and communication technology (ICT) infrastructure

to provide remote medical assistance in 26 of the countries where it operates, including many in

Africa.

3
Vodafone’s mHealth services include the tracking and supply of medicines in remote health

centres, with an aim to transfer data in real time. In Tanzania during a pilot run of this service,

the number of health facilities running out of medicines dropped from 90% to 6%.6 mHealth

projects also look at facilitating clinical research and prescription adherence. In terms of

research, patients can feed in their responses to questions prepared by medical researchers and

submit them using a standard mobile handset. For prescription adherence, mHealth solutions

utilize mobile handsets to send out regular reminders to patients by SMS thereby automating

dispensary follow-up.7 Finally, the company’s mHealth initiatives also enable the transfer of

medical expertise and data remotely. For example, with the company’s Nompilo project in South

Africa, Vodafone works with the Department of Health and local NGOs to enable community

care workers in remote communities to register, record and recall patient data securely on their

handsets, whilst giving healthcare managers realtime information oto ensure better integrated

care.8

M-Pesa. M-Pesa, a payment service for the unbanked, was pioneered by Vodafone through

Safaricom, its Kenya-based business which is managed and 40% owned by Vodafone9. First

launched in 2007, M-Pesa enables a range of financial services to be conducted by those without

access to formal banks or bank accounts simply by using their mobile phones. The range of

services includes money transfer, disbursement and repayment of micro loans, merchant

payments, airtime purchases, and disbursement and receipt of salaries.10

Today, M-Pesa allows Vodafone customers in Kenya, Tanzania, Afghanistan, South Africa and

India to use a variety of financial services on his or her handset without needing to visit a bank or

4
start a formal bank account. The impact of the service has been enormous both socially and

financially. M-Pesa has almost become the gold standard of money transfer for citizens of

Tanzania and Kenya. In Kenya, it is used by one third of the 41m population11, whilst in

Tanzania it generates transactions worth US $10m per month.12 The financial benefits of the

service are highlighted in Safaricom's annual reports which shows that almost 75% of the

revenue earned by Vodafone through its Kenyan subsidiary come from M-Pesa in license fees.13

Meeting the diverse needs of African stakeholders

Moving away from the technological innovations such as mHealth and M-Pesa that are

employed to generate social and economic good in Africa, the company’s South Africa-based

subsidiary, Vodacom, provides some further insight into how Vodafone is seeking to respond to

the diverse needs of its African stakeholders.

With respect to customers, the mobile services provider has launched handsets for the less

privileged, people with disabilities and the elderly. For instance, their range of Ultra Low Cost

(ULC) handsets are aimed at “democratising communications” by enabling even those on low

incomes to purchase an entry level phone. The company has also launched

two new-model speaking phones for the visually impaired, three products for the hearing

impaired and a specially designed phone for the elderly14.

5
In terms of employees, Vodacom is working in line with South Africa’s Broad Based Black

Economic Empowerment (BBBEE) Codes of Good Practice which are aimed at overturning the

decades of injustice created by the apartheid regime. The company is South Africa’s leading

telecommunications company in terms of its BBBEE performance, but challenges remain in

securing greater black empowerment within the company. For example, in 2010, 70% of

Vodacom’s workforce was black, yet only 27% of management positions were held by black

Africans15. Moves to increase black equity ownership are managed through YeboYethu Limited,

a minority (3.4%) equity holder of Vodacom South Africa. YeboYethu Limited in turn is held by

Vodacom SA employees (45%) and by black South African citizens (55%), meaning that

Vodacom at least earmarks some proportion of its shareholding to the black population.16 The

group also engages in preferential procurement since influencing the supply chain to embrace

black empowerment is another way in which it can expedite transformation in the South African

economy. Procurement from BBBEE-accredited suppliers amounts to about one half of the

company’s total procurement spend.17

Vodafone’s African foundations

As with its CSR practice elsewhere Vodafone also looks to meet its social obligations through

charitable foundations. In Africa, the group has two dominant foundations – the Vodacom

Foundation and the Safaricom Foundation. The Vodacom Foundation allocates its resources in a

5:3:2 ratio between long term (multi-year), medium term (three years) and short term projects.

Acting essentially as a funding agency, the foundation evaluates programs/NGO on the grounds

6
of social change sought, expected degree of impact, sustainability, governance, track record and

solvency. Broadly both foundations offer funding for poverty alleviation, environment,

healthcare, arts and culture, and community sports. The Foundations also respond to disasters

and humanitarian emergencies.18

Vodafone have also funded economic and policy research on the impact of mobile phones in

Africa. One report funded by Vodafone found that mobile phones can have a positive and

significant impact on economic growth and social stability, emphasizing that:

• A developing country with an extra 10 phones per 100 people would have had GDP

growth 0.59% higher than an otherwise identical country.

• Fixed and mobile communications networks have a positive effect on the size of foreign

direct investment.

• Mobiles aid in economic development and transformation of the economy. Many of the

small businesses surveyed used mobiles as their only means of communication, with the

highest proportion of all among black-owned businesses.

• A majority of small businesses reported an increase in profits as a result of mobile

phones, in spite of call costs.

• More than three quarters of respondents said they had more contact and better

relationships with family and friends as a result of mobile phones, especially in rural

areas which are often not served by fixed line telecommunication services.19

7
Changing political contexts

The CSR challenges in a continent as diverse and complex as Africa are ever changing. The

Arab Spring of 2011, where citizen revolts across much of North Africa and the Middle East

precipitated insurgencies, military action, and political upheaval in much of the region, brought

Vodafone a new challenge in terms of how to manage its role in political unrest.

Vodafone Egypt, in particular, came under severe criticism for its stance during the 2011 civic

revolt against the Mubarak regime. The critical juncture was the Murbarak government’s request

to Vodafone and other mobile operators to temporarily shut down their services in some parts of

the nation to inhibit the protestors’ ability to organize. Not only did Vodafone comply with the

directive, it also sent out specific pro government messages by SMS as demanded by the regime.

Only towards the end of the revolt did the company take on a stronger stand, by refusing to send

the last pro Mubarak message under its brand name and limiting its circulation.

According to media reports, “some sections of the Egyptian society considered Vodafone’s

protocol to be cowardly and despite the company’s clarification that the move was to protect the

well being of its employees (physical danger and of being arrested), people blamed the

organization.” 20 Many were unconvinced that a company of Vodafone’s size and influence

could not have resisted the government and sided with the Egyptian people, suggesting that the

firm was “complicit in dictatorship”21

8
As a mark of retaliation, Vodafone Egypt’s Facebook page was hacked, and a message left by

the hackers on the page received hundreds of comments and likes before the page disappeared.22

The website ihatevodafoneegypt.com also acted as a forum for virulent criticism. Subsequently,

the organization received further rebuke when a television commercial made by the firm’s

advertising agency JWT (allegedly without Vodafone Egypt’s knowledge) was made public,

provoking widespread anger on social media sites for its suggestion that Vodafone played a role

in the ousting of the Mubarak regime. The advertisement featured Vodafone’s “power to you”

slogan over images of the revolution, seemingly rewriting history by showing Vodafone’s

posters on Tahrir Square, the centre of the protests, and alluding to the power of social media in

starting the revolution.23 While these events took place far from the heartland of Vodafone’s

African businesses in South and East Africa, they demonstrated well that along with the CSR

opportunities, business in Africa also brings with it significant CSR risks.

Questions

1. To what extent does Vodafone in Africa demonstrate the seven core characteristics of CSR as

set out in Chapter 1?

2. Using the example of Vodafone in Africa, describe the main ways that CSR will differ for

Vodafone in developing countries compared with in more mature or developed economies.

9
3. Consider the case for CSR as illustrated by Vodafone. Is Aneel Karnani right in suggesting

that managers will focus attention on CSR only where it aligns with profit maximization –

and that governments should regulate in cases where the two are not aligned?

4. In Chapter 2, Craig Smith suggests that there may be ethical and/or strategic reasons for

engaging in CSR, but that commitment to CSR must be assessed relative to the specific

vulnerabilities and opportunities of a particular company. What are these vulnerabilities and

opportunities with respect to Vodafone in Africa, and should it develop an ethical or strategic

approach to CSR?

5. Consider the four types of CSR theories discussed by Garriga and Mele in Chapter 3. How

would each of them apply to the case of Vodafone in Africa and what contribution, if any, do

the theories have to understanding CSR practice?

1
http://www.vodafone.com/content/index/about/about_us.html
2
http://www.vodafone.com/content/index/about/foundation/about_foundation.html
3
http://www.safaricom.co.ke/fileadmin/M-PESA/Documents/Press_release/MONEY-TRANSFER-SERVICE-Launch.pdf
4
Vodacom Sustainability Report Page 6
5
http://mhealth.vodafone.com/discover_mhealth/
6
http://mhealth.vodafone.com/solutions/access_to_medicine/supply_logistics_safety/ (video)
7
http://mhealth.vodafone.com/solutions/clinical_research/patient_reporting_outcomes/
8
http://mhealth.vodafone.com/global/solutions/mobile_flexible_working/field_force_enablement/community_care/index.jsp

10
9
http://webarchive.nationalarchives.gov.uk/+/http://www.dfid.gov.uk/media-room/news-stories/2007/M-PESA-1-million-
kenyans-bank-by-phone/
10
http://www.roshan.af/Roshan/M-Paisa.aspx
11
http://www.thinkm-pesa.com/2011/08/water-delivery-through-payment-platform.html
12
http://thecitizen.co.tz/magazines/31-business-week/3032-money-transfervodacom-m-pesa-takes-financial-sector-by-storm
13
http://online.wsj.com/article/BT-CO-20110815-708880.html
14
Vodacom 2010 Group Sustainability Report: http://www.vodacom.com/pdf/sustainability_reports/sus_report_2010.pdf
15
ibid
16
ibid
17
ibid
18
http://safaricom.co.ke/foundation/index.php?id=25
19
Vodafone (2005) Africa: The Impact of Mobile Phones, Moving the Debate Forward, The Vodafone Policy Paper Series, No. 2,
March 2005: http://info.worldbank.org/etools/docs/library/152872/Vodafone%20Survey.pdf
20
http://www.channel4.com/news/vodafone-egypt-faces-hashtag-backlash
21
http://www.guardian.co.uk/world/2011/jun/03/vodafone-egypt-advert-claims-revolution
22
http://www.egypt-business.com/Web/details/Vodafone-Egypts-Facebook-page-hacked-then-disappeared/781
23
http://www.ft.com/intl/cms/s/0/34c9b2f2-8de7-11e0-a0c4-00144feab49a.html#axzz1YWyJRdUN

11