ETHIOPIAN CIVIL SERVICE UNIVERSITY

የኢትዮጵያ ሲቪል ሰርቪስ ዩኒቨርሲቲ

School of Diplomacy & International Relations (SDIR)

An Assessment and Evaluation of the Practice of Social

Responsibility in Ethiopian Construction Works
Corporation

Partial Fulfillment to the course “Ethiopian Public Administration,

Governance and Ethics/DIR-5041/”

By: Demeke Chanie/I.D No. ECSU1801463/

Submitted to: Dr. Tesfaye Molla

August 19, 2019

Addis
Ababa
 Table of Content

Title Page

1. Introduction/Background of the Corporation/..............................................................1

2. Social Responsibility.........................................................................................................2

2.1. Brief Definition..........................................................................................................2

2.2. Importance of Social Responsibility........................................................................2

2.3. Aspects of social responsibility.................................................................................2

2.3.1. Economic Aspect.............................................................................................3

2.3.2. Legal Aspect....................................................................................................3

2.3.3. Ethical Aspect..................................................................................................3

2.3.4. Discretionary (Philanthropic) Aspect...........................................................3

2.3.5. Environmental Aspect....................................................................................3

3. Stakeholder Theory and Stakeholders of the Corporation...........................................4

3.1. Stakeholder theory...................................................................................................4

3.2. Stakeholders of the Corporation............................................................................4
4. Practices of Social Responsibility by the Corporation..................................................4

5. Weakness of the Corporation’s Social Responsibility Activities..................................6

6. Recommended Solutions for the Weakness....................................................................8

7. Conclusion.........................................................................................................................9

 References
 1. Introduction/Background of the Corporation/

The Ethiopian Construction Works Corporation (ECWC) is a state owned construction company
which is established by the council of Ministers regulation no. 366/2015 with the authorized
capital of over 20.3 billion birr. It is established in 2015 with the aim of becoming a leading,
preferred and competitive construction company (contractor) by merging the former three
independent public Enterprises, namely Ethiopian Road Construction Corporation, Ethiopian
Water Works Construction Enterprise, and Ethiopian Prefabricated Building Parts Production
Enterprise.

Public enterprises are an organization wholly or partly owned by the state, supervised by
government bodies and largely has autonomous in its management. And it is an institution
which created to accelerate economic and social development of the society on behalf of the
government (britannica.com).

Accordingly, Ethiopian Construction Works Corporation is public enterprises governed by the

Public Enterprises Proclamation No.25/1992. It is supervised by the Public Enterprises Holding
and Administration Agency/the agency is also accountable to Ministry of Finance/ and the Board
of the Corporation is its policy-making body.

The head office of the corporation is located in Addis Ababa. It has 10 branch offices and
currently it is constructs and maintains more than 20 road, bridge, dam, irrigation main canal,
airport and dry port construction and maintenance projects, which the worth of over 38 billion
birr all over the country. Currently, it corporation has over 15,000 permanent and contract
employees who are working at the head office and at its projects.

Each organizations, government, non-government or private, is established to alleviate social and

economic problems and expected to do their activities in social responsible way (Potluri and
Zelalem, 2017, P.456). Therefore it is expected to do its activity in social responsible way in all
its activities within the corporation and to the society.

Accordingly, this term paper tries to evaluate the practice of social responsibility by the
corporation, investigates its weakness and finally concludes by recommending and proposing
possible solution for the weaknesses.
 2. Social Responsibility

2.1. Brief Definition

The concept of social responsibility has been defined in many ways by different scholars.
According to Selam (2017, p.1), it is the set of standards which is used by organizations to make
a positive contribution to the society. World Bank also defined it as a company’s obligations to
be accountable to all of its stakeholders in all its operations and activities. social responsibility
is how companies manage their business processes to produce an overall positive impact on
society. It is also a self-regulating business model that helps a company be socially accountable
to itself, its stakeholders, and the public in general (investopedia.com).

2.2. The Importance of Social Responsibility

People and organizations need each other and socially responsible activities benefit both the
society and the organization. Accordingly, organizations, as members of society have a moral
obligation to help society in different ways and the society will be benefit the organizations by
participating in its different the activities.

Therefore, such proper and ethical social responsibility activities will improve reputation and the
public image of the organizations, creates increased brand awareness, secure the ‘goodwill’ of a
local community, increase the moral of employees, their productivity and reduce production
costs, minimize business risks, etc. On the other side it costs money to implement such types of
social responsibility activities which reduces profits of the companies.
(socialresponsibility.vinsign.com, highspeedtraining.co.uk).

2.3. Aspects of social responsibility

According to Carrol (1991) as cited in Mathias (2016, p.6), there are four levels of social
responsibility. These are economic, legal, ethical and philanthropic responsibilities. On the other
hand, according to Selam (2017, p.11), in Ethiopia even though the practices are still in infancy
stage, there is an increased commitment to social responsibility by a number of organizations and
it is mostly guided economical, legal, ethical, philanthropic and environmental aspects.
 2.3.1. Economic Aspect Social Responsibility

Business organizations are created to make money by producing quality goods and delivering
better services to the society. This eventually benefits the company with profits. If the company
is not profitable, all of its employees and stakeholders will be affected.

2.3.2. Legal Aspect Social Responsibility

Legal responsibility requires that companies while acting in their economic obligations observe
laws and regulations. This includes government regulations that businesses are required to obey
them.

2.3.3. Ethical Aspect Social Responsibility

Moral or ethical responsibility refers to a variety of business practices and ethical norms that are
expected to be followed but not covered by legislation. Therefore, such types of gap or limitation
of law will be fulfilled by moral or ethical responsibilities.

2.3.4. Discretionary (Philanthropic) Aspect Social Responsibility

Philanthropic responsibilities include financial and non-financial assistance to improve the life of
the community. It covers the activities of the company that shows the company is like a good
citizen. Among cases where companies can have a share is include participation in supporting
the arts, education and other sectors that can enhance the quality of life in society. The difference
between ethical and philanthropic responsibilities is that the latter is not regarding moral and
ethics (Selam, 2017 10; Mathias, 2016, p.6).

2.3.5. Environmental Aspect Social Responsibility

Environmental social responsibility focuses on protecting and maintaining the natural

environment: the air, water, rivers, lakes, forest, soil, plants, animals, etc. Any organization,
operating in any nation of the world, has a social responsibility of protecting the environment
from damages and pollutions caused by its functions (transparenthands.org).
 3. Stakeholder Theory and Stakeholders of the Corporation
3.1. Stakeholder theory

Stakeholder theory was first described by Dr. F. Edward Freeman, a professor at the University
of Virginia, in 1984. A company’s stakeholders include customers, employees, suppliers, local
communities, the media, financial institutions, governmental bodies, and more. This theory
suggests that a company’s real success lies in satisfying all its stakeholders. Stakeholder theory
says that if a company treats its stakeholder badly, there might be short-term profits, however it
cannot survive for a long time and eventually will fail. Therefore, all of a company’s
stakeholders need to be satisfied to keep the company healthy and successful in the long-term
(smartsheet.com).

3.2. Stakeholders of the Corporation

Ethiopian Construction Works Corporation has different stakeholders. Among these, the main
stakeholders of the corporation are its employees, trade associations of the corporation, board
members of the corporation, suppliers, financiers, and governmental bodies, the media, local
communities and the public in general. Therefore, in order to achieve its goal and objectives, it
has to perform such activities in socially responsible way. Such activities include job creation
and paying appropriate wages for local community, working in healthy and safe conditions,
giving due attention to the local community values/culture, protecting the environment,
delivering quality works and etc. As listed above the corporation has different internal and
external stakeholders. Accordingly, in order to keep and maintain good relations with its internal
and external stakeholders the corporation is expected to perform its activity in socially
responsible way.

4. Practices of Social Responsibility by the Corporation

As mentioned above, the area of social responsibility practiced by either government or non-
government organizations may vary depending on the type of their work or the nature of the
work in which the institutions are engaged, the place of the in which they are working, the
occupational sector and other criteria.
Ethiopian Construction Works Corporation, as a public enterprise, is established to engage in
different construction sectors. While doing its activities, it is expected to fulfill its internal and
external stakeholders such as, its employees, clients, suppliers, local communities and in general
the society of the country. Therefore, the corporation is expected to do its activities in line with
rules and regulations, social norms and values of the society/communities and giving due
attention to ecological, environmental issues.

Hence, the Corporation tries to protect the natural resources of the construction sites, rehabilitate
areas that are affected by construction of its projects, create jobs for unemployed people, and
participate in the prevention and controlling activities of HIV/AIDS and others diseases. As a
result, for the implementation of such social responsibility activities, every year the corporation
spent approximately five million birr and for the 2011 E.C fiscal year, it pledged close to 12
million birr to construct buildings, roads and for water purification and donated over seven
million birr in cash to different communities and institutions.

Accordingly, the corporation undertakes various activities to benefit the community by

constructing different types of small buildings that are used for clinic, school and other social
services; dumping sand stone on degraded areas, constructing gravel roads, providing clean
water for human and animal use in neighborhoods with water shortages, Providing ambulance
services to areas with limited access, and etc. In addition, the corporation benefited over 5,000
citizens by creating job opportunities. Each camp of the project that are used for project offices
also transferred to local administrations after such project is completed,

Besides, one of the tasks the corporation undertakes in social responsibility is the protection of
the environment. As mentioned above, the Corporation ha s various construction
projects in different parts of our country. The corporation should be careful not to
pollute and damage the environment while performing its construction activities. To
this end, the corporation tries to prevent the occurrence of air, soil and water pollution and
environmental degradation as a result of project activities, and protect the local ecosystem
by planting trees and other necessary activities. Accordingly the corporation plants
trees every year in each project, and this year the corporation plants over 50
thousand trees/seedlings.
Charitable work is also another area in which the corporation participates on social responsibility
activities. In this area, the corporation itself and leaders and employees of the corporation has
contributed over 192,000 birr for humanitarian aid. In addition they donated 13,157 chairs,
tables, bags and other educational materials to Yeka Abado kindergarten and primary school
students, dippers and clothes to Macedonian Elderly and Mental Health Center and over 2,000
different types of dishes, plastic cups, iron plates and closes for displaced people from the Gedo
and Guji zones.

The corporation has also participated Sheger Dinner program, donated 1 million birr in cash to
Macedonian Center for the Elderly and Mental Health and pledged to the Center to construct
asphalt road with in the compound, dig water wall for clean water, and deliver over 100 thousand
blocks which costs over 14.5 million birr.

Organizations also should be socially responsible in their dealings with their employees.
Participation of employees’ in decision making, attractiveness of working environment,
institutional support for professional development, job enrichment, job security, working
conditions and empowerment also another areas of CSR regarding its employees (Yohannes,
2014, p.327). In addition, treating employees fairly, making them a part of the team and
respecting their dignity and basic human needs will cultivate a favorable working environment,
and ultimately enable the organization to have a satisfied and committed work force (class room
lecture note, 13 August, 2019).

In this regard, the corporation has been undertaking various activities; such as in the protection
of health and workplace safety of its employees. Additionally, more than 3,700 corporate
employees have attended short and long-term training. Under the corporation's collective
agreement, they are also entitled to life and medical insurance and other benefits. Furthermore,
as long as the employees respect the work they have been assigned, they have the right to do as
allowed by the corporate rules and regulations.

5. Weakness of the corporation’s Social Responsibility Activities

As mentioned above, the corporation is an institution that has a large number of employees,
internal and external stakeholders, and operates construction projects in all areas of our country.
In a single year, it will be able to procure billions of birr worth of construction equipment and
other office materials. Therefore, the social responsibility activities of this huge institution must
be planned and carried out properly. In addition, in order to achieve the objectives of its
establishment, the contribution of internal and external stakeholders play vital role and the
corporation is expected to meet the needs of the corporation's internal and external stakeholders
as much as possible.

However, several operational gaps and problems have been noted as the corporation undertakes
many of the above-mentioned social responsibility tasks. These include, for example, failure to
plan social responsibility tasks properly, fail to assess changes in work done by social
responsibility tasks, and lack of support and supervision, inadequate hospitality or customer
handling for internal and external customers, lack of sustainable job creation for local
communities, and the like.

In addition, most of the time, the corporation operates its humanitarian activities in the way of
campaigning, which is not sustainable, not in planned way. As an example, this year tree
plantation, philanthropic activities given to Macedonian Center for the Elderly and Mental
Health, the students of Yeka Abado kindergarten and primary school, and elsewhere, have been
done through campaign.

The construction of gravel roads, clean water provision, construction buildings used for schools,
clinics, and other social services in the vicinity of the construction projects is also usually carried
out by without planning, or deal with local communities. In addition, local youth who are
benefited by temporary employment through construction projects are more likely to be
unemployed when the projects are completed.

Organizations are also should be socially responsible to maintain good relations with customers,
listen to their complaints, provide them with quality services, and treat them with respect.
However, according to data obtained from the corporate planning, finance, ethics and
communication Departments of the Corporation, there is a lack of frequent contact between the
top management of the corporation with its lower staff. The payments for construction
equipment leases also delayed for a long period of time which leads to demolish their
relationship with the corporation.
Other weaknesses of the corporation which will reduces employee motivation are, there is visible
corruption on procurement, recruiting, promotion and hiring of employees and other capacity
building trainings deliveries.

6. Recommended Solutions for the Weakness of the corporation’s Social

Responsibility Activities

A socially responsible activity makes good relationship with stakeholders and benefits both the
organization and its stakes. Without the internal and external stakeholders involvement, any
organizations hardly fulfill its objectives. Therefore, in order to do this from internal
stakeholders’ perspective;

 The corporation needs to improve the relationship with its employee and employee
promotion; recruitment and transfer system and other activities that benefit the employee
should be implemented in a clear and fair manner, as allowed by the corporate directive.
 In addition, it is better to provide short and long term trainings based on proper plan in a
regular basis.
 Top management members must plan and communicate with the lower staff so that they
have adequate information on the planning and implementation of the corporation and
other corporate functions and
 The corporate organization needs to be revised in a way that combines professionals with
professionalism.

And from external stakeholders’ perspective;

 Construction machineries are the back bone for any construction activities. Therefore in
order to keep up the smooth relation with the owner of rental machineries, the
corporation must pay their machineries rent on time. In the long term it is better to fulfill
its demand by its own construction machineries.
 Philanthropic and charitable activities should not be done only by a one-time campaign
activity; rather it should be a planned and continuous activity.
 Any support implemented in project areas should be done by assessing the shortages and
by consulting with the local community, not by accident. In addition in the future it is
 better to implement the support and other social responsibility activities by conducting
impact assessment of the social responsibility activities.
 Projects of the corporation benefited local communities by job creation. However, they
will be unemployed when the projects are completed. Therefore, to overcome this
problem, there must be a knowledge transfer.
 The employers or the owner of construction projects are another main stakeholders or
clients for the corporation. Hence the client is satisfied if the construction projects are
constructed without compromising quality and if the projects are completed within the
deadline. Therefore in this regard the corporation will take in to consideration.

7. Conclusion

This term paper tries to assess the background of the corporation, areas, aspects and importance
of social responsibility, stakeholder theory, stakeholders of the corporation, the practice of social
responsibility by the corporation from the perspective of its internal and external stakeholders’
relationship, environmental protection, community and charity-based activities, its weakness and
possible solutions.

In this regard this paper tries to show how the corporation participated in social responsibility
activities in the areas of environmental protection, jobs creation for the society, philanthropic,
humanitarian and volunteerism activities, and other legal and moral obligation to help society
deal with its problems.

Although the corporation's performance of corporate responsibility is good, it is small in

comparison to the size of the business, contract amount of its projects and the amount of money
it can generate. As a result, the corporation should continue to carry out its social responsibility
in a planned and organized manner so as to maintain its acceptance by the staff, external
stakeholders, the government bodies and the communities in which it currently operates.
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12. የ ኢትዮጵያ ኮ ን ስ ትራክ ሽ ን ሥራዎች ኮ ር ፖሬሽን የ 2011 በ ጀት ዓ መት ዕ ቅድ አ ፈፃ ፀ ም
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