Doing Business in a Just Way: A Focus on Corporate Social Responsibility

By Willy Mamah*

As Nigeria confronts the current challenge of an Empty Treasury and need to encourage private capital, it is crucial to alsointerrogate, more closely, the notion of ‘Corporate Social Responsibility’ as a framework for doing business in a just way. ‘Property’, the ‘having mode’ is crucial to ‘people’, the ‘being mode’, but the tendency to lose sight of people in the pursuit of profit margins is usually very high, indeed. So the question must be asked, how many Nigerians have, in fact, been lifted out of poverty by big corporations? This question is critically relevant because as Jochnick(1999: 59-60) rightly argued: “the narrow focus of human rights law on state responsibility is not only out of step with current power relations, but also tends to obscure them. The exclusive concern with national governments not only distorts the reality of the growing weakness of national-level authority, but also shields other actors from greater responsibility…” The position of this article is simple: there are structural challenges that hinder CSR in Nigeria. The way forward is to understand these structural challenges in order to make an informed decision on the best way to properly manage the profit drive and harness it for development and not just growth.

CSR and the Power Question in Nigeria

Nigeria presents an interesting case study of the power dynamics in the discourse and practice of CSR. Three main factors account for this. First is the coexistence of oil wealth and chronic poverty in Nigeria. As aptly captured by Okonjo-Iweala (2012:21), “… despite its substantial oil earnings—estimated at US $300 billion since the 1970s—Nigeria remains mired in poverty, with high rates of adult illiteracy, maternal mortality, and infant mortality.” Nigeria, according to this writer, is expected to be “one of the sub-Saharan African countries that will not meet the Millennium Development Goals by 2015.” The second interrelated factor is the globally acclaimed struggle of the oil producing communities of Nigeria. The Ogoni case, which revolves around incessant allegations of human rights deficits caused by oil exploration and related activities in Nigeria, symbolises this struggle. In almost all the court cases on this issue, the people of Ogoni are usually on one side (the plaintiffs) whereas the oil companies and their joint venture partners, the Nigerian State, are usually on the other (the defendants). What makes the case of the Ogoni remarkable is the stark reality of the role of oil in the economic survival of Nigeria vis-à-vis poverty and the pains it is said to cause. This paradoxical situation has been ably discussed at length in the ‘oil-curse’ literature and related reviews (Karl 1997; Ross 2001). The third factor is the contradiction of corporate success and chronic poverty. Whilst Nigeria remains off-track as far as achieving the MDGs, the country is rightly identified as one of the ‘bottom billion’ countries that is now becoming the ‘fastest billion’ (Robertson, 2012). As an emerging global economic power, Nigeria also attracts a multiplicity of corporations (local and transnational) from non-oil sectors such as telecommunications and construction. I focus on TNCs because of their more commanding influence and financial position. Apart from oil TNCs, Nigeria hosts other powerful TNCs in these other non-oil sectors. MTN, the South African mobile telephone operator, for instance, has continued to record unprecedented turnover from its operation in Nigeria. In analysing MTN’s 2010 financial results, Osae-Brown (2011) writes:

“The MTN Group’s financial results show that the Group’s total revenues globally for 2010 stood at N2.57 trillion (115 billion rand) while earnings before interest, taxes, depreciation and amortization (EBIDTA) stood at N1.07 trillion (48 billion rand).

A break-down of the Group’s results however shows that MTN Nigeria, which remains its biggest operation, also contributed the most to the Group’s revenues and profits in 2010.

Similar trajectories of resounding corporate successes are discernible in the financial reports of many other TNCs in Nigeria, a reality that highlights the country as a hugely profitable investment destination. From the foregoing, it is easy to observe that in Nigeria two dominant loci of powers, namely the state and multinational corporations, hold sway. Their shared experiences of financial breakthroughs, well-encapsulated in the ‘fastest billion’ theory, contrast sharply with that of the generality of Nigerians (another potential power block) who are supposed to be the subject and beneficiaries of development (Article 1 of DRTD). From the point of view of RTD, therefore, one is struck by the inverse relationship between development-resource potential and the diminishing reality of resource availability. This trend of ‘missed opportunities’ compels a shift of focus: from laws on paper to underlying structural challenges that often diminish laws’ effectiveness.

In light of the above background, the perspective I find relevant in the discourse of CSR in Nigeria concerns effectiveness, an angle which tends to expose the complex power play at work. Why is it that corporate successes are not ‘trickling down’, despite voluntary and non-voluntary mechanisms for CSR in Nigeria? To what extent are capital, capitalism and the nature of the state implicated? It is not contested that in a classical capitalist setting businesses are not traditionally set up as ethical organisations, as their overriding objective is to maximise shareholders’ value. What is implied, therefore, is that encouraging businesses to “behave ethically and contribute to economic development whilst improving the quality of life of the workforce and their families as well as of the local community and society at large” (Helg, 2007:7) would require intervening in the market via effective legal and related frameworks. To what extent is Nigerian law structured as a market intervention mechanism?

From a Legal to a Structural Framework

On the important question of a legal framework for CSR in Nigeria, scholars (such as Amao 2008, 2011; Mordi, Opeyemi, Tonbara and Ojo 2012) have done extensive and engaging analyses of the provisions of the country’s company laws, torts and human rights on CSR. The CSR Bill before the Nigerian National Assembly (a Bill for an Act to provide for the establishment of the Corporate Social Responsibility Commission) has also been analysed and reform initiatives marshalled out. A consensus that is shared by all the analysts is the need to strengthen the legal framework to deliver better results. For instance, following his rigorous analysis of the possibilities that Nigerian company law offers as a tool for controlling MNCs, Amao (2008: 101) lamented that “despite the potential of domestic company law as a tool for controlling MNCs, Nigerian Company Law also failed to develop to meet modern realities in companies operations.” The author expressed dismay at this turn of events. In his words, “considering the importance of CSR and the control of MNCs within the Nigerian context, it is rather surprising that there has been no significant attempt to utilize the potential of company law in this respect” (Amao, 2008: 102).

For most scholars of CSR and law in Nigeria, there is general agreement that there is a problem with implementing its legal framework on CSR. Hence, CSR in Nigeria is yet to deliver the desired result to the Nigerian people. The reality of ineffectiveness, which has occasioned the clamour for legal reforms, also calls attention to another perspective – stepping aside from legal analyses, as far as possible, in order to expose the systemic challenges that stand in the way of any CSR law. These challenges are fundamental and border on power and powerlessness. Without an enabling environment, no CSR laws can work magic. Idemudia (2010: 137) is spot on here: “CSR efforts cannot transform political and economic structures that create conditions in which inequalities and injustices persist.”I proceed to examine these fundamental challenges from the prism of an enlarged notion constitutional law.

Systemic Challenge 1

The Nature of TNCs in Nigeria Perpetuates Unequal Bargaining Power

In developing countries like Nigeria, there are ample historical and current realities that support the thesis that corporations are becoming more powerful than states. In some developing countries, corporations have even had a hand in constructing the state: “The flag,” it is said, “followed the trade.” Historically, TNCs were one of the key facilitators of colonialism in Nigeria. The Royal Niger Company, for example, paved the way for the eventual colonisation of Nigeria, which is why the nation was nearly named ‘the Territories of the Royal Niger Company’ (Meek, 1960). Post-independence, MNCs hosted by Nigeria have been usually richer than the host state. The expertise and wealth they bring are desired to give real value to the resources that host states desperately need. Unequal bargaining power is thus created. Strict legislations are watered down to encourage these corporate entities to invest. The role of law as a strict regulator is therefore de-emphasised as law is pushed to a subservient position vis-à-vis the need for economic growth. These economic imperatives then become the de facto regulator. This is the key for construing the challenges of CSR in Nigeria. This key also helps to explain why the same corporations act differently with regard to CSR, depending on where they are located.

Systemic Challenge 2

The Market Fundamentalist Constitution Negates CSR, ab initio

When called upon to proffer a solution to a legal problem in one aspect of law, it is tempting to lose sight of the dynamic inter-linkages of all laws, especially the overriding status of the constitution in a federation. The constitution is the backbone of laws in Nigeria. A spinal injury, when not fatal, is usually a life-changing situation, which is why the constitution in its very first section declares its supremacy and offers a measure for testing the validity of all laws. It is important that one understands the philosophy underlying the Nigerian constitution because this philosophy offers a critical tool for critiquing the effectiveness of other subsidiary laws, such as company law, torts law and environmental laws. The underlying philosophy is acute liberalism – the promotion of property rights over and above socio-economic rights. I use ‘acute’ advisedly because unlike the situation in international constitutional law, where liberal theory has been challenged and a seeming compromise reached at the Vienna Conference of 25 June 1993 , Nigerian constitutional law is firmly constructed around strict liberalism. The current wave of economic globalisation, in negating the seeming compromise at Vienna, appears to evaporate all hopes of social justice in developing countries such as Nigeria. It is not surprising, therefore, that as one of ‘the last frontiers of capitalism in Africa’; Nigeria’s capitalist development seems retarded. Whilst the logic of ‘the invisible hand of the market’ has been challenged in advanced capitalist settings by economists such as Keynes, Beveridge and Stiglitz, Nigeria seems stuck with the questionable logic of the market with absolutely no safety nets. Clearly, there are complexities involved in the economic choices set before the country. Market pressures constrain law and democracy and hence limit any available options. Rights to shelter, environment, education and health are first and foremost presented as second or third class rights. The non- patent nature of these rights coupled with absence of any Social Benefit Structureto diminish the worth of these core development rights. There are negative philosophical and psychology implications. The body language of absence of care for our people is easily picked up by big businesses.

Systemic Challenge 3

The Nature of the Nigerian State Inhibits CSR

Nigeria has been aptly described as a “mono-commodity rentier state” (Idemudia 2010: 135). The capture of the state by a few powerful elites and corporate interests is motivated by the logic of accumulation. According to Idemudia (2010: 135-136), “by virtue of a number of decrees and laws, Nigerian central government is the principal recipient of oil rent. This rentier economy fosters a rentier mentality that affects both the nature of state and its role in governance.” Elaborating on the implication of this statement, Idemudia (2010:142) posits that “the rentier nature of the Nigerian state means that oil revenue is central to its existence. Consequently, the profit motive of oil TNCs is in symbiosis with governmental interest in rent accumulation. Hence, oil TNCs are often placed to influence government and have their interest privileged over the interests of local communities.” In such a setting, a strict focus on the wording of the constitution in the search for a grundnorm may mean that one loses sight of the ‘grundfact’ of powerful interests with the capacity to set and re-set mechanisms for determining the priority of interests.

From the foregoing, it is clear that any CSR regime in Nigeria, in order to be effective, must seek to challenge the established vested interests in the country. The ‘third force’ in the tripod-like power dynamics in Nigeria is populated by the Nigerian people. In a working democracy, this ‘people power’ ought to be able to contest the privileging of a few elites and corporate interests. The nature of the Nigerian state and the seemingly elusive nature of TNCs pose huge challenges. However, it ought to be appreciated also that the state and TNCs have the capacity to play important roles in development. It is therefore, urged that the objective of this critique be not lost, that is, how to balance the seemingly divergent interests and create a mutually profitable and beneficial arrangement for the Nigerian people, the Nigerian state and investors in Nigeria. The best viable way forward may be to go beyond voluntarism, build an alliance of forces and draw strength from local, regional and international legal norms and global civil society mechanisms with a view to counteracting the systemic challenges faced by the country.

*Mamah, PhD (London) is Partner/Head, Development Law, Olisa Agbakoba Legal