Corporate Social Responsibility In Sub-Saharan Africa's Development

Thursday, May 1, 2008 - 01:00

By Matthew Groch

In today's globalizing economy it is no surprise that Milton Friedman's notion that corporate social responsibility has no place in business is a phrase that is quickly becoming moot. Across the globe demands from consumers, non-governmental organizations (NGOs), and shareholders have changed the role of corporations in human and environmental development. Since the late 1980s there has been a push from many forces in the corporate world to expand CSR projects across the globe; no place is there a better example of this than the influx of corporate development projects in Sub-Saharan Africa.

One of the most famous CSR projects in Africa is the Chad-Cameroonian Pipeline, which was the brainchild of Exxon, Chevron, and Petronas working in partnership with the World Bank and the governments of Chad and Cameroon. While the World Bank was an essential partner in striking the agreement, it only covered about 4 percent of the total project's cost. Exxon, Chevron, and Petronas pushed the project forward and today, nearly five years after completion, people in Cameroon and Chad are feeling the benefits of the pipeline.

As of the end of 2006, Chad has fed almost $440 million in pipeline revenues into education, health and economic development programs. Meanwhile, in Cameroon, the pipeline has not only provided additional funding for the government but has spurred small business development as well (World Bank Report 2007). On a more local level, in 2006, Swiss Re, one of the world's leading and most diversified reinsurers, gave $50,000 for a watershed management program in the North West Province in Cameroon. This program helped to mitigate conflict between native people who were concerned with quality and quantity of water supplies and those who were looking for access for grazing cattle.

CSR projects like these are vital in Sub-Saharan Africa because it continues to be one of the poorest and least developed areas in the world. While it is clear that development projects are helping to lift countries like Cameroon out of poverty, there is still a lot of work to be done. So what is the future for development in Africa?

In January of 2008, 19 students and two professors from Drew University in Madison, NJ went to Cameroon to do a field study on development at the grass roots level. Dr. Kathleen Madden, Associate Professor of Mathematics and a former Peace Corps volunteer in Cameroon, and Dr. Andrea Talentino, Associate Professor of Political Science, planned the trip working in coordination with one of Madden's former pupils, Mr. Tanyi Felix Nkongho. Mr. Nkongho is the director of the Cameroonian NGO ETAYA, which specializes in economic empowerment and education development in rural Cameroonian villages. After a semester-long pre-departure course focusing on the various aspects of development, the students spent a month onsite working with community leaders, government officials, and rural villagers to understand how development is working at the grassroots level. The students were then charged with designing a development project of their own using what they had learned on the ground and in the fields.

One project that was approved for funding was the Corporate Expansion Loan Project. The loan provides $2000 to a farming cooperative to expand its group farm and to become a registered corporation with the government. Farming cooperatives are an essential part of life in rural Cameroon. Poor farmers pool labor and resources together to assist members during harvest and clearing months. These organizations usually consist of twenty to twenty-five members and have group charters as well as an elected board of directors.

The loan, administered by the ETAYA NGO, will go into the expansion of a new corporate farm to be tended to by group members. The crops from this farm will provide income to increase the amount of capital flowing to every member of the group, and savings requirements stipulated by the loan will constitute the beginning of the new company's budget. In addition, ETAYA will guide the group into becoming a legitimate company. By forming a legal charter these groups will have access to increased government support, from tools to needed fertilizers and pesticides.

If this loan is a success, it could be the beginning of a new style of economic development in rural Cameroon. By enabling these groups to increase market capacity, the farm expansion project provides a means by which to increase fungible cash for these poor farmers. This will positively impact the whole village because local schools and health care centers do not receive full funding from the Cameroonian government and rely on individuals. This additional income will enable poor farmers to pay the school fees and medical costs which they might not otherwise be able to manage. By creating corporate farms this project hopes to spur CSR on the grassroots level.

As noted by Madden, "There is a long history in rural villages of pooling effort through the creation of farming cooperative groups. This project builds upon that tradition and creates a more formal company out of one of these cooperative groups. The influx of capital will allow them to expand to a larger, more corporate farming model in hopes of generating income, jobs and general village development."

This program takes aim at a problem affecting many rural Cameroonian villages: lack of economic opportunity. It seeks to create a stable source of employment and revenue for villagers who were once focused primarily on subsistence farming. By expanding organizations native to the region, this program will help village farming cooperatives take the next step to becoming larger, more commercial farms. In regions with little economic opportunity, this will generate much needed employment and cash while laying the groundwork for the expansion of a legitimate business community. These farming companies, owned and operated by the villagers, will provide the economic stimulus to help lift families out of poverty while providing an increase of fungible cash for the development of the community.

The students who went to Cameroon raised nearly $6,000 in advance of their trip in order to pay for the completion of several development projects. The Corporate Expansion Loan Program, one of the projects approved for funding, will soon be the pilot program for this new type of micro-finance loan focusing on corporate expansion. For information on, or to donate to any of these programs, please visit www.peoplefundingpeople.org or contact Dr. Kathleen Madden at kmadden@peoplefundingpeople.org or Matthew Groch at mgroch@drew.edu.

Matthew Groch has been an intern for the Metropolitan Corporate Counsel since September of 2007. Currently he is a senior at Drew University in Madison, NJ graduating with a major in Political Science. In January of 2008 he traveled to Cameroon and helped to develop this program working alongside Felix Nkongho and Professors Kathleen Madden and Andrea Talentino. This was his second trip to the region; in May of 2006 he traveled to Ghana to research democratic development in Sub-Saharan Africa.