South Africa: big changes, clear choices

April 01, 1996

Outside the UK and the US, South Africa has the longest tradition of corporate community involvement. David Grayson of BITC has just returned from an extended visit and here he reports on the impact of the profound changes now affecting every aspect of life.

My last visit was to a major multinational. The night before, the community affairs manager had been called to an emergency: their sub-contractor, building a new outlet in Kalichya township outside Cape Town, had been run out by local residents; he was not from the area and wasn’t even using local labour. Community affairs were called in as the only people who understood the problem and were working towards solutions.

How quickly their role has changed from the traditional form of corporate social investment (as CCI is known in South Africa). Under the Sullivan Code, American companies were expected to contribute 12% of pre-tax profits and not derive any business benefit from it. Today there is a strong push for more professional, business-related and added value CSI. The driving forces are many.

Pressures for change

First, the chill winds of international competitive forces are blowing strongly, now the protective wall of trade sanctions are gone. Down-sizing, re-engineering and bench-marking are all the rage as companies defend home markets and compete externally.

Second, the Mandela government of national unity has launched an ambitious Regeneration and Development Programme and a National Business Initiative has developed a toolkit to help companies organise their CSI in support. For example in the Eastern Cape, private sector management skills are being mobilised to manage a major public works programme.

Third, affirmative action targets, requiring a proportion of women and black people in supervisory and management positions are forcing companies to examine how they attract, develop and retain talented staff.

Fourth, companies need to present a new image, develop a better understanding of black markets and the products they need. Deep suspicions remain of business and the role it played under apartheid.

Fifth, social exclusion is widespread: the top 12%, mainly white, enjoy GNP equivalent to that of Canada while the bottom 88% live in third world conditions, equivalent to Mozambique.

CSI today

Education has been important but now job creation is a key priority. The Anglo-American Corporation helps black-owned SMEs to bid for sub-contracting work. Shell has transferred its Livewire programme from the UK. The British government ODA is funding Durham University Business School to advise on a new national network of Local Business Service Centres, drawing on enterprise agency and Business Link experience.

Third wave

South African CSI is still mainly in the first (philanthropic) or second (strategic focus) wave; the emphasis is mainly on cash, with little employee volunteering and only limited use of other business functions. But this is changing as the third wave comes in. Coca Cola is involving its suppliers and organising CSI training conferences for them. BP has written a booklet for its employees to set out what it does, why and how to get involved. NedBank is adopting cause-related marketing with affinity cards.

One of the most intriguing developments is KPMG’s promotion of social auditing. The head of its Global Edge division, Keith Rosmarin, predicts that by the turn of the century most top 100 companies on the Johannesburg Stock Exchange will have a social audit.

Nowhere in the world today are the sheer range and complexity of issues facing business seen in starker terms. Will corporate community relations simply be one part of a new wider discipline advising companies on how to balance the interests of internal and external stakeholders? Or can the CSI function grow into this wider role, advising the corporation on how to adapt to survive in a world where expectations of business are growing?

Is that CSI manager I met on my last day a pointer to the future: earn your license to operate or see it eroded by direct action?

David Grayson is a director of Business in the Community and of the Prince of Wales Award for Innovation. He visited South Africa as part of the ODA programme of support for Local Business Service Centres. he is due to return in May and can be contacted on 0171 224 1600

Corporate Citizenship Briefing, issue no: 27 – April, 1996