Chapter 2: Corporate Social Responsibility: A literature review
2.5. Challenges and priorities that influence CSR practices in developing countries
39
operations found in these areas (Ajayi, 2006:15; Goulbourne, 2003:4). MNCs operating in these countries quickly become significant conduits of socio-economic development as their investments are expected to improve the livelihoods of citizens. These organisations are expected to become partners of the country’s governments in the developmental agenda.
Visser (2009:474) states that developing nations offer a distinct set of challenges that need to be addressed by organisations operating in them. These are distinctly different to the challenges faced by developed nations because of the glaring socioeconomic disparities. Developmental challenges form an integral part of the former as their priorities are focused more on social, economic and environmental matters.
40
regarded as poor. This is seen as a considerable setback in the fight against poverty as the pandemic is estimated to have created between 88 and 115 million new poor individuals, thereby settings poverty eradication goals back by six to seven years.
There may be no single solution to poverty eradication. It requires a collective effort from all players.
With this in mind, a concerted effort from both government and the private sector has to be made to achieve even greater results. What is significant about the challenge of poverty is that it is a cycle that affects and is affected by other aspects of society as illustrated below in Figure 2.4.
Figure 2.4. The ecosystem of poverty Source: Sarkar (2015:77)
Sarkar (2015:77) found that poverty is caused by a range of issues that create a vicious cycle of failure and further suggests that these problems are all interrelated. As illustrated by the ecosystem of poverty, challenges experienced by poor countries make it exceedingly difficult to escape from it.
These challenges, which include lack of healthcare, lack of capital, inadequate housing, lack of access to education and unemployment, all contribute to the cycle of poverty. Breaking the cycle of poverty is a complex process which requires a concerted effort from a number of social, economic
41
and political players. Assistance may be sought from external funders like the World Bank, the African Development Bank and the International Monetary Fund, but this often comes with imposed ideas and or conditions. Sarkar (2015:74) also criticised aid programmes which he suggested did little to eradicate poverty especially in corrupt nations. The influx of aid into these countries may worsen the situation by creating distortions in the economy thereby increasing inequality and disturbing efforts towards real development.
Some of the worst affected countries are those in the ‘Third World’. These countries remain the most resource-rich nations on earth but sadly, their citizens do not always enjoy the benefits of investment in their areas. These nations suffer immensely from concerns such as low unemployment, inadequate housing, low per capita income, high birth rate leaving Kleinpenning and Reitsma (1985:214) to argue that these are interrelated, and all contribute to a vicious cycle of poverty as illustrated below. Poverty, according to Kleinpenning and Reitsma (1985), is a state of social deprivation that causes individuals to live in substandard conditions. It has a myriad of causes and consequences such as hunger, lack of access to health and sanitation, ecological degradation, and low productivity. Figure 2.5 compliments the argument presented by Sarkar and illustrates that the eradication of poverty is a complex endeavour which cannot be explained simplistically. According to Kleinpenning and Reitsma (1985:214) poor nations are trapped in a “complex web of interlocking vicious circles” which are very difficult to escape from.
Figure 2.5. The poverty cycle
Source: Kleinpenning and Reitsma (1985:214)
42
Cizon (1966:84) describes the poverty cycle as “poverty that generates poverty” and the diagram above illustrates the difficulty of solving each problem in its singularity. Much effort is needed in identifying key issues and their consequences thereby affording developmental practitioners the capacity to enact meaningful roadmaps for the eradication of poverty. As such, empowering disadvantaged communities, many are those who live in the rural areas, may be important to the challenge. For example, Todaro and Smith (2009) describe African agriculture as being characterised by low output subsistence farming, primitive practices, shift cultivation and inadequate labour supply during the peak farming season. They also suggest that agriculture in Asia, for instance, is characterised by large numbers of people crowded onto too small pockets of land.
Therefore, by developing rural infrastructure, improving access to capital and improving agricultural practices and technology, these communities are afforded a vital chance to improve their livelihood.
This would consequently mitigate rural to urban migration and ease the pressure on towns and cities.
Developing countries also face challenges with the provision of quality education and skills development. UN estimates in 2018 showed that approximately 103 million youths across the world lack elementary literacy skills and of these, above 60% of them are women (Mlambo-Ngcuka, 2018:
par. 16). This is significantly detrimental to any socio-economic developmental effort. As a focus, the World Bank (2015) contends that “increased access to higher education is needed to achieve a productive, talented, diverse labour force and empowered citizenry”. This will see developing nations emerge from an economic quagmire that they face.
By ensuring that there is an adequate and attractive pool of skilled and knowledgeable labour, developing nations may find a way to escape the poverty trap. The World Bank (2015) estimates that in order to keep up with the pace of population growth, 600 million jobs will need to be created by 2030.
Despite major progress towards gender equality and the emancipation of women in recent years, some gaps still exist around the world as women continue to face difficulties. The world acknowledges gender inclusivity and the empowerment of women and girls and lays out formidable goals for the eradication of all types of abuse and harmful behaviours, boosting economic emancipation, access to resources and technology, and amplification of women's voices in decision- making (World Bank, 2016:10).
Developing countries need access to potable and affordable water as well as access to adequate sanitation. The UN Academic Impact (2015) notes that although there is an adequate supply of potable water on the globe, poor management and weak infrastructure have had a negative impact on water supply and quality, resulting in millions dying across the globe.
Driving economic development through industrialisation and modernisation is paramount to the development. The World Bank (2015:20) suggests that investments in telecommunication, energy, and transportation networks form the foundation for industrialisation, innovation and improved
43
productivity especially in developing countries. Many of these countries find themselves stuck in sectors that may be characterised by low productivity such as subsistence farming and informal trading. However, for there to be meaningful economic development, it is imperative for these countries to shift towards high productive initiatives such as manufacturing, construction, trade and services.
Many developing countries are former colonies and are faced with socio-economic challenges that may have been created by the injustices of the past. Central to changing the socio-economic situation of its citizens, many of whom have been disadvantaged or marginalised by the legacies of colonial policies such as segregation, these countries are enacting policies that aim to address this.
These countries believe that structural economic policies such as IEEP will help to strengthen citizen’s participation and achieve social parity for their citizens (Social and Economic Empowerment, 2014).
The priorities for developing countries may be summarised under the 17 Sustainable Development Goals (SDG) as prescribed by the UN. These goals were agreed upon by UN member countries as a global guide to action for 15 years and replaced the Millennium Development Goals.
2.5.1. Sustainable Development Goals (SDG)
Adopted by the UN’s 193 member states in September 2015, the SDGs are a set of goals designed to challenge and mobilise the global community towards providing a better and more sustainable future for its citizens. These goals represent a universal call to action that sets targets for global development through the eradication of poverty, the promotion of economic prosperity, the protection of the environment and the promotion of peace. The SDGS consist of 17 goals and are broken down into 169 targets. The 17 goals as presented in Figure 2.6 and represent an integration of effort that is needed to improve the lives of world’s citizens. The 17 icons below characterise the coherence of economic growth, social development and environmental protection to achieve sustainability across the globe.
44 Figure 2.6. The 17 Sustainable Development Goals Source: (UN.org, 2021)
The SDGs were drawn up as an expansion and follow up on previous developmental agendas including the Millennium Development Goals (MDGs) that expired in 2015. Buhmann et al.
(2019:390) state that while previous global declarations on sustainable development concentrated on governments, the SDGs were designed to be more innovative and inclusive by increasing the involvement of the corporate world through global partnerships. The MDG's had fallen short of achieving desired results and it was viewed that the SDGs would address critical elements more effectively. Critics of the MDGs suggest that they were not inclusively formulated, lacked specificity especially on issues such as gender equality poverty and hunger eradication. Funding for the MDGs was expected to flow from donor aid whereas the SDGs have focused on economic sustainability where countries have been challenged to improve their fiscal discipline and enhance their own revenue generating capabilities.
The MDGs also lacked the monitoring framework necessary for evaluation and accountability. With 169 targets and 230 indicators, the SDGs add a different dimension to monitoring and evaluation as part of the whole process. Despite these shortcomings, the MDGs did achieve some success and prepared the world for clearer, more concise, time bound and measurable goals. MacArthur and Rasmussen (2017: par.6) reported that the MDGs’ successes included observed progress by low- income countries in areas of water and sanitation, child mortality and the expansion of HIV/AIDS and TB treatment.
The world has entered the last decade of the SDGs and with it comes increased interest and conviction to try to achieve them within the allotted time. Over these remaining ten years (aptly
45
dubbed the decade of delivery) countries and organisations acknowledge the need to meaningfully invest in decisions which will culminate in positive SDG outcomes. They recognise that developing nations will require additional resources if these goals are to be achieved. As such, much effort is centred on the mobilisation of resources to assist these countries to ensure that no country is left behind.
Organisations, through their CSR initiatives, are well placed to assist governments, especially those in the developing world, to achieve these SDGs. These organisations may either provide governments with funds to support developmental projects or may elect to actively undertake their own initiatives, for example through building schools, clinics and roads.
Understanding the challenges and priorities that influence CSR practices in developing countries, the research is presented with a view of what needs to be considered by MNCs in the formulation of strategies. It is also worthwhile to compliment this with a thorough comprehension of the theories that influence these strategies.