In the existing globalized economy, big business enterprises are operating in a number of countries beyond their own. Some of these global business enterprises, apart their normal business operations, they won the respect and recognition of the communities in countries they are operating due to their undertakings of a number of social initiatives aimed social advancement and poverty reduction. Coca Cola, Microsoft and GAP are some of the cases in point here.
On the other hand, there are a number of global business enterprises which are well known for their notoriety in disregarding the social and cultural values of the communities in their areas of operations. The global energy giant, Shell can be sited as an example of such global business enterprises in the oil rich Niger-Delta region of Nigeria.
The motivation and commitment of corporations to the goals of poverty reduction and economic and social advancement has been the subject of much debate and analysis. Some of today’s leading practitioners of corporate social engagement, especially among firms in the extractive industries, have historically been closer to the lagging rather than leading edge of enlightened behavior.
Several firms in the apparel industry and retail trade have been hit with harsh publicity about labor practices of subcontractors. Thus, in many cases, the concerns exhibited by global businesses to improve social conditions results from the need to restore a tarnished image or make amends for previous behaviors. The depth of business commitment to social progress also has been questioned. Many social activists question whether corporations are interested only in the public relations benefits of their social programs.
Based on the evidence gathered, it is possible to conclude that the range of activities, motivations, and commitments on the part of global business is very broad. The most forward looking companies have established policies and made commitments that permeate the corporation from the Board and CEO levels on down to the very lowest stratum of the company. Others have yet to understand fully the business case for corporate social engagement and have not embraced such policies.
Further, even those companies that strive most to achieve the highest standards of corporate engagement can fall short on occasion. Although social activities are voluntary on the part of business, governments of the advanced economies have taken steps to encourage and promote such activities. For example, most governments allow a tax deduction or credit for charitable donations. Governments also use various forms of public advocacy and moral suasion to promote good corporate engagement.
The broadest effort to influence the conduct of global enterprises is encompassed in the OECD Guidelines for Multinational Enterprises. These guidelines are recommendations of appropriate business conduct by global enterprises. Another important multilateral, and tripartite (government/business/labor), effort is the set of voluntary guidelines and commitments of the International Labor Organization’s Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy, known as the MNE Declaration.
The question of whether a private, commercial enterprise should engage in socially beneficial programs must be answered by each business itself. But the large number of businesses that answer that question affirmatively verifies that sufficient business reasons exist. Motivations run the gamut from proactive brand identification with social causes to strictly defensive measures to ensure against negative publicity and consequent lost sales. In some instances, especially when they find themselves in conflict situations, businesses may feel they have no choice but to play a positive role in supporting social stability and better governance.
Not all global businesses, of course, are inspired to implement policies or programs that respond to local conditions. Circumstances differ among developing countries and various lines of business. Some firms have a narrower and, in some view, shortsighted perspective based strictly on the exploitation of local resources. In addition, smaller firms may be less able than larger firms to afford social programs, or, at least, their programs will be smaller. There are some reasons which have motivated global businesses to become more socially engaged.
One of them is enlightened self-interest. Perhaps the simplest and strongest explanation for why firms go beyond narrow-gauged market activities is because it is right and serves the longer-term interests of the society, which in turn benefits the longer-term interests of the business by creating a more stable environment, good will, and brand identity. Many business leaders cite humanitarian motives for social activities, and these are clearly important. But businesses are unlikely to be motivated solely or consistently by altruistic appeals. They are neither charitable nor government institutions, and they should not be expected to act as if they were. Nevertheless, businesses prefer to operate in more stable political and economic environments.
Positive brand identification or goodwill is another reason. Some firms undertake social initiatives to enhance their brand image. Some act to defend their brand against negative publicity while some have built their brand based on identification with social causes. The value of its brand can be a significant asset to a firm since strong brands have the power to lift sales and earnings. Consumers in developing countries represent a fast growing segment of many markets. Positive brand recognition based on identifications with social engagement can be important in building consumer loyalty in those markets. In addition, goodwill can have a direct payback as local governments may examine the totality of their relationships with a company when making regulatory or licensing decisions.
Labor markets-at home and abroad is also part of the reasons. Tight labor markets for skilled workers in developing economies lead firms to improve local labor conditions. In many cases businesses are investing in the education and training of their workforce to improve its quality and productivity or to improve other aspects of the work environment. The AIDS programs of Volkswagen in Brazil and Daimler-Chrysler in South Africa provide good examples of how a firm can help itself by addressing a social problem. These programs focus on prevention of HIV/AIDS and care of those stricken by the virus. Both companies have found that it is far more profitable to educate and treat their employees than to recruit and train new ones.
Profitability is also one of the reasons. Numerous studies have linked corporate social activities to better business performance as measured by profitability or return on equity, and evidence of a narrowly defined “business case” for social engagement, although weak in some dimensions, is clearly positive.
Global companies make practical business decisions to invest in, buy from, and sell to developing countries. Those activities promote economic growth and poverty reduction. Decisions to invest in corporate social policies and programs are no less practical or business-based. They are valuable both to the business and to the recipient nation.
On close examination, many firms will find that when they invest in initiatives that help the host country, they, in turn, benefit because their commercial success is directly affected by local economic and social conditions. Although businesses should neither be expected to perform the functions of government nor mandated to perform non-commercial social activities, significant room remains for global businesses to voluntarily engage in a number of social initiatives which can help the economic advancement and poverty reduction of the communities in the area of their business operations.
Global Enterprises and Social Initiatives
Sudan’s dire humanitarian crisis
As Sudan’s conflict heads toward its fifth month, a dire humanitarian crisis looms with thousands of people, many of them residents of the capital Khartoum, facing the prospect of death by starvation and malnutrition.
The tragic passing of Khaled Senhouri, a well-known violinist, who recently succumbed to hunger in Omdurman, highlighted the predicament of civilians for whom lack of food and water can be just as deadly as bullets.
With intermittent electricity, dwindling food supplies, and limited access to essential resources, Sudanese in Khartoum and other violence-torn towns and cities are locked in a desperate fight for survival.
In a heart-wrenching online post shortly before his death, Senhouri described the reality of life under siege. Unable to leave home to procure food because of the fighting, his was a despair now shared by countless others.
Since the outbreak of violence in Khartoum on April 15 between the Sudanese Armed Forces and the paramilitary group Rapid Support Forces, the nation’s food imports and domestic agriculture have faced severe disruptions, leaving supermarket shelves bare.
Most markets, shops, and petrol stations are closed, and even basic commodities like cooking gas are scarce and exorbitantly priced on the black market.
In the face of such scarcity, the price of essential items has skyrocketed, with the cost of lamb reaching a staggering $91 per kilogram. Poultry meat is almost nonexistent, while fruit and vegetables are disappearing from the market.
Tomatoes, cucumbers, and other fresh ingredients now cost a fortune, leaving families with no choice but to endure hunger and malnutrition.
The UN says 25 million people – more than half Sudan’s population – need food and 13.6 million children are in desperate need of humanitarian aid.
More than 19 million people, which accounts for 40 percent of the population, are already experiencing hunger. The World Food Programme says it has reached more than 1.4 million people with emergency food aid as needs intensify.
Fighting in the capital – three cities built around the confluence of the White and Blue Niles, Khartoum, Omdurman and Bahri – has heavily affected areas housing important state or military installations.
The Darfur region, already ravaged by brutal conflict in the early 2000s, has seen some of the worst of the violence. Fighting there has recently concentrated around Nyala, after clashes in El-Geneina where the UN had reported atrocities.
A series of ceasefires brokered by Saudi Arabia and the US in indirect negotiations in the early stages of the conflict have gone ignored or not fully respected by the dueling factions.
As a result, many Sudanese workers have gone unpaid for four consecutive months. The collapse of the banking system and the lack of cash liquidity due to the conflict have left families burdened with debts and unable to meet their basic needs.
The health sector is also grappling with immense challenges. Attacks on health workers have put the few remaining hospitals in Khartoum at risk. The scarcity of medicines and difficulty in accessing treatment have further aggravated the crisis.
The International Rescue Committee warns that the country is hurtling toward a man-made food crisis, which could grow worse in the coming year if global food price inflation continues on its current trajectory.
Farmers in several states across Sudan say the conflict is disrupting the production of staple crops like sorghum and millet, which aid agencies say could drive the nation deeper into hunger and poverty.
Even though many agricultural areas in Sudan are relatively calm and not directly affected by the fighting, delays have been caused by factors such as a lack of credit.
Banks have been looted in Khartoum and supply chains have faced disruption, impacting the availability of crucial agricultural resources like fertilizers, seeds, and fuel. Several warehouses storing these inputs have also been plundered.
Sally Beth Anyanga is a versatile Communications Specialist with 7+ years’ experience working for non-profit and corporate organizations with a proven history of developing effective media communications, helping to establish strong internal communications policies, and developing helpful crisis management procedures. Sally is currently serving as the East Africa Regional communications officer for the International Rescue Committee. Capital caught up with her to talk about the dire situation in Sudan. Excerpts;
Capital: The International Rescue Committee (IRC) warns that the ongoing fighting in Sudan that has displaced almost one million people and will continue to rise if the fighting does not end. How are you planning to cope with this?
Sally Beth Anyanga: Following intense violence in Sudan, there is an acute shortage of food, water, medicine and fuel and limited access to electricity and communications.
In addition to its ongoing health, nutrition and women empowerment activities, the IRC is providing displaced people in Tunaydbah (Gedaref) and Blue Nile with basic items to help meet their immediate needs.
In Chad, the IRC has been providing drinking water to people who have arrived severely dehydrated and has set up a mobile health clinic to attend to the vast health needs of the arriving population.
IRC will continue to scale up WASH (including hygiene and sanitation), health and protection support in the coming days.
Capital: Issues such as economic instability, a lack of basic services, and ongoing violence continue to impact the country. What do you think will be the solution for Sudan?
Sally: Funding: response in Sudan is very underfunded despite unprecedented humanitarian needs. Donors will need to provide significant additional funding to address new needs as well as support the likely increased operational costs.
In addition, Donors will be required to provide flexible funding to partners to allow them to adapt to a very fluid situation, new emergency needs (e.g., from those in Khartoum), address operational challenges (e.g. use of Hawalas) and support local community groups already working in Sudan.
Safety and Security: There needs to be significant investment in security information sharing and analysis. The Humanitarian Country Team and leadership should proactively support organizations to establish a presence in Sudan and provide support to the NGO and wider humanitarian community. At the State Level INGOs must be involved in scenario and contingency planning to ensure that the requirements of INGOs shape potential evacuation plans.
Bureaucratic Impediments: The operational space for NGOs has been shrinking as they have faced increasing restrictions. The complexity of the ongoing crises in Sudan will require greater operational flexibility and a removal of administrative obstacles. Requirements such as travel notifications, involvement of government authorities in recruitment of national staff should be removed by local and national authorities.
Banking System: The functionality of the banking system in Sudan has been significantly impacted by the current crisis. Banks have been closed. As a result, thousands of people have been unable to access their income. The Cash Working Group should be supported to conduct a mapping of functional financial service providers and provide technical guidance to inform standardisation in the approach to using informal financial service providers (e.g. Hawalas).
Information Management: Significant additional investment in information management will be required. Current estimates on numbers of displaced persons risks under-estimating the scale of new displacement as many of those displaced from Khartoum are hosted by extended family, host community and rented accommodation. Accurate estimates are essential to facilitate humanitarian planning.
Capital: Sudan is also facing a refugee crisis, with over 1 million refugees from neighboring South Sudan seeking safety in the country. Additionally, the country is dealing with the effects of climate change, including devastating floods that have displaced thousands of people. How is the IRC dealing with this?
Sally: The IRC has a main office in Khartoum with three field offices in El-Gadarif, Blue Nile and South Kordofan states.
In Sudan, the IRC supports people impacted by conflict and crisis, including women, children, the elderly, persons with disabilities, refugees, mixed populations, and host communities.
We provide an integrated health, nutrition and water, sanitation, and hygiene (WASH) program that maintains basic service provision while actively working to increase local capacity to sustain the service provision.
The IRC also provides child protection services and comprehensive women and girls’ protection and empowerment services including gender-based violence (GBV) survivors.
Capital: In Darfur, a region in western Sudan, violence and displacement have been ongoing for many years. In recent years, fighting has also occurred in other parts of the country, including the Blue Nile and South Kordofan states. These conflicts have resulted in significant displacement and humanitarian needs. What have you done so far on these fronts?
Sally: Currently we are responding to the influx of refugees at the border by providing clean water, health and protection in 5 villages with about 30,000 people in the provinces bordering Darfur.
Capital: Do you think the conflict in Sudan will spill to the neighbouring countries?
Sally: The conflict has led to the displacement of thousands of people who have already crossed borders to other countries. up to 70,000 people have been estimated to have arrived over the border from Sudan into Chad since last weekend.
Capital: East Africa is home to some of the IRC’s longest-running programs globally. Can you tell us your works?
Sally: The International Rescue Committee (IRC) helps people whose lives have been shattered by conflict and disaster to survive, recover, and rebuild.
Founded in 1933 at the call of Albert Einstein, we now work in over 40 crisis affected countries as well as communities throughout Europe and the Americas.
We deliver lasting impact by providing health care, helping children learn, and empowering individuals and communities to become self-reliant, always with a focus on the unique needs of women and girls.
NBE to polish directive to onboard financially excluded
The National Bank of Ethiopia (NBE) takes prudent steps to revise its directive to best realize the targets set by the National Digital Payment Strategy (NDPS), by boosting the role of agents whilst splitting certain weights to banks and other financial institutions.
During the recently launched ceremony for the GSMA report, titled, ‘Mobile Money in Ethiopia: Advancing financial inclusion and driving growth’, Solomon Damtew, Acting Director for the Payment and Settlement Systems Directorate at NBE, pointed out that digital payment schemes are registering tremendous growth despite being relatively new in the country.
As Solomon highlighted, in order to register the required growth, the central bank has harbored a conducive environment by backing the sector on issuing relevant laws and directives, “The directives in the digital payment and agent services has created an enabling environment for the system to flourish.”
However, the Acting Director cited that some changes are expected on the directive to boost the role of agents on the digital payment goals.
He told Capital that regarding boosting the role of agents, there will be clarifications on the directive and some changes will follow suit to realize NDPS’ success.
According to the latest report of GSMA in Ethiopia, the number of agents has been growing steadily, albeit slightly lower than its peers.
Regarding agents, Solomon said that the system needs to have some contact point where it can be able to change someone’s physical cash to electronic money especially for the very remote areas, “So these agents are very critical. This is still the area that we are yet to touch upon. So in terms of the agent businesses, most of the agencies are located in towns.”
He signaled that as a country, we need to expand to the rural areas in order to onboard the financial excluded society, “Therefore, we have to be considerate of these issues.”
“So what we did when we drafted this regulation, we saw who should be the agent? So in the previous directive, a valid business ID for example was a requirement for being an agent, which is very restrictive. This is because when we go to remote areas those kiosks and small shops seldom have any valid business license, which is a trend we have as a country,” the Acting Director explained.
“As per the use of the agent directive, we also encouraged an individual to be an agent especially in the remote area like through using the elders who are most respected, to attract new agents,” he added.
The other thing that NBE has considered was with regards to agent exclusivity. In the previous directive, which was issued in 2012, an agent was exclusive for specific financial institutions that have now changed to multiple mobile money services, which allow a single user to use that agent regardless of the issuer.
At the panel discussion which accompanied the report launch, the Use of Agents Directive, issued April 1, 2020, cited it allowed broader access to agent network management as the key enabler to expand agent services.
As Solomon indicated, the directive was a kind of comprehensive developed to serve both agents for regular bank services and mobile money services, “We are planning to split it.”
“The current Use of Agent Directive is more of an enabler for further financial services. And of course, we need to make more awareness to provide more clarification on the intention of the directive.” he said.
The Acting Director also expressed that the regularity body is considering revising its steps, “From the feedback that we got from the assessment of the regulation as per the implementation of the national digital payment strategy; we are considering to do some improvements.”
The leader of the sector at the regulatory body elaborated that for mobile money services agent, it is very crucial to convert cash to electronic means, mainly in very remote areas.
Most of the agents are located in big towns that require expanding to rural area in order to onboard the financially excluded society.
According to the plan, Solomon said, “We identified six major points in which we need to intervene and revise. The first is splitting from the other so that’s very important. The other five are in terms of KYC while some are there that created complications. So we have to clarify the existing directive.”
Bruk Adhana, Head of telebirr at ethio telecom, explained that agent networks are one of the key pillars for the successful implementation of mobile money, “And as it was, the first basic point is having an enabling directives and associated guidelines from the central bank in order for there to clarity.”
However he expected more amendments in the directive particularly written one besides the existed supportive understanding and green light from the regulatory body and leaders at the central bank.
In the past two years, telebirr has achieved to recruit around 111,000 agents.
Bruk said that the very important point is the active rate of the agents that is usually the key KPI to measure 30 days, 60 days, 90 days active rate.
“So, for the past two years we have engaged most of our airtime distributors to be our master agents and we have tried to engage different modalities to expand the agent network. We have currently around 20 percent weekly active rate agents from the total one,” Bruk said.
It is around 25,000 or 21 percent for 30 days active rate and 23 percent active rate in 60 days, “It is growing but we need to add more and also support our agents to have different engagement. And hopefully we will also have a very enabling directive very soon from NBE.”
He added that one of the key learning points that the operator has from NBE is that things have become very easy as environment is enabling.
The NDPS which was designed to be achieved until next year indicated on its document that the in the new ecosystem, agent networks are key to improving the distribution reach of financial services. The Use of Agents Directive addresses prior restrictions on the use of agents, such as allowing agent non exclusivity and agent network management by a non-bank financial service provider, and providing for a tiered structure of agents (super agents and micro agents).
The National Strategy also mentions that regarding the success of the agents that the NBE will continuously assess the impact of the directive, troubleshoot challenges in collaboration with sector stakeholders, and adapt regulations to grow the available agent networks and serve the needs of customers.
According to GSMA report,financial services access points at brick-and mortar outlets and mobile money agents are both crucial to advancing financial inclusion in the last mile.
The GSMA report, which Solomon and Bruk expressed their reservation particularly on the data, claimed there are significant changes than what the figures mention on the report. As indicated, according to the NBE data, 71 is the number of access points in Ethiopia which have now grown by almost 200 percent between September 2021 and September 2022. With mobile banking and mobile money services expanding, the NBE estimates that as of September 2022, there were more than 185,000 agents in the country.
It added that while agent networks are growing in Ethiopia, reportedly KYC requirements can be challenging to meet and that on-boarding processes can be slow.
The number of agent network share for the public is still very low that needs more expansion.
It a universal recommended that in order to fast-track the KYC processes, more agents need to be registered.
Tele’s ‘LEAD Growth Strategy’ curves success in its first year
The state owned, mammoth telecom enterprise, ethio telecom’s strategy pays dividends in the first year of roll out, as the firm expressed great enthusiasm of success for its second year.
The telecom operator which ended its 127 year monopoly courtesy of Safaricom Ethiopia entering the mix fully this past financial year disclosed that its first year of the three year LEAD Growth Strategy has reeled in great success.
As the CEO of ethio telecom, Frehiwot Tamiru expressed at a press conference on Thursday July 27, if the current situation both in the country and the globe is set to continue, her enterprise’s projections for the second year will surely be attained.
According to Frehiwot, the goal designed for the 2023/24 budget year targets to; have a healthy competition in the market, better security situation, improve on access to foreign currency, improve on the international market and other issues.
“We are targeted to attain growth in all sectors in the budget year,” Frehiwot signaled her delight.
The enterprise stated that the annual business plan has been developed considering and reviewing relevant government policies, international best practices, and industry trends.
“As the telecom sector is rapidly growing and being dynamic by nature, this plan is not a static plan, rather it follows as a ‘deliberate’ and ‘emergent strategy approach’, taking into account the growth and changes in the industry, the government’s development plans and directions, as well as issues related to competition and further reform, and the current conditions of our country,” the firm disclosed in its statement.
In the year, the enterprise has targeted to expand its mobile towers and capital investments.
In line to that, the subscriber base is targeted to increase by 8.3 percent to reach 78 million, with the mobile voice customers share projecting growths of 7.5 percent to reach 74.74 million, while data and internet targets to reach 41.17 million that may have more than one fifth increment. Likewise, the fixed broadband customers is gearing to reach 842,800 with 36.3 growth while the tele density is projected to reach 71 percent.
Regarding the promising new business venture, mobile money, the enterprise has aimed to boost its growth by 28.5 percent. The statement of the company disclosed that the telebirr customers will reach 44.1 million for this year.
The revenue on the other hand is expected to show a 14.7 billion birr increment compared with the 2022/23 budget year to reach 90.5 billion birr.
The projection revenue growth rate is however at a lower trend compared with the experience of the preceding years’ performance.
In the 2022/23 budget year, the revenue of ethio telecom had attained 75.8 billion birr at a growth of 23.5 percent compared with the 2021/22 budget year, while for the current budget year the growth percentage would be 19.4 percent that it a bit lower compared with the experience observed in the past budget year.
The enterprise to this regard stated that the revenue growth forecast considers the new business venture and shifting revenue source from traditional to value-added services, offering local and international products and services to the market, expanding telebirr’s access, service types and partners’ network, enhancing service delivery and by increasing customer satisfaction, retention and loyalty.
