Caring Without Control: Corporate Social Responsibility

Do Chinese enterprises contribute to the societies in which they extract resources? According to independent researchers Chinese companies generally do not promote corporate social responsibility (CSR) programmes in Africa, but are increasingly interested in these programmes and the positive impact they could have on corporate image. Our research revealed a familiar pattern: the companies insist that they are contributing to society, their critics respond that they are not putting back anything like that which they take out. But this is hardly unique to Chinese companies.

Claude Kabemba's picture

Director of the Southern Africa Resource Watch (SARW)

October 10th, 2012

Do Chinese enterprises contribute to the societies in which they extract resources? According to independent researchers Chinese companies generally do not promote corporate social responsibility (CSR) programmes in Africa, but are increasingly interested in these programmes and the positive impact they could have on corporate image. Our research revealed a familiar pattern: the companies insist that they are contributing to society, their critics respond that they are not putting back anything like that which they take out. But this is hardly unique to Chinese companies.

There are clear breaches of social responsibility standards. Perhaps the clearest example is the role of individual Chinese traders who relied on an exploitative relationship with artisanal Congolese miners. This relationship was not initially contractual or predictable. Chinese bosses bought commodities spontaneously, without knowing the real value of the merchandise (because the goods never went to a laboratory for analysis). In many cases, Chinese buyers pretended that the minerals were of low grade, and paid the Congolese less than they were worth. The Congolese artisanal miners were desperate to find money for their daily meal, and Chinese traders used this situation to devalue the goods. It is not surprising that artisanal miners speak of bad working conditions and bad treatment at the hands of Chinese companies. One of the biggest human rights abuses in the mining sector was the presence of children in quarries. Most of the Chinese commodities were acquired through child labour. A study by a Congolese NGO, Action Against Impunity for Human Rights (ACDH), found that of the over 200 000 miners employed in artisanal mining, 40 per cent were children under the age of 15 years.

There are many cases in which companies are accused of not doing enough. Our Zimabwe research team encountered a strong view that mining companies generally, the Chinese and Russian included, do not plough back resources into the community. In the Democratic Republic of the Congo, the agreement setting up a new mine, Sicomines, which will start production in 2013, is said to be weak. The mine is not expected to make a significant CSR contribution.

In Zambia, Chinese company LCM differs from other mining companies such as Lumwana (a Canadian company), where corporate social responsibility is an integral part of its strategic engagement with the community. There was no evidence to suggest that the same applies at LCM. CCCM’s contribution to the community as part of its corporate responsibility is almost non-existent. Apart from providing employment to the surrounding villages, no contribution has been made to the development of the area.

From the field studies, we noted the following:

1.     Education: Apart from ferrying sand to Chamukwapulo community school during construction, no other commitment has been witnessed by the surrounding community. According to employees, education is a key priority as lack of it has caused a lot of suffering and underdevelopment.

2.     Training: The company hasn’t put in place any plan to upgrade employee skills and education standards.

3.     Health facilities: At the time of the study, the mine sites had recorded a number of cholera cases involving employees; this resulted from the lack of concern by the management to put in place precautionary health measures. According to the area councilor, there have been suggestions for the company to contribute to the upgrading of a local health post into a centre or mini-hospital, but the response hasn’t been positive. There is a sick-bay at shaft 1, stocked with drugs and administered by a Chinese expatriate without being approved by a medical institution. The person in charge of the sick-bay understands only Chinese, while the Zambian workers do not understand Chinese.

The road leading to the mine is important for the local people. It was constructed between 1965 and 1968, when Maamba coal mine started mining in the area before relocating to its current location. Besides the mine, the road serves the needs of this predominantly agricultural community, serving as an important link between people’s produce and access to market. During the study, most respondents lamented the state of the road which is now in a deplorable state. They observed that until 2005 the road was intact and transport wasn’t a problem for the local farming community, but by the time production commenced at CCCM the road had been damaged extensively. The company does not repair the road. When asked whether the community had talked to the mine owners about the road, the area councillor informed the study team that they had on several occasions. He further stated that in one meeting the mine owners informed the community that if they were issued instructions from State House, they would take corrective action. CCCM management doesn’t recognise the lower organs of government, and this raises concerns about the extent of political control and decision-making. The people of the area are in desperate need of a good road if their agriculture is to be developed further. At the time of study, the newly appointed District Commissioner in the area acknowledged that his office had made frantic efforts to improve dialogue with the mine owners, inviting the management many times to meet for discussions. He further contended that he had in possession technical reports from the Ministry of Mines Safety Department whose major recommendation is the closure of the shafts until identified issues are addressed. Despite this, the mine has continued operating.

Unlike most of the large mining operators in the Copperbelt and north-western regions of the country which are on state land, Collum Coal Mine is on Chief Sinazongwe’s customary land. It is not yet clear as to the type of mine license the company has. There have been a lot of systematic displacements, which have been carried out with full consent of the local village headmen and the chief. It is not clear as to who owns the land between the mine and the local community, and the extent of the land is not known. The local government authority has no idea on how the land was acquired. When local households are displaced, compensation arrangements have been made indirectly through traditional structures, and not directly with the households concerned.

But again, the assumption that Chinese companies ignore CSR is contradicted by evidence of an array of programmes in several firms. In DRC, despite a generally bleak CSR record, Chinese companies are upgrading their operations – many have made applications for large-scale mining permits, which shows their intention to convert to industrial mining. At the same time, many Chinese private companies have promised to contribute to the amelioration of the social conditions of their workers and to respect the country’s legislation.

In South Africa, Aquarius’s CSR and community development projects include a water and sanitation project, upgrading of schools in Ikemeleng, Rustenburg Waste Management project, training at the Lapologang Village, expansion of Retief and Marikana Primary Schools, Kiwi Early Childhood Development Centre, and Bakone Ba Phetla Community Centre. Environmental management plans (EMPs) are developed in accordance with national legislation, while SRK Consulting conducts annual performance assessments of the EMPs.

In Zambia, LCM’s poor performance is not as poor as it seems. From information gathered away from the establishment (including periodic observations of ongoing practices), LCM has taken on various commitments of support to a number of sectors, including education, health, recreation (support for a football team, Roan United) and sports facilities, support to the swimming pool facilities and related activities. Two unique areas of support are the women’s club for miners’ wives, with a focus on empowering them economically, and supporting activities for female child life skills. LCM will support these activities through a centre in the Mpatamatu community. The second area is the support being provided to agricultural activities. According to information gathered from officials, LCM has for the 2009-2010 farming season, donated 25 million kwacha (US$5000) worth of agricultural input, including 100 bags of fertiliser and 50 bags of maize seed. LCM sees this as a way of addressing alternative economic survival measures for the district. LCM is a member of the Chamber of Mines, which advocates for its members to be fully involved in issues affecting their immediate community. One of the ways in which LCM, like many other mining companies which entered development agreements, is expected to contribute to the community is through engaging in social projects within and close to the district. This is the anticipated corporate social responsibility programme, which anticipates that the mine owners will be compelled to share some of their profits to the benefit of the immediate communities. And, at the time of study, the newly appointed District Commissioner in the area in which CCCM is active observed that it is wrong to say that Chinese investment is not community-friendly. He cited cases other than CCCM where companies from China are operating differently.

In Zimbabwe, ZIMASCO has long-standing CSR programmes. Donations have been made to local schools, hospitals and disabled people. ZIMASCO has donated in kind to 11 primary and secondary schools, four hospitals (including the construction of Mutorashanga Hospital and the mortuary at Kwekwe Hospital), five stadiums and youth centres, a bridge and road maintenance, water treatment for Kwekwe Town Council, Kwekwe Polytechnic (and equipment), 50 houses in Kwekwe, and a police station in Mutorashanga. Seven orphanages, six homes and seven rehabilitation centres benefit in cash and in kind on a regular basis. The advent of Sino-Steel has seen other high-profile donations. According to the CEO of Sino-Steel Zimbabwe, a donation of $200 000 was made to the first lady’s orphanage in the Mazowe district (north of Harare). The research team also learnt that there were plans to sponsor a budding local driver in Formula One car racing. But most of these donations predate the majority shareholding takeover of ZIMASCO by Sino-Steel Corporation. The real issue is their continuation and possible expansion under the ownership arrangement.

A recurring theme in several of the country studies was the absence of a clear legislative framework forcing companies to engage in CSR activities. In South Africa, this does exist in the various industry-wide charters negotiated between employers and other stake-holders, including the government – the Mining Charter is obviously the applicable instrument here. In Zimbabwe, there was previously no legal requirement for CSR, but new legislation requiring the indigenisation of companies contains regulations which stipulate that 10 percent of gross profit must go to the community. The Mining and Minerals Act will be amended to legalise this requirement. Since the South African Charter was initially designed to ensure greater black ownership, both of these measures requiring CSR are a result of indigenisation policies. In other countries, where this is not a pressing issue, there are no policies or laws compelling CSR.

Zambia has no policy compelling multinational corporations to engage in social projects. The absence of a compelling corporate responsibility policy or framework is visible, and works to the disadvantage of both the mining companies (who are expected to make contributions to the community, though these remain undefined) and the community (who expect to benefit from the mining companies in some way). Corporate social responsibility is implemented largely as an alms-giving activity. CSR, in the view of our research team, needs to be an integral component of the companies’ strategic development plan. It should also take into account a more responsive, deliberate strategy rather than a reactive one, and ensure that sustainable results are achieved.

In Zimbabwe, the Chamber of Mines argued strongly during an interview that there should be targets for CSR. ZELA concurs with the MMCZ view on CSR in the mining sector. A distinction ought to be made between the facilities they provide for their employees, and what they do for the surrounding communities. On the former they are obligated by their business interests; on the latter they operate on a “trickle-down” or spill-over basis. In other words the surrounding communities are not an object of their investments. Small-scale miners are instead depriving the communities they are working in of both community development and environment reclamation.

In the view of our research teams, CSR should not be voluntary and the other countries studied would benefit from following South Africa and Zimbabwe’s lead by introducing frameworks requiring a minimum level of CSR.

About the author(s)

Claude Kabemba is the Director of the Southern Africa Resource Watch (SARW). In 2006, the Open Society Initiative for Southern Africa (OSISA) asked him to spearhead the formation of SARW. He holds a PhD in International Relations (Political economy) at the University of the Witwatersrand (Thesis: Democratisation and the Political Economy of a Dysfunctional State: The Case of the Democratic Republic of Congo). Before joining SARW, he worked at the Human Sciences Research Council and the Electoral institute of Southern Africa as a Chief Research Manager and Research Manager respectively. He has also worked at the Development Bank of Southern Africa and the Centre for Policy Studies as Policy Analyst. Dr. Kabemba’s main areas of research interest include: Political economy of Sub Saharan Africa with focus on Southern and Central Africa looking specifically on issues of democratization and governance, natural resources governance, election politics, citizen participation, conflicts, media, political parties, civil society and social policies. He has consulted for international organizations such Oxfam, UNHCR, The Norwegian People’s Aid, Electoral Commissions and the African Union. He has undertaken various evaluations related to the work of Electoral Commissions and civil society groups interventions in the electoral process in many African countries. He is regularly approached by both local and international media for comments on political and social issues on the continent. His publication record spans from books (as editor), book chapters, journal articles, monographs, research reports, and newspaper articles.

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