Nigeria: Legislating CSR
March 2, 2009 by admin
Filed under Editorials
By Daniel Chandranayagam
Nigeria might be the first country in the world to legislate on corporate social responsibility (CSR). A bill which proposes that businesses spend 3.5% of its gross profits on CSR is making its way through the National Assembly. While there have been many definitions of “CSR”, “tax” has never been one of them, for that, appears to be the essence of the proposed legislation. Doing business in Nigeria is getting more expensive.
On the face of it, the Nigerian idea of “CSR” appears to be more philanthropy-based, with some failure in valuing CSR’s integration through the supply chain (although labour aspects are covered in the bill). In addition, the Nigerian government (which has proposed the bill) seems to have overlooked that CSR means going beyond compliance.
It has been reported that the motivation for the bill is the lack of CSR initiatives by Nigerian companies. Apparently, the country’s government has felt that legislation and a supervisory body to enforce the laws are adequate solutions. The bill also proposes the establishment of a commission, whose duties include providing standards, integrating social responsibility and international trade issues, conducting research and investigations into community needs, informing businesses of requests, and ranking of organisations according to their CSR initiatives.
CSR by Asensi
The commission will also publish an annual report of social and environmental impact of businesses’ activities, develop policies to encourage corporations to become engaged in the community, and ensure that companies sponsor cultural and educational activities that add value to Nigeria’s socio-political and technological development.
On one level, one might offer Nigerian businesses sympathy, as they might find they have a lot on their plate once the bill is passed, and to add salt to the wound, they might find their profits dwindling. In fact, considering that CSR levy comes from profits before tax, SMEs might struggle to survive in the long-run.
On the next level, one wonders what to which standards the new commission might subscribe, as many developing countries find the CSR / SRI standards practised and required by developed nations to be far too onerous to be profitable.
Finally, it must be said that there are always ways around any law.
Criticism of the bill is rife. Nigeria has been reported to have a long list of taxes as it is. In addition, one critic has said that the Nigerian government should consider increasing its breadth of taxation rather than depth. Apparently, those who pay tax in Nigeria are overtaxed, while many others are not required to pay tax at all.
It has been suggested that, rather than legislating, the Nigerian government should try to promote CSR through persuasion and complementary activities.
Yet, it is likely that many nations are watching Nigeria, and waiting to find out if the CSR law works. If it does, it is likely that many other countries might find similar laws proposed and implemented over time.◊
