Nigerian CSR Legislation: Good News or Bad?

By Charlotte Morgan

The Nigerian Government’s decision to issue a bill which legislates CSR (Corporate Social Responsibility) on a national level has been met with a fierce wave of criticism, which has now spread rapidly across the world. The bill, which was first announced in February 2009, proposes to make obligatory a 3.5% donation of companies’ profits to the government to spend on general CSR practices, such as “community investment and philanthropic activities”, as stated by Camilla Flatt, a consultant in Corporate Citizenship at AfricaPractice in London.

Many are under the impression this new move is a tax scam, an audacious action on the part of the government as Nigerian companies are already taxed just over 30% on their gross profit. Mallen Baker’s article, ‘Nigeria joins the “CSR as stealth tax” movement’, suggests that the Nigerian Government is abusing the notion of CSR to “lever more cash into government coffers”. Others see it as a step backwards, as it is common belief that CSR initiatives should come from the companies themselves, motivated by incentives as opposed to being forced by laws.

In actual fact, a recent definition given by the EU states that CSR should consist of “actions that appear to further some social good, beyond the interests of the firm and that which is required by law”, thus supporting the idea that compliance is the lowest form of contribution towards CSR. On the other hand, it could be said that the bill is offering a chance to get the country’s severe infrastructure under greater development. This includes the improvement (and establishment) of education and health systems, the construction of proper roads, and the provision of utilities, such as electricity and gas. Why should it matter that the CSR is only on a level of compliance to begin with, if such good can come from it?

Perhaps the bill is not the best means by which this goal can be achieved, but a quick review of the facts will demonstrate that Nigeria has been war-ridden for decades, and only recently has it begun to flourish, notably through its fast-growing telecommunications sector and other businesses. Despite this recent investment and consequent increase in wealth, 92% of the 140 million Nigerians are living on less than $2 per day.

These facts are perhaps indicative that there is still a high level of indifference in this country when it comes to lifting the poor out of the poverty and supporting the entirety of the nation, rather than a select few. In a country ravaged by corruption and poverty, fixed laws might be the only chance it has of improving the situation, as national businesses, not charities, have the power to feed the hungry and support the poor. And although this Bill appears underdeveloped and hasty, every nation must start somewhere. After all, a country is not revolutionized in a night.

Some may pose the justified question: is it fair that companies are obliged to pay what the Government should be financing? After all, with the 30% tax that businesses are paying, the Government surely has a large enough fund to finance this project. However, business is fast proving itself to be the future of Nigerian economy, and what better way to optimise its effects on the country than by asking a small percentage of its revenue to improve its condition? Currently, voluntary CSR initiatives in the country are not altogether widespread, with the exception of some commendable efforts from companies such as the Nigerian Total branch, MTN, a South African telecommunications company, and one of Nigeria’s national telecommunications company, Starcomms. A little push in the right direction may be the best option at present.

It is evident that something must be done about the current situation in Nigeria, as the figures of infants dying from hunger rises every year, HIV/AIDS continues to spread like wildfire across the country, and schools are under-financed and over-populated. In the economic crisis, finding a job is even harder than it was before for those living under the poverty line. But boycotting a decent chance at improving is not going to help improve their lot. A global action should be taken to first support the bill, then develop it, because Nigeria needs a starting block, and a journey of a thousand miles begins with a single step.

Featured thumbnail art by Horatziu.