Caleb M Fundanga: Corporate social responsibility - challenges that the private
sector in Zambia should overcome
Key note address by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Mufulira District
Advisory Committee's 2006 Business Forum, Mufulira, 18 March 2006.
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CHAIRPERSON,
YOUR HONOUR THE MAYOR OF MUFULIRA MUNICIPAL COUNCIL,
THE DISTRICT COMMISSIONER,
THE TOWN CLERK,
DISTINGUISHED INVITED PARTICIPANTS,
LADIES AND GENTLEMEN
On behalf of the Bank of Zambia and indeed on my own behalf, allow me to thank you for this
invitation to Mufulira. It is an honour to be invited to this important Forum to share a few words with the
business community on the issue of Good Corporate Citizenship.
In view of the growing role of the private sector as a partner in economic development in Zambia, this
topic could not have come at a better time than now. In fact, when I was invited to come here by the
Municipal Council, I took a bit of time to reflect on the challenges good corporate citizens face. On the
outset, it is imperative to realise that despite the moral ethics that come with being a responsible and
good corporate citizen, advantages can also be exploited by strengthening the synergies between
private sector growth on the one hand and social, economic and environmental development on the
other. In view of this, I prepared my address within the context of the underlying theme "Corporate
Social Responsibility: Challenges that the Private Sector in Zambia Should Overcome".
Your Honour the Mayor, Chairperson, Ladies and Gentlemen, there is a growing awareness world
over on the importance of the role that business communities should take in contributing to the
improvement in the overall welfare of the communities in which they operate. It is being realised that
even though Governments are accountable to their citizens, business houses can also make valuable
contributions to society without heavily compromising their corporate objectives.
You would agree with me Ladies and Gentlemen that companies that practice good corporate
citizenship are usually preferred employers, investment partners and neighbours in the communities
they operate. To help achieve their nonfinancial objectives, many have adopted corporate creeds or
ethical statements as integral parts of their behaviour. Such firms know that their acceptance into new
markets could hinge upon their contribution to the social well-being of their environment.
Ladies and Gentlemen, this is a phenomenon that has become generally known as 'Corporate Social
Responsibility' and refers to the attention by companies to community involvement, environmental
protection, socially responsible products and processes, and socially responsible employee relations.
Put differently, Corporate Social Responsibility is the extent to which businesses meet the economic,
legal, ethical and discretionary responsibilities imposed on them by their stakeholders.
The world over, Corporate Social Responsibility has promoted activities in key areas, namely
education, health, the environment, culture and the arts. Examples of the activities generated by good
corporate citizenship include charitable donations and local community action, e.g. employee
volunteering, youth projects, unemployment schemes, etc.
The motivations of the business community to engage in Corporate Social Responsibility are
numerous.
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Firstly, investment by the business community in the promotion of social goods such as
education and health can have a direct impact on the productivity of the community and
profitability of the private sector. This contributes to the physical and mental health of the
company's employees, hence enhances social and human capital.
•
Secondly, the sensitivity of a firm to the concerns of a society can contribute positively to its
reputation and the acceptability of its products.
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Thirdly, beyond improving the customer-company relationship, Corporate Social Responsibility
can foster harmonious relationships between various stakeholders in a society.
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Lastly, it is acknowledged that a stable environment is generally good for business.
Ladies and Gentlemen, institutions such as the Bank of Zambia is no exception in this respect. The
core function of the Bank of Zambia is "to formulate and implement monetary and supervisory policies
that ensure price and financial stability." The overall objective of this is to contribute to the attainment
of a stable macroeconomic environment i.e. low and stable prices, low and positive interest rates,
stable exchange rate, stable financial system as well as fiscal prudence so that the private sector can
flourish. Many of you will agree with me that since 2002, Zambia's macroeconomic indicators have
generally been improving. This has been reflected in the positive developments in real GDP growth,
lower inflation, a downward trend in lending interest rates coupled with a stable exchange rate.
It must be stressed here that the Bank of Zambia is optimistic that further progress will be made in
lowering inflation to a single digit in the near future as appropriate monetary and fiscal policies
continue to be implemented. This will be supported by the effects of the movements in the exchange
rate of the Kwacha, which is reflected for instance in the adjustment of the prices of petroleum
products and the expected improvement in food supplies following the favourable rainy season.
Ladies and Gentlemen, beyond delivering on its core functions of attaining price and financial system
stability, the Bank of Zambia recognises the importance of being a good corporate citizen. In this
regard, the Bank has for many years been involved in providing financial and material support to the
two state universities by sponsoring a Chair at each of these institutions as well as providing
educational awards and scholarships to deserving students. In assisting the needy, the Bank of
Zambia and its employees have on several occasions made donations to charitable institutions.
Ladies and Gentlemen, in view of the potential benefits that can accrue to a society, the business
community in Zambia, and Mufulira in particular, are hereby challenged to make Corporate Social
Responsibility an integral part of every business decision and action.. Companies should demonstrate
corporate citizenship in what they are as a company, how they conduct business, how they take care
of their employees, as well as in how they interact with the public at large.
Distinguished Ladies and Gentlemen, without being exhaustive, allow me to suggest some avenues
through which good corporate citizenship can be encouraged among the Zambian business
community.
• As a first step for pursuing Corporate Social Responsibility, companies can focus on defining
the normative directions that would be appropriate and acceptable to them. These directions
can be converted into a formal statement of business values and practices. Such statements
can be presented in the form of principles, guidelines, or codes of conduct. For instance, a
code of conduct can aim at regulating activities of an industry within the principles of
responsible business by requiring the signatories to uphold fundamental human rights, to
respect the culture and customs of their employees and local communities affected by their
actions. In effect, these become a commitment vehicle for the business to declare its
perspective and way of doing business with respect to the challenges relating to Corporate
Social Responsibility.
•
Secondly, integrate tenets of good corporate citizenship into corporate structures and
processes, create innovative and proactive Corporate Social Responsibility solutions, and
collaborate with internal and external stakeholders on social challenges, and report and
account for performance in this area.
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Thirdly, Corporate Social Responsibility awards can be introduced to acknowledge the works
of those that make considerable effort and impact. This can help to act as an incentive to
motivate employees and managers to advance Corporate Social Responsibility. The
recognition can take place at different levels such as those of the project team, corporate
management, company, specific industry sector, etc.
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Finally, companies can also have their managers and employees participate in networks and
multi-partner organizations that aim to advance responsible business practices for the benefit
of business and society. The partners can include other businesses, government, civil society,
labour unions, investor groups, etc.
As earlier alluded to, one of the tenets of good corporate citizenship is transparency and
accountability. On the part of the Councils, the major challenge they face in this regard is the delivery
of quality service to their clients, which is underpinned by better management of resources.
In conclusion, Chairperson, Ladies and Gentlemen, in the interest of enhancing the competitiveness of
business and maximise the value of wealth creation in Mufulira District in particular and Zambia as a
whole, companies are urged to make social responsibility an integral part of the wealth creation
process. I am confident that the Zambian business community shall appreciate the benefits that
accrue to both the company and its stakeholders in this vein, and hope I shall one day have the
honour of being present at the first event to award deserving entities in this noble sphere.
I thank you all.