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. * * * 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

national saving relative to investment, which should have the direct effect of restraining u. s. imports and shrinking the u. s. trade deficit. more generally, by lowering interest rates, fiscal consolidation should diminish net capital inflows into the united states, thereby reducing the current account deficit in this country and current account surpluses elsewhere. the resulting pattern of international debt accumulation and capital flows would be more balanced than at present, promoting a more sustainable pattern of growth in the global economy. indeed, such a rebalancing program was strongly endorsed by the leaders of the group of twenty at their recent meeting in seoul. although the fiscal consolidation process is just beginning, the weakness of private demand in the united states and other advanced economies, combined with robust growth in the emerging market economies, has led to a two - speed global recovery that already is creating pressures toward rebalancing. the advanced economies started their recoveries in 2009, but economic growth has barely exceeded the growth rate of potential output ; as a result, the level of output in most advanced economies, including the united states, is still well below its potential. forecasts suggest that growth and resource utilization will remain lackluster in the advanced economies for some time. furthermore, inflation pressures in most other advanced countries, as in the united states, remain quite low, reflecting the existence of substantial economic slack. in contrast to the subdued pace of recovery in the advanced economies, economic activity in the emerging market economies has rebounded sharply, and the level of output in most of those economies now well exceeds pre - crisis levels. the consequence is that policymakers in emerging market countries have turned their attention to the threat of rising inflation and have begun tightening monetary policy. the stronger growth prospects in the emerging market economies, coupled with the tightening stance of their monetary policies, appear to be contributing to a resurgence of capital inflows to these economies. sizeable differentials in expected returns between advanced and emerging market economies also seem to be reinforcing these flows and causing emerging market currencies to rise. in light of their increasing concerns about inflation, a case can be made that emerging market policymakers should welcome currency appreciation because it reduces inflation pressures and, over time, aids global rebalancing. however, some of them have argued that unduly large and rapid capital inflows may lead to asset - price bubbles and expose the financial sectors in their economies to a subsequent reversal of these flows, while rapid currency appreciation could