Saturday, July 20, 2024

Corporate Social Responsibility should be legislated

Two weeks ago the Governor of Bank of Botswana decried low levels at which commercial banks doing business in Botswana were taking up their corporate and social responsibilities.

She said this was notwithstanding the fact that these banks continued to make huge profits from Botswana.

She also observed that she was not happy because in countries where their head offices were domiciled, these same banks were contributing handsomely to their corporate and social responsibilities.

We cannot agree more with Ms Linah Mohohlo.

Banks in Botswana really have to look at the amounts of money they are making from this country against their contributions towards social welfare of ordinary Batswana.

While it would be unfair to tarnish all banks with the same brush, for there are those that are trying to contribute, by and large, such contribution pales when looked at from the perspective of the huge profits that banks continue to rake from Botswana.

Having said that we think it is time as a country we looked at the efficacy of coming up with a law that would make it mandatory for companies to contribute a certain of their net or gross profits to corporate and social responsibility causes.

Certainly that is how it is done in many jurisdictions where these banks do business.

There are not many philanthropists in boardrooms.

In fact executives often find themselves often at loggerheads with Board of Directors who insists on higher profits without any due regard for contributing to the welfare of communities from where such profits are made.

Experience has shown that every time the margins are squeezed, CSR donations are often the first to be sacrificed by companies.

This is mainly because companies regard CSR not as an integral component of their operations but rather as a grace and favour undertaking that can be withdrawn at the whims of either the board or the executive.

Commercial banks in Botswana do not contribute sufficiently, not because there is no money to contribute, but because the shareholders, who are for the most part domiciled in London are taking advantage of the laxity in our rules which let it to their discretion to decide how and if they want to contribute by way of CSR.

What we need is a law, which will make it a requirement that as at every year end, a company will against its audited results also show how much they have contributed to social causes.

Government is no longer able to shoulder the burden alone.

In fact Botswana Government has gone to tremendous lengths to facilitate flexible regulatory frameworks that allow the companies to make the huge profits they are making before repatriating them abroad.

It is only fair that government is met half-way.

Commercial banks are appallingly reluctant to rollout their businesses to the rural communities.

That cannot be right.

Success of these businesses should not be gauged solely on the profits they make by refusing to go out into the countryside.

A way has to be found to make sure that banks that invest more in the countryside are encouraged incentivized.

There are many ways of doing it.

We agree with the Governor’s findings.

But she must go beyond the surface to see why a bank making more money in Botswana than say in South Africa would invest more in South Africa when it comes to CSR.

The reason, for most of the time would be that South Africa has made it mandatory to contribute a certain proportion of the profits.

That is the way to go.

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