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How Do Foreing Companies Understand and Practice Corporate Social Responsibility in Mozambique?

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How Do Foreing Companies Understand and Practice Corporate Social Responsibility in Mozambique? How do foreing companies understand and practice Corporate Social Responsibility in Mozambique? A comparative study of three business activities and their approach to CSR. Bettina Thomsen Supervisor Oddvar Hollup This Master’s Thesis is carried out as a part of the education at the University of Agder and is therefore approved as a part of this education. However, this does not imply that the University answers for the methods that are used or the conclusions that are drawn. University of Agder, 2010 Faculty of Economic and Social Sciences Department of Development studies 1 Abstract Corporate Social Responsibility (CSR) which is a set of standards to which a company subscribes in order to make its impact on society is believed to have potential to contribute to sustainable development and poverty reduction in the world by addressing one or more of the four responsibilities described by Carroll in his CSR Pyramid, and later revisited by Visser. The impacts however will depend on which approach a business chooses. Therefore, this study takes the stand that it no longer is a discussion about whether or not a company has a role to play in development and reducing poverty in developing countries, but rather a discussion about how they can contribute. Three different approaches used by foreign companies with operations in Mozambique acting social responsible have been compared. The approaches are; an integrated approach, a business-to-business partnership approach and last, a social community investment approach. There is not enough evidence to find a common definition and understanding of CSR in the three cases. The Danish approach is much wider compared to the Mozambican approach that has a tendency to focus mainly on philanthropy. Visser is addressing some of the challenges for CSR in Africa due to the social needs - despite decades of aid and development effort (Visser, 2006:31). The study reveals that philanthropic responsibilities supporting employees with e.g. transport, health assistance or access to micro- finance can have a positive impact for the employee and their families. Furthermore, legal and ethical responsibilities taking into consideration elements such as workforce and environment can support a company moving towards integrating CSR as part of a company’s business strategy, and hereby move CSR beyond philanthropy. It is not possible to say that one of the approaches is more suitable than the other. On the other hand the study indicates that there is a call for bringing CSR to a level where everyone can participate whether it is an MNE or an SME. It will implicate that each company takes into consideration available resources, being it financial, competences or time before choosing the approach that best suits their business. Key words: CSR in global context, developing countries, Mozambique, businesses activities, applying CSR, philanthropy, social community investment, inclusive business . 2 Acknowledgements This thesis is a product of two very fruitful years at the University in Agder (UiA). My thanks go to my supervisor Oddvar Hollup. I am grateful for your encouragement and valuable comments during the thesis work. I would also like to take this opportunity to say thank you to all my peers, tutors, professors at UIA. I am sending my love to my family and friends. Without your support and encouragement during the last two years, I would not have been able of accomplishing where I am today. Thanks for standing by my side - even at odd hours. I am also obliged to each of the interviewees and all the people I met in both Denmark and Mozambique for their hospitality, co-operation and time. A special thank goes to the staff at the Danish Embassy in Maputo who assisted me during the fieldwork. 3 Foreword During the period 2003 to 2010 I lived and worked with sustainable development in Mozambique. It has given me not only a comprehensive knowledge about development aid and strategies, but also given me a strong insight in some of the challenges that Mozambique is facing fighting their way out of poverty, and will form a base when discussing Corporate Social Responsibility combined with thoughts and ideas from scholars like Carroll and Visser. Witnessing how extreme poverty still is the consequences for more than half of the population in Mozambique, and this despite many years with development aid, caused that I began to gain interest in whether the private sector could become a potential ally in alleviating poverty. Being a Dane I found it relevant to gain more knowledge about how Danish companies with activities abroad act social responsible. Would it be possible to combine making profit with a purpose, and if so, is there an approach that suits better than another? It felt natural to choose Mozambique as base for the comparative study. The country is categorised as a least developed country (LDC) categorised by the fact that the majority of the population still lives for less than one dollar per day. On the other hand Mozambique has been able to demonstrate a positive economical development and it makes the country interesting for foreign investors. CSR has mainly been introduced through the foreign investors and is characterised to be in its initial phase of the CSR evolution. It allows for more exploring and discussions about approaches and to share best practices. 4 Abbreviation 3BL Triple Bottom Line B2B Business-to-Business CCM Chamber of Commerce CenSa Centre for Social Responsibility CPI Corruption Perceptions Index CSI Corporate Social Investment CSR Corporate Social Responsibility CTA Mozambican Confederation of Business Associations DANIDA Danish International Development Assistance DCCA Danish Commerce and Companies Agency DIIS Danish Institute for International Studies GDP Gross Domestic Product GoM Government of Mozambique IFU The Industrialisation Fund for Developing Countries IFZ Industrial Free Zone IMF International Monetary Fund INE National Statistic Institute IPD Innovative Partnerships for Development LDC Least Developing Country MDGs Millennium Development Goals MICOA Ministry of Coordination of Environmental Affairs MMAS Ministry of Women and Social Activities NGO Non-Governmental Organisation PARPA II Mozambique’s Poverty Reduction Strategy Plan RoM The Republic of Mozambique SADC Southern African Development Communities SME Small and Medium Enterprises UN United Nation UNDP United Nations Development Programme UM Ministry of Foreign Affairs of Denmark WB World Bank 5 Abstract ........................................................................................................................................................... 2 Acknowledgements .......................................................................................................................................... 3 Foreword ......................................................................................................................................................... 4 Abbreviation .................................................................................................................................................... 5 1 Introduction ............................................................................................................................................ 9 1.1 Background ............................................................................................................................................... 9 1.2 Mozambique in brief ............................................................................................................................... 14 1.3 Problem statement ................................................................................................................................. 14 1.4 Purpose and research questions ............................................................................................................. 15 1.5 Methodology in brief .............................................................................................................................. 15 1.6 Presenting the companies in the comparative study .............................................................................. 16 1.6.1 Kjær Group .................................................................................................................................... 16 1.6.2 Dam Graphic and Typografia Globo Lda........................................................................................ 16 1.6.3 Kenmare Resources plc ................................................................................................................. 16 1.7 Concept definitions ................................................................................................................................. 17 1.8 Outline of the thesis ................................................................................................................................ 17 2 Introduction to Mozambique ................................................................................................................ 19 2.1 Country profile ........................................................................................................................................ 19 2.2 Independence, Civil War, and Multiparty System ................................................................................... 20 2.3 Economic recovery .................................................................................................................................. 20 2.4
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