Corporate Social Responsibility: Key to Poverty Alleviation

Published on 20th November 2007

While some will dump tonnes of expired food on one side of the globe, their counterparts on the other side will be dying for lack of the same. Since poverty is multi-dimensional, only a multi faceted approach can produce results in the fight against it. The government, civil society, private sector, development partners and the general public, among others, are stakeholders in the fight against poverty and hunger.

The business community plays a very critical role in alleviating poverty through   corporate social responsibility (CSR) activities, for example, the recent flood disaster in North and Eastern Uganda. As Vernon Ellis, International Chairman, Accenture puts it: "…By supporting broader economic and social development, [businesses] turn poor and excluded people into customers and employees, and neglected areas into new markets and new sources of supply. By improving local communities they obtain greater quality and reliability from their partners in local supply chains. There is business sense in the virtuous circle...'' It is therefore important to highlight what the two stakeholders in question (that is, businesses and the poor/community) stand to benefit so as to establish a rationale as to the value of this union.

The extent to which a company and its products are accepted in society is highly dependent on the extent to which the products and services meet the needs of the poor and generally the level to which the company is involved in meeting the real needs of the community. Take the Celtel promotion for example; I would like to refer to it as a life changing promotion because housing is a real need in our society and while 7 houses may make a difference in the lives of less than 0.1% of the population, there's no doubt that for the lucky winners of those houses, their lives will never be the same.

There is also a reduction in the black market that usually harms genuine business in the formal sector because socially responsible businesses are embraced by the very people who constitute these communities. Catering for the needs of stakeholders enhances a firm’s competitiveness. While stakeholders include shareholders, government, consumers, business partners, communities constitute the firm's customer base. 

A firm working with the poor will boost its image consequently opening up new business opportunities for new products. As a firm cooperates with the community, it's able to tailor products and services to suit indigenous markets and employ local expertise, thereby lowering production costs especially for new investments. The community will seamlessly support a firm that cares for them. Having the poor at heart is likely to generate political good-will from government through incentives such as tax relief and favorable policies.  

Neglecting CSR issues can lead to tarnishing the image of the firm and mass boycott of the firm’s products and services. Generally, a socially responsible business will create a win-win situation that will seek to offer the employees the best terms possible while pursuing its own profit objective in order to maximize shareholder value. 

It is imperative that corporate strategies be sustainable. They must include a commitment to poverty alleviation; assessing the external environment; reviewing internal structures, strategies, and action plans; implementing genuine CSR activities based on set plans and strategies and measuring and reporting results. To guarantee success, consultations with stakeholders, including government and civil society is essential.


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