Nigeria: Legislating CSR
Nigeria may join a small number of countries in the world to legislate on corporate social responsibility (CSR). A bill, which proposes that businesses spend 3.5% of its gross profits on CSR, is currently being debated in the National Assembly.
It has been reported that the motivation for the bill is because CSR initiatives by companies in Nigeria are lacking. Apparently, the country’s government has felt that legislation and a supervisory body to enforce the laws are adequate solutions. The bill also proposes the establishment of a commission, whose duties include providing standards, integrating social responsibility and international trade issues, conducting research and investigations into community needs, informing businesses of requests, and ranking of organisations according to their CSR initiatives.
The commission will also publish an annual report of social and environmental impact of businesses’ activities, develop policies to encourage corporations to become engaged in the community, and ensure that companies sponsor cultural and educational activities that add value to Nigeria’s socio-political and technological development.
Criticism of the bill is rife. Nigeria has been reported to have a long list of direct and stealth taxes as it is. Further, it has been suggested that, rather than legislating, the Nigerian government should try to promote CSR through persuasion and complementary activities.
Indonesia, a developing country like Nigeria, also blessed with a high population of well over 200m, was the first country to pass a CSR legislation. The CSR legislation was also keenly opposed by the private sector in Indonesia and international observers but was eventually passed by the county’s lawmakers in 2007.
But the wind of change blowing across the globe appears to be supportive of CSR regulation because for example, beginning 2010, hundreds of the largest private and state-owned companies and institutional investors in Denmark must compulsorily include corporate social responsibility information in their annual financial reports. “The Danish Parliament voted in mid-December 2008 to force the 1,100 largest enterprises to describe their corporate CSR or socially responsible investment policies, the ways in which they've been implemented and the results they've produced.”
It is likely that many nations are watching Nigeria, and waiting to find out if the CSR law works in Africa. If it does, it is likely that many other countries might find similar laws proposed and implemented over time.