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Book Review: Corporate Social Responsibility and Law in Africa

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The book titled Corporate Social Responsibility (CSR) and Law in Africa, is a timely contribution to literature in this era, with regards to the role of corporate law towards promoting sustainability in Africa. The book is a rich source of knowledge in understanding how CSR can be embedded in the governance of firms and provides a framework to achieve this.

This book is significant in these times where the clamour for corporate responsibility is on the rise. It provides in-depth theoretical and practical insight into the current CSR practice in Africa and the need for the private sector and business communities to deviate from viewing CSR as philanthropy or community development projects. It enlightens policy makers, private sector and government officials on the importance of integrating stakeholder concerns into corporate decision making to promote sustainable economic growth.

 

The central thesis posited in this book is that corporate law and corporate governance (CG) codes can contribute to effective CSR implementation in Africa. In this sense, the author is critical of the shareholder primacy model adopted in corporate law as an hinderance to sustainability, which may undermine the facilitation of corporate law as a tool to promote CSR in Nigeria and South Africa.  Faulty legal transplantation and lack of policy incoherence in the primary and secondary legal instruments for CSR enforcement is another factor affecting advancement of CSR in these two nations. Dr.Amodu argued that despite improvements in the CG codes in Nigeria and South Africa towards stakeholder concerns, they are still subject to shareholders interests. The myth of shareholder primacy hinders the promotion of stakeholder’s interests in the CG codes which are more progressive than corporate law towards effective implementation of CSR in Africa.

 

This book emphasizes the urgent need for policy makers to harmonize both soft and hard laws to address this issue. Currently soft law in Nigeria and South Africa are more progressive towards CSR than the company legislation. This may affect enforceability of the CSR provision in the codes. For example, the existing Nigerian CG code 2018 emphasizes the need for CSR to be embedded into the CG of a company, whilst the CAMA 1990 existing corporate law is silent on it.  I find the suggestions by the author insightful and capable of achieving sustainable economic growth that benefits both shareholders and broader stakeholders affected by a company’s decisions.

 

The book provides illuminating insights on the fact neither the shareholder primacy model nor stakeholder model may be able to guarantee effective CSR implementation in Africa. This is because the shareholder primacy model appears both normatively indefensible and morally untenable. In contrast, the stakeholder-centric theories, in trying to provide solutions to the criticisms of the shareholder primacy model, present an unworkable and impractical framework for CSR implementation.

 

This book proposes a third way approach which is the Responsible Stakeholder Model (RSM) for corporate Africa as the best solution for adequately embedding CSR into business activities. The RSM embodies two key notions which comprises of a default legal duty on companies to balance competing stakeholder interests and a presumption of verifiable corporate irresponsibility whenever alleged by a qualified stakeholder. It opines that whilst shareholders’ interests remain paramount, companies through corporate legislation must consider the interests of stakeholders that are directly affected by decisions of the firm in the long term.

 

Unlike many stakeholder-oriented models lacking practical measures on how directors balance the competing interests in promoting the success the company, the author creates a unique prescription of a practical set of model CSR-oriented provisions for adoption within the corporate law systems of Nigeria and South Africa. This framework guides directors on how to balance these competing interests between shareholders and stakeholders in promoting the long term success of the company.

 

The author has no question in his mind therefore that, once the field of corporate law and practice is set on proper reformatory pattern towards getting companies to behave responsibly, the world (Africa included) will more likely witness better disciplined and responsible business communities. He recommends that further attention needs to be paid to the respective corporate law systems across Africa, and the assumptions of the RSM together with the regulatory consequences of the model should be implemented across the continent.

 

Furthermore, the book examines the existing African Continental Free Trade Area (AFCFTA) agreement to determine whether it contains any provision on CSR. Unfortunately, the agreement made no direct reference to CSR. This is usually based on the myth that CSR practice is associated with the western world and in conflict with trade and dispute settlement. In fact, incorporation of CSR within the AFCFTA will ensure multinational corporations behave responsibly to promote sustainable development.

A comparison was made with the European Union, which has taken steps in ensuring that the core values and principles of CSR are embedded within the Union. This resulted in advancement of CSR practice in EU member countries. In contrast, not many indications of this realization have been observed within the African regional integration discourse, including the recent African Continental Free Trade Area (AFCFTA).

 

In conclusion the book submits that based on the tremendous success recorded at the EU AFCFTA should draw lessons from the EU approach. Embedding CSR into AFCFTA agreement will ensure that 55 member countries in the African Union take CSR seriously and change the notion that CSR is philanthropy.

 

Overall, this book comprises brilliant chapters which are appropriately linked, making the book interesting and enlightening. This work is highly commended for the approach adopted in conducting a research which encapsulates a combination of theory and practice to attain proper enforcement of CSR in Africa. The work is an essential reading for corporate responsibility scholars and policy makers, especially those with interest in corporate law and corporate governance.

This article was published outside of GRN Think Tank. The full text of the article can be found at the link above.

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