Mallen Baker's Blog

Nigeria joins the 'CSR as stealth tax' movement

5 Feb 2009

Just weeks after the state of Gujarat in India backed away from its CSR bill, now it is Nigeria's turn. A bill has been going through the Senate there that would compel businesses to pay 3.5 percent of their profits towards "corporate social responsibility", which means infrastructure spending like roads, schools and so on.

I hope the measure fails. As noted before, compulsory financial contributions to government for the purpose of public projects already has a name. It's tax. It has nothing to do with corporate social responsibility, and the use of CSR in this way to lever more cash into government coffers just threatens to bring the term, and the concept, into disrepute.

It's not that CSR couldn't do with some promotion in Nigeria. When Senator Uche Chukwumerije introduced his Bill he said that only 150 out of 5000 registered companies in Nigeria "are alive to their social responsibilities". It would bear examining what criteria were in use here, but I wouldn't be surprised.

Bank PHB played smart recently, with some light community investment in Benue State in the form of support for scholarship students. This is pretty small beer by comparison to how companies tackle issues elsewhere, but the company has been bathed in much beneficial publicity, principally because in Benue "no corporation had ever thought of Benue State as a place to invest resources".

Shame on the majority of businesses for not investing in their local community. Good on Bank PHB for breaking the mould, and setting the precedent for others to follow.

But of course what might now happen is that others will follow the example because they see how effective it has been in building a bridge to the community, and developing positive relationships there.

A very different dynamic to actions taken as a result of the imposition of a CSR tax.

And who would blame all those companies in a year's time for saying "why would we give money to support students - we already pay our CSR contribution to the government".

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