CSR IN KENYA: FACTORS THAT DRIVE and AFFECT THE BUSINESS COMMUNITY

This paper seeks to address the concept of CSR within the Kenyan context and in particular the factors that affect its effective practice and the benefits to the local stakeholder community. The growth and implementation of CSR-related activities throughout the years in developing countries and in particular Kenya will also be dealt with. The research questions posed will be tackled using the mixed methods cross-sectional design as focus will be on all the sectors of the economy so as to have a better understanding of the different contributions by these businesses and organisations. Through this research, I hope to identify the precise ways in which CSR is practised in Kenya while establishing the various businesses that are committed to this cause. This paper will also highlight the major characteristics of the practice of CSR in Kenya and thus, give businesses insight into which areas need improvement and how they can do so while still turning a profit.

4. INTRODUCTION

a) Area & Topic

Corporate Social Responsibility (CSR) is an ever evolving concept that comprises of any strategic tool that creates new opportunities for businesses while mitigating and managing the risks to the businesses. The focus of this study is on the area of CSR and in particular its practice in Kenya. The topic of choice is whether there have been any factors that have driven and affected the local businesses’ contributions to the stakeholder community.

b) Statement of purpose

The purpose of the study is to examine what key CSR drivers are present in Kenya & whether there have been any factors that have prevented the business organisations in Kenya from substantially contributing to the local community through the practice of CSR. Additionally, the study will also look into spheres of possible improvement by the government and the business community.

5. LITERATURE REVIEW

CSR means many things to different people & institutions and as Frankenthal (2001) clearly states, ‘CSR is a vague and intangible term which can mean anything to anybody, and therefore is effectively without meaning’. These CSR interpretations have evolved over the last 30 years from being relatively focused on compliance with environmental regulations & a search for eco-efficiency to a broader concept that combines and balances economic, social and environmental commitments as part of the drive towards sustainable development.

Therefore, different companies have adopted slightly different interpretations as to what CSR means to them but the underlying message is always the same.

Welford (2004 and 2005) has noted that CSR has been adopted in different ways in the different parts of the world.

CSR concerns how organisations interact with their stakeholders, and is linked to improving sustainable development, health and wellbeing for people, as well as enhancing organisational profits (Price, 2009).

This is because over the years, business organisations have come under immense pressure from their stakeholders to act in a responsible manner. Scandals such as Enron and Parmalat (Ruggie 2003: O’Higgins 2005), Nike’s employment practices and the very recent BP/Shell oil spill have provoked increased scrutiny into business policies and practices.

Mullerat and Brennan (2005) deduced from a study carried out by the Italian Union of Chambers of Commerce, Industry, Craft and Agriculture in cooperation with Instituto per i Valore d’Impresa that the adoption of CSR-related activities by companies depends on 2 factors:

The size of the business enterprise/ organisation – there is a difference on CSR performance between the smaller companies and the large ones due to financial & personnel differences; and

The particular sector of the economy in which the business operates – for example, businesses within the agro-industrial, building & construction, manufacturing ICT sectors are more concerned with environmental issues arising from their production processes and product lifespan.

Globally, companies that have engaged in CSR have come to the realization that their environmental and social impacts need to be managed in line with their economic or commercial performance (Little, 2003).

In Africa, CSR is still in its infancy stage due to socioeconomic realities such as poverty, HIV/AIDS and ineffective public administration & service delivery which have had a significant impact on the drivers, role and function of CSR for companies operating in Africa (Klins, Niekerk & Smit, 2010). Thus, CSR activities and projects aspire to resolve challenges faced by communities, which governments cannot fully address. Therefore, issues such as the environment, workplace, product quality and health & safety get much lower priority. CSR in Africa is most often associated with multinationals or large foreign investors e.g. Coca Cola.

Visser, Matten, Pohl & Tolhurst (2010) have identified some of the drivers for CSR in developing countries as:

Cultural tradition where CSR draws deeply from indigenous beliefs of philanthropy, business ethics and community togetherness;

Reforms in politics;

Socio-economic priorities e.g. alleviation of poverty, eradication of HIV/AIDS;

Governance gaps;

Response to crisis such as accidents, catastrophes;

Market access;

International standardisation through the adoption of global CSR codes;

Investment incentives;

Stakeholder activism; and

Business supply chains.

CSR is therefore seldom related to the companies’ core business but rather tends to be ‘positive payback’ philanthropy, with public relations benefits (Klins et al, 2010). Some priority issues covered by CSR activities in Africa are poverty reduction, health & HIV/AIDS, skills development & education, youth development and socioeconomic development.

In Kenya, the cultural context is an important factor in defining CSR and this communal culture is captured in the indigenous concept of “Harambee” which embodies and reflects the strong ancient value of mutual assistance, joint effort, social responsibility and community self-reliance (Winston and Ryan, 2008). This concept simply means that collective good outweighs individual gain.

According to Gathii (2008), the Kenya Bureau of Standards (KEBS) has been involved in drafting guidelines on CSR. These guidelines, in addition to those voluntarily adopted by companies and the current ISO standards, form a backdrop against which to measure CSR in Kenya.

In Kenya, CSR is often seen as an ‘add-on’, peripheral to the core business (Imani Development, 2009). CSR departments are rare and many operate from within marketing, communications, corporate affairs, training or human resources departments (Klins et al, 2010). Furthermore, where CSR policies are established, more often than not, they refer to philanthropic approaches. CSR policy adherence is not typically evaluated in Kenya and corporate leadership involvement tends to be focused on launching community projects, supporting CSR policies and ensuring resources for these projects, rather than embedding CSR in business processes.

Regulations that have an impact on CSR are often based on the ratification and subsequent domestication of international conventions which mainly focus on workplace issues and the physical environment. Examples of specific national CSR-related legislation in Kenya are:

Vision 2030;

Kenya National Environment Action Plan; and

Draft guidelines (recently developed) by Kenya Bureau of Standards (KEBS)

Ponnu and Okoth (2009) in a study done on CSR disclosure in Kenya found that Kenyan companies are relatively small if compared in the international standards. These companies’ participation in social activities may not be pegged on their financial capability rather, their willingness and desire for strategic positioning within the society for future economic advantages. Some organisations & business committed to practising CSR in Kenya are:

The Federation of Kenya Employers (FKE) – which fights against HIV/AIDS is a signatory of the Global Compact and is also involved in Kenya’s Vision 2030;

The Kenya Association of Manufacturers (KAM) – has established the Centre for Energy Efficiency & Conservation (CEEC) and has been the focal point of the Global Compact Local Network in Kenya since September 2009;

The Kenya Private Sector Alliance (KEPSA) – is promoting the UN Global Compact and is active in the field of anti-corruption;

East African Breweries Ltd (EABL) – founded the EABL Foundation in 2005 which deals with the supply of water, environment, health, education & training and other special projects, aimed at improving the lives of the people in Kenya, Uganda and Tanzania;

Safaricom Ltd – a leading mobile service provider that has greatly contributed to the Kenya community since 2007 through its sponsorship of various projects under the spheres of community, environment, health, sports and education;

Intex Construction Ltd. – a Kenyan company that deals in construction, civil engineering and real estate development and is committed to CSR, environmental impact management and Corporate Social Investment (CSI);

Unilever Tea Kenya Ltd. – as part of its CSR agenda is involved in health care, employee welfare (housing), community participation (educational scholarships, training of farmers) and environmental care (is a corporate member of WWF and encourages sustainable agriculture); and

Equity Bank – the Equity Group Foundation focuses on eradication of poverty, hunger and the provision of humanitarian aid, education, gender equality and women empowerment, health, environment sustainability and voluntary service to society by the bank’s leadership.

Kivuitu, Yambayamba & Fox (2005), argue that the CSR agenda needs to be locally owned if it’s to make a significant contribution to the local development priorities – and it must be relevant to local enterprises, whether large or small.

Many scholars agree that in order for CSR and its policies to produce substantial gains within the Kenyan local community, it needs to be tailored to suit the business practices of the organisations that operate in Kenya.

6. RESEARCH QUESTIONS

i) General Questions

Has the practice of CSR in Kenya been successful overall?

What are issues that have benefited from the practice of CSR?

How much more can be done by the relevant authorities and businesses?

ii) Specific Questions

What are main drivers of CSR in Kenya?

How many companies in Kenya practice CSR?

How many of these companies are listed on the Nairobi Stock Exchange (NSE)?

Does the Kenyan Government participate in CSR-related activities?

Are there any state policies or laws that regulate or steer CSR in Kenya?

What are the various ways in which CSR is practised in Kenya?

What are the critical success factors that have led to implementation of successful CSR projects in Kenya?

How have local issues benefited from CSR-related activities?

Are the gains substantial and/or should more be done?

7. RESEARCH METHODS

i) Design (Strategy & Framework)

The research questions will be answered using the mixed methods cross-sectional design with a pragmatic worldview which consists of collection of both quantitative and qualitative data sequentially. This approach is based on the assumption that the collection of diverse types of data best provides a deeper understanding of the research problem posed. The study will commence with a broad survey in order to generalize the results from a sample of the businesses to the population. Then qualitative open-ended interviews will be used to collect detailed views from the participants. The strengths of both quantitative and qualitative research will provide the best understanding of this particular study.

ii) Sample

Sampling is an important part of the research study and this is because it’s cheaper, faster, practical, and more confidential in nature and lastly it has more in-depth analysis of the research problem.

The research will be located in Kenya as this is the topic of the area under study. The population from which the samples will be selected will be the companies operating in Kenya (both national and foreign internationals). This is because these companies’ CSR practices are the major focus point of the research study.

Sampling will be done through the sequential mixed methods sampling procedure, whereby the results from the QUAN strand will influence the methodology subsequently employed in the QUAL strand. The first sample will be generated through stratified random sampling where businesses will be surveyed and from these results then simple random sampling will be applied so as to investigate the issues that have benefited from CSR-related activities in Kenya. The first sample will consist of 30 companies randomly selected from:

The Nairobi Stock Exchange;

Foreign internationals companies operating in Kenya; and

Medium-sized companies not listed on the NSE.

The second sample will comprise of 20 issues that have benefited from CSR-related activities and the size of this sample will be inclusive of institutions, individuals or group of individuals, the environment and other local causes.

iii) Data Collection

This will be done in 2 stages as the quantitative data collection will build on the qualitative one. Quantitative data on the factors that drive and affect CSR performance by businesses will be through a cross-sectional survey using:

Close-ended Online Questionnaires

Advantages are:

There is greater flexibility when displaying the questions in mind e.g. through check boxes, pull down menus;

It allows a quicker response from the participants;

It’s cheaper to administer due to the absence of costs of purchasing paper, printing and postage;

There is no prior arrangement to be done;

They avoid any embarrassment to the respondents;

There is no bias from the researcher;

Reduction in the time needed for analysis as the data is collected in a central database; and

It’s easier to correct any errors made on the questionnaire thus no need for reprinting.

Disadvantages are:

There is a limited response rate because some people may not have access to the internet;

They assume that the respondents are literate;

There are people who are not receptive to completing questionnaires online; and

There is a bias as the demographic that generally responds to online questionnaire invitations are usually younger people.

Structured Telephone Interviews

Advantages include:

Relatively cheaper and speedier than personal interviews;

There is a high response rate which is also spontaneous ;

Interviews can be aided where necessary;

The researcher can tape the interviews;

Has accessibility to a wide geographical area; and

Has more anonymity than personal interviews.

Disadvantages include:

The participants can terminate the interview at any time they want;

Questionnaire will be required so as to guide the researcher on what to ask;

There is the inevitability of repeat calls;

Respondents have very little time to think;

The researcher must have phone etiquette;

The questions presented must be straightforward;

Non-verbal cues cannot be read (visual aids cannot be used);

The interviews have to be short so as to avoid irritation; and

There is the danger of contacting obsolete telephone numbers while omitting unlisted ones.

While qualitative data on the contributions to the local issues will be collected through:

Document Review

The advantages include:

The information contained the documents can be verified independently;

The review process can be done independently without relying on other sources extensively; and

It’s cheaper than other data collection methods.

The disadvantages include:

The information uncovered may not be in line with the requirements of the research study;

The documents may be difficult to locate & obtain;

The information may not be available for public viewing;

The documents may be located in a distant archive thus requiring the researcher to travel;

It can be a time-sensitive process; and

The researcher does not have control over the quality of data unearthed and thus relies on the information provided in the documents so as to assess the reliability of the sources.

Open-ended/in-depth interviews

Advantages are:

They provide more detailed information than the other methods; and

Information is collected in a more relaxed atmosphere thus interviewees are more open.

Disadvantages of this method are:

The respondents may be biased in order to prove a point;

These interviews are time-sensitive due to transcription and analysis of this data; and

They produce results that are not easily generalized due to the small samples chosen.

Audiovisual materials

Some advantages of this type of data collection are:

It’s easier for people to relate to images;

They provide a gateway for participants to share their perceptions; and

They provide extensive data on real-life situations.

Disadvantages include:

Due to the amount of extensive data collected, they are difficult to analyse; and

Data collected could be easily influenced by the researched thus there’s bias.

iv) Data Analysis

Research Question

Data Source

Analysis Plan

What are the main drivers of CSR in Kenya?

Books, dissertations, periodicals, journals & research reports

Content/ document analysis of the identified paper-based sources.

How many companies in Kenya practice CSR?

Company websites, annual reports, periodicals & journals

Web content analysis of the relevant company websites.

Document analysis of the relevant company-related documents.

How many of these companies are listed on the Nairobi Stock Exchange?

Nairobi Stock Exchange website

Web content analysis of the NSE website.

Does the Kenyan government participate in CSR-related activities?

Government reports & publications

Content/ document analysis the accessible and relevant government sources.

Are there any state policies or laws that regulate or steer CSR in Kenya?

Government statutes

Document analysis of government statutes dealing with CSR in Kenya.

What are the various ways in CSR is practised in Kenya?

Questionnaires, books, journals, research reports & conference reports.

Use of constant comparison (grounded theory) to analyse questions.

Document analysis of the obtained documents.

Use of SPSS to collate responses to the questionnaires issued.

What are the critical success factors that have led to implementation of successful CSR projects in Kenya?

Periodicals, dissertations, journals, books, research papers

Document analysis of the books, journals, periodicals, dissertations and research papers unearthed during the research.

How have local issues benefited from CSR-related activities?

Interviews, company websites, questionnaires, journals, periodicals

Document analysis of journals, periodicals.

SPSS analysis of the interviews & questionnaires issued.

Web content analysis of the various companies identified.

Are the gains substantial and/or should more be done?

Interviews, questionnaires, research papers & conference reports.

Document analysis

SPSS analysis

Therefore, due to the mixed methods research design formulated, the research will undergo the following 5 stages in order to fully answer the research questions posed:

Data Reduction

It will involve the use of memoing, descriptive statistics and cluster analysis.

Data Display

This will be done through charts, graphs and tables.

Data Consolidation

Both sets of data will be combined to create new ones.

Data Comparison

Comparison of data from the quantitative & the qualitative data sources will then be done.

Data Integration

Lastly, integration of both types of data into one whole will reveal the final picture.

v) Assumptions

The following will be made in relation to this study:

That respondents will answer the questionnaires truthfully;

That the samples represent the population; and

The instruments used have validity and are measuring the desired constructs.

8. SIGNIFICANCE

This research study is important as it will examine deeper an area that has not been fully explored by previous scholars while paying homage to them. This is due to the fact that CSR is an ever-growing phenomenon that Kenya as a developing country needs to improve on so as to catch up to its developed counterparts. This study is important to the businesses operating in Kenya as it will enable them to gauge themselves and identify areas of improvement at the same time.

9. LIMITATIONS & DELIMITATIONS

Limitations

The study will be limited by time constraints because of the length of time provided for completing the research. It will also be limited by the number of businesses, institutions willing to participate in the study.

Delimitations

This study will be delimited to companies, institutions operating in Kenya that have participated in CSR-related activities in the last 10 years.

10. ETHICAL ISSUES

The following ethical issues will be taken into consideration during this study:

Informed consent and the participants’ understanding of their rights. These consents will be both written and oral in nature;

Confidentiality of any information collected from the participants; and

Anonymity of the interviewees before, during and after the interviews.

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12. APPENDICES

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Appendix 1

CORPORATE SOCIAL RESPONSIBILITY QUESTIONNAIRE

QUESTION

YES

NO

N/A

COMMENTS

Does your organisation have a CSR structure?

Have targets been set?

Who has overall responsibility for CSR in your organisation?

Does your organisation report on CSR?

Has your organisation undertaken any type of activity that has aided the community or protected the environment?

Has management received training on CSR issues?

Has your organisation tried to reduce its environmental impact in terms of:

a) Pollution Prevention?

b) Waste minimisation & recycling?

c) Protection of the natural environment?

Does your organisation supply clear & accurate environmental information on its activities to the local community?

Does your organisation have open dialogue with the local community on adverse, controversial or sensitive issues that involve your enterprise (e.g. accumulation of waste at construction sites, vehicles obstructing roads or footpaths)?

Are your employees encouraged to participate in local community activities (e.g. providing employee time & expertise, or other practical help)?

Does your organisation give regular financial support to local community activities & projects (e.g. charitable donations or sponsorship)?

Has the CSR structure been reviewed to evaluate its effectiveness?