SMEs and the CSR concept

There are about 17.28 million SMEs in Nigeria, according to Federal Bureau of Statistics (FBS). The SME sector, which the Bureau says employs over 32.4 million people, is classified by Central Bank of Nigeria (CBN) as businesses with turnover of less than N100 million or less than 300 employees.

According to official figures, SMEs account for about 96 percent of Nigeria’s businesses. Although most operators in the sector embark on community responsibility projects and when they do, they avoid the term “Corporate Social Responsibility” in preference for ‘donation,’ ‘philanthropy,’ ‘charity,’ ‘contribution’ or just ‘gift.’ The question then is, is CSR too big for them.

However, to SMEs when they embark on giving back to communities, they have fulfilled their social obligation which to them is ‘CSR’ but they avoid using the language. What is in CSR then that some organisations apply it but the SMEs fail to incorporate it?

Understanding CSR?

CSR is defined by the EU as a concept “whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. CSR is not, therefore, some ad-hoc, bolt-on activity. At its best, it goes to the heart of how a sustainable successful business is run: engaging stakeholders; thereby determining what CSR particularly means for that particular business; and then continuously striving to minimise negative social and environmental impacts and to maximise positive impact.”

Experts have defined corporate CSR as a concept whereby a company indulges in continuous, responsible activities that point to its good intentions as a corporate citizen. A renowned social responsibility analyst in the UK, Mallen Baker, says CSR is about how companies manage the business processes to produce an overall positive impact on society.

In his piece in Business Express, Nelson Obine quoted a group of concerned individuals as defining CSR as a complete business strategy that aims to ensure the long-term viability of business by assuming an active role in the development of the community, the economy, and the environment through good business practices.

A renowned public relations practitioner, Sam Adenekan of Nestle Nigeria, maintains that CSR is a way of life and it is a business strategy and should not be confused with philanthropy or charity.

The concept is also said to be about how businesses align their values and behaviour with the expectations and needs of stakeholders. Informed practitioners state that CSR describes a company’s continuous commitment to be accountable to its stakeholders.

European Multistakeholders forum on CSR says CSR is not a “bolt-on” to how business is run.” It goes to the core of how business does business: how it sources, manufactures, markets and how it engages its stakeholders and the wider environment.”

From the foregoing, ‘continuity’ and ‘sustainability’ are the core ingredients of community responsibility, which is CSR. Ordinarily, other components of CSR such as philanthropy, donations or gifts are good, but the best approach by organisations to make societal impact is through a process of continuous involvement in community interest, says Ken Egbas, managing director of TruContact Consulting.

Divide between CSR and SMEs

Often times, CSR as a concept is largely situated in the context of bigger enterprises. Awards and recognitions for CSR initiatives have mostly been concentrated on multinationals and blue-chip organisations. This does not mean that the SMEs don’t embark on giving back but because their concept and application of CSR is narrowed.

SMEs may be involved in giving back, but because they avoid the use of the term ‘CSR’ and because their community responsibility lack sustainability and continuity, they are not usually considered as CSR and therefore not considered for awards.

The European CSR forum agrees that “relatively little is known about CSR among SMEs and where SMEs are doing it, they may not use the language of CSR.”

To Anga Sotonye, an enterprise development and managing director of Universal Quest Nigeria Limited, there is ignorance among SME operators about CSR. “Not many SMEs are aware of the term. Some of the SMEs are established by uneducated people, and to them CSR is strange.”

Sotonye says the SMEs are about the founder and the CEO, and when his/her organisation embarks on community responsibility, he would be at the forefront of the donation to be recognised; “as a result he prefers to give under philanthropy to be called a philanthropist. This goes down well with him.”

He says SMEs need enlightenment, training and capacity building on CSR as the CSR budget reduces the tax exposure of enterprises.

Nelson Obine supports Sotonye’s view that lack of awareness is a challenging factor among SME for implementation of CSR. “Great chunk of business managers under the SMEs scale lack awareness on the role, importance and benefits of CSR for business growth. The high budget and resource constraint to CSR implementation influences their turn-off from CSR plan.”

As argued by Lisa Henshaw from Fourth Day, the term CSR can itself prove daunting to a small business owner that try to measure his/her CSR with big organisations. She says that a CSR programme does not require corporate-sized teams or budgets.

Surprised that most SMEs shy away from adopting CSR or operating within its tenets, Edobong Akpabio, CEO of Visionage Agrotech Farm, says: “Frankly, I really do not know why CSR could be called by any other name because gifts, donations have their place and cannot be referred to as CSR.” If SMEs mean to have engaged in CSR when they use philanthropy or donation, then there is total misunderstanding of the term CSR among the sector.

Henry Eguridu, once a manager in TruContact involved in monitoring CSR among organisations in Nigeria, says what most SMEs do in community efforts is not sustainable; “they don’t have programme of action for CSR and the term is not embedded in their corporate culture.” The CEO can wake up and donate to a society and once he or she is not there, that is the end of such donation.

CSR analysts maintain that “many SMEs don’t know what CSR is or how to incorporate it effectively in their businesses – and that even if they are already doing some aspects of what is regarded as CSR, they may have difficulty in understanding the applicability of other aspects of CSR to their circumstances and how to handle it.” The experts further maintain that though many SMEs are committed to environmental, social and community responsibility but these actions will not be called “CSR.”

Simplifying CSR for SMEs

As long as SME operators think that giving back is for personal ego and as long as they think that CSR requires big-sized budgets, they will continue to shy away from it in preference for philanthropy, a component of CSR that is ad-hoc. In this connection, they will continue to miss the benefits of CSR on their organisations.

In her publication in the Guardian UK, Lisa Henshaw gave some tips and examples of how SMEs can implement a successful social responsibility programme.

Some of the tips involve SMEs finding a champion to drive their CSR. “As with any business initiative, social responsibility needs someone to drive it. Most SMEs can tap into team members who are passionate about it and make it an additional part of their role. Their energy will help to attract others to get involved.”

She also advises SMEs to view CSR as an investment in the business. According to her, developing a strong responsibility programme is actually an investment in the business.

Henshaw believes that engaging with the community helps to extend business network, opening up doors for new business opportunities. “Community engagement can also help give you an edge over competition. Ethical and socially responsible companies are more attractive organisations for many businesses to work with and having a programme in place can be huge asset in the procurement process for any company looking to work with the government or public sector.”

Another strategy for SMEs to implement CSR, according to Henshaw, is to define programme and set realistic goals. “Social responsibility means something different to everyone. Focus your programme no matter how little on what makes sense to your business,” she advises.

Conclusively, there is misconception among SMEs about CSR. They think it is for multinationals and requires big budgets for big projects. If over 17 million SMEs in Nigeria understand that CSR is the sustainability of the little community efforts they embark on, their business and the society will be better for it.