Firms must stand with us in good, bad times

Kibra residents outside the chief’s office during the distribution of relief food following the Covid-19 outbreak. [David Gichuru, Standard]

Whereas elected leaders, the religious community, the media and other actors in our society continue to offer support in various ways to combat the Covid-19 pandemic, corporate organisations, save for a few, have not been as active, particularly in the mobilisation of the necessary resources for this war. The question is: Why?

A large percentage of our national wealth is domesticated within the multinational corporations (MNCs). By MNCs, I mean a business entity with its headquarters in one country, called the home country, and subsidiaries in host countries, such as Kenya, where it conducts its operations.

MNCs are usually large-scale enterprises that transcend territories of states and acquire a global spread in terms of investible capital.

In Kenya, MNCs are established in almost all the 47 counties and are engaged in large-scale enterprises ranging from agriculture, commerce, banking, finance, insurance, mining, tourism to hotel industry, among others.

The main goal of MNCs is to capture the local markets and establish a monopoly for the purposes of profiteering and extraction of profits. These enterprises are driven by a number of factors in as far as mobility of capital is concerned. There are factors that influence the behaviour of MNCs in the pursuit of profit returns and capturing of local markets.

The labour factor ranks high, especially in developing countries where labour is relatively cheap and maximisation of profits is almost guaranteed. Secondly, MNCs seek to create a monopoly in the means of production – a true manifestation of capitalism.

Multiplier effects

Third, MNCs seek to establish a mutual collaboration with the political elite in order to capture the State to pave way for favourable policies for their enterprises to thrive. Equally, MNCs seek to diversify their production to enjoy the benefits of multiplier effects of investment, which maximises their returns on investment.

Additionally, MNCs are engaged in value-addition in enhancing their products and services because the higher the value of products, the better the returns on investment.

Finally, MNCs, especially in developing countries such as Kenya, enjoy access to cheap raw materials, which increase the profits that they accumulate in such markets.

However, with all these benefits that MNCs accrue in the local markets, there is always a moral question: Should MNCs engage in Corporate Social Responsibility (CSR) activities, especially during crises such as the one that has been brought about by the raging Covid-19 pandemic?

I am here not talking about mere tokenism or publicity stunts of the kind that we are witnessing currently. I spent close to 15 years in the corporate world before I joined Parliament and, therefore, I am in the know of what goes on.

CSR is premised on the logic that corporates have a social responsibility to support communities where they accrue their massive benefits. On the contrary, what we see in Kenya is an entrenchment of paternalism, with the major players continuing to hoodwink Kenyans that this responsibility is but a favour to the citizens.

Support SMEs

Globally, MNCs and business moguls are actively involved in mobilisation of resources towards combating Covid-19. According to the Wall Street Journal, small businesses’ confidence has plummeted as a result of Covid-19. Large corporations are stepping in to support SMEs during this difficult time.

Some of the biggest United States technology firms have also stepped up in the effort to combat Covid-19. Amazon, for instance, pledged to donate $5 million to local businesses based near its Seattle headquarters that will likely lose out on sales now that the technology firm’s thousands of staff are working from home.

Google, on the other hand, is pledging $1 million to organisations in Mountain View, California, impacted heavily by the pandemic.

Facebook pledged to donate $20 million to support coronavirus relief efforts, while Apple is committing $15 million.

Billionaire Mark Cuban has been reimbursing employees who purchase lunch and coffee from local restaurants. Additionally, Jack Ma, the billionaire founder of Chinese e-commerce giant Alibaba, through his foundation, donated 1.1 million testing kits, six million masks and 60,000 protective suits and face shields to the African continent alone.

In Nigeria, Aliko Dangote, one of Africa’s wealthiest men, has donated the equivalent of more than Sh50 million through the Aliko Dangote Foundation.

South Africans Johan Rupert and Nicky Oppenheimer donated Sh11.4 billion to the solidarity fund to assist small-scale businesses and their employees to cope with Covid-19 pandemic.

Here in Kenya, Narendra Raval Guru was the first Kenyan entrepreneur to support the emergency fund by donating Sh100 million worth of oxygen to all government hospitals. Few others have followed suit.

The question, then, is why are multinational corporations operating in Kenya, from where they continue to accrue massive profits, slow in taking up their CSR in contributing to the efforts aimed at containing the Covid-19 pandemic in a robust manner?

This crisis, when it is finally over, will have taught us a number of valuable lessons. Perhaps, it’s time to start considering the need for a legislation to govern corporate social responsibility and to introduce a sense of accountability in the way businesses relate with the host populations.

The writer is the MP for Ugunja and chairs the Public Accounts Committee in the National Assembly and is also the ODM Secretary for Political Affairs