Past Editorial : December 2009

Introduction

Multinational corporations are expanding in Africa, attracted by massive raw material reserves and burgeoning business and economic opportunities. Africa is the most naturally endowed continent in the world and the list of organizations engaged in exploring her resources is long. Oil, diamonds, gold, coltan, and copper, among other resources, draw diverse business interests from around the world. At the same time, Africa represents an expanding market, importing everything from books to electronics, beverages to textiles, automobiles to arms.

As part of their corporate responsibilities, multinational corporations are known to commit considerable resources to institution building in their respective “home” countries. Their motivations include tax benefits, enhanced public image, and a bona fide desire to contribute to social and economic advancement.

To what extent have these organizations been willing and interested to fulfill their corporate social responsibilities beyond their home countries? This editorial examines the potential scope of operations and impact, as well as the opportunities and drawbacks of tapping the resources of multinational corporations in Africa in order to advance higher education and research in the region.

Corporate Social Responsibility: The Reality in the Corporate Heartland

The Chronicle of Philanthropy, a well-known publication in the United States, regularly publishes information about major donations and gifts from multinational corporations, large and small businesses, and private citizens in support of an array of issues in education, health, environment, energy, and welfare, among others. With a multi-million dollar gift, a philanthropist ensures that his or her name is inscribed on an institution, a center, or a classroom. Others, driven by a passionate cause, establish brand-new research centers and institutions. A small number of top-tier philanthropists even embark on establishing multi-billion dollar grant-making foundations. Wealthy foundations that have evolved out of successful business ventures—such as Carnegie, Ford, Gates, MacArthur, and Rockefeller—award grants to a multitude of social, educational, and economic projects benefiting communities at home and overseas.

Research is an expensive enterprise and resources from such wealthy foundations are instrumental in enabling cutting edge research and development, as well as fostering enhanced teaching and learning. States, nations, and the global community as a whole benefit from these endeavors in many fields, including climate and environmental studies, energy, food security, and health sciences, to mention a few.

The motives behind giving are a subject of considearble debate and criticism, as are the notion and practice of corporate social responsibility. This paper does not address those concerns, but rather focuses on the pragmatics of mobilizing resources from major multinational (and national) business ventures to promote research, teaching, and innovation in the region.

Moving Beyond the Façade: A Win-Win Scenario

A modicum of corporate activity is currently evident across Africa, largely consisting of basic development initiatives—supplying clean water, building roads, establishing health clinics, cleaning up the environment or helping conservation efforts. Regardless of the intentions that drive corporations to support these efforts, these are all commendable actions that contribute to the welfare of nations and citizens.

However, for the supported schools to provide teachers, the clinics to provide doctors and nurses, and the construction companies to provide engineers, higher level institutions that train these personnel need to function in a meaningful way. Corporate responsibility in Africa needs to seriously embrace support not only for visible public activities but also for less visible, and yet vital, efforts of capacity building.

When De Beers, the diamond conglomerate, moved certain technical aspects of diamond processing to Botswana, one of its major business hubs, it made headlines on a global scale. The media rightly highlighted the anomaly: while extracting and exporting raw materials from the region has been the norm, committing to “process” these resources on site remains uncommon.

By contributing a minute fraction of their resources to research, innovation, and training, multinational corporations actually benefit. This occurs through the process of strengthening the knowledge system of a country in general as well as building up the specific skills of the human resource pool in areas relevant to the corporations’ particular businesses interests. The technology transfer model that has been benefiting Asia and Latin America through national capacity building strategies dictates that the multinational corporations do the same in Africa.

The Conundrum: Oil Curse or Black Gold?

Oil is the lifeblood of many African countries and generates enormous revenues. As the major oil producing country on the continent, Nigeria, for instance, attracts numerous multinational corporations engaged in oil extraction and other natural resource related businesses. Whereas many agree that the resources of the country have not been frugally managed for decades, the country has still managed to establish a trust fund that benefits from oil revenues.

In recent years, the Educational Trust Fund of Nigeria has granted billions of niara to initiate educational projects, revitalize laboratories, and support university research. This year, the Trust Fund granted 500 scholarships for citizens to study overseas.

The voracious appetite for oil in the global market and its relatively high price mean that this resource will continue to be a major revenue earner for the African countries that produce it. Therefore, these countries as well as the multinational businesses involved in the oil industry are well positioned to dedicate a tiny portion of revenues to similar trust funds or endowments dedicated to research, innovation, and teaching.

The Enigma in a Continuum: Conflict Ores or Sacred Resources?

Africa is a major supplier of the world’s diamond, gold, iron, copper, and coltan, to name just a few key natural resources. A plethora of multinational and national corporations have been extensively involved in extracting these resources in the region. However, the ineffective use—not to mention the highly detrimental effects—of these resources is now memorialized in a popular movie called “Blood Diamond” (2006).

With the exception of a few countries, Africa has largely been unsuccessful in effectively leveraging its resources to sustain socio-economic development. Even more so, it has failed to both put forth the vision and demonstrate the capacity to tap the resources necessary for building the research and innovation know-how that can “process” these raw materials for a better economic deal.

Except for a few cases where multinational corporations offer capacity building opportunities in their areas of core business interest, the corporate world is not known for establishing research centers, institutions or endowments in Africa. A rare exception to this rule occurred recently, however, when Chevron, the oil giant, announced 850 scholarships for Nigerian citizens. Critics may describe this effort as “too little, too late,” in the context of the billions of dollars the company makes in the country. However, if only for symbolic reasons, this can also be seen as a good beginning for future substantive investment by Chevron in Nigeria’s human resource development.

Unsung Assets: Genetic Resources

Africa is rich not only in extractive natural resources but also in biological material. For instance, Tanzania is known to have more than 12,000 plant species. More than 10 percent of Ethiopia’s approximately 7,000 plant species are unique to that country. Madagascar has one of the world’s most exceptional populations of fauna, comprised of many species that can only be found on that island. These are genetic resources of potentially massive benefit to pharmaceutical, drug, cosmetics, beverage, food, and tourism industries, among others.

A while back, Ethiopia tussled with Starbucks, the U.S.-based global coffee behemoth, on a case involving the patenting some of its popular coffee brands. The conflict arose when Ethiopia, where the coffee bean originated historically, opted to patent its own popular brands. There are many claimants of African genetic resources, including universities, government departments, as well as small and large companies. Their claims span a wide range of natural products used for anti-aging, skin-care, sexual dysfunction, anti-viral therapies and vaccines, insect repellents, and possible cancer treatments. In one case, Bayer Consumer Care (out of Germany) sought patents on any plant of the Vernonia genus in Madagascar for skin treatments, while also making specific claim to eight Vernonia species. Even more shocking, attempts have been made by other unscrupulous companies to patent the genes of local ethnic groups in Africa!

In the case of Starbucks, for example, supporting the Ethiopian patenting case makes common—and business—sense. It helps not only the Ethiopian coffee producers but enhances in the process Starbucks’ current and future revenue. At any rate, whereasStarbucks has pledged to establish coffee research centers in Ethiopia and Rwanda, such pledges and actions are simply rare. The point here is that nations need to urge such corporations operating in their jurisdictions to create and/or support institutions that promote common economic and business interests.

The Devil is in the Details: What are the Basics?

Multinational corporations should commit to long-term investments to raise the pool of expertise in the region to help expand their operations—and ultimately their profit. For its part, the region needs to fully embrace this effort as a critical strategy to evolve from dependence on agrarian and raw material-based activities to commodity-based, industrialized economies. In this process, universities, as central hubs of knowledge creation, assimilation, and dissemination, need to be supported in a serious and sustained manner.

A coltan-rich country such as the Democratic Republic of Congo needs to urge the major cell phone companies that depend heavily on the ore, such as Nokia, Samsung and Motorola, to build relevant research and development centers in the country’s “flagship” universities. Automotive giants, such as Toyota, Fiat, and Peugeot, need to be persuaded to establish or support research and innovation in appropriate university departments. Major computer manufacturers such as Dell, IBM, and HP need to be encouraged to support software and hardware development in relevant institutions. The pharmaceutical and drug industries need to support research in the documentation, preservation and development of genetic resources in the region. The oil giants need to be entreated to help build research and development centers in oil, gas, and other alternative energy sources in the region’s universities and research centers.

The first act of this effort begins with the identification of multinational corporations and major businesses in respective countries, and presenting them with a simple, concrete, and legitimate question: “How are you prepared to support our research and development institutions in your areas of business interest?” Of course, the ABCs of such an approach need to be deliberatively developed.

Corporate Responsibilities: A Universal Attribute?

A sizable number of multinational corporations that operate in Africa do not behave in the same manner abroad as they do at “home,” where they are often the subject of public and media scrutiny. Many behave in an irresponsible, reckless, and even corrupt manner in distant lands, away from the full view of citizens “at home.” The dumping of waste, the devastation of natural resources, and the inhumane treatment of workers, are just a few examples of unethical business behavior abroad by multinational corporations. Therefore, the act of mobilizing corporate resources for the purpose of building up universities—which themselves tend to be critical of poor corporate behavior—may be considered tricky.

It is important to acknowledge that unethical behavior is not confined to greedy multinational corporations concerned with maximizing profit at all cost. Foreign governments and their agents also engage in unsavory behavior that undermines social responsibility. The provision of Chinese fellowships to wealthy and politically well-connected students in Namibia (as reported recently by The New York Times) is a poignant example of this. Preaching about fairness, ethics, and social justice is one thing; putting these values into practice is yet another.

Enlisting African Oprahs: Paving the Way

In 2007, Oprah Winfrey, the popular American talk show host, built The Oprah Winfrey Leadership Academy for Girls in South Africa “to nurture, educate and turn gifted South African girls from impoverished backgrounds into the country’s future leaders.” Madonna, the American superstar singer who has adopted children from Malawi, also recently announced a plan to build a girls’ academy in the country’s capital, Lilongwe. As this was happening, the education minister was quick to propose that Madonna build a university as part of her future endeavor. Many such efforts by “external entities” take place in the region with more or less fanfare or criticism.

Yet we hear little about African business moguls or celebrities supporting educational institutions on par with their affluence, if at all. When I spoke in 2007 with a Nigerian billionaire who was considering establishing a foundation in 2007, it was evident that considerable guidance and support, as well as appropriate policy that encourages and governs giving, needed to be put in place to promote philanthropy in the region.

Building an Endowment: An Enduring Impact

African universities urgently need to establish endowments through both external and internal sources. In a region where research and development grants are scarce and foreign currency is tight, such a sustained resource has considerable impact on the health and operation of institutions. For example, in a conservative investment environment of 5 percent a year (without going into the nitty-gritty of risk analysis) a relatively modest endowment grant of $10 million would annually generate half-a-million dollars.

Though there have been some attempts to build endowments in the region (see Teferra, 2005), especially for regional think tank institutions, this approach has not yet attracted much support. And yet the critical importance of sustained and dependable resources such as endowments in revitalizing the state of higher education and research in the region cannot be overemphasized. Therefore multinational corporations, businesses, and foundations, need to be urged to support such schemes as endowments.

Conclusion: Universities as Beneficiaries and Activists

African universities have not had a long culture of fund raising, for many technical, historical, and logistical reasons. It is only recently that revenue augmentation has caught the imagination of institutional leaders, due largely to dire financial straits and shifts in institutional governance.

Only a handful of local institutions have strategically targeted multinational corporations to support teaching, research, and innovation. Thus, on a much wider scale, African countries and their institutions need to take proactive measures to establish trust funds, endowments, and foundations, by actively engaging multinational corporations and other major businesses. They should persistently encourage these organizations to support research and innovation in areas of their business interest, in meaningful ways.

Individuals can play a key role in this process, proving that multinational corporations’ interests are more local than they may think. For instance, local operations are often staffed by alumni of local universities. These alumni are vital interlocutors, yet untapped, in realizing the effort of actively engaging multinational corporations.

Ultimately, however, universities should spearhead national efforts to encourage multinational corporations to carry out their corporate duties. Furthermore, regional institutions tasked with promoting higher education, such as the Association of African Universities and the Southern African Regional Universities Association, in concert with the economic think tanks such as the African Economic Research Consortium, business forums such as African Business, and business ethics organizations, should play an important role in fostering the dialogue and widely disseminating awareness at the national, regional and global level. There can be no fair or sensible reason for multinational corporations to abandon abroad the same social and corporate responsibilities they honor at home.