Business in civil society

Business is important to strengthen civil society. But what is the role of the private sector in the transformation of society? Every organisation or institution should attempt to transform and improve the lives of all people. So why should this be different for business? Or is it?

By Leon Louw

 “As we begin to more clearly grasp the idea of good governance as not something that should be bound by a definition, we are offered a wider space to inquire how to achieve governance that serves the people,” said former president of South Africa Kgalema Motlanthe in his address to delegates at the University of Johannesburg’s civil society conference earlier this year. 

Governance, in this instance, does not only refer to matters of the state. Governance encompasses the system by which any organisation is controlled and operated, and the mechanisms by which it, and its people are held to account. Corporate governance, for example, includes ethics, compliance, risk management and administration.  

“It is for the people that any system of governance exists, and because of the people that a value system of governance should operate. Thus, there is a moral imperative for a principled-based style of governance that includes the voices, thoughts, and participation of all people,” said Motlanthe.

“To be successful, you need to be more than a businessman, you need to be a responsible citizen,” writes Acha Leke, Mutsa Chironga and Georges Desvaux in their book, Africa’s business revolution: How to succeed in the worlds next growth market.

Create shared value

“Any company seeking to build a sustainable, scalable business in Africa needs to focus on creating value for both shareholders and stakeholders. There is no inherent tension between earning healthy profits and serving the interests of employees, suppliers, customers, creditors, communities and the environment,” says the authors.

Moreover, business has a responsibility to ensure that civil society thrives. Business, in fact, is an integral part of civil society, and therefore must play an active role in strengthening civil society.     

According to Brookings, civil society comprises organisations that are not associated with government; like schools and universities, advocacy groups, professional associations, churches, and cultural institutions. According to Brookings, that could also include the private sector, but business is not always included in the definition of civil society.

The importance of civil society in a functioning democracy can never be underestimated. Civil society is an important source of information for citizens, government, and business. They monitor government policies and actions and hold government accountable. They engage in advocacy and offer alternative policies for government, the private sector, and other institutions.

Civil society delivers services, especially to the poor and underserved, and they defend citizen rights and uphold social norms and behaviours.                                              

According to Motlanthe, the sensitive impact of change in an equation is well-characterised in geometry, where, according to the length of a triangle’s sides, or the measurement of its angles, we are presented with an infinite set of possibilities and unexpected geometric connections.

“Like a triangle’s three sides, the private sector touches with the side of the state, to reach an apex that should represent the connection of a nation’s political, economic, and social goals.

“At the base of the triangle, we find the third sector, civil society as the third side that forms a support and, in many ways, has the power to influence the measurement of elected governments and businesses.

“A geometric rule to remember is that the angles of opposite sides are not always in a proportionate ratio. Similarly, the burden of civil society in relation to the public and private sectors, can also be disproportionate, sometimes unpredictable, and certainly evolving in its response: leaving the equation open to calculation by nuanced changes within society.

“Civil society as the third sector, has the ability to be an independent representative of the people and a critical conscience of communities,” said Motlanthe.

Business should contribute to society’s development and transformation

Dr Bhekinkosi Moyo, director of the Chair of the African Centre on Philanthropy and Social Investment (ACPSI ZA) at Wits Business School, tells WhyAfrica in an interview that the most important role of business is to contribute to the development and transformation of societies, especially in jurisdictions where there are significant social challenges.

“It is in communities where poverty, unemployment, a lack of education, inequality, crime, violence and poor health have devastating effects, where the business sector has to play a transformative role. Without healthy societies, there will simply be no business,” says Dr Moyo.

Business should plough back into their communities through corporate and social responsibility, social investments, and by the way in which they operate as a business. The private sector must be guided in such a way that their intervention contributes to social justice and to financial and environmental sustainability. 

Are companies doing enough? 

So, is business doing enough? “Although most companies have good intentions, they usually promise the world, but do very little to bring about real change,” he says. This is the result of pressure to meet shareholder requirements rather than considering stakeholder interests. Business is still largely driven by profit margins rather than societal needs. According to Dr Moyo, there is still a long way for businesses to go to meet the requirements of society.

Dr Moyo adds that business leaders are part of civil society and must act in that manner. “Civil Society’s role is to hold government, business and other forms of society accountable. They represent the voiceless and it is important therefore that business leaders genuinely understand the role of civil society. The only way for them to understand is to be part of it, to be actively involved in civil society and to support civil society in terms of funding,” he says.

If business is supposed to strengthen civil society, will that not negatively affect their relationship with government? “Not necessarily,” says Dr Moyo.

“A successful society comprises of a healthy partnership between government, business and civil society. Each of them has different roles to play, but they should ideally work together towards one common goal. Business should support the policies of government and where government fails, should partner with them to serve society. At the same time, it is government’s responsibility to create a conducive environment for business to thrive and put in place policies that promote business growth performance and sustainability. The same could be said for civil society as part of the mix,” Dr Moyo concludes.

Inclusive growth is critical

Prof Adrian Saville, founder and CEO of Cannon Asset Managers and Professor at the Gordon Institute of Business Science, tells WhyAfrica in an interview that elevated, sustained and inclusive growth is critical for development. Moreover, there is not a country in the world where sustained growth has been achieved without public and private collaboration, including civil society. 

“Our recent research work covers 160 countries over 60 years and there is not a single example of a country that has achieved transformation without public and private collaboration. This means that business is fundamental to transformation. Unless you have transformative business, you cannot have a transformed society,” he says.

“From our research it is clear that business models that engage are the business models that enjoy the most elevated performance. By doing good you get the license to operate in society and that social license sustains your performance,” he says.

The only way business can play a role in strengthening civil society is through leading by example and by recognising that sustainability is multi-faceted. Sustainability includes the environment and the broader society (including civil society), and not only profits. Being a functional member of society is multi-faceted, it is uninterrupted, you can’t choose when to be a member of society and when not to be.

“You can never have a sustained, inclusive, and prosperous society if you have an extractive business sector removed from the rest of society that is seeking gain for itself at the expense of others,” concludes Prof Saville.

Leon Louw is the founder and editor of WhyAfrica. He specialises in the extraction and responsible utilisation of natural resources, the primary sector of African economies and Africa’s political economy. 

WhyAfrica does research, and reports about, natural resources and the primary sectors of African economies, and the infrastructure, equipment and engineering methods needed to extract and utilise these resources in an efficient, responsible, sustainable, ethic and environmentally friendly way, so that it will benefit the people of Africa.