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Egypt’s Corporate Social Responsibility

Exclusive Interview for Business Today Egypt

According to the Supreme Council of the Armed Forces seminar titled ‘January Revolution and Horizons of Economic Growth,’ Egypt’s economy [is] at risk,’ as reported by the Egyptian State Information Service.

The statement described the unprecedented decline of economic conditions in post-Mubarak Egypt: poverty rates at 70%, economic growth sliding to 1 to 2%, and hard currency reserves that have declined to $28 billion (LE 168.84 billion) from $36 billion (LE 217.08 billion). 

Egypt is undergoing a tough transition process and is at a social, economic and political crossroads. Over the last year we have seen the rise of individual efforts and local ventures taking on social and developmental challenges. Yet is funding social welfare projects an appropriate role for corporations? Should corporate social responsibility (CSR) prevail when governments fail?

As the post- Mubarak government is still struggling to meet the existing societal challenges and fulfill the people’s revolutionary aspirations, socially responsible behavior (SRB) taken on by both individuals and corporations holds real promise. This could provide hope within the existing political and economic uncertainty, provided we understand its motivations and limitations.

CSR in the Egyptian context
There seems to be an infinite number of definitions of CSR, ranging from the simple to the most complex. To make matters more confusing, there are also a range of associated and interchangeable terms and ideas, including corporate sustainability, corporate citizenship, responsible governance, socially responsible investment and others.

CSR embraces a wide range of behaviors, such as being employee- and environment-friendly, mindful of ethics, respectful of communities where the firm is located, and even investor-friendly. Sometimes, the call for duty extends beyond the corporation’s immediate realm and includes supporting the arts, health issues, universities and other noble causes. Some even go to such extremes as to regard CSR as the panacea for the global poverty gap, social exclusion and environmental degradation.

The World Business Council for Sustainable Development in its January 2000 publication ‘Making Good Business Sense’ by Richard Holme and Phil Watts, used the following definition for CSR, “[It] is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large.”

The motivation for CSR in Egypt differs from that of companies operating internationally. CSR is strongly influenced by Egypt’s religious beliefs. For more than a millennium, the country has been predominantly Islamic. However, there is also a Coptic Christian minority, which account for as much as 8–9% of the total population. As such, Egypt has a powerful culture of giving, practiced in both its Islamic contribution of zakat and the Christian tradition of ushur (tithing). Loyalty and solidarity still remain paramount values and often override most other societal rules. The money is often utilized to provide the poor with food and clothing, as well as enabling educational or health services. 

Egypt’s history is full of examples of the corporate sector contributing to community development. Before the 1952 Revolution, Egypt’s educational and healthcare facilities were established through corporate giving (El-Awkaf). These corporate social development efforts stopped shortly thereafter, alongside the subsequent nationalization of Egypt’s large companies. After this, the private sector which consisted mainly of small businesses, were unable to compete with charitable works. That was taken over by the state which assumed responsibility for social and economic development. It is therefore logical to say that the corporate sector’s contribution to community development during the past seven decades has witnessed many changes. It was reshaped in response to diverse stimulations and political alterations — sometimes it acted as a catalyst and at others, it was a barrier to many philanthropic activities.

CSR in Egypt is still regarded as a non-institutionalized phenomenon and is understood mainly as a philanthropic concept. Egyptian companies operate in an environment where CSR compliance is mostly voluntary and many lack the necessary consistency and seriousness of purpose in their social responsibilities. In Egypt there are the usual PR and marketing campaigns rather than well-conceived programs aimed at ongoing societal development and sustainable economic improvement. 

In addition, with the increasing wave of globalization and the influence of growing westernization, a dramatic shift in society’s value system took place. 

A new turn occurred following the ongoing Egyptian uprising and the state’s noticeable failures. Egypt’s CSR was regarded by many as a legitimate alternative philosophy needed to correct the country’s economic fiascoes and amend its social inequalities. Many questions rose in trying to describe the expected role of CSR in the country. 

Should it act for just cause? Stay low-key and independent or become institutionalized? 

Egypt: CSR actors 
An important public rationale is to implement CSR as an economic concept that draws on Egypt’s religiously inspired culture of giving, in order to help create a stable socioeconomic order in a more strategic way.

Recently, an Egyptian Islamic mufti advised Muslims to direct a portion of their zakat contribution to state hospitals and their pharmaceutical counterparts; so as to meet the increasing shortage in its medical capacity. This was in part due to the accelerated number of sustained injuries and disabilities among rioting citizens and protesters. A health official in the Egyptian Health Ministry has confirmed that CSR contributions and donations were the backbone that supported the continuation of these institutions during the last year.

Religious organizations in Egypt, which in large part depend on zakat and ushur, have embarked upon different initiatives to implement sustainable development projects instead of simply providing donations to the poor. However, they have approached businesses from the perspective of asking community members to give back to society as part of their religious practice and not as part of their responsibility toward society. This is found in the Moustafa Mahmoud Charitable Organization, Resala Foundation, Masr El Kheir Foundation, Nour ala Nour Foundations, the Coptic Evangelic Organization for Social Services and others.

Some suggest that Islamic political parties won the current Egyptian Parliament and Shura elections due to their CSR credibility. They relied on the political slogan of ‘Islam is the Solution’ — an Islamized version of CSR and a powerful remedy capable of solving social injustice and economic inequality in the Egyptian community. They advocated their platform via complex social service networks and by responsible social penetration to poverty-stricken slums. Islamic parties also offered multiple CSR services, that range from monthly monetary allowances to widows and orphans, medical services to those in need either free or low cost, assistance in educational tuitions and group learning, and interest-free loans according to the principle of Islamic banking: murabaha and other activities. Unlike state CSR campaigns that gained media coverage, these Islamic groups practiced pragmatic CSR that earned them public respect and profound acceptance by the Egyptian masses.

The oil and gas, telecommunications, banking, construction and food sectors were previously active in adopting the CSR concept. These large corporations communicated CSR initiatives through a range of media outlets. They possessed the necessary resources and the economic capacity that enabled them not only to comply with CSR-related laws, but also to go beyond these laws voluntarily. For instance, almost all corporations in these sectors provide their employees with better health and insurance packages than is required by law. 

For example, the National Bank for Development (NBD) donated an intensive care unit (ICU) to the Children’s Cancer Hospital. As well as donating the ICU to the hospital, NBD and other banks like National Bank of Egypt have also opened up a bank account allowing the Egyptian public to give donations to the hospital and help in its very important work. Funding that comes from such entities does not have to be in cash but could be in-kind contributions that includes technical, human and logistical support. Examples of tapping into the local market included Orascom Telecom, Shell, Vodafone, Procter & Gamble and Barclays.

However, it has been circulated that these corporations donated to the cancer hospital not only because it was the first pediatric cancer hospital in the Middle East to provide management and treatment for prevention, treatment, education and research, free of charge, but also because, since its opening in July 2007, it had been under the direct auspices of Suzanne Mubarak.

Nevertheless, many of these corporation are still holding a wait-and-see approach which is rather unexplainable and alarming.

Provisions for the needy
The Egyptian Food Bank was first established as a non-governmental organization. Its mission was overcoming hunger in Egypt, through accepting monetary and moral support to supply food on a continuing basis. Previously said corporations depended largely on hotels and touristic food venues to collect leftovers and redistribute it to the needy. However, since the January 25 Revolution and the collapse of tourism, Food Bank campaigns have suffered great setbacks.

A representative at the Heliopolis Sporting Club said that individual donations now constitute 80% of its revenue and most corporate donations are on hold.

Despite its size and impact, the real estate sector has been completely ignored in any CSR-relevant discussion due to the limited financial resources of its member enterprises. In addition, many are not always able to adhere to legislation pertaining to labor and environmental standards. SMEs make charitable donations, but the majority are still unaware of the concept of CSR.

The Egyptian individual social responsibility (ISR) is at the root of CSR, and constitutes a subset of its philosophy, because a corporation is comprised of individuals which determine the social responsibility culture it creates.

There are three distinct types of ISR in Egypt. First, individuals that have ‘good intentions’ who believe that social responsibility is a good and unselfish idea. They are basically reactive rather than proactive to any societal problem or crisis. These individuals may be driven sometimes by social and self-esteem concerns. They are likely to be generous to prestigious charities, such as rotary clubs and official state donation campaigns, which might have media coverage and boost their image as benevolent and altruistic.

The second group are the unconcerned; in this subset, social responsibility has little consequence in their lives.

The third group identifies with the bright side of ISR, as they interact by intrinsic motivation and extrinsic incentives to support public interest. They constitute approximately one-third of Egypt’s population. This type of ISR was the backbone of the January 25 Revolution. Their CSR awareness led them to rebel against all the ill deeds of Mubarak’s reign. They are the promising future, and Egypt’s hope to close its aggravated Pandora’s box of flaws.

The way forward
Egyptians are historically known for their close social ties and their inherently philanthropic disposition. However, CSR is still waiting to become a full-fledged and integral part of core business activities.

Egypt’s CSR public policy is assessed as being in the first generation of maturity. The non-state CSR actors need not replace the state CSR actors. Both are needed to achieve success.

State actors need to resume their social responsibility by undertaking a number of utilitarian public policy activities in the fields of corporate governance, community development and consumer protection. 

This can only succeed if CSR state actors work side-by-side with national individuals and corporations. This can be done within a transparent and accountable framework of duties and obligations, free of bureaucratic barriers, and functioning in adherence to a CSR awareness-raising national cult.

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