Helmke Sartorius von Bach | Jul 1, 2020 | 0
Social purpose and the enterprise
Recently, there have been calls for Namibian enterprises to begin sharing their prosperity with broader publics. There appear to be several particular aspects to this, though I speak subject to correction.
Firstly poverty is increasing due to the drought, and it can be expected to increase, not just until the first good rainy season, but until the rains have an impact on levels of wealth, which will take at least a year using wild optimism as the guideline, but more likely several years. As I write this, I feel the need to say that the drought impact on enterprise productivity is still unfolding, and will only fully be understood in hindsight.
Secondly, poverty will continue to hold Namibia in its grip due to external factors such as low commodity prices, the strengthening rand which knocks some of the lustre off the value of commodites that Namibia can export, as well as the outflow of Angolans, which will kick us right in the turnover.
The social and economic vulnerability of lower income groups, and declining recruitment levels and potential retrenchments, lie ahead. They can be expected to grow.
The suggestion that enterprise should contribute seems far from preposterous to me. As I understand Namibian culture, personal wealth held by one is apportioned to others. Although the apportionment may be unequal (skewed to family and a small network, rather than a broader community), it is most likely apportioned, not held as investments.
In Namibia, and globally, enterprise apportions resources through employment, acquisition of raw materials, backward linkages to other enterprises, social responsibility as well as returns to shareholders and investments.
The issues lie in narrowly linking the premium on the transaction, as well as the idea of ‘hoarding capital’ in the form of relatively fallow investments. These two skew the perception of the value of enterprise. If that is a basis for reform, as well as business accepting that it needs to shoulder some of the burden, the post-capitalism idea of a participatory economy is worth taking a look at.
The question that needs to be asked is how can social purpose be paired with traditional enterprise models (capitalist) to benefit the enterprise? Once that question is answered, a better idea of social purpose can be formulated.
The idea of social purpose, broader benefit other than a narrow focus on the transaction, and accumulation through financial investment has two subsets of interests: internal and external.
Internally, the aspects that need to be considered are staff who rely on the enterprise, investors in the enterprise as well as the enterprise as a holistic entity. Staff can be said to be beneficiaries of enterprise activity and ethical behaviour goes without saying in their regard. In terms of the enterprise and its investors, redirection of accumulated profits, away from financial investments and into growth can compensate for losses on financial investments. In this way the social purpose of growth can be achieved. The question is what is the correct premium and associated level of growth?
Externally, an enterprise might consider the cost and profit of its existence to its customers and broader publics? Does the premium on the transaction place a burden on the market, and to what extent can the premium be redirected to development and social purpose. For a look at this, in practice, consider Facebook’s idea of developing a beneficial mechanism to provide free internet globally, as well as the benefit to the company.
A statement of social purpose is well worth considering in the governance toolkit, however it has to be more coherent than current social investment practices, and it has to be linked to the asset value of the company.
The question that Namibian companies have to ask is how can the idea of shouldering the burden begin to improve their operating environments, and how to convert the challenge into opportunity.