Friday 1 March 2024

Corporates need to build shared value ecosystems to rebuild legitimacy whilst making profit

By Radithebe Rammutle

Just about everyone who has the faintest interest in business has observed with bewilderment the drama of the 2008 Wall Street market crash. Millions of people in the United States (US) and the rest of the world lost their jobs and investment. Economic performance of many countries stalled and even after few years recovery was still fragile. The fragility of the economic recovery meant that the increasing demand on public resources due to unemployment and poverty could not be met Some large financial institutions, such as Freddie Mae and Freddie Mac, responsible for this crisis fell from grace. Some managers and board members were given heavy penalties for their role in this saga. Despite these acts, communities have questioned the legitimacy of business because it was clear for all that the actions of big financial institutions were to benefit their leadership teams and shareholders at the expense of other stakeholders. It is for this reason that creating shared value ? building business models in which communities benefit and social progress is achieved ? has become the concern of private businesses and public institutions today. On 14 October, Shared Value Africa Initiative (SVAI) convened a virtual meeting to explore how businesses could build shared value business models and strategies. The panel comprised of representatives from various industry players including Orange Botswana, Mascom, and Botswana institute for Technology, Research, and Innovation.

As a concept, shared value is less understood given its recency. Furthermore, it is difficult to delineate it from Corporate Social Investment (CSI). However shared value is distinct from CSI because its core focus is to create value for the company whereas CSI focuses on giving back to the community through taking part in philanthropic causes and providing positive social value. Historically businesses turned to CSI to make a difference in a community and to build a positive brand.

Shared value ' not about donating a cheque. We're actually wanting to drive change and I think through programs and partnerships we can be agents of change' said Orange Botswana Chief Sales Officer, Buyile Makgekgenene. Shared value strategies are geared towards making a business an agent of change in a profitable way. To develop a shared value strategy is however a complex process. Historically business have shied away from societal problems even though they impact their value creation. For example, COVID-19 can have a serious impact on business value creation because of high levels of absenteeism particularly in human resource intensive industries such as mining.

Instead of shying away from the problem a large-scale program to vaccinate and to treat ill patients can be introduced to protect the workforce and to reduce absenteeism. In this way businesses don't only become agents of change, but their corporate profits would rise. Corporations today are focusing their attention on global societal issues such as income inequality, gender inequality or climate change. Any company working to eliminate gender inequality, particularly in Africa, will encounter roadblocks. For example, women and girls are less likely to access to education hence the pool of suitable women candidates to employ, or to form part of a business supply chain is small.

Mabu Ntate, founder of Service Bridges Consulting, said "Deliberate focus on equipping women and girls with business skills, access to finance and access to peer groups and networks to help them succeed [as economic agents] is the best thing we can ever do for our long-term success as a world and as a country"

On their own corporates or any single actor cannot resolve such societal challenges. It requires creation of multisector coalitions where individual businesses can participate. In these coalitions not only, corporates have a role to play. Governments, Non-Governmental Organisations (NGOs), and community members have an essential role to play.

A living example of shared value efforts in Botswana is the coalition of businesses started by Executive Margin to empower women street vendors through equipping 10 000 vendors with innovative Sun Hearts kiosks that serves as retail channels. However, corporates and potential partners still work in opposition than in alignment and more needs to be done to create shared value.


Previous Editions

subscribe to our magazine