6. Legislating corporate social responsibility (CSR) activities

The relevance of CSR in the mining sector is not in doubt ([40], p. 239). However, in spite of this, CSR in Africa largely remains a voluntary undertaking. This is even more evident in the

<sup>5</sup> Tiomin Resources was the leading titanium mining firm in Kwale between 2002 and 2010. It changed its name to Vaaldiam Resources in early 2010. Its operations in Kwale were acquired by Base resources of Australia, who bought this concern (from Vaaldiam) on 30th July, 2010. For the CSR activities pursued by Tiomin, see Tiomin (K)'s document entitled District Compensation and Resettlement Committee (DCRC) [49].

mining sector. It is perhaps because of this that CSR activities in the mining industry have had a questionable reputation for social responsibility ([34], p. 275). The voluntary nature of CSR makes many extractive companies in the mining sector opt to do just enough to appease the host government that it is doing something along these lines. Some scholars have termed this as the practice of obtaining a "social license" to operate. In Africa, South Africa stands out as the only country with a large extractive industry to have an explicit law that regulates CSR activities. This is the Mineral and Petroleum Resource Development Act (MPRDA) backed by the Broad-Based Socio-Economic Charter for the Mining Industry (Mining Charter). These two efforts call upon mining companies to invest in social development and to diversify ownership to historically disadvantaged groups [50]. On the backdrop of colonialism and apartheid, the South African government enacted the law so that CSR can be used as a development tool to address social justice (especially past injustices) and community development [51].

With regard to the community health program, the company has rolled out a program to assist in the expansion of the Kwale and Mombasa Counties Health Departments' Community Strategy Program by providing funding for training and ongoing logistical support. On hospital equipment, long-term plans to upgrade the Msambweni Referral Hospital to a level that will be able to handle almost all emergency and routine medical procedures are underway. The Magaoni Health Center has also been constructed by Base Resources. Base Resources has provided equipment for this facility and has constructed a dispensary at Bwiti in 2012. Community health workers have also been empowered to deal with the emerging bedbug infestation through training in fumigation procedures and provision of fumigation equipment. Under the Prevention of Mother to Child Transmission ("PMTCT") project, the company had by September 2017 enrolled close to 800 HIV positive pregnant mothers into the care, with further effort envisaged to reach 11,000 HIV negative pregnant mothers with preventive messages.

Under the scholarship program, base resources have established a scholarship program to cater for bright but needy students. By December 2017, the company boasts of having supported over 1050 needy local students from Kwale County and Likoni Sub-county who are studying at a variety of institutions across the country. Since 2013 the company has invested 164 million shillings (US\$1.6 million) in providing scholarships. One other community training initiative is in the area of Maritime Course Training. This is promoted as a community initiative geared toward improving livelihoods near the company's ship loading facility at Likoni. Toward this end, base resources donated a fishing boat and fishing equipment to the Likoni Beach Management Unit ("BMU"). It has also facilitated attendance of 50 members of the BMU at the Dar es Salaam Maritime Institute in Tanzania to receive training in fishing and marine safety. The company's investment in this initiative is said to total 14 million

On the initial CSR programs pursued by Tiomin (K),5 a study found that the various CSR activities fall below the expectations of the local communities, especially when these were compared with the assets they had lost to the project [47]. The now increased CSR activities seem to suggest that lessons from the past have been learn. What remain unclear are the community's sentiments toward these expanded programs. Research of this is necessary as it has been found that at times what is on paper is actually not being substantiated on the ground [36, 37]. This then begs the question: should CSR be legally regulated? The following section

The relevance of CSR in the mining sector is not in doubt ([40], p. 239). However, in spite of this, CSR in Africa largely remains a voluntary undertaking. This is even more evident in the

Tiomin Resources was the leading titanium mining firm in Kwale between 2002 and 2010. It changed its name to Vaaldiam Resources in early 2010. Its operations in Kwale were acquired by Base resources of Australia, who bought this concern (from Vaaldiam) on 30th July, 2010. For the CSR activities pursued by Tiomin, see Tiomin (K)'s document entitled

6. Legislating corporate social responsibility (CSR) activities

District Compensation and Resettlement Committee (DCRC) [49].

shillings (US\$136,000).

74 Social Responsibility

examines this conundrum.

5

The MPRDA specify the objectives and processes for the Social and Labor Plans (SLPs) that must accompany every mining application. These guidelines form the main regulatory force driving CSR in the South African mining industry. The 2004 Mining Charter demands on the other hand, among other things, 26% ownership of mines by historical disadvantaged South Africans within 10 years. It also enacted a scorecard to monitor company compliance with their SLP requirements. Previous studies have found that existence of regulation has increased the formalization and strategic nature of CSR in South Africa [52]. The studies have also noted that the existence of regulation has led to increased reporting on CSR and the generally increased commitment to CSR. Without a doubt, therefore, regulation of CSR is a good thing.

Other countries also appear to want to follow suit. Kenya is such one country. Previously, mining contributed only 1% to Kenya's Gross Domestic Product (GDP) [53, 54]. The recent discovery of titanium in Kwale, gold deposits in Trans Mara, coal in Eastern province of Kenya, and oil deposits in the Turkana basin in Northern Kenya has now placed Kenya among the great mineral nations in the world. The 2016 Mining Policy6 and the new 2016 Mining Act (that replaced the archaic 1940 mining act inherited from the colonial government) seeks to address past and present concerns over problems associated with mining extraction. The mining policy sets out the aspirations of the Kenyan government with regard to mineral development in Kenya. Much of the objectives in mining policy have been translated into law (the enactment of the 2016 Mining Act<sup>7</sup> is a case in point). In the said Act, regulations resolved the contentious issue of royalty as, under Section 183 (5) royalties are now payable and are distributed as follows: 70% to the National Government; 20% to the County Government; and 10% to the community where the mining operations occur. The new act retained the government rights over minerals and the forceful taking of community land for mineral development. With this proviso retained, it will not be surprising if conflicts over land rights continue, as this has been identified as one of the factors that promote conflict in this sector [36].

<sup>6</sup> Available: http://www.mining.go.ke/images/PUBLISHED\_MINING\_POLICY\_-\_Parliament\_final\_.pdf - accessed 17/4/ 2018.

<sup>7</sup> Available: http://kenyalaw.org/kl/fileadmin/pdfdownloads/Acts/MiningAct29of1940.pdf - accessed 17/4/2018.

The new Act further affirms CSR as a voluntary activity, as it only recommends that companies should engage in CSR activities. It is this loophole that the Local Content Bill of 20188 hopes to seal. Among other things, this bill recommends that application for mining licenses must be accompanied by a comprehensive Local Content Plan (Part IV of the Act), which will address employment and skills development of locals. The plan will include employment and skill development plan, education and training plan of locals, a research and development plan; a technology transfer plan; preference to a local company in the grant of a license or award of a contract with respect to extractive activities, percentage of local equity ownership of extractive industry companies; a financial services plan, and a succession plan for positions not held by Kenyans, among other things. It also suggests a reporting and monitoring framework for each stage of the mining process.

remedy this [48]. However, even with local (and government) participation, it is doubtful that if left on their own, companies will actually mount CSR programs that will benefit local communities. The South African case is a good example of how legislation can lead to good CSR practices. Kenya appears to be heading in this direction going by its recent introduction of the Local Content Bill. The bill is currently undergoing the legislative process. As Carroll's CSR pyramid illustrates, to many companies, CSR comes a distant fourth after economic, legal and ethical responsibilities. Therefore, making CSR a legal requirement will increase its importance

Mining Conflicts and Corporate Social Responsibility in Kenya's Nascent Mining Industry: A Call…

http://dx.doi.org/10.5772/intechopen.77373

77

As observed earlier, mining conflicts in Africa revolve around five issues; conflict over land ownership, over environmental degradation, over compensation for lost assets, over not having a share in the profits emanating from the mining ventures, and over human rights abuses. Since governments will continue to forcefully take land from local communities for mineral development, it is imperative that CSR activities be taken serious if governments and mining companies are to assuage the disaffection of communities over mining enterprises. This is for the reason that in mining ventures one cannot do without the significant other [25]. It is, therefore, imperative for CSR activities to be legislated. This will be in line with suggestions from other quarters that insist that there should be a firm/consolidated policy and legal basis for CSR [58]. This is perhaps the only way through which CSR can succeed in Africa. For as

"CSR decisions of most foreign firms …are triggered mainly by legal obligations and anticipated economic gains. By seeing CSR investments as duties rather than morally appropriate discretionary acts, the foreign firms….tend to uphold the barest minimum set of CSR obliga-

Making it a legal requirement will bring CSR to the center of the company agenda. It is, therefore, time to move CSR from rug four in Carroll's CSR pyramid to rug two as a legal obligation. Once that is done, the next step will be for developing countries to develop their own corporate governance models that consider the cultural, political and technological con-

The author wishes to thank the University of Fort Hare for the use of its facilities during my

PhD studies to carry out research that led to the production of this article.

in the agenda of mining companies and governments.

argued:

tions" ([59], p. 531).

Conflict of interest

Note of appreciation

ditions found in each country ([60], p. 14).

There is no conflict of interest with regard to this article.

Developing countries present a unique context for CSR strategy, as the role of government is often limited or different from developed countries [55]. The South African and Kenyan case demonstrates that African governments are now flexing their muscles into the realm of CSR. While South Africa already has a CSR law, Kenya has a bill that is very comprehensive in content and one which gives promise to a structured CSR environment in the mining sector.

## 7. Discussion and conclusion

In the quest for foreign investment, African governments are often accused of bending over backward to accommodate the interest of foreign extractive companies over the interest of its own citizen. In Zambia for instance, the government has succeeded in keeping mining companies happy by meeting their every whim, but in so doing it has been unable to collect a sensible share of revenue or to perform its role as a regulator and protector of the rights of workers and local communities and as a provider of social services [56]. Despite increases in copper prices, poverty in Zambia continues unabated with mining communities being hit the hardest as they have already lost their assets (thereby lost their means for livelihood) through displacement. Similarly, in Kenya, it is argued that the economic crisis allied the state with Tiomin Inc., to acquire mining rights for mining of titanium in Kwale, southern Kenya. In order to attract investment, the Kenyan government offered substantial incentives to the mining company, which limited the potential benefits accruing to the community ([57], p. 8). It is for this reason that mining communities agitate for a share of the profit emanating from the mining ventures. Mining communities clearly face challenges of structured constraints and systemic inequality.

Mining communities expect a certain degree of social services to be provided by the existing mining companies [25]. However, in view of the fact that in much of Africa CSR activities are not legislated, companies are often left at their own device to decide on what CSR programs to run—with often disastrous results. A more participatory approach has been suggested to

<sup>8</sup> Available: http://kenyalaw.org/kl/fileadmin/pdfdownloads/bills/2018/LocalContentBill2018.pdf- accessed 17/4/2018.

remedy this [48]. However, even with local (and government) participation, it is doubtful that if left on their own, companies will actually mount CSR programs that will benefit local communities. The South African case is a good example of how legislation can lead to good CSR practices. Kenya appears to be heading in this direction going by its recent introduction of the Local Content Bill. The bill is currently undergoing the legislative process. As Carroll's CSR pyramid illustrates, to many companies, CSR comes a distant fourth after economic, legal and ethical responsibilities. Therefore, making CSR a legal requirement will increase its importance in the agenda of mining companies and governments.

As observed earlier, mining conflicts in Africa revolve around five issues; conflict over land ownership, over environmental degradation, over compensation for lost assets, over not having a share in the profits emanating from the mining ventures, and over human rights abuses. Since governments will continue to forcefully take land from local communities for mineral development, it is imperative that CSR activities be taken serious if governments and mining companies are to assuage the disaffection of communities over mining enterprises. This is for the reason that in mining ventures one cannot do without the significant other [25]. It is, therefore, imperative for CSR activities to be legislated. This will be in line with suggestions from other quarters that insist that there should be a firm/consolidated policy and legal basis for CSR [58]. This is perhaps the only way through which CSR can succeed in Africa. For as argued:

"CSR decisions of most foreign firms …are triggered mainly by legal obligations and anticipated economic gains. By seeing CSR investments as duties rather than morally appropriate discretionary acts, the foreign firms….tend to uphold the barest minimum set of CSR obligations" ([59], p. 531).

Making it a legal requirement will bring CSR to the center of the company agenda. It is, therefore, time to move CSR from rug four in Carroll's CSR pyramid to rug two as a legal obligation. Once that is done, the next step will be for developing countries to develop their own corporate governance models that consider the cultural, political and technological conditions found in each country ([60], p. 14).
