Corporate Social Responsibility

WIPHOLD’s Corporate Social Investment programme is integrated into its business model, and specifically designed to support our empowerment initiatives such as Project Imbizo.

The empowerment focus is two-fold:

• Firstly, we aim to link the core business of our group and investee companies to social development issues in a way that is both profitable to the companies and empowering to the recipient communities
• Secondly, we have a parallel programme, through which we make grants and donations to organisations that work on empowering women and children.  This enables the recipients to have the finances required to get off the ground and run effectively

Core Business and Social Development

WIPHOLD actively seeks opportunities to link core business activity to social development in a way which is profitable for the companies involved whilst simultaneously empowering recipient communities.

One such initiative is Project Imbizo – an initiative which WIPHOLD has spearheaded in co-operation with its partners Old Mutual, Nedbank and Mutual & Federal.

The following article carried in the Sunday Times during 2006 outlines the thinking behind Project Imbizo and its birth.

Making business sense out of empowerment

SPEARHEADED by some of the world’s larger corporations, there’s a new movement bubbling out there. Companies like Unilever, CEMEX and ICICI Bank are making the poor part of their core business strategy.

They’re creating new business models which aim to simultaneously empower poor communities while creating profitable future markets for themselves. And it’s working — not only are these Corporates helping to lift poor people out of poverty in a way that traditional corporate philanthropy (unless conducted on the scale of a Bill & Melinda Gates Foundation) will never be able to do, but they’re making money doing it.

To be sure, there are some poor communities that perhaps forever have to be wards of the state, so dire are their circumstances. In some parts of any society, the welfare state has to operate. But corporates are finding many others where, through their regular course of doing business and in partnership with the state and NGOs, market forces of a different kind can substantially alter poverty patterns.

Take for example the experience of CEMEX, the world’s third-biggest cement producer. According to its website, CEMEX has helped make home ownership a reality for more than 123000 Mexican families. Its Patrimonio Hoy programme organises low-income families into self-financing cells that facilitate and expedite a typical home-building process. CEMEX not only supplies them with the products they need but also offers technical assistance so they can optimise space and reduce waste. This year, Patrimonio Hoy has begun its expansion to Colombia , Venezuela , Nicaragua , and Costa Rica .

Unilever’s Indian subsidiary, Hindustan Lever Ltd (HLL), runs Project Shakti — a scheme to train rural villagers in India in business skills and build sales for Unilever’s products.

According to HLL’s website, “the project connects women’s self-help groups, set up by the government and NGOs, with business opportunities. Hindustan Lever offers the groups the chance to become very local, small-scale sellers of the company’s products, or to use their skills in another way. Most of the women who have chosen to participate in Shakti have managed to create a sustainable micro-enterprise for themselves, generating a steady income that almost doubles their usual household income.”

It adds that 28000 women’s lives have been positively affected by the project.
HLL drew on “the work carried out by Grameen Bank of Bangladesh ... and learnt that micro-credit, when carefully targeted and well administered, can alleviate poverty significantly”.
The company believes “such initiatives are successful and sustainable when linked with the company’s core business and are mutually beneficial to both the population for whom the programme is intended and for the company”.

In South Africa , with all the hype and hysteria of black economic empowerment (BEE) codes and charters existing merely to facilitate deals and enrich a few lucky black South Africans, we are perhaps busy missing a key point at the heart of BEE policy. Simply put, it is that probably the most important parts of the codes and charters are about South African companies doing exactly what the HLLs and CEMEXs of the world are doing. Get it right and our companies, poor South Africans and the economy at large might just have BEE to thank for moving us all onto new growth paths.

Take, for example, the access provisions of the Financial Sector Charter (FSC). These are about creating the ground rules for doing business with the poor. So, already we see ATMs popping up all over remote rural areas. Poor communities have the FSC to thank for that, as do the banks. They will tell you that some of these ATMs are already among their most profitable.
That’s a great start, but the ATMs in themselves will not generate sustainable cycles of growth for poor communities or for the banks. More is required and that is the challenge that the Old Mutual Group (Old Mutual, Nedbank, Mutual & Federal) and its BEE partner WIPHOLD seek to address.

The four companies have begun pilot exercises in a poor rural community, the Mnquma district in the Eastern Cape , and in two urban communities, Khayelitsha and Kliptown. Earlier this year we spent time with these communities, listening to them tell us what their financial services needs were. These imbizos gave us insights which traditional market research strips out. Based on those discussions we are now returning to these communities with packages which we think speak to their needs, and which we believe will in the longer term deliver sustainable business for our companies.

One of our non-negotiable principles is that while there will be a little philanthropy, almost all of what we do will be done on a commercial basis. And in terms of our “rural package”, a key underlying principle is that income generation and wealth creation must lie at the heart of our rural business model. So yes, we’ll be putting staffed banks and ATMs into the towns of the Mnquma district, but we’ll also be piloting micro lending for productive purposes and exploring commercial agricultural initiatives in partnership with the Mnquma community and with public-sector institutions.

We’ve also learnt that in a rural community wealth is more often than not measured in terms of livestock and homes. Finding ways to offer insurance cover for such assets can mean that important sources of wealth will never be obliterated by lightning or fire.

We will employ and train people from the community to operate “Green Shops” — branches of a different sort. They will be less about our corporate brands and more about a place of gathering and pride, and a direct response to the community’s expressed need to be able to engage their financial services representatives. In some cases we’re introducing new products. In others, such as Old Mutual’s funeral cover, we’ve simply had to adapt existing product to address problems articulated during the imbizos. Interestingly, through devising these strategies for the poor, in at least one instance we think we’ve come up with an allied offering for higher-income segments around the country.

This has not been about taking our traditional business models and pushing them down the income ladder. We’ve had to challenge existing paradigms and in some cases turn age-old practices on their heads, and not without risk. We believe that what we’re doing speaks to the true intent of the FSC — perhaps representing the first substantial delivery of broad-based BEE as the codes and FSC intended.

As we replicate the model in other communities and if other companies follow our lead, we could witness a corporate revolution right here in South Africa . Coincidentally, it will have taken a BEE equity deal to make it happen.

Serobe is founder and executive director of WIPHOLD and CEO of Wipcapital; Marsden is WIPHOLD’s business transformation executive.