Social Responsibility in Nigeria’s Mining Sector: The Way to Go

Social Responsibility in Nigeria’s Mining Sector: The Way to Go

“A business that makes nothing but money is a poor business” – Henry Ford.

Globalisation and Increasing Mining Activities

In recent times, globalisation, newer technology, connectivity and better education have all worked to increase the amount of business activities globally. These increasing activities have birthed mega corporations, increased working opportunities and improved economic capacity. Along with the earlier mentioned growth areas is an increasing understanding of the concept and dimensions of business social responsibility. As a result of this awareness and its efficacy in building a sustainable business, backed by research and other studies, the concept is now viewed as a critical aspect of today’s business model.

Today, the Nigerian mining sector is valiantly struggling to increase its contribution to the country’s GDP, which is currently low at 0.55%, to relive its glory days during the Enugu cool boom between 1909 and the 1950s, and to provide the much-needed boost to the Nigerian economy. Key decision-makers in the Nigerian mining sector are pushing on all fronts to make the sector a leading one. It is without doubt that the push in the sector that will lead to increased local and international business for Nigeria’s mining sector.

Currently, exploratory studies show that there is potential for exploration and exploitation of various minerals in about 500 locations within the 36 states in Nigeria. All things being equal, the economic implication of this is the increase in cash flow across the mining value chain. However, while many organisations in the extractive sector have expanded operations and revenue base over the years, the same cannot be said about the communities that host the companies.

Learning from the Past

A cue can be taken from Nigeria’s experience with her oil sector. Events in the sector can give us a grasp of the impending outcome of heightened activities in the mining sector. With Nigeria’s oil boom and it’s subsequent mismanagement came oil spill, air-water-soil pollution, biodiversity loss, ill-health, business/community conflicts, communal and national conflicts, and many other negative issues which all exist till this day.

These negative issues are wont to manifest their hyra-headed presence in the mining sector if proactive steps are not taken. One can only imagine the intensity of disaster that can occur across 500 locations in Nigeria. It is worthy of note to state that some communities in Nigeria such as Okobo (Kogi State), Shikira (Niger State), Anka and Bungudu (Zamfara State), just to mention a few, have already tasted the negative consequences of mining.                              

To curb this impending menace, which is capable of reversing the development of mining communities, mining companies need to commit to and embrace social responsibility.

Social Responsibility, the Way Out

As asserted by Milton Friedman, it is true and accepted that “a business’ sole social responsibility is to increase profit”. However, while increasing profits, businesses often have collateral social goals, and these social goals if treated as insignificant can affect the business, leading to a fall in profit and possibly no business at all. It is therefore, in the best interest of companies to act responsibly in their dealing with key external stakeholders (local communities).

According to the globally renowned guideline by the International Standard Organisation, ISO 26000, which addresses issues around social responsibility, social responsibility is defined as “the responsibility of an organisation for the impact of its decisions and activities on society and the environment, through transparent and ethical behaviour that is consistent with sustainable development and the welfare of society; takes into account the expectations of stakeholders; is in compliance with applicable law and consistent with international norms and behaviour; and is integrated throughout the organisation and practice in its relationships.” It is a business’ commitment to sustainable economic and social development of employees, local communities and society at large, in ways that are good for business and for development.

Social responsibility is critical to today’s business environment, especially to mining companies with direct host communities. With social responsibility, the theory of shared value creation as proposed by Porter and Kramer in 2011, benefits both organisations and communities in the long run.

In the light of evolving global guidelines such as Organisation for Economic Cooperation and Development Guidelines for Multinational Enterprises (2000); ISO 26000, Guidance on Social Responsibility (2010); Sustainability Reporting Guidelines, Global Reporting Initiative (2000); United Nations Global Compact (2000); IFC Performance Standards on Social and Environmental Sustainability (2006); Sustainable Development Framework, International Council on Mining and Metals (2003), and even the Sustainable Development Goals (SDGs), knowledge of the concept of social responsibility has become widespread. As such, it is not best practice to not practice social responsibility.

More specifically, social responsibility in the mining sector would address transparency and accountability, social investments, stakeholder engagement, labour rights, workers wage, workers health and safety, diversity, equal pay and opportunities, gender equality, social equality, free prior and informed consent, rights of vulnerable groups, inclusion, resettlement of displaced populations, security, peace and conflict resolution. The list exceeds the dimensions mentioned above, however, these dimensions would not be elaborated in this write up.

In mining host communities, the needs of the dwellers are similar across locations. Mining communities want to benefit from the activities of the industry that imposes on their livelihood, including immediate financial benefit, the creation and strengthening of local social services and infrastructure, labour opportunities, improved quality of life, respect for their culture, and equitable management of their ancestral lands.

Galvanising for Action

The trend in advanced countries is for government to vigorously pursue regulations and strategies that would negate ill-consequences of mining and that would drive sustained economic, business and community development. However, in many developing countries, social responsibility is not typically backed by mining laws and regulations, which deal with core business operations (mining licenses, remitting royalties and taxes, assessing funds, and the mining investment landscape) and has, therefore, suffered.

In Nigeria’s entire Nigerian Minerals and Mining Act, 2007, National Minerals and Metals Policy, 2008 and Nigerian Minerals and Mining Regulation, 2011, there is not one mention of the critical matter of human rights. Given this, organisations – excluding thought leaders – may argue that they are not mandated to conduct their activities in a socially responsible way.

While Dr. Kayode Fayemi, Minister for Mines and Steel Development, mentioned some key interventions being driven by his Ministry today to address equity in community relations – including ‘encouraging’ businesses to give communities a financial stake in their operations – the government would need to consider incorporating core social responsibility matters in her mining regulatory framework, as this will establish a holistic baseline for organisations that are willing to play in the sector.

Conclusion

The concept of social responsibility has evolved and is still evolving through the years. With globalisation, companies are required to approach business with the singular goal of value creation, as this is important in ensuring long-term viability as well as in producing sustainable local communities. Existing and potential mining companies in Nigeria are encouraged to voluntarily adopt socially responsible business practices as this affords them an opportunity to contribute to Nigeria’s broader development.

 

Resources

A Strategic Approach to Early Stakeholder Engagement: A Good Practice Handbook for Junior Companies in the Extractive Industries, International Finance Corporation, 2014

Corporate Social Responsibility For Broad Based Empowerment In The Mining Industry, The Chamber of Mines of Zimbabwe

ISO 26000, Guidance on Social Responsibility, 2010

National Minerals and Metals Policy, 2008

Nigerian Minerals and Mining Act, 2007

Nigerian Minerals and Mining Regulation, 2011

Mapping Mining to The Sustainable Development Goals: An Atlas, CCSI, UNDP, UN-SDSN, WEF, 2016.

Michael E. Porter and Mark R. Kramer “The Big Idea: Creating Shared Value,” Harvard Business Review, vol. 89, no. 1/2 (January– February 2011): 62–77

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