The Dynamics of Corporate Social Responsibility by Maria Aluchna & Samuel O. Idowu

Author:Maria Aluchna & Samuel O. Idowu
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

9.2 Banking , CSR and the Tanzanian Banking Industry

Since the Renaissance and more prominently since the nineteenth Century, commercial banking has been a keystone to the social and economic development of nations and other political entities. As a primary source of capital , commercial banks continue to play a primary role in the direction that economic development will take. Certainly, with respect to any discussion about economic development in Africa , commercial banking must be considered for it was through this system that, for better and worse, European investment and colonization of Africa was largely financed.

In this regard and others, economic changes have innumerable societal implications. The development of a society and a country cannot be separated from its economic development. Thus, commercial banks are arguably the primary force affecting the evolution of social habits and values. Considering commercial banking in this way, social responsibility, whether deliberately or by default, is an integral part of a bank’s identity and operations.

In Tanzania , the banking industry is a large and very important sector in the economy. Macro-economic reforms in 1992 led to the emergence of private banking and the privatization of state owned commercial banks . In specific, private commercial bank grew from 4 state owned banks to 50 private commercial banks between 1992 to the present 2012 (BOT, 2012).

Commercial banks in Tanzania are major players in the economy as a whole and also through their impact on local communities. Every bank loan or investment decision has a potential impact on the community and its sustainability. For example, it is estimated that the loan provided by financial institutions to private sector in 2001 was 5.4 % of the GDP which increased to 18 % of the GDP in 2011 (BOT, 2012). Most Tanzanian commercial banks claim to be major stakeholders in the protection of community interest. However, this claim is difficult to reconcile with various environmental reports of the impact of industrial and commercial development supported by them.

For example, recent years have seen an increase in land degradation and illegal log business as well overexploitation of nonrenewable natural resources leading the Tanzanian government to ban exportation of logs in 2004 (URT, 2009). Illegal timber business in Tanzania is estimated to be US$58 million annually (Daily News, 2014). The timber businesses in Songea ran into conflict with district councils who claimed that the loggers are encroaching on water catchment areas. The timber sellers complained that they have loans to support their work and that these council decisions are unfair and jeopardize their own business interests. These loans came from commercial banks . Is the bank’s loan to loggers an indication of social responsibility or the lack of responsibility?

Selected information about Tanzania is listed in Table 9.1. The country ranked 6th in population in Africa . The GDP growth in 2012 and 2013 exceeds that of Nigeria (5.4 %), the continent’s largest economy, and that of sub-Saharan Africa (4.2 %) as a whole. Tanzania ’s pace of GDP growth is predicted to continue through 2017.Table 9.1Selected demographic

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