The 7 ‘C’s Of Challenges Facing African Businesses By HamidBouchikhi
12/02/2014 03:49:00 am |
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The Capitalism 3.0 challenge
The welcome enthusiasm for CSR policies and practices in Africa must not shadow the fact that the primary purpose of a business is to create wealth, i.e. making a profit. There simply can be no responsible company with no viable economic model.
To address the huge needs of African populations, companies must seek wealth creation and, along the way, create jobs, generate tax revenue, and distribute purchasing power. If profit is essential to effective contribution of the common good, we need to agree on what kind of profit we are talking about.
Summarizing the history of capitalism with a very broad brush, we can say that 1.0 version is characterized by the pursuit of wild-profit, with no care neither for law nor morality. Capitalism 2.0 pursues legal profit and the 3.0 version emphasizes legitimate profit.
While many African enterprises in the formal sector have, I think, or at least I hope, made the transition to legal capitalism, they still have a long way to go to meet the challenges of socially legitimate capitalism.
In capitalism 3.0, the legitimacy of profit depends, upstream, on how it is made and, downstream, on how it is used. Profit is legitimate if it is achieved without doing harm to people and nature. Downstream, profit is legitimate if a significant share of it is reinvested in the development of the ecosystem that made it possible. To illustrate the difference between legal and legitimate profit, the distribution of 100% of profits to shareholders is legal, but less and less socially legitimate.
The establishment of policies and CSR practices in African companies must facilitate the transition to a virtuous capitalism 3.0 which contributes to the common good, in addition to enriching its shareholders.
But, what are the 7 'Cs'? Please, Continue reading here...http://talkafrica.co/ng/p/7078/
Check us out here---http://newsbeatportal.com, http://twitter.com/nigerianewsbeat, http://facebook.com/nigerianewsbeat
The welcome enthusiasm for CSR policies and practices in Africa must not shadow the fact that the primary purpose of a business is to create wealth, i.e. making a profit. There simply can be no responsible company with no viable economic model.
To address the huge needs of African populations, companies must seek wealth creation and, along the way, create jobs, generate tax revenue, and distribute purchasing power. If profit is essential to effective contribution of the common good, we need to agree on what kind of profit we are talking about.
Summarizing the history of capitalism with a very broad brush, we can say that 1.0 version is characterized by the pursuit of wild-profit, with no care neither for law nor morality. Capitalism 2.0 pursues legal profit and the 3.0 version emphasizes legitimate profit.
While many African enterprises in the formal sector have, I think, or at least I hope, made the transition to legal capitalism, they still have a long way to go to meet the challenges of socially legitimate capitalism.
In capitalism 3.0, the legitimacy of profit depends, upstream, on how it is made and, downstream, on how it is used. Profit is legitimate if it is achieved without doing harm to people and nature. Downstream, profit is legitimate if a significant share of it is reinvested in the development of the ecosystem that made it possible. To illustrate the difference between legal and legitimate profit, the distribution of 100% of profits to shareholders is legal, but less and less socially legitimate.
The establishment of policies and CSR practices in African companies must facilitate the transition to a virtuous capitalism 3.0 which contributes to the common good, in addition to enriching its shareholders.
But, what are the 7 'Cs'? Please, Continue reading here...http://talkafrica.co/ng/p/7078/
Check us out here---http://newsbeatportal.com, http://twitter.com/nigerianewsbeat, http://facebook.com/nigerianewsbeat
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