Corporate Social Responsibility Reporting in a Developing Country Context:
Rethinking the Role of Government Regulatory Controls and NGOs Activism in the
Mining Sector of Tanzania
By
Sarah Lauwo
Kent Business School
University of Kent, UK
&
Olatunde Julius Otusanya
Department of Accounting
University of Lagos, Nigeria
Correspondence Address:
University of Kent
The Medway Building
Chatham Maritime
Kent, ME4 4AG, UK.
Email: s.lauwo@kent.ac.uk
Tel: 01634 882951

Abstract
The paper contributes to the debate on the role of government regulations and NGO activism with respect to corporate social accounting disclosures in the context of a developing country.
Adopting a political economy perspective, the paper considers the difficulties faced by the
Tanzanian government in the context of contemporary globalisation in its endeavours to devise a regulatory framework which will attract and secure foreign investment and at the same time control corporate activity. It is argued in the paper that the pressure on the
Tanzanian government to attract foreign investment for social-political economic development and poverty reduction has prevented the government from formulating and implementing a strong and effective regulatory framework to regulate and control CSR and other social accounting practices in Tanzania. The paper also argues that, although NGOs have played a significant role in stimulating CSR reporting, it has nevertheless been difficult for NGOs in Tanzania to bring about the much needed changes with respect to corporate social disclosures. It considers, in particular, the mining sector in Tanzania, where weaknesses in the regulatory framework and lack of NGO activism have undermined the possibility of corporate social responsibility development in the sector. The paper provides evidence of demystifying CSR practices in the Tanzanian mining sector, and argues for reform.
Key words : corporate social responsibility; globalisation; multinational corporations; regulatory structures; non-government organisations (NGOs); Tanzania.
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1.
Introduction
Recent years have witnessed a considerable increase in the variety and volume of the literature on corporate social responsibility (CSR) ( see e.g.
Cooper and Owen 2007;
Detomasi, 2008; Unerman and O’Dwyer, 2007; Solomon and Darby, 2005; Belal and Owen,
2007). As an interdisciplinary discourse, the literature on CSR has emerged from a variety of disciplines, such as sociology, philosophy, accounting, management, finance, law and politics
(see Banerjee, 2007, 2008; Porter and Kramer, 2006; Vogel, 2005; Jones, 2008). Within the accounting literature, CSR has been considered as part of social accounting, which overlaps with social and environmental accounting (Adam, 2004; Beck, Campbell and Shrives, 2010;
Gray et al.
, 2001). Within the accounting context, CSR is viewed as a potentially benign mechanism which can be used to mobilise meaningful organisational changes leading to less unethical and unsustainable business practices ( see Dey 2007, p. 424). However, notwithstanding the increasing attention being given to CSR in the literature as a postulate for accountability and for the promotion of ethical and responsible business practices, most studies have been primarily Western-centric ( see e.g.
Adams, Coutts and Harte, 1995; Adams and Harte, 1998; Campbell, 2004; Gray et al ., 1987, 1995a and 1995b; Guthrie and Parker,
1990; Hackston and Milne 1996; Matten and Moon, 2004). Although, over the last decade or so, there have been an increasing number of studies focusing on CSR issues in developing countries ( see e.g.
Belal, 2008; Belal and Owen, 2007; Kuasirikun, 2005; Ite, 2004).
However, despite these studies, little explicit attention has been paid to the role played by local laws and regulations and other institutional structures (such as NGO activism) on the development of social accounting practices. Previous studies on social and environmental accounting have instead tended to focus on the impact of global pressures such as that of international organisations ( see for example , Islam and Deegan, 2010). This study, on the other hand, aims to explore the extent to which government regulation and NGO pressure appears to shape the nature of corporate social disclosures in a developing country, namely
Tanzania.
CSR is a social practice which tends to be embedded in a particular economic, social cultural, historical and institutional structure (Midttun et al ., 2006). For this reason, Tsang (1998) has argued that it is inappropriate to apply conclusions reached from studies on developed countries to what happens in developing countries, as the different socio-political, economic
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and regulatory environments of developed and developing countries shape CSR practices differently. Jones (1999) has drawn attention to the significance of the national socio-cultural environment and the level of national economic development as important variables influencing our understanding of CSR. With these considerations in mind, this paper seeks to add to the current literature on CSR in developing countries by investigating the sociocultural and regulatory framework governing CSR practices in Tanzania, a developing country in East Africa. In the 1990’s, Tanzania implemented a number of legislative reforms advocated by the World Bank (WB) and the International Monetary Fund (IMF) with the aim of improving public accountability, good governance and transparency. However, despite these developments, evidence from the Tanzanian mining sector shows that poor working conditions, social unrest, pollution and environmental degradation caused by corporate activity have remained endemic (Bitala, 2007; Kitula, 2006; Almas, Kweyunga and Manoko,
2009). This evidence therefore questions the effectiveness of local laws and regulations to control CSR practices in Tanzania and to promote public accountability, responsibility and transparency ( see Lauwo, 2011).
Studies on CSR have shown that there has been increasing public pressure from bodies (such as governmental organisations, non-government organisations (NGOs), academics, trade unions and the media) for corporations to act in a socially and environmentally responsible way (see e.g. Moon and Vogel, 2008; Neu et al ., 1998; O’Donovan, 2002; Unerman and
O’Dwyer, 2007). Such pressure has to some extent had an impact on CSR, as they have created a ‘legitimacy gap’, which provide a significant motivation for companies to engage or attempt to engage in responsible business practices in order to acquire or maintain legitimacy (Doh and Teegen, 2004; Waddock, 2004). However, as indigenous communities living in the poorer regions of the world (usually developing countries) continue to suffer severe social and environmental problems as a result of corporate activity (Banerjee 2007), then there a clear need for debate about the extent to which pressure group intervention in developing countries (such as Tanzania) can have an impact on improving CSR practices.
International organisations, such as the UN Global Compact, International Labour
Organisation (ILO) and the Organisation for Economic Cooperation and Development
(EOCD) have enacted various conventions and regulations with the aim of encouraging
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corporations to be ethical, accountable and responsible. Also, an increasing numbers of laws and regulations have been enacted at the national level (particularly in developed countries) in order to impose obligations on companies to address ecological, employment, investment and gender issues and other social problems caused by corporate activity (Buhr, 1998). One way in which major corporations have responded to the increasing pressure to improve their social and environmental performance is by adopting the practice of publishing CSR reports
(see Rabet, 2009; Vogel, 2005; Banerjee, 2007). As a result of increasing CSR reporting,
CSR has gained greater prominence in the contemporary global economy 1 . However, it has been argued (for instance by Dillard et al (2004)) that in a capitalist society, norms, standards and institutionalised values (such as those relating to CSR), which are sometimes codified in laws and regulations, are grounded in a neo-liberal ideology which facilitates wealth accumulation, private property rights and free trade policies. It is questionable, however, whether such a view is relevant to developing countries, such as Tanzania, where governments are often desperate to attract foreign investment in order to deal with the various socio-economic problems, in particular the endemic poverty which exists in many such countries.
Within the context of contemporary globalisation, poor developing countries are often persuaded to deal with the problem of endemic poverty by seeking to attract foreign trade and investment through de-regulation and liberalisation policies. As a result, the regulatory frameworks of such countries often prioritise the need to attract and mobilise foreign capital at the expense of protecting citizens from the adverse consequences of corporate power and irresponsible business practices including inadequate CSR reporting (see Offe, 1984; Strange,
1996). When governments in developing countries decide to adopt institutional arrangements and strategic capacities to improve the prospect of retaining or attracting capital investment, this poses a challenge for governments with respect to balancing the interests of private capital and the broader societal issues associated with promoting social order (Picciotto,
1991; Giddens, 1984; Korten, 2001).
Indeed, the issue of promoting CSR practices in developing countries raises difficult problems, as the promotion of such practices may have an adverse impact on foreign investment. Thus, in the context of developing countries it is necessary to understand the
1 However, as these are often subordinated to the pursuit of higher profits for shareholders, a number of scholars have described contemporary CSR practice as a new management tool and as a business strategy for legitimising corporate power (Bakan, 2004; Korten, 2001; Vogel, 2005; O’Dwyer, 2003).
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impact on CSR practices of the historical, socio-cultural and regulatory structures and power relations in such countries. Against this background, this paper aims to investigate the role played by the Tanzanian regulatory framework and NGO activism in promoting CSR reporting practices in Tanzania. The paper is structured as follows. Section 2 provides an overview of the literature. Section 3 considers the broader institutional structure of globalisation, which has facilitated the integration of both developed and developing countries into the world economy, but which has increased corporate power and influence while at the same time constraining the role of the state particularly in developing countries.
Section 4 examines the Tanzanian context in order to consider some of the socio-political, economic and historical issues which have shaped CSR practices in the country. It considers the role played by the legal and regulatory frameworks and NGOs activism in enabling or constraining the various aspects of CSR practices in Tanzania. Section 5 provides a case study to highlight the nature of CSR reporting in the Tanzanian mining sector and its sociocultural and regulatory context. The sections also considers some evidence of demystifying
CSR practices in the mining sector, which point out to some weaknesses in the governance structures in Tanzania, in particular the inadequacy and ineffectiveness of the legal provisions and the failure on the part of both the government and NGOs to bring about the much need reforms with regard to CSR practices. Section 6 provides a discussion and conclusion to the paper.
2.
An Overview of the Literature on CSR Practices
Despite CSR’s long history 2
, it has become a much-debated topic in the era of contemporary globalisation ( see Spence, 2007, 2009; Puxty, 1986; Tinker et al.
, 1991). Parker (2005) has described the literature on CSR as voluminous, disparate, diverse and exiting, but without a commonly agreed philosophical and methodological standpoint (p. 844). In the accounting literature, CSR reporting has been considered as part of a wider system of societal governance, which entails corporate responsibility to address and disclose issues such as social, economics, accountability, ethics, sustainability, ecological and humanitarian problems (Gray 2001; Banerjee, 2007; Sikka, 2010; Vogel, 2005).
2 The history of CSR can be traced back to the emergence of the modern corporation in the 17 th and 18 th centuries, with the introduction of legislation in the form of Acts of Incorporation in Europe and America which led to the formation of limited liability companies (Avi-Yonah, 2006).
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The literature indicates that increased awareness of socio-economic and environmental crises and recent corporate failures and collapses have raised further questions about the regulation and morality of capitalism and the complexity of the business-society relationship, leading to demands for enhanced corporate accountability and social responsibility (Bakan, 2004;
Puxty, 1986; Tinker et al.
, 1991). Indeed, making corporations socially responsible and accountable has become a major issue in many societies (Mitchell and Sikka, 2005).
Concurrently, companies have been increasingly urged to become accountable to a wider range of stakeholders with whom they interact – such as employees, local community, NGOs, consumers, suppliers and government authorities ( see Reverte, 2008). Greater public awareness of, and interest in, environmental and social issues and increased attention from countervailing structures such as international NGOs and the mass media on the impact of corporate power and corporate activities have resulted in increasing corporate social disclosure (Deegan and Gordon, 1996; Gray et al.
, 1995b; Reverte, 2008). Thus, the literature shows that an increasing number of major corporations claim to be socially responsible and do so by publishing substantial environmental, economic and social reports (Cooper and
Owen 2007; Cooper 2004; Demirag, 2005; Detomasi, 2008; Sikka, 2010).
It has been argued that businesses have a duty to disclose information about their socioeconomic and environmental activities to a wide group of constituents ( see Adams, 2002;
Deegan, 2002; Spence, 2009). The aim of such disclosure is to create public awareness and to bring about a just and fair society (Spence, 2009; Sikka, 2010; Gray et al ., 1996). However, the increasing socio-economic and environmental impact of corporate activities on the wellbeing of employees, communities and individuals, especially in developing countries, raises questions about the potential of CSR to create a just and fair society (see Gallhoffer and Haslam, 1997; Spence 2007, 2009). It is in this context that some commentators consider that CSR disclosure is vulnerable to being captured and manipulated by powerful managerial interests (Owen et al.
, 2000; Gray and Bebbington, 2000; O’Dwyer, 2003). Thus, instead of increasing public awareness and creating a just and fair society, CSR is considered to be merely a form of window-dressing and a practice where mandatory government regulation is replaced by self-regulation (Spence, 2007, 2009; Puxty, 1986; Tinker, 1991). In this context, this paper considers the role played by government regulations and pressure groups in shaping the nature of CSR practice.
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Although increasing government regulation and increasing pressure group attention on corporate activities has the potential to be a key factor in the development of CSR accounting, the role of played by the regulatory framework and pressure groups in promoting public accountability, transparency and responsible business practices, especially in developing countries, has remained open to doubt. This is because many developing countries, including Tanzania, have prioritised the need to attract foreign investment at the expense of protecting their citizens from the detrimental and antisocial activities of some corporations. Thus, in order to stimulate their economies, create employment and reduce poverty developing countries have sometimes failed to control corporate activities lest they risk losing the investment and investment potential that multinational and transnational corporations can provide. Thus, although foreign investment has been viewed ( e.g.
by
Asiedu, 2004) as a mechanism for increasing productivity, exports, employment, government revenue and stimulating growth, it may have serious adverse implications for a government’s ability to demand increased disclosure, public accountability, transparency and good governance (see e.g
. Global Witness, 2006). As foreign investment is driven by the search for profit, transnational corporations often choose to adopt investment protection strategies to minimise the commercial and political risks of their investment (see e.g.
Sikka, 2011, p. 4).
Such strategies may have a negative impact, however, on the social and economic situation of the country in which foreign corporate investment is made, including the protection of citizens and the promotion of responsible business practices. Thus, the financial interests of corporations may conflict with the socio-economic needs of the country in which they are investing. Governments in developing countries are often in a difficult situation because they are keen to adopt strategies to attract and maintain foreign investment (such as a favourable tax environment and investment guarantees) but such strategies may be at odds with the socio-economic needs of their own citizens because of possible inappropriate practices by those corporations which decide to invest in the country. Thus, government attempts to secure foreign investment to improve the economy and provide a better life for its citizens may actually be having the opposite effect.
In order to understand the complexities associated with CSR reporting, scholars have adopted a range of theoretical frameworks ( such as stakeholder, legitimacy, institutional and political economy frameworks), and these have provided some insight into both the social and environmental problems relating to corporate activities (Balkaoui and Karpik, 1989; Deegan
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and Gordon, 1996; Donaldson and Preston, 1995; Freeman, 1984; Guthrie and Parker, 1989;
Guthrie and Mathews, 1985; Ullmann, 1985). Although stakeholder and legitimacy theories
3 have often been used as theoretical frameworks for understanding CSR practices, the extent to which these theories can explain the contradictions and dilemmas faced by a developing country with respect to CSR practices has remained problematic. Thus, while such theories can provide useful frameworks for explaining and understanding the business-society relationship, they seem to pay little attention to the broader socio-political, economic, historical and power structures which shape CSR reporting practices ( see Tinker et al ., 1991;
Banerjee, 2007; Cooper and Scherer, 1984). Banerjee (2007, p.28), for example, has criticised these theoretical frameworks for ignoring the many social and economic conflicts which can exist in different societies. For example, from a legitimacy theory perspective, social and environmental disclosure is perceived as one of the strategies employed by corporate entities to seek society’s acceptance and approval of their operations. However, this has become questionable especially in developing countries where, despite the increasing social and environmental impact of corporate activities, companies continue to carry out their activities with minimal challenges ( see Banerjee, 2007). Therefore, in order to understand
CSR practices in a developing country, such as Tanzania, it is necessary to adopt an appropriate methodological framework which takes into account the social, political and economic contexts in which business organisations conduct their activities (see Banerjee,
2007; Kuasirikun and Scherer, 2004; Scherer and Palazzo, 2007; Tinker, 1980; Tinker et al .,
1991). As the mirror, a suitable methodological framework should focus not only on analysing the socio-cultural and regulatory framework, but also take into account the influence of history, power relationships, social conflicts and institutional structures on CSR practices. The theoretical framework adopted in this paper is discussed in the next section.
3.
The Mirror: Theoretical Perspectives
CSR as a social accounting practice is embedded in a particular socio-political and economic and historical context. Thus, it cannot be easily understood in isolation but must be considered in relation to the dynamics of a society as a whole. The paper argues that both
3 It has been argued that theories such as stakeholder and legitimacy theories are neither separate nor competing theories, but can be viewed as overlapping perspectives between political and economic assumptions (Gray et al ., 1995, 2001). Stakeholder and legitimacy theories assume a mutual contract between an organisation and society whereby an organisation takes resources from society in return for satisfying the social, economic and environmental expectations of society.
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local and global structures, such as globalisation, corporate power, the regulatory framework, history and politics, have shaped and influenced corporate social responsibility practices in
Tanzania. This paper adopts a political economy approach in order to consider the local and global institutional structures and power structures which shape, modify and influence the construction and (re)production of CSR practices in a developing country such as Tanzania.
Political economy theory places an emphasis on the interrelationships between socio-political and economic forces in society and recognises the effects of accounting reports on the distribution of income, power and wealth (Cooper and Sherer, 1984). From political economy theory perspective, accounting systems, of which CSR is part, act to ‘create, distribute and mystify power relations’ (Buhr, 1998 p. 165). As Tinker (1980) has argued that:
‘Political economy relies on the social relations of production: an analysis of the division of power between interest groups in the society and the institutional processes through which interests may be advanced’ (p. 148).
According to Tinker et al., (1991), CSR reporting can be considered to be a reflection of power relations and social conflicts occurring between capital and other social groups ( e.g
. environmentalists, workers, consumers, women, minorities) (p. 46-7). Guthrie and Parker
(1990) are of the view that a political economy theory of social disclosure can improve our understanding of corporate social reporting practices.
‘[A] political economy theory of social disclosure is both viable and may contribute toward our understanding of observed developments in national reporting practices. Corporate social disclosures have appeared to reflect public social priorities, respond to government pressure, accommodate environmental pressures and sectional interests, and protect corporate prerogatives and projected corporate images’ (pp. 172-173).
From a political economy perspective, contemporary CSR can be regarded as being driven by changes in the institutional structures in the era of contemporary economic globalisation, such as, for instance, the deregulation and technological advances that escalated in the 1980’s and 1990’s (see Tilt, 1994). It has been argued that contemporary economic globalisation has produced substantial changes in the structure of societies which has created significant challenges with regard to the nature and form of CSR practices ( see e.g
. Held and McGrew,
2002) particularly in developing countries (Hoogvelt, 2001). Globalisation has increased the economic inter-connectedness of the global economy, expanded the global network of
MNCs, and also substantially enhanced their size and power (see Bakan, 2004; Korten,
2001). Thus, MNCs have become dominant governance institutions on the planet, with the
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largest among them reaching into virtually every country of the world and sometimes even exceeding governments in size and power (Korten, 2001). For example, with a global annual foreign direct investment (FDI) flow of US$1.7 trillion in 2008, developing countries received 43% of this sum (UNCTAD, 2009), giving corporations enormous influence as to the terms and nature of trade in such countries .
Within the dynamics of capitalism, the most important corporate concern is to generate profits and economic surpluses for shareholders (see Friedman, 1970). Since corporations are primarily motivated by profit, the pursuit of higher profits often brings corporation into conflict with social policies (such as those devoted to the provision of housing, transport, healthcare, and education) ( see Rayman-Bacchus, 2004; Sikka, 2010). It is in this context that the economic imperative driving globalisation has been challenged by many researchers on the basis that it has been responsible for weakening governance mechanisms for promoting social and environmental accounting particularly in developing countries (Bakan, 2004;
Korten, 2001). It has been argued, for instance by Detomasi (2008), that MNCs have become adept at exploiting the governance gap that exists between weak states and fledging international regulatory frameworks. According to Bakan (2004), corporations are no longer tethered to their home jurisdiction, but produce goods and services at substantially low costs by buying cheap labour from poor developing countries where social and environmental regulations are weak, and by selling their products in wealthy countries where people have disposable income and are willing and able to pay for them. Thus, due to the pressing need to stimulate their economies and to reduce poverty, governments in developing countries have increasingly turned to MNCs to provide investment, create employment, increase government revenues and promote economic development. In order to attract investment, developing countries have sometimes permitted corporations to be subject to less stringent regulation than other bodies and persons and have also attempted to entice foreign investors by offering investment incentives, subsidies, investment protection, guarantees and stabilisation clauses
4
(Cox, 1996; Lobel, 2006).
However, although these strategies have increased the inflow of
FDI and the growth of MNC operations in such countries, they have sometimes had an adverse effect on the capacity of governments to make and enforce laws and regulations
4 These are contractual clauses in foreign investment agreements with developing countries, which guarantee foreign investors that the terms agreed will remain unchanged over the life of the project, including its fiscal and regulatory regime.
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which promote accountability, protect employees and local communities, and also protect the environment. As FDI often comes with ‘many strings attached’, this in turn constrains a government’s ability to promote public accountability, transparency, responsibility and good governance ( see Sikka, 2010). Indeed, as a result of global pressures and corporate demands, governments in developing countries, including Tanzania, may find themselves unable to put in place suitable and workable regulatory and institutional structures which are needed to encourage CSR reporting and accountability practices. In essence, the legal and regulatory framework ( e.g.
governing the environment, employment, and taxation) and the economic policies of developing countries may be drawn up with the primary aim being to facilitate the mobility of capital (Hoogvelt, 2001). This, however, may have the effect of creating a regulatory vacuum whereby social accounting practices in such countries tend to be poorly controlled and regulated.
Although strong governments may be able to challenge corporate conduct and deal with externalities and business consequences, the ability of governments in developing countries to address the adverse socio-economic and environmental impact of contemporary capitalism has remained constrained ( Harvey, 2006; Sikka, 2010). Even though governments in developing countries may be willing to introduce new laws to promote public accountability, transparency and corporate disclosure, stabilisation clauses and investment guarantees often constrain a government’s ability to enact and implement laws to protect its citizens (Cotula,
2008). Thus, in the context of the contemporary global economy, developing countries such as Tanzania have become enmeshed in tensions and contradictions. In other words, the ability of governments to develop and enforce regulations to promote CSR reporting and to protect the welfare of its citizens by encouraging responsible business practices has been constrained by socio-economic pressures, including, in particular, the desire to attract international capital and investment.
The next section examines the socio-political and economic context of Tanzania in order to look at the challenges faced by the Tanzanian government with respect to promoting transparency, accountability and responsibility on the part of MNCs conducting their business in the country.
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4.
The Tanzanian Social-political and Economic Context
The previous section highlighted the dilemmas faced by many developing countries in promoting public accountability, transparency and responsible business practices while at the same time trying to attract foreign investment. This section considers the socio-political and economic environment of Tanzania in order to provide the background for understanding
CSR reporting practices. As a post-colonial country, Tanzania’s socio-political, economic and institutional structures, like that of many other developing countries, have continued to be shaped by its historical development
5
. Tanzania has also continued to experience considerable economic challenges, which have acted as a thrust for major policy and institutional changes (Lauwo, 2011). It has been for many years one of the poorest countries in the world, with many of its people living below the world poverty level (UNDP, 2009).
In order to address its endemic poverty, Tanzania has over the years introduced a number of institutional reforms. For instance, in 1967, the government attempted to bring the economic sector and the political sphere under the control of the state through nationalisation policies
(Tsikata, 2001)
6
. However, lack of public accountability and too much discretion and monopoly control skewed the benefit in favour of the political elite instead of the intended societal beneficiaries (Bagwacha, Mbele, Van-Arkadie, 1992). In fact, the Tanzanian government failed to create adequate policies and institutional structures which would promote public accountability, responsibility and transparency in the state-owned enterprises
(SOEs) (Bagwacha et al ., ibid ., Melyoki, 2005). As a result, various anti-social practices
(such as corruption, embezzlement, nepotism) have become endemic in Tanzania and so has severe and widespread poverty (Heilman and Ndumbaro, 2002).
5 Tanzania, like many other developing countries, has been subjected to colonialism and subordinated to the dominant poles of the world capitalist economy (Leftwich, 2000). Tanzania was initially colonised by the
German colonial government (1884-1917) and later by the British colonial government (1918-1961). The imposition of the international division of labour under colonialism had the effect of laying the foundations for continued economic control and domination over colonial resources, even in the absence of direct colonial political administration (Hoogvelt, 2001). During the colonial period, an effort was made to integrate Tanzania into the capitalist industrialist countries in order to supply raw materials (such as minerals and agricultural commodities) and cheap labour to the countries in Europe (Richardson, 2000). As result of this development, public accountability and responsibility became less of a priority ( see Lauwo, 2011; Shivji, 1975). Indeed, colonialism had prepared and firmed up those institutions necessary for the ‘historical structure’ of global capitalism in the globalising era (Hoogvelt, 2001).
6 This reform was contained in the Ujamaa policy which called for self-reliance oriented economic and political policies to replace the capitalist private sector market economy inherited from the colonial government with the state owned centrally planned and controlled economy (Ngowi, 2009).
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To further address governance problems and widespread of poverty, in 1985, the Tanzanian government adopted the structural adjustment programmes (SAPs) and liberalisation policies of the WB and the IMF. SAPs required the Tanzanian government to introduce political and legislative reforms
7
, remove state controls and implement free trade and liberalisation policies in order to attract the inflow of foreign investment and MNC operations.
Following the liberalisation of the Tanzanian economy, a number of multilateral and bilateral agreements were entered into, with most of them being particularly in the lucrative sectors of the economy such as mineral and oil extraction, manufacturing and tourism (SID, 2009). To attract FDI, the Tanzanian government has had to create a favourable investment environment for MNCS, such as by providing tax holidays, subsidies, substantial investment incentives, low taxes and minimal obligations in respect of the workforce and the environment. This led in turn to an increasing inflow of FDI (from US$12 million in 1992 to
US$744 million in 2008) (World Bank, 2001, 2010). However, in the integrated global economy, Tanzania, like many other developing countries, has had to compete with other states for private investment (UNCTAD, 2009). Despite the increased inflow of foreign investment, Tanzania has remained overwhelmingly poor, with stagnant economic growth and deteriorating social services (World Bank, 2010). Thus, notwithstanding foreign investment, 96.6% of the 41.3 million Tanzanian population were in 2008 living on less than
US$2 per day (see
UN Development Programme’s Human Development (UNDP) Report,
2009). About 45% of the population has no access to clean water (UNDP, 2009), and only
31% of the urban population has access to proper sanitation facilities (UNDP, 2006).
According to the UNDP Report (2009), average life expectancy in Tanzania is 55 years. As the Human Development Index (HDI) (of 0.53) has remained very low, Tanzania was ranked at number 151 in the list of the 184 poorest countries in the world in 2007 (UNDP, 2009).
Moreover, Tanzania’s gross national product (GNP) of US$400 per capita has also remained very low and is far less than that of other countries in Sub-Saharan Africa, which have averages of US$952 (World Bank, 2007). As a consequence, the economy has remained
7 One of the political reforms implemented was the creation of a multi-party democratic system aimed at removing the monopoly in the political sphere in order to improve democracy, public accountability, responsibility and transparency (Mmuya, 2000).
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overwhelmingly dependent on donors
8
and foreign investment, especially for employment and government revenues (IMF, 2007).
However, as contracts signed with foreign companies often ‘cherry pick’ the most profitable sector of the economy, this has had the effect of giving MNCs greater corporate ‘clout’ to demand further favourable investment condition and has also resulted in their social responsibility reporting practices being insufficiently controlled ( see Lauwo, 2011; Oxfam,
2008). In fact the Tanzanian government’s reliance on MNC activity to stimulate socioeconomic development has posed, and continues to pose, serious questions about the boundary between the state and corporations, and about how to make MNCs accountable, responsible and transparent. Moreover, as Tanzania has become deeply enmeshed in, and integrated into, the world economy, the global processes of capital accumulation have continued to shape government regulations and socio-economic development. As a result, the institutional and social structures in Tanzania have become subject to the requirements of international capital investment, which limit the possibility of advancing good governance and corporate social responsibility. Thus, although corporate social responsibility disclosures can be encouraged, promoted and enforced by an appropriate regulatory framework, the
Tanzanian government has found it difficult to control corporate conduct as it is constantly under pressure to attract and to retain foreign capital. The legal and regulatory framework of
Tanzania with respect to CSR practices is considered next.
4.1 The Legal and Regulatory Framework in Tanzania and CSR Practices
Since independence in 1961, there has been a strong local desire to encourage and maintain ethical business practices, public accountability, transparency and good governance in
Tanzania (Oxfam, 2008; Mmuya, 2000; Killian, 2006). Thus, successive Tanzanian governments have attempted to pass new laws and regulations to promote public accountability and good governance and to foster good CSR practices (Mmuya, 2000).
However, as the post-independence codes of conduct retained most of the features of the
8
By the end of December 2008, Tanzania had an external debt of US$5.311 billion (IMF, 2007). This huge external debt has had a negative impact on the economy (due to various attached conditionalities) and has continued to restrict the Tanzanian government's efforts to alleviate poverty and create an adequate legal and regulatory framework to promote responsible business practices. Domestic debt increased to US$1.67 billion from US$1.43 billion during December 2006 to December 2007.
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codes from the former colonial regime
9 , Tanzania’s ability to promote CSR reporting and to protect the public interest has remained limited ( see Shivji, 1976). For example, the
Companies Act 1932–CAP 212 (as amended), which was enacted in 1929 during the British colonial period and which laid down requirements for addressing governance issues in the colonial government, remained in force for many years in post-independence Tanzania and was not amended until 2002 (see Lauwo, 2011). Although the Companies Act of 1932 required directors to improve corporate disclosure and to act in good faith to promote the best interests of the company ( see section 185), stakeholder interests have remained subordinate to the financial interests of shareholders.
In 1967, President Nyerere’s government enacted new codes of conduct, enshrined in the
1967 Arusha Declaration
10
, with the aim of promoting socio-economic development, public accountability, responsibility, good governance and corporate responsibility. However, despite the rhetoric of the Arusha Declaration, the reality left much to be desired by
Tanzanian citizens (Bierrman and Wagao, 1986; Killian, 2006). Thus, laws and regulations continued to promote rent-seeking practices among the elite at the expense of the needs of wider society ( ibid .). This constrained the possibility of promoting corporate disclosure, public accountability and good governance (Fischer, 2006).
In the 1990’s, major legislative reforms were implemented by the Tanzanian government in order to integrate its economy into the global market. This led to a proliferation of new laws and regulations which contained inter alia provisions requiring public accountability, responsibility, transparency, and enhanced corporate disclosures. These laws and regulations also sought to address and promote the issues of environmental protection and management.
For example, in 1997, in line with Agenda 21 of the Rio Declaration (which required a crosssectoral integration of policies, plans and programmes for the effective management of the environment), the National Environment Policy (NEP) 1997 was introduced in Tanzania. The
NEP 1997 required companies to ensure the sustainable and equitable use of resources
9 While colonial codes of conduct were created to deepen the colonial interest of wealth accumulation, their pertinence in addressing post-independence socio-political and economic issues in Tanzania, and CSR practices in particular, has been questionable (Shivji, 1975).
10 The Arusha Declaration was pronounced by President Julius Nyerere on 5 February 1967. Outlining the principles of Ujamaa, Nyerere’s vision of socialism sought to bring the economic and political spheres under state control (Tsikata, 2001). The Ujamaa policy called for self-reliance oriented economic and political policies to replace the capitalist private sector market economy inherited from the colonial government (Ngowi, 2007)
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without degrading the environment or risking health and safety. However, although the NEP required companies to prevent and control environmental degradation in Tanzania, the reality has left much to be desired.
Following the global environmental concerns of the UN Conference on the Environment and
Development (UNCED) at the Earth Summit in Rio Janeiro in 1992 and reaffirmed in
Johannesburg in 2002, Tanzania has had to implement other environmental law reforms.
Thus, in 2002 the Tanzanian government enacted the Environmental Management (EM) Act
No. 20 of 2004 to replace the National Environment Management Council (NEMC) Act of
1983. The EM Act 2004 requires companies to submit an environmental impact assessment
(EIA) before commencing operations in Tanzania, together with an environmental management plan (EMP). The Act requires companies to control and prevent pollution, manage waste products, and provide restoration plans. The penalties for failing to comply with the provisions of the EM Act 2004 are set out in table 1 below.
Insert Table 1 here
However, as the penalties for breach have remained relatively low, companies may decide that it is cheaper to pay the penalty than to internalise the environmental costs ( see e.g
. Lissu,
1999, Lauwo, 2011). For this reason, the environmental reforms may have little impact .
In an attempt to address local and global pressures and to improve corporate governance, in
2002, the Tanzanian government enacted the Companies Act 2002 (CA 2002), which amended the Companies Act 1932. The CA 2002 made important changes to Tanzanian company law in order to take incorporate global developments into domestic law with regard to accounting disclosures, corporate governance and directors’ duties. For example, section
151 of the CA 2002 requires companies to prepare books of accounts in order to disclose and explain their financial transactions. Moreover, section 183(1) provides the: ‘matters to which the directors of the company must have regards to in the performance of their functions, which include, having regard to the interests of the members, the interests of the company’s employees’. Although the Act requires directors to disclose accounting information and consider the interests of other stakeholders, not just shareholders, nevertheless stakeholder interests are often subordinated to the pursuit of shareholder interests. Furthermore, while
16

section 206 of the CA requires audited financial reports to disclose details of the remuneration of directors and other officers, there is no obligation on companies to disclose information about, for instance, employee discrimination, employee health and safety, tax planning schemes, pollution and environmental degradation caused by corporate activities, and social difficulties caused by corporate acts and omissions in local communities ( see e.g.
Curtis and Lissu, 2008; Lauwo, 2011).
In response to the requirements of the International Labour Organisation (ILO) and the
Universal Declaration of Human Rights (UDHR) with regard to employee working conditions and human rights issues, the Tanzanian government enacted the Employment and
Labour Relations Act 2004 and the Labour Institutions Act 2004 (which came into force in
2007 and 2006 respectively). Furthermore, in response to ILO requirements about the importance of improving health and safety in the workplace and reducing workplace injuries and accidents, the Tanzanian government enacted the Occupation Health and Safety Act 2003 and the Workers’ Compensation Act 2008. These enactments contain provisions requiring companies to improve workplace conditions and to protect employees against hazards to health and safety arising out of, or in connection with, activities at work. However, despite these provisions, there is much to be desired in the workplace in Tanzania.
A number of laws and regulations have also been enacted in Tanzania to impose obligations on companies in respect of a variety of social issues, including occupational health and safety, labour standards, non-discrimination and environmental protection .
However, the ability of these provisions to promote public accountability, good governance, corporate responsibility and transparency has not yielded positive results ( see Lauwo, 2011).
The inadequacy of regulatory controls on public accountability, transparency and corporate responsibility in Tanzania has attracted both local and international NGOs attentions. NGOs and other pressure groups (including academia and the media) have expressed concern about the activities of corporations, as their pursuit of profit and the maximisation of shareholder returns is often in conflict with the social welfare of ordinary citizens (Detomasi, 2008,
Oxfam, 2000; Christian Aid, 2005, 2008; Action Aid, 2008, 2009). The role of NGOs with respect to CSR practices in Tanzania is considered in the next section.
17

4.2 NGOs and CSR in Tanzania
The work of NGOs and other independent pressure groups is crucial in promoting corporate disclosure, transparency and public accountability. NGOs have sought to step into the regulatory gap created by the inadequacy of both national governments and international institutions in demanding for social and environmental accounting and improved public accountability (Moon and Vogel, 2008). NGOs have played an increasingly significant role globally in challenging government policies and the activities of corporations with regard to abuses of human rights, environmental degradation and social unrest ( see Mercer, 1999;
Lauwo, 2011; Curtis and Lissu, 2008).
In Tanzania, the rise of NGO activism dates back to the colonial period when a number of organisations mobilised campaigns against colonial exploitative practices and demanded respect for human rights and public accountability (Levin, 2001). However, colonial government policies and regulations (such as the Societies Ordinance of 1954) constrained
NGO activism and NGO involvement in scrutinising government policies (Shivji, 1980). In the post-independence period, successive governments embraced the colonial legal regime, which undermined the freedom of association and freedom of expression of NGOs (Shivji,
1976). The Arusha Declaration of 1967, in particular, restricted the independence of NGOs and their role in promoting public and corporate accountability, enhanced corporate disclosure and good governance. As a result, the activities of the few registered NGOs remained under strict government control, with their ability to campaign against government policies and to address democratic governance, enhanced disclosures, humanitarian and ecological problems being severely constrained.
In the 1980’s and 1990’s, local and global pressures to liberalise the political and economic spheres, in order to reduce the role of the state and improve democratic governance, led to an increasing number of NGOs being established in Tanzania (Lange et al ., 2000). NGO activism in this context expanded to include local, national and international development organisations, such as Oxfam, Norwegian Church, and Christian Aid (Lange et al ., 2000).
According to Kelsall (2001), there were approximately 8,000 local and international NGOs in
Tanzania dealing with a range of activities, such as gender issues, human rights, the environment, advocacy and participatory development (p. 140). In fact, NGOs have emerged as important social actors working closely with other civil society organisations to promote
18

democratic governance, responsible corporate practice, the protection of human rights, and to support the government in providing social services (Lange et al ., 2000). NGOs have often urged the Tanzanian government to introduce reforms to address issues such as abuses of human rights, community unrest, pollution and environmental degradation (Lissu, 1999;
Curtis and Lissu, 2008). However, due to the level and scale of poverty in Tanzania, a significant number of NGOs have chosen to focus more on social service delivery and poverty reduction (Shivji, 2004). Shivji ( ibid .) has argued that Tanzanian NGOs are mainly represented by donors who claim to have an interest in poverty eradication and the promotion of good governance. According to Shivji ( ibid
), NGO activities may let the government ‘off the hook’ as they may facilitate the legitimation of Western neo-liberal policies:
‘Using the name ‘promoting good governance’, they facilitate in the legitimation of the neoliberal policies of hegemonic Western powers and the international financial institutions (IFIs) applied in developing countries. Thus, by pretending to be partners in policy making, these
NGOs let the government off the hook as it abdicates its own primary interest’, (Shivji, 2004, pp.690-91.)
Although increasing numbers of international NGOs (such as Christian Aid, Amnesty
International, Corporate Watch, Mining Watch and Friends of the Earth) have played an important role in promoting social disclosure and CSR at the global level, relatively few local
NGOs in Tanzania have been actively involved in advocating CSR practices (Shivji, 2004;
Lissu, 1999)
11
. Indeed, Tanzanian NGOs have not been sufficiently strong and active enough to be able to mobilise pressure with respect to such issues as enhanced corporate disclosure, public accountability and transparency in Tanzania.
As a socially constructed practice, the nature of CSR reporting depends on the outcome of the roles played by corporations, the state and countervailing structures such as NGOs. However, the extent to which Tanzanian laws and regulations and NGOs activism have helped to stimulate corporate social disclosure and CSR development in Tanzania has remained problematic. Thus, despite the enactment of various laws and regulations in the name of
11 One of the active local NGOs in Tanzania is the Lawyers’ Environmental Action Team (LEAT), established in 1994 with the mission to ensure sound natural resource management and environmental protection in
Tanzania. LEAT carries out policy research, advocacy, and selected public interest litigation with its members, who largely include lawyers concerned with environmental management and democratic governance in
Tanzania. Other organisations have been campaigning for reform in Tanzania. Thus, Norwegian Church Aid (an international organisation formed in 2005 by Norwegian Church to fight global poverty, social and environmental injustices) has been actively involved in addressing environmental pollution and degradation in
Tanzania, facilitating access to improved, affordable and sustainable energy services to the public, both in urban and rural areas. It has published several reports on the destructive social and environmental actions of MNCs in the mining sector.
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promoting corporate governance and public accountability, the Tanzanian government lacks the necessary financial, legal and administrative resources to ensure compliance. Similarly, although NGOs have played an important role in fostering the development of CSR in the global economy, it has been difficult for Tanzanian NGOs to bring about the much needed changes to CSR practices in Tanzania. As a result, social and environmental problems have persisted in Tanzania. This is particularly evident in the mining sector, which is considered in the following section.
5. The Mining Sector of Tanzania
This section considers evidence from the mining sector in Tanzania in order to highlight some of the social and environmental problems caused by mining operations in the country. It demonstrates how Tanzania’s legal and regulatory framework and NGO activism have failed to make any positive impact on corporate social and environmental practices in Tanzania.
Historically, mining activity in Tanzania (as in many African countries) can be traced back to the pre-independence period. Due to the poor performance of the mining sector, an effort was made by the Tanzanian government to reform the sector through liberalisation policies and deregulation in order to improve good governance and CSR. Thus, following the liberalisation of the Tanzanian economy in the 1990’s, a number of multilateral and bilateral agreements were entered into, with most of them being in the mining sector (SID, 2009).
To attract foreign investment in the sector, Tanzania introduced the so-called Mining Policy
1997 12 which: offered investment protections, investment guarantees and stabilisation clauses o mining companies; permitted full ownership rights in mining investment by multinational mining corporations; and allowed the repatriation of profits and capital ( see Lauwo, 2011;
Havnevik, 1993). In addition, the Tanzanian government enacted the Mining Act 1998 which came into force in July 1999 as the major Act of Parliament governing the exploration of solid minerals in the mining sector. The Mining Policy, together with the Act, sought to provide investment incentives through a competitive fiscal regime, and a legal and regulatory framework for the attraction of foreign investors in the mining sector. The effect of these developments was to increase the inflow of foreign investment and MNC operations in the
12 The Mining Policy 1997 played a significant role in transforming the Tanzanian mining sector and integrating it into the global market (Christian Aid Report, 2009).
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mining sector. For example, between 1996 and 2006, MNCs invested more than US$1.5 billion in the sector (Lange, 2006).
The Mining Policy, together with the Act, also contain provisions which inter alia require mining companies to account for the social and environmental impact of their activities. For example, sections 38(4)(c) and (d) of the Mining Act 1998 provide that:
‘Every application for a special mining license must include or be accompanied by the applicant's environmental management plan (EMP), including his proposals for the prevention of pollution, waste treatment, protection and reclamation of land and water resources and for eliminating or minimizing the adverse effects on the environment of the mining operation’ .
In addition to the above legal and regulatory developments, in recent years NGOs and other pressure groups have become increasingly interested in the impact of mining activities in
Tanzania (see Curtis and Lissu, 2008; Christian Aid, 2008, 2009; SID, 2009). In response to increasing pressure and scrutiny of the social and environmental impact of mining activities, multinational mining companies have, like other MNCs, published various statements in which they claim to be accountable, transparent and socially responsible. Thus, corporate social and environmental disclosure in the Tanzanian mining sector has increased in recent years (see Lauwo, 2011).
5.1 CSR Reporting Practices in the Mining Sector of Tanzania
Mining companies in Tanzania are increasingly facing demands to improve their accountability and transparency and to reduce the adverse social and environmental impact of their mining activities. In response to such demands, mining companies in Tanzania have embraced the idea of corporate social reporting.
This section examines the CSR statements of Barrick Gold Company
13
for 2005-2009.
Corporate social reports published by AngloGold Ashanti Limited
14
for 2005-2010 are also
13 Barrick Gold Corporation is a leading international gold mining company, with headquarters in Toronto,
Canada, and a portfolio of mining and exploration projects in the United States, Canada, Australia, Peru, Chile,
Argentina and Tanzania. The company is listed in the Toronto, New York and London stock exchanges with a market capitalisation of about US$37 billion (about Tsh.48.1 trillion). In Tanzania, Barrick Gold Corporation is now one of the leading private foreign companies in the mining sector, due to its acquisition of the four mine sites: Bulyanhulu Gold Mine BGM; North Mara Gold Mine; Tulawaka Gold Mine; and Buzwagi Gold Mine
21

examined. As fighting Tanzania’s endemic poverty is one of the most important social and economic issues in Tanzania, CSR reporting has been predominantly philanthropic in nature
( see Lauwo, 2010, 2011). For example, Barrick Gold Company publishes substantial information about community relations and investment. Like other MNCs, Barrick Gold has expressed its commitment to making a positive difference to the communities in which it operates ( Barrick Social Responsibility Reports , 2005, 2006, 2007, 2008, 2009). In its Annual
Report (2006), Bulyanhulu Gold Mine stated that the company had spent US$275,000
(Tshs.302.5 million) on supporting the local Bugarama secondary school and had donated
US$15,000 (Tshs.16.5 million) to the District Council to support a government food relief initiative in the district (p.4). The Annual Report also revealed that at least US$186,000
(Tshs.204.6 million) was spent, in 2006, on upgrading a clinic in the district (p.7)
15
.
Similarly, Anglo Gold Ashanti considers itself to be an integral part of the communities in which it operates, and a neighbour and key instigator of economic development which seeks to improve the standards of living of those living in local communities. AngloGold Ashanti claims that it ensures that communities in the mining area are kept informed and are involved in developments that affect them throughout the lifecycle of the company’s operations. For example, AGA’s
Society Report (2005) stated:
‘Geita Mine liaises with local communities and district authorities in the formulation and implementation of development projects and is part of a district consultative committee which formulates and co-ordinates the implementation of donor-funded projects. The focus is on the key areas of health, education, water and economic development’ (p.3).
Environment protection and management have also become one of the most commonly reported aspects of CSR reporting in the mining companies in Tanzania. An analysis of
Barrick Company reports shows that the intensity of environmental disclosures have been increasing in recent years ( e.g.
from a 3-page report in 2004 to a 17-page report in 2009). The company has emphasised the importance of controlling air emissions at the processing plants,
(Policy Forum, 2008). The company operates both open pit and underground mining activities and employ over
19,000 Tanzanian.
( http://www.miningwatch.ca/sites/miningwatch.ca/files/Canadian_Cos_in_Africa_2001.pdf
).
14 AngloGold Ashanti (AGA) Limited is a global gold producer with headquarters in Johannesburg, South
Africa. It is listed in the Johannesburg, New York, London, Paris, Brussels, Australia and Ghana stock exchanges. In Tanzania, AngloGold Ashanti owns Geita Gold Mine Limited, which is the biggest of the group’s eight open-pit mines in Africa, and employ over 3116 Tanzanian. http://www.anglogold.com/NR/rdonlyres/DDF9E29F-F49A-4A9C-87EC- 1C3757B55CB/0/tanzania_2008.pdf
.
15
The company’s total community support to Tanzania in 2006 was reported to be US$321,000 (donations),
US$1,110,000 (for infrastructure development), and US$655,000 (for community initiatives and local/regional procurement).
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such as particulate matter, sulphur dioxide, carbon monoxide and mercury. From 2007 onwards, Barrick Gold Company started to disclose information about spillages of hazardous chemicals at the mining sites and the fines paid thereon for non-compliance. For example,
Barrick Responsible Mining Report (2009) disclosed that 9.2 million litres of processing water had been discharged into the Tigithe River in Tanzania. The Bulyanhulu Gold Mine
Responsibility Report (2009) also reported that environmental management was a key issue for the company:
‘Respect for the environment is at the heart of our management approach to environmental protection and stewardship. Barrick’s Corporate Social Responsibility Charter drives this approach. The environmental management system in place at Bulyanhulu helps us achieve our
Charter goals of protection and stewardship, and performance indicators help us measure how well we have done’ (p.1).
Similarly, AngloGold Ashanti has claimed that it addresses a wider range of environmental issues in Tanzania, including pollution control, chemical management, environmental audit, resource management, CO2 emissions and environmental incidence reporting. AngloGold
Ashanti has reported that it is committed to environmental protection:
‘The company is committed to working in an environmentally responsible way, recognising that the long-term sustainability of its business is dependent upon good stewardships in both the protection of the environment and the efficient management of the exploration and extraction of mineral resources’ (AGA
Society Report , 2006 p.16-17).
Although Barrick and AngloGold acknowledge in their CSR reports that mining activities can have an adverse impact on the environment and they have disclosed their commitment to environmental protection and management, no specific targets on environmental matters were laid down in their reports which would have shown evidence of their real commitment to being environmentally responsible and accountable. Setting targets would make it possible to evaluate whether a mining company was succeeding in meeting its professed obligations and responsibilities for environmental matters.
The CSR reports of the gold mining companies have also professed a commitment to promoting employee welfare management, and they have included statements on issues such as health and safety, employee relations, working conditions, remuneration and benefits, recruitment practices, training and professional development, equal opportunities and nondiscrimination. For example, AngloGold has reported that:
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‘We place people first and correspondingly put the highest priority on safe and healthy practices and systems of work. We are responsible for seeking out new and innovative ways to ensure that our workplaces are free of occupational injury and illness. We live each day for each other and use our collective commitment, talents, resource and systems to deliver on our most important commitment to care’ (2008 p.14).
Similarly, Barrick Gold in its Bulyanhulu Gold Mine’s Social Responsibility Report (2009) has professed its commitment to promoting the health and safety of employees:
‘We are committed to eliminating and/or controlling all workplace hazards for the protection of our workers. We believe that everyone is responsible for workplace safety. Health and safety training programs are in place for managers, employees and contractors at Bulyanhulu. These programs provide all employees and contractors with a clear understanding of their rights, responsibilities and accountabilities in creating and maintaining a safe workplace for all’ (p.4).
Although CSR reporting in the gold mining sector of Tanzania has been increasing in recent years, the information disclosed has remained somewhat selective and at the discretion of the management. The selectiveness of information disclosure in CSR reports is consistent with earlier studies where it was found that disclosures are dependent upon management discretion and that the reason for supporting social responsibility initiatives is purely for business reasons and not for an altruistic desire to improve conditions in the workplace and in local communities (see e.g.
Adams, 2004; Sikka, 2010; Unerman and O’Dwyer, 2007). For example, despite references to transparency, accountability and responsibility, none of reports of the mining companies studied disclosed their tax planning and other financial engineering schemes which were devised to minimise their financial and social obligations to the
Tanzanian government and to Tanzanian society. Disclosure of such schemes would increase public awareness of those institutionalised corporate mechanisms which reduce the payment of taxes to the Tanzanian government.
As gold mining extraction and processing involves the use toxic chemicals, such as cyanide, there is a high likelihood of such chemicals leaking into the surrounding environment which can cause serious pollution, environmental degradation, and health problems for local communities. However, despite this risk, the environmental statements published by the gold mining companies provide no information about the spillages of toxic chemicals, their impact on the environment, and the associated health risks. Instead, reports provide vague and general information about their policies, such as that the companies are ‘environmentally conscious and responsible’. This is unsatisfactory for, although such statements may create
24

the impression that the mining companies in Tanzania are acting in an environmentally responsible manner, this is misleading for, in practice, the matter is quite different.
Despite their claims to be promoting employee welfare and community development, employee welfare and community involvement are given short shrift in corporate reports.
Although the various CSR disclosures tend to portray an image of employee well-being and employees having a mutual interest with the company, in many cases the genuine concerns of employees, for instance their human rights are rarely considered. Similarly, the social unrest which prevails in the local mining communities is not disclosed in the CSR reports of the mining companies.
Despite legal requirements for social and environmental accounting, pressure group activity, and increasing corporate disclosure, the reality in the mining sector in Tanzania is that there much to be desired by local communities, employees, the government and by society as a whole (URT, 2008; Curtis and Lissu, 2008; Christian Aid, 2008, 2009; SID, 2009). The legal and regulatory framework governing the gold mining sector in Tanzania rarely impose obligations on MNCs to create structures for improving social and environmental performance and disclosure ( see Lauwo, 2011; Curtis and Lissu, 2008). Thus, the absence of strong state support and empowered stakeholders (including pressure groups interested in
CSR and corporate governance) leaves CSR reporting comparatively weak in Tanzania.
5.2 Demystifying CSR Reporting Practices in the Tanzanian Gold Mining Sector
There is evidence to show that the negative socio-economic and environmental impact of gold mining activities in Tanzania has increased considerably in recent years ( see Kitula,
2006; Curtis and Lissu, 2008; Lauwo, 2011). For example, the large quantities of waste generated from gold mining processing contain heavy metals, potential acids and chemicals which often cause land and natural water source pollution (Ramasar et al ., 2003). The amount of cyanide and heavy metals leaking from waste rock piles and from the tailing dams of the big mining companies is much higher than that recommended as safe by the World Health
Organisation (WHO), and the USA and Tanzanian regulatory bodies ( see Almas et al .,
2009)
16
. As a result, people living in the gold mining areas face a serious risk of suffering and
16 For example, sample water taken from one river in North Mara Gold Mine (a mining site with alleged spills in
2009), contained an arsenic level of 1142 micrograms per litre (μg/l), drastically above the WHO recommended
25

dying from health-related problems caused by the effects of pollution from heavy metals and cyanide (Almas et al ., 2009).
Although environmental laws in Tanzania, such as the National Environmental Policy, 1997 and the Environmental Management Act, 1984, require the mining companies to control pollution and to deal with the environmental impact of their activities in the mining areas, pollution and environmental degradation caused by mining activities have remained prevalent and has posed serious health risks for local communities (see Lauwo, 2011 ). In fact, environmental legislation has failed to provide specific provisions requiring companies to create structures to combat pollution and environmental degradation, and promote sustainable environmental management (Lauwo, 2011). As a result, total carbon dioxide emissions increased from 2.3 metric carbon tonnes in 1999 to 4.3 metric carbon tonnes in 2004 (UNDP,
2010). However, the CSR reports of the mining companies have remained silent about the amount of pollution discharged into the environment and its effect on the health and life of local communities living near the gold mining areas.
Furthermore, despite legal requirements for the gold mining companies to maintain good relations with local communities living in the mining areas, those communities have been concerned about corporate violations of their basic human rights. In fact, the abuse of human rights is starkly evidenced by the mass evictions of the poor from local communities in order to ‘make room for’ foreign investors, often with little or no compensation being paid (Curtis and Lissu, 2008; The Citizen , 27 June 2009). Mining companies have been accused of causing social unrest in local communities due to the forceful eviction of local people, whose livelihood depended on mining activities, in order to make way to foreign investors ( see
Kitula, 2006; Curtis and Lissu, 2008; Lauwo, 2011). For example, according to Curtis and
Lissu (2008), 400,000 artisanal miners were evicted from their land to make room for foreign
MNCs. According to Wanzala (2007), most of those who had been displaced from their land by the gold mining companies and who had been unable to find a job were ‘bitter’; and they viewed ‘the discovery of gold and the coming of large-scale investors as a curse rather than a blessing’ (p.40). According to Wanzala, ‘the bitterness and anger of those displaced [was] reflected in the ongoing conflicts between local communities and the mining companies’
( ibid .). level of 10 micrograms per litre (μg/l) for drinking water (Almas et al., 2009). High levels of arsenic can cause serious skin problems.
26

Although in their CSR reports, the gold mining companies claim to maintain good relations with and make a significant contribution to local communities, there is in fact little disclosure about the ongoing social unrest and grievances which exist in local communities. The existence of ongoing social unrest and corporate-community conflicts at the mining sites raises serious doubts about the claims of the mining companies with respect to their professed commitment to improving and maintaining good community relations.
Despite legal provisions, such as those in the Labour Relations Act 2004 and the Labour
Institution Act 2004, requiring companies to respect workers’ rights and maintain proper working conditions in Tanzania, employee grievances in the gold mining sector have increased significantly in recent years ( see Curtis and Lissu; Lauwo, 2011). Mining employees have complained about violations of their human rights, such as their right to equality and non-discrimination, freedom of association, collective bargaining, and freedom of speech ( ibid ). Despite the professed claims of the mining companies to be committed to employee welfare, the ongoing workplace disputes and grievances about poor working conditions, discrimination and abuses of human rights are never disclosed in the CSR reports of the gold mining companies.
The above social and environmental problems provide some evidence of demystifying CSR practices in the gold mining sector of Tanzania but which are rarely disclosed in the CSR reports of the mining companies. The increasing evidence of poor working conditions, discrimination in the workplace, and pollution and environmental degradation, all of which deprive citizens of fundamental rights, raises vital questions about the effectiveness of the regulatory framework and about the role of NGOs and other pressure groups in Tanzania.
6.0 Discussion and Conclusions
CSR as a social practice is embedded in a particular socio-political and economic context and is shaped by historical, socio-cultural, regulatory and power relations structures. Using a political economy perspective, the paper has shown how the interrelationship between sociopolitical, historical and economic structures has shaped the nature of social accounting practices in a developing country. In particular, the paper has considered the impact of
27

broader institutional structure of globalisation, neo-liberalisation and de-regulation policies on the governance structures, especially those for promoting transparency, accountability and social responsibility, in a developing country.
The paper has examined the socio-political and economic environment of Tanzania by considering the institutional structures which may have shaped the nature and scale of CSR practices. It showed that Tanzania’s socio-political and economic environment has been shaped by both global and local institutional structures. In particular, CSR practices in
Tanzania have been significantly influenced by global structures such as the mobility of capital and by globalisation and liberalisation policies. The paper has shown that the
Tanzanian government is dependent on corporate activities, particularly foreign investment, for economic growth, for the creation of employment, and for increasing government revenues, and that this dependency has shaped the legal and regulatory frameworks as well as
CSR practices. MNC activities have become dominant in the Tanzanian economy, particularly in the mining sector, and these have had a significant influence on the institutional structures and laws of Tanzania, and consequently on CSR practices. In essence, the desire of the Tanzanian government to attract MNCs and FDI has posed, and continues to pose, serious challenges for both corporate practices and the governance system in Tanzania.
Thus, the nature of the Tanzanian state and its anxiety to attract foreign investment to deal with the endemic poverty which pervades the country has made it difficult for the Tanzanian government to properly formulate and to effectively implement effective laws and regulations to enforce social accounting practices in Tanzania. Despite the enactment of various regulations in the name of promoting corporate governance and public accountability, the enforcement of laws and regulations remains marginal in Tanzania with regards to CSR. In fact, the enabling environment which would promote corporate disclosure, transparency and accountability in Tanzania remains just a dream.
It has been argued that the increasing pressure from NGOs and other civil society organisations has problematised excessive corporate power, the declining role of the state, and the governance gap created in the globalising era. As result, corporations have responded by embracing CSR reporting. Although NGOs have played a significant role globally in challenging the activities of corporation with regards to the social and environmental impact, and fostering the development of CSR, this has not been as successful in Tanzania as it has
28

been in developed countries. In essence, NGOs in Tanzania have not been sufficiently strong to be able to mobilise pressure for enhanced corporate disclosure and accountability.
Although the adoption of neo-liberal policies in Tanzania has increased the potential of
NGOs and other pressure groups to act as countervailing power structures, their capacity to uphold transparency, public accountability and responsible business practices has remained relatively insignificant
17
.
Thus, although corporate social disclosures have increased in Tanzania, particularly in the mining sector, the increasing evidence of social and environmental problems questions the adequacy or effectiveness of the legislative and regulatory frameworks as well as the role played by NGOs. In fact, socio-economic and environmental problems have prevailed in
Tanzania, especially in the mining sector, and have threatened the lives of many citizens
(Bitala, 2008; Kitula, 2006; Almas, Kweyunga and Manoko, 2009). For example, despite regulatory requirements and increasing corporate disclosure, the reality in practice is that social unrest, environmental pollution, and employee grievances remain prevalent in
Tanzania, and in the mining sector in particular (Lauwo, 2011).
The perspectives above have broad implications for the development of ethical accountability practices including corporate social disclosures in Tanzania, and more generally in developing countries. Despite the initiatives of the gold mining companies in Tanzania to increase their social and environmental reporting, such reporting has remained selective, and has tended to focus exclusively on the business reasons for such reporting (see O’Dwyer et al ., 2005). The persistence of socio-economic and environmental problems in the Tanzanian mining sector suggests that there is a need to reform the regulatory and institutional structures in Tanzania in order to promote corporate social disclosure, corporate social responsibility, as well as transparency and public accountability. However, any attempt to change governance structures at the domestic level may require the Tanzanian government to be more proactive
( e.g.
by introducing new laws and regulations or amending existing ones) in order for more pressure to be placed on the mining companies and the other MNCs in Tanzania to discharge their obligations to local citizens. As part of such a process, the government of Tanzanian
17 Indeed, the NGOs in Tanzania have often focused on pressing issues including service delivery and poverty reduction (see Assad and Goddard, 2010).
29

would need to review the Company Act 2002 to impose a duty on companies to be accountable to the various constituencies.
The difficult for Tanzania, however, is that the government is on the ‘horns of dilemmas’ in that it needs to attract foreign investment in order to stimulate the economy and deal with its endemic poverty. To do so, it offers various guarantees, protections and stabilisation clauses as incentives to MNCs to invest in Tanzania, but in doing so fails to control such MNCs with regard to their corporate social responsibilities ( e.g.
with regard to the environment, health and safety and work and the protection of human rights). In particular, the stabilisation clauses and other investment agreements offered to attract FDI guarantee fiscal stability over the long-term life of investment agreements, thereby preventing the Tanzanian government from reviewing the terms in such agreements ( see SID, 2009). Thus, the need to attract foreign investment makes it difficult for the Tanzanian government to demand corporate disclosures and to promote the welfare of its citizens with regard to controlling and eradicating unethical corporate social practices. If the Tanzanian government places too many stringent requirements on companies to ensure that they conduct their business in a socially responsible way (such as by giving greater consideration to environmental and human rights concerns), this may have a negative effect in that companies may decide not to invest in
Tanzania which will, in turn, have a detrimental impact on the socio-economic development of the country. These problems and contradictions for the Tanzanian government have existed for many years and continue to exist. It is to be hoped that such difficulties can be resolved in the future by the Tanzanian government and by MNCs adopting positions which simultaneously respect both the rights of employees, the environment, and the local communities living in the mining areas and also those citizens living in abject poverty in
Tanzania.
The paper calls for the empowerment of NGOs and other civil society organisations. NGOs can work closely with other civil society organisations to combine forces to demand improved corporate social disclosure, transparency and accountability both in Tanzania and elsewhere (see O’Dwyer et al ., 2005). NGOs, the media and academics should work together to lobby for mandatory regulations on corporate social disclosure, in particular disclosure about the effect of corporate activities on local communities. Furthermore, NGOs and other pressure groups can play a pivotal role by criticising and challenging governance structures
30

and by producing counter-accounts of corporate activities, in order to bring the issues and problems to public attention. Through rigorous critical analysis and intellectual intervention to mobilise public opinion on CSR practices, academics, in particular, can play a significant role in bringing about the much-needed changes and improving corporate social disclosure practices. Working closely with civil society organisations, academics can challenge the impact of increasing corporate power on the lives of Tanzanians, many of whom live in abject poverty, and the impact of such power on their socio-economic and environmental welfare.
This paper aims to contribute to the literature on the role played by government regulation and NGO activism with respect to corporate social accounting practices in developing countries. While the paper addresses ethical, accountability, transparency and responsibility issues which may be of relevance in many social settings, the paper has focused on the
Tanzanian socio-political economic and regulatory context, and provided some evidence of corporate social responsibility in the Tanzanian gold mining sector. With regard to future research, there is the potential for considering some social accounting issues within a wider political arena. Future research should further consider the social and environmental issues relating to CSR practices and consider the broader institutional structures as well as different types of civil society groups, such as, for instance, the role played by trade unions or the media. More research is needed to examine the challenges faced by NGOs and other pressure groups in engaging with the issue of corporate social accountability in developing country context. Research is also needed which examines how NGOs themselves develop their conceptions of the social needs and expectations of the individuals they purport to represent.
Acknowledgements
We are grateful to Professor Prem Sikka of the University of Essex for his encouragement, intellectual support and constructive remarks which have been useful in the development of this paper. The authors are also grateful to Professor Warwick Funnell and Dr Robert Jupe of the University of Kent for their helpful feedback, and invaluable and illuminating comments on the paper. The helpful support of Kate Standley, proof-reader, is also acknowledged.
31

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42

Table 1: Offences and Penalties for Breaches of the EM Act 2004
Section of the
Act s.186
Infringement s.187 s.191
Failure to submit a project brief, EIA or making a false statement in an EIA.
Causing pollution contrary to the provisions of the
EMA.
General penalty for noncompliance with any provision in the Act for which no specific penalty is prescribed.
Penalty
Tshs.0.5-10 million
18
and/or imprisonment for 2-7 years.
Tshs.3-5 million and/or imprisonment for up to 12 years, and the full cost of cleanup of the polluted environment.
Tshs.50,000-50 million and/or imprisonment for 3 months to 7 years.
18 In 2004, Tshs.2000 was approximately equivalent to £1.
43