A STUDY ON THE IMPACT OF FIRM PROFITABILITY ON CSR ACTIVITIES BY FIRMS IN NIGERIA (ECONOMICS PROJECT TOPICS AND MATERIALS)
1.1 BACKGROUND OF THE STUDY
Hashimu and Ango (2012) opined that business does not exist in a vacuum and cannot be divorced from the rest of the society. The processes involved in maximizing profit, attaining optimal business performance and hence fostering economic growth and development comes with some cost, both private and social. Production activities of business organisations do exert significant external costs on the society. Noise and atmospheric pollution from factories, environmental degradation resulting from exploratory activities and long term health implications for the society are the most common examples. How can such costs be minimized? How can the impacts of these costs on the society be ameliorated? The more relevant question is: Who should be responsible for minimizing these costs and ameliorating their impacts on the society? These and many more questions bring about the concept of Corporate Social Responsibility (CSR).
While CSR as a concept and its practice in the West was developed as early as in the 1950s, the concept of CSR is a relatively new phenomenon in Nigeria (Uadiale & Fagbemi, 2012; Helg, 2007). Formalized CSR in Nigeria can be traced back to the CSR practices in the oil and gas multinationals. The CSR activities in this sector are mainly focused on remedying the effects of their extraction activities on the local communities. The companies provide pipe-borne waters, hospitals and schools.
In Nigeria today as a developing country, CSR has attracted both business leaders, the academics and has been a highly contemporary and contextual issue to all stakeholders including the government, the corporate organization itself, and the general public, with companies being demanded to develop a “social conscience” and expected to be more ethical and socially responsible. Moreover, the social problems caused by business activities are too urgent to wait on the relatively weaker regulatory systems and the slow course of political processes in Nigeria, requiring that the exercise of social responsibility by businesses as a quicker and surer way to solve pressing current problems.
The issue of CSR in Nigeria is brought into perspective by several peculiarities in Nigeria as a developing country faced with seemingly overwhelming growth and development challenges in the political, economic and social dimensions. Despite the challenges, several prospects exist, each being associated with massive expansion of business activities than the present levels as business is essential for the development and wellbeing of a society. According to a forecast of bodies as diverse as the International Monetary Fund, the European Union and investment firms such as Goldman-Sachs, Nigerian economy will become the 19th largest in the world by 2025 (Jacques, 2009).
The Nigerian economy has been named as one of the Next 11 (N11) economies, identified as having high potential of becoming one of the world’s largest economies in the 21st century (O’Neill, Wilson, Purushothaman & Stupnytska, 2005). Meanwhile, Nigeria nurses her homegrown Vision 20:2020 wherein by 2020, Nigeria will be one of the 20 largest economies in the world.