Looking for ways to fulfill your corporate social responsibility (CSR) objectives? Look no further than small scale enterprises in the community near you. While mining and exploration companies have traditionally funded hospitals, schools and/or the tools of health care and education in the areas where they are working, supporting entrepreneurs to become self sufficient can have an equally lasting impact on community welfare.
Microfinance initiatives such as The Townships Projects http://www.thetownshipsproject.org/ launched by Canadian Martha Deacon in some of the most impoverished areas of South Africa provide a vehicle for these types of investments. While Deacon’s initial goal was to provide micro loans to individuals, experience has shown the limitations of this approach. She is now promoting the concept of microfranchising that takes a successful business in one community and replicates it in another (add link to full story).
South Africa is a natural incubator for microbusiness because companies operating there are required to contribute 3% of their net profit after tax (about a billion dollars annually) to enterprise development but Deacon hopes the model she and others are working on will spread to other areas where mining companies and explorers are active.
“We’d like junior companies to be aware of the model that we are pursuing, which integrates asset-based community development with microfinance, and to understand how that links to their responsibilities around CSR,” she says. “The holistic approach provides much more leverage - in terms of other people’s money and other people’s skills - to the small amount of money they might have available,” says Deacon.
Deacon says companies such Toronto-based Banro Corporation, already considered a CSR leader in the exploration industry because of its contributions in the Democratic Republic of the Congo, are in a unique position to support this approach and “build an ecosystem of small business.”
“In the past, when mining companies have gone in and built a project, they’ve had the company store approach where they have to be everything to all people,” says Deacon. “What we’re hoping to do with the microfranchising launch (scheduled for August 2011 in Cape Town), is to build up a whole raft of small businesses through franchising.”