Investing in the social licence to operate, an imperative for African businesses
The social licence to operate refers to the informal approval and acceptance of a company’s activities by the local community and other stakeholders. There are four levels of acceptance that must be met before a company is allowed to operate. These levels range from economic legitimacy, socio-political legitimacy, and interpersonal trust – to trust in the company. A company with a weak social licence is more likely to face protests, boycotts, and reputational crises, as well as greater regulatory and legal pressure.
In Africa, this issue was previously given less attention within a controlled media environment. Companies were content with maintaining favorable government relations by appointing influential individuals to their boards of directors, individuals with strong government connections. All of this occurred amidst accusations of corruption. However, with the advent of digital technology transforming the media landscape, there has been a notable surge in social activism targeting companies across various African nations. Incidents are now on the rise, and companies are finding themselves increasingly exposed.
In the past, the concept of a “social license to operate” was primarily associated with heavy industries like mining. However, it has now become mandatory across all sectors. Several high-profile cases have emerged where companies have lost their social license for several reasons, including environmental pollution, human rights violations, corruption, and unethical business practices.
On 1 June 2022, the Syndicat national des propriétaires de points de vente mobile money de Côte d’Ivoire (Synam-CI), a union of some 1,500 mobile money outlets, issued a press release announcing a “systematic 72-hour work stoppage throughout the country from 2 June”. The statement followed a decision by Wave, the e-wallet start-up, to apply a new commission scale which according to the union, halved workers’ income.
To operate successfully in an environment as dynamic as Africa’s at the moment, companies need to earn the trust, credibility, and goodwill of their stakeholders – above all, local communities, NGOs, and the media – after spending time focusing solely on governments and investors. This is even more the case today in Africa’s geopolitical crisis environmenta. Companies are now associated with the perception of their home countries. Following the Tunisian President’s comments about migrants from sub-Saharan Africa, calls for a boycott of Tunisian products have been heard on social networks. Blacklists of several Tunisian brands were massively shared on the web.
Pressure from local stakeholders is increasingly intense. They are demanding greater transparency, accountability, and participation in decision-making, and can rally thousands or even millions to their cause on social networks. Companies no longer have a choice. Public relations can play a crucial role in helping companies retain their social licence to operate in Africa. Public relations is a strategic communication process that builds mutually beneficial relationships between organisations and their audiences. Their limited use by businesses in Africa is set to change in response to the challenges facing the social licence to operate. They can help companies to better:
- Understand the concerns and priorities of local communities, the media or civil society organisations;
- Communicate more effectively and transparently about their activities, policies, and practices, as well as their social and environmental impact;
- Manage their reputation, particularly in the event of negative publicity or crisis;and demonstrate their social responsibility and commitment to community development.
African populations are increasingly educated, exposed to informationt as well as to misinformation. They form opinions on all subjects, including business. They are more demanding and put pressure on regulators, the justice system, and governments to obtain better quality, lower costs, and healthier practices for their communities. It is imperative to adapt. The status quo is not an option.
