• Monday, June 24, 2024
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Banks’ spend on CSR more than double amid rising poverty

Banks’ spend on CSR more than double amid rising poverty

Some listed Nigerian banks’ donations to charity more than doubled in the first quarter of 2024 as rising inflationary pressures increased the number of poor people in the country, a BusinessDay analysis shows.

The firms are Zenith Bank Plc, United Bank for Africa (UBA) Plc, Stanbic IBTC Holdings Plc, FBN Holdings Plc, FCMB Group Plc, Wema Bank Plc and Fidelity Bank Plc.

The latest financial statements of the lenders show that their Corporate Social Responsibility (CSR) activities rose by 115 percent to N3.38 billion from N1.57 billion in the first quarter of last year.

United Nations Industrial Development Organisation defines CSR as a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.

“Banks that reported significant profits are more capable of participating in CSR activities. CSR can help to reduce the level of poverty in a nation as it addresses some challenges in the economy,” Bolade Agboola, energy and consumer growth analyst at ChapelHill Denham, said.

She said it was not mandatory but most companies choose to engage in it as a way to give back to their communities.

“The popularity of CSR has grown because investors and shareholders often favour companies that participate in these activities and consider them before making investment decisions,” Agboola added.

The banks recorded a combined after-tax profit of N840.2 billion in Q1, a 248 percent increase from N241.3 billion in the same period of 2023.

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The increase in CSR means the banks are more profitable, according to Oluebube Nwosu, consumer goods analyst at Vetiva Capital, said.

Tajudeen Ibrahim, director of research and strategy at Chapel Hill Denham, noted that profitable banks take CSR more seriously because of the kind of business they are into.

‘Banks are a client-facing business as they are in almost every street in Nigeria. Hence, they take the responsibility seriously.”

The inflation rate in Africa’s most populous nation has accelerated to a record high, largely on the back of federal government reforms, including the removal of petrol subsidy and naira devaluation.

Data from the National Bureau of Statistics shows that the headline inflation quickened for the 16th straight time to 33.69 percent in April, up from 33.20 percent in March.

Food inflation, which constitutes more than 50 percent of headline inflation also increased to 40.53 percent from 40 percent.

Rising inflation and sluggish growth in one of Africa’s biggest economies increased the number of poor people to 104 million in 2023 from 89.8 million at the start of the year, according to the World Bank.

Apart from poverty and inflation, Nigeria’s unemployment rate rose for the second time in the third quarter of last year since the National Bureau of Statistics (NBS) adopted a new methodology for the country’s labour force.

The survey said the unemployment rate rose to 5.0 percent from 4.2 percent in Q2. It stood at 4.1 percent in Q1, down from 5.3 percent in Q4 of 2022.

The latest survey by the African Polling Institute (API) revealed that some of the challenges Nigerians are presently contending with are hunger, inability to meet basic needs, and rising insecurity among others.

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“Hunger (36 percent), inability to meet basic needs (28 percent), unemployment (13 percent), heightened insecurity (nine percent), and poor electricity supply (five percent) are identified as the biggest challenges facing them personally today,” the report stated.

“Banks’ CSR shows their customers that they care about their well-being and they are not just transactional. The impact on the economy is that they become more mindful of climate change and its effect on the economy,” Uchenna Uzo, professor of marketing at Lagos Business School said.

Further analysis of the statement shows that Zenith Bank recorded the highest CSR donation of N1.63 billion from N765 million in the same period of 2023.

UBA’s CSR donation surged to N503 million from N298 million while Stanbic IBTC Holdings’ own jumped to N478 million from N24 million.

The CSR donation of FBN Holdings rose to N434 million from N165 million. However, FCMB Group’s CSR donation dropped to N162.9 million from N305.5 million in the period reviewed.

Wema Bank’s CSR donation surged to N118.4 million from N7.56 million and Fidelity Bank’s CSR donation surged to N58 million from N7 million.

Although the firms didn’t disclose the specific uses of their CSR donations in their Q1 financial reports, their 2023 statements revealed that these activities included donations to ICT, health facilities, and schools, among other initiatives.

They also sponsored training programmes to improve youths’ digital skills and promote financial inclusion, as well as various events.

“The beneficiaries included educational institutions (N1.403 billion), charitable organisations (N1.19 billion), and state government infrastructure/security trust funds (N1.2 billion), among others,” Zenith Bank said in its statement.

For FBN Holdings, the company renovated, furnished, and equipped the library of Okun Ajah Secondary School with a total sum of N4 million in 2023. Additionally, the holding company’s subsidiaries made donations to various worthy causes.

Access Holdings made contributions amounting to N2.6 billion in 2023 to charitable and non-charitable organisations, an increase from N1.6 billion in 2022.