Corporate Purpose in Africa: Heterodox Pluralism and Another Case of ‘No Need to be Woke’

When policymakers, businesses, academics, and other market constituents in the global North engaged in heated debates over the purpose of the corporation, rediscovering in the process that the corporation has purposes beyond merely satisfying the financial interests of shareholders, some commentators were swift to point out that there was ‘no need … to be woke’ about this revelation. In many other jurisdictions, business regulations have long embraced a pluralist mandate. Perhaps no jurisdiction puts this case of corporate purpose pluralism more prominently than the African regional business law organisation known as the Organisation for the Harmonisation of Business Law in Africa (OHADA).

In a recent paper, I argue that business norms in Africa reflect heterodox pluralism. There is pluralism in the sources of corporate purpose, and these sources exhibit a plurality of policy objectives, distribution schemes, and company membership.

Firstly, the study of corporate purpose in Africa calls for an examination of inescapably complementary disciplines of company legislation, sectoral laws, and local cultural norms. Seventeen African states have done away with their national company laws to adhere to a single uniform regime under OHADA. However, sectoral matters, such as mining and banking legislation, are dealt with at the national level and construe their own companies’ raison-d’être. Meanwhile, cultural norms heavily inform companies’ practices. Failure to conform to local cultures, such as the communal expectations around profit distribution, opens the company to grievances that can significantly disrupt its normal functioning, and protests can go as far as seeking a director’s removal or liability.

Secondly, while each regulatory strand has its own conceptualisation of corporate purpose, the rejection of shareholder primacy emerges as the underlying rationale. In OHADA company law, companies are formed in the common interest of their members, but directors are subject to a duty to advance the interests of the reified entity, which comes with a diverse stakeholder base. The peculiarity of OHADA in this area is evident in its highly prescriptive nature and a decried authoritarian intrusion into the company’s management. To give but one example, some courts have adjudged that a majority shareholder can be forced to sell their shares when their behaviour threatens the company’s normal functioning (Cour d'Appel de Ouagadougou, Arrêt 037/09, 19 June 2009). The idea here is simple: the wishes of the owners alone are not paramount, and the company is an institution embodying rules for social conduct.

Under such sector-specific laws as mining legislation, companies are effectively conceived as semi-public institutions. They are legally and contractually required to achieve the socio-economic and industrial development of surrounding communities through annual contributions (0.3% of annual turnover in DR Congo and 1% of monthly turnover in Burkina Faso) and agreements with local communities on a set of development projects. As I articulate in the paper, corporate social responsibility in Africa ends up as ‘legal, contractual, and voluntary communal development commitments at the charge of a corporation’.

Finally, African cultural norms wholly reshuffle the idea of company membership. Who counts as a company member is not merely a function of financial contribution. The company’s neighbours (such as local communities), too, assert claims to corporate membership and expect a share of profits and a say in the company’s decisions that affect them. Because the company is viewed as a social good from a cultural perspective, capital, though a staple of all companies, is nevertheless one element in the grand scheme of things along with labour, neighbourhood, and the culturally-rooted ownership of or affinity to land and resources.

The problem is that the governance of corporations in Africa falls short of reflecting these imperatives for pluralism, with the danger of a prevailing shareholder primacy norm continuing its unencumbered de facto reign and reducing African stakeholderism to comparative impotence.

The author's article can be accessed here.

Bonheur Minzoto is a Doctoral Candidate in Law at The University of Manchester.