By Asatu Getaweh
The potential for foreign direct investment (FDI) to help the economic growth and social development of Africa (UNECA, 2015, UN, 2002) surely should be an incentive for African governments to make their countries attractive to multinational enterprises (MNEs). FDI is said to account for the second largest source of external finances inflow in Africa, and it was projected to increase from 4.1 per cent in 2014 to 4.2 per cent in 2015 (UNECA, 2015). But though many States in the African region have already, and continue to seize the opportunities offered by FDI, lack of infrastructure, transparency, political unrest, corruption and poor economic growth have continued to deter potential investors. Moreover, despite the potential importance of the tripartite declaration of principles concerning multinational enterprises and social policy (MNE Declaration) to strengthening MNEs’ performance in Africa, promotion of the declaration has been insufficient, and non-compliance with its principles continues to be widespread.
The tripartite declaration of principles concerning multinational enterprises and social policy, known as the MNE Declaration, was first adopted in November 1977. As an international guiding instrument, the MNE Declaration sets out the roles of government, workers’ and employments’ organisations and enterprises, covering such areas as employment, training, conditions of work and life, and industrial relations. Through the MNE Declaration, the International Labour Organisation’s (ILO) Governing Body aimed to encourage collaboration between all the parties concerned (including host and home countries). Since 1977, the text of the Declaration has been amended twice, in November 2000 and March 2006. It was agreed by the Governing Body (GB) in 2006 to regularly update the text to reflect changes relevant to the MNE Declaration. The Governing Body requested at its 325th session (November 2015) a number of modalities for the next review of the MNE Declaration, which it discussed in March at its 326th session. The three options proposed were:
- Option one- the text of the Declaration, as well as the annex and addenda
- Option two- the text and the interpretation procedure
- Option three- the text, interpretation procedure and the implementation strategy
It was decided at the 326th Governing Body session that a full review of the MNE Declaration, including its annex, addenda and interpretation procedure, should be conducted, a task which will be undertaken by a tripartite working group consisting of members from the government, workers and employer groups. The worker’s group was particularly in favour of the reworking of the text of the Declaration. For them, option one was impractical and unclear and they favoured option two instead- an option welcomed by the European Union. They also urged enterprises to not only promote human rights but to also take action against the violation of these rights. The African group on the other hand, acknowledged the importance of the MNE Declaration but admitted that the Declaration has not been promoted effectively. This presents particular challenges with regards to the contribution many claim MNEs can make to the social and economic development of Africa. The MNE Declaration is essential to protecting vulnerable developing countries; but in the case of Africa, the effectiveness of the MNE Declaration will be heavily dependent on, among other things, the vigilance of African States in their policing role,- which may involve improving their regulatory, judiciaries and political systems. A recent report on the promotion and application of the MNE Declaration in Africa provides important insight into the challenges and opportunities of the MNE Declaration in the ILO member states of the Africa region. The key findings of the report will be presented in the next paragraph.
Findings from the report on the ‘promotion and application of the MNEs Declaration in Africa’
The findings of the report on the promotion and application of the MNE Declaration in Africa came from a questionnaire distributed to the tripartite constituents of the 54 member States during the 13th African Regional Meeting (30 November-3 December 2015). A total of 59 questionnaires were returned from 33 of the 54 African member States.
In response to the question on the areas of the MNE Declaration relevant to the operation of multinational enterprises in their country, 93 per cent of government respondents indicated employment promotion, 86 per cent security of employment and 86 per cent training. The workers’ organisation respondents, in contrast, reported that employment promotion (80 per cent), security of employment (76 per cent), wages, benefits and conditions of work (76 per cent) were relevant. Surprisingly, only 20 per cent mentioned minimum wages. In relation to opportunities and challenges, respondents from the three tripartite bodies highlighted the vital role MNEs could play in promoting employment of women, youths and people with disabilities. However, some respondents also reported the discriminatory practices of MNEs between local and foreign workers, and male and female workers. It is particularly disappointing as these are the very unlawful practices the Declaration seemed to condemn (sections 18 and 21-23). Section 18 makes it clear that nationals of host countries should be given first priority with relation of employment, occupational development and promotion, and that MNEs should abide by the anti-discrimination policy of the host county, as set out in section 22. Security of employment was another challenge highlighted by many workers’ organisations. Short term contracts and unfair dismissal, among other things, were reported by these respondents as causes of jobs insecurity. Results also revealed that fewer governments (21 per cent) and employers’ organisations (21 per cent) reported organising events or taking initiatives to promote the principles of the MNE Declaration, in comparison to 33 percent of respondents from the workers’ organisations.
The findings of the report clearly indicate that the MNE Declaration has not been effectively promoted by the African member States that participated in the questionnaire survey. But as important as it is to promote the Declaration, without effective national laws and/or the enforcement of such laws any initiatives or activities taken up to promote the principles set out in the MNE Declaration will prove unfruitful. MNEs and FDI could potentially contribute to the economic and social development of Africa, but it will require that African governments seize the protection and guidelines offered by the MNE Declaration. However, one could equally add that any attempt to use MNEs to drive developments in the Africa region will have to grapple with the self-interest of different parties involved.
Asatu is an MA Social Research student in the department of Sociological Studies at the University of Sheffield. Asatu’s research interests are manifold, but she is specifically interested in issues pertaining to disability and employment, stammering, and Western society’s perception of Africa.