Over the past few years, Rwandan corporations especially banks and other publicly listed corporations have consistently adopted a culture of declaring profits at the end of each financial year. I suppose this is partly due to regulatory requirements and an effort to entice more investors in the publicly traded companies. In fact, this culture of profits declaration is so embedded that even during the last year (2020) when most businesses were hit hard by Covid-19 our corporations still declared profits. These corporations have indeed held high the theory that the only duty of a corporation is to maximize the profits accruing to its shareholders. Precisely, during this year (2021), one bank posted a 33% increase in profit equivalent to $36 million for only nine months. This was expected to grow even higher in the last and final quarter. The lender is not an isolated achiever because another local beverages manufacturer’s annual profits soared above 600%. We can go on and on with examples of the latest profitable corporations. Before anybody gets me wrong, I am not against corporations making profits and later on publishing them. Rather, I am only concerned that only one part of Rwandan corporations (the shareholders) has consistently received the attention of both its directors as well as the journalists that keep reporting interests of only one part of the corporation. So, these corporations have made profits even in the harshest of business environments but at what cost? The missing part of the story therefore, is where are the interests of the corporations’ stakeholders like employees, creditors, customers, supplier and the local communities in which these corporations operate? I know of so many employees who put their lives on the line by working even at the time when we had minimal knowledge and protection against covid-19. I know of some other employees that work in high risk areas despite earning very little salaries. The question therefore, is, should these employers be publishing profits year after year without telling the same public what they have done for their employees (stakeholders)? I do not intend to raise the academic debate of ‘The Corporate Purpose’ but when public limited companies utilize the media to publish profits year in year out without any single report on how beneficial the corporations have been to their own employees or other stakeholders leaves the public wondering in whose interests do these Rwandan corporations work? At the moment, it is hard to see any other social responsibility of Rwandan corporations other than increasing their profits much to the benefit of their shareholders even though this is very contrary to Stakeholder Theory. Stakeholder Theory proponents believe in capitalism that stresses the interconnected relationships between a business and its customers, suppliers, employees, investors, communities and others who have a stake in the organization. The theory further argues that a firm should create value for all stakeholders, not just shareholders. Whether these corporations produce goods or provide services, at the end of the day the Rwandans are their consumers, employees, creditors, etc. This is far from a feeling of entitlement but rather a claim for minimal reward for stakeholder efforts. The public acknowledges your capital investment and appreciates the salaries and taxes regularly paid out but stakeholders cannot ignore the three months old babies left at home by their mothers just to ensure work is properly executed. Neither can the stakeholders ignore the rivers being polluted by the shareholders’ factories, lives lost due to artificial sugar related diseases all in bid to maximize profits. All these issues cannot be ignored any more. Before publishing high and sweet profits, the directors and media owners should first ask themselves the big question, apart from maximizing profit for the shareholders, what else have the corporations done for their employees or customers. In this respect, the public shall be more than happy to see and hear how many houses have been built for their struggling pensioners, how many children of the low income earners have been awarded scholarships, which bridge or source of water has been rehabilitated? Just to mention but a few. In an ideal world, stakeholders would prefer casting a vote on which percentage of the corporations’ earnings should be directed to socially responsible activities or when and where these activities should be placed. For now, any corporate publication beyond shareholder profits is welcome. Until then, the public shall continue to see the sole purpose of these corporations as maximizing profits at the expense of their stakeholders, an approach that is not sustainable in the 21st century. The writer is an in-house legal counsel at Rwanda Broadcasting Agency (RBA)
