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Why Ugandan companies must stay ahead of the curve

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Added 23rd July 2019 03:37 PM

Uganda is also facing growing investor pressure and regulations (in California and countries like the UK, The Netherlands, France and Australia) that seek compliance.

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Uganda is also facing growing investor pressure and regulations (in California and countries like the UK, The Netherlands, France and Australia) that seek compliance.

By Anisha Rajapakse

The current landscape for Business and Human Rights
The business case for human rights has never been clearer. The link between business and human rights (B&HR) has gained global momentum, and in 2019, we are operating in times, unlike anything we have ever seen before.

Consumer demand for transparency is at an all-time high. As globalisation has accelerated around the world, it has become increasingly clear that companies - whether local or multinational, publicly or privately operated - have major impacts on human rights, both positive and negative. It has become less of a choice and more of a necessity.

The question is no longer whether to improve human rights across the value chain, but how to maximize the business advantage of doing so. It will be the business leaders who can crack that question who will build the strongest, most resilient organizations ready to survive an increasingly transparent world. 

In short, it is about minimizing risk and leveraging opportunities. Companies that fail to respect human rights face financial risks – investors divesting. In this era of hyper-transparency, companies face reputational risks. 

Social media has given people a channel to make their voices heard more loudly and clearly than ever before. ‘Naming and shaming’ companies that violate rights related to social and environmental sustainability and the resulting negative attention can damage critical relationships with investors, workforces and local communities.

Ever-increasing scrutiny from the media, civil society, campaigners can be detrimental, particularly for consumer-facing companies that are arguably most exposed to brand damage and loss of market share.

A business imperative for Uganda
Uganda needs to stay ahead of the curve and have a greater competitive edge. The country’s FDI potential and efforts to attract new investments for the country will be further reinforced if businesses in-country are positioned as being aligned to an internationally accepted business and human rights framework such as the UN Guiding Principles on Business and Human Rights. 

Uganda is also facing growing investor pressure and regulations (in California and countries like the UK, The Netherlands, France and Australia) that seek compliance, and are clear in their intent that their suppliers must adhere to their ethical standards as a condition of working with them and maintain that any abuse of these standards will not be tolerated. 

Today, investors prefer sustainable investments rather than a lucrative business which gets shut down by human rights violations or corruption. Therefore, the government also has a prudent responsibility to create a level-playing field where unethical companies cannot undercut ethical ones for merely short-term gains.

An increasing number of business agreements, free trade agreements, and other international partnerships signed to-date include clauses of international human rights conventions, making them law.

Examples of abuses include extractive and manufacturing companies abusing individual and community rights through pollution, forced displacement, or environmental degradation; sexual violence and harassment of women workers in the floriculture sector including employers disregarding critical safety measures for their workers in chemical-intensive settings with many working without protective gear.

Furthermore, the discovery of oil and gas in Uganda, as well as large scale investment in the energy sector, have placed Uganda on the radar on business and human rights in the face of weak regulatory frameworks and mechanisms.

An independent report published in 2016, cited that Uganda has 2 million child labourers. According to the National Labour Force and Child Activities Survey, 2011/12 – 93% of them worked in agriculture, forestry and fishing. Furthermore, in 2011, Uganda had the highest rate of construction accidents in the world.

Earlier this year the Transparency International 2018 Corruption Perceptions Index ranked Uganda 15) out of 180 countries) in 2018 compared to 151 in 2017. In East Africa, Rwanda is the best ranked and globally ranked 48, Tanzania came second at number 103 globally, Kenya third and ranked 143 globally. Uganda fourth at 151.

It is important to note that corruption also fuels state complicity incorporate human rights abuses, especially where huge public investment is involved, such as in oil and gas.

Gaps in corporate accountability and the failure to undertake human rights due diligence to identify and address any potential negative impacts, not only risks violating international human rights standards but will undermine both a business’s workers and the communities surrounding its operations.

It ultimately undermines the sustainability of a company’s business model. Successful companies operate in a manner that is sustainable and respectful of the rights of workers and communities.

Gaps in Uganda’s human rights protection framework as it relates to business
Article 20(2) of the Constitution explicitly recognizes that private actors have human rights responsibilities. Nevertheless, laws to regulate the human rights impact of corporate activities have weaknesses in their design, implementation, and enforcement.

The Employment Act and the Workers Compensation Act offer remedies for abuses and injuries arising in the course of formal employment; the Acts do not cover those in the informal sector, who make up the vast majority of the labour force—81.5% in 2012/13 (GoU, 2015).

The minimum wage has not been adjusted since 1984 and stands at UGX 6,000 (USD 2) per month; by contrast, the national poverty line is equivalent to USD 30 per month (Ministry of Finance, Planning and Economic Development (MFPED), 2014).

Risks of inaction outweigh the risks of action
Ugandan companies need to take the next step in their transition towards more sustainable business practices to gain a more competitive edge in their national, regional and international business operations.

In 2016 the Government established a National Coordination Framework for the implementation of the Sustainable Development Goals (SDGs) and set up accountability and reporting mechanisms for the achievement of the SDGs.

The corporate sector is a critical stakeholder to ensure that business obligations and contributions are harnessed while the risks and potential negative business impacts are mitigated.

With the private sector playing an increasingly prominent role in the country’s development, it is crucial that Uganda adopt the laws, policies and action plans needed to effectively operationalize the UN Guiding Principles (UNGPs) on Business and Human Rights.

To date, increasing private sector involvement in the country’s development has not been accompanied by adequate efforts to protect, respect and remedy human rights in line with the Guiding Principles on Business and Human Rights.

Apart from statements of commitment, businesses need to translate that into developing a long-term sustainable process that leads to greater transparency and accountability of corporate actions through ongoing due diligence processes. Human rights cannot be cordoned off in the corporate social responsibility/investment (CSR/CSI) department.

All company functions, from human resources to procurement to legal compliance, interact with human rights every day, whether they realize it or not. Companies across the world implement policies and processes to adopt a systematic, ‘do-no-harm’ approach that integrates responsibilities into their daily operations.

In practice, companies are expected to ‘know and show’ how they minimize harm to people in their value chains.  Today it is not on why companies should work with human rights and business, but on how companies can work in practice to ‘know and show’ that they are respecting human rights.

Successfully facing the corporate human rights challenge will be crucial to business success nationally and internationally in the years ahead.

Critical! - Leadership and buy-in from the top
Companies that make the greatest headway and are tremendously successful tend to have senior leadership actively involved in human rights issues. There needs to be internal understanding of the UNGPs and what potential human rights risks exist throughout all aspects of the business followed by buy-in from the top management to act to ensure that the company’s human rights responsibilities are fully met.

If there is a lack of management commitment, it will certainly result in other teams and departments in the company being unaware of their responsibilities on what it means to uphold human rights.

The writer is an international development expert who has two decades of global expertise working closely with corporates, governments, intergovernmental and bilateral agencies, UN, Civil Society, and other stakeholders

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