Problems Associated with Community Share Ownership Trust in Rural Development

On Corporate Social Responsibility


Bachelor Thesis, 2013
97 Pages, Grade: 2.1

Excerpt

Contents

Dedication

Acknowledgement

Abstract

Abbreviations and acronyms

CHAPTER ONE
1.0 INTRODUCTION
1.1 Background
1.2 Problem Statement
1.3 Purpose of the study
1.4 Research Questions
1.5 Objectives of the study
1.6 Significance of the Study
1.7 Delimitation of the study
1.8 Assumptions of the study
1.9 Limitations of the Study
1.10 Definition of terms
1.11 Summary

CHAPTER TWO
2.0 LITERATURE REVIEW
2.1. Introduction
2.2 Overview
2.3 Participatory theoretical framework (Bottom-up approach)
2.4 Common Good Capitals
2.5. Regulations and structures
2.6 The extent of community participation
2.7 Strength and limitations of CSOT
2.8 Expectations of communities on CSOT
2.9 Summary

CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
3.2 Research Design
3.3 Population
3.4 Sample and Sampling Procedures
3.5 Research Instruments
3.5.1 The questionnaire
3.5.2 Interviews
3.6 Pilot Study
3.7 Data Collection Procedures
3.8 Data Presentation and Analysis
3.9 Summary

CHAPTER FOUR
4.0 DATA PRESENTATION AND ANALYSIS OF DATA
4.1 Introduction
Table 1: Response table [N = 35]
SECTION. A
4.2 Characteristics Of Respondents
Table 2: Distribution of sample by gender [N = 35]
Table 3: Number of years respondents lived in Mazvihwa
Figure 1: Academic and professional qualifications [N = 32]
SECTION. B
4.3 Regulations and structures governing CSOT
Table 4a Regulations and structures of CSOT in Mazvihwa [N = 32]
Table 4b Regulations and structures of CSOT in Mazvihwa [N = 32]
4.4 Extent of participation
Table 5: Extent of Community Participation
4.5 Strengths and limitations
Table 6: The Strengths and Limitations Of CSOT
4.6 Community Expectations on CSOT
Table 7: Community Expectations on CSOT
4.7 Review of CSOT documents (Secondary Data)
4.8 Summary

CHAPTER FIVE
5.0 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
5.2 Summary
5.2.1. Objectives of the study
5.2.2 Review of literature
5.2.3 Research Design and Methodology
5.3 Findings and Conclusions
5.4 Recommendations

References

Appendixes

Appendix A: Questionnaire Introductory Letter

Appendix B: Questionnaire

Dedication

I dedicate this project to my wife and kids who want to see me a successful person in life.

Acknowledgement

First and foremost I would like to thank the good Lord for the gift of life and health throughout this long walk. My sincere gratitude to my wife and kids who endured my absence. They spared me time and resources to undertake this course. Special thanks go to the Lupane State University staff for their harmonious assistance and support throughout my course. I would also like to observe passionate and professional assistance by my supervisor Mr S B Mutale. It would be unjust not to thank my colleagues particularly Brighton Gwamure, Mandlenkosi Nyathi, Shingirai Magama, Tofara Hwara and others for their company and assistance throughout this course. That was a great team to reckon.

Abstract

Community Share Ownership Trusts are increasingly becoming popular and popular as a means of community economic empowerment. However, there is very limited documented stock of knowledge on the frequency of their use, their validity in ensuring economic empowerment, structures and regulations governing their operation, or the factors that enable and constrain their effectiveness.

The government of Zimbabwe recently introduced the Community Share Ownership Trust legitimized by the indigenization and Economic Empowerment Act of March 2010, statutory instrument number 21. The indigenization Act is a national policy which stipulates that the native citizens of Zimbabwe should be the majority shareholders of almost every business entity operating in Zimbabwe. The policy precisely states that 51% of the shares should belong to Zimbabweans with the community owning 10% of the 51%.

Community Share Ownership Trust (CSOT) as an imaging rural development approach is proving to be effective. The approach has been implemented in countries like South Africa, India and others. It is a hybrid of Corporate Social Responsibility (CSR) which was coined in Europe in 1890s. Corporate social responsibility lacked legal force to enforce the corporate world to compensate the communities of the damage left during their operations. This led to the emergence of CSOT in developing countries.

While there are benefits attributed to the implementation of CSOT there are challenges that are also associated with it. The implementation of CSOT as a rural development approach is marred with a number of challenges which are both administrative and operational. It is constrained by funding, lack of managerial skills, limited community participation, poor communication, and lack of community sense of ownership among others. The strength of CSOT lies in the active participation of communities in development initiatives. CSOT promotes dialogue and community interaction, this is good for development as it brings social bond. It also promotes sustainable use of natural resources, management and protection. It encourages efficient and equitable distribution which is important for communities to participate in the economic mainstream. CSOT promotes economic empowerment, capacity building and community participation. This enables communities to participate in the economic mainstream and it gives them the capacity to address their real development needs.

Abbreviations and acronyms

Abbildung in dieser Leseprobe nicht enthalten

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background

Community Share Ownership Trusts (CSOT) is an emerging concept in Zimbabwe meant to economically empower rural communities. In development, economic empowerment is a means and an end in itself.

Unequal distribution of economic resources amongst the black majority and white minority was a legacy of the colonial regime. The legacy entrenched poverty in rural communities and wealth was concentrated in the urban areas. Allied to this is the urban biased development to the detriment of the rural communities exhibited by under-development of rural communities and exploitation. According to Golfillan (2009) the socio-economic disparities existing between the rural and urban communities can only be bridged by active participation of rural communities in development initiatives. Community Share Ownership Trust is a strategy used by the Zimbabwean government to empower rural communities to propel their development. Community Share Ownership Trust is based on the concept of Corporate Social Responsibility whereby corporate are obliged to plough back to the communities. Under the guise of corporate social responsibility the firms or companies would occasionally offer donations to communities to meet their needs. However, these donations many times were falling far below the needs of the communities or were far-short the damage caused by the firms (Golfillan, 2009). In addition to that there is no legal framework in Zimbabwe that binds firms to comply with their social responsibility. This saw most of the firms flouting their social responsibility policy. This necessitated the formation of community share ownership trusts or schemes. This innovation has a legal binding on the compliance by firms.

According to Tshikululu Social Investments (2010) the Corporate sponsored community trusts has its genesis in the nineteenth century in the United States and United Kingdom. This gave birth to the civic societies and trusts. The corporate sponsored community trusts evolved into several names among others including Community Trust Lands, Equity Trusts, Social Responsibility, Ownership Schemes, Social Contract only to mention a few. This was supported by Kelly and Ratner (2011) who remarks that community trusts exist in many forms such as cooperatives, employee ownership, community land trusts, municipal ownership, and conservation easements. Therefore, different names are used in different parts of the world. Particularly in Zimbabwe the popular name used is the Community Share Ownership Trusts or Schemes.

In the contemporary world the corporate sponsored Community Trust has proved valuable as a mechanism for channeling economic resources for development, administering development programs and empowering the victims of underdevelopment (Tshikululu Social Investments, 2010). This is based on the conviction that firms and companies should capacitate communities. Community capacitating should not only be through creation of employment or payment of taxes. Tshikululu Social Investments (2010) states that community capacity building should include direct funding of community development initiatives like construction of schools, hospitals and other critical infrastructure. It also involves the funding or supporting the growth of local economies and small business enterprises.

According to Gilfillan (2009) the business community is expected to take a leading role in the protection and promotion of the interests and rights of marginalized people. Tshikululu Social Investments (2010) supported this notion mentioning that social responsibility is good corporate governance and best practices complemented by the development theory that says communities should take ownership of their own development. The thrust of community development is based on the idea that development leads to peace and economic stability. Development is the responsibility of all sectors of the economy and Community Share Ownership Trust is seen as one of the avenues of pooling resources towards community development.

In fact, Community Share Ownership Trusts are increasingly becoming popular and popular as a means of community economic empowerment. However, there is very limited documented stock of knowledge on the frequency of their use, their validity in ensuring economic empowerment, structures and regulations governing their operation, or the factors that enable and constrain their effectiveness. Achieving developmental objectives mentioned in the Indigenization Act which legitimize the formation of Community Share Ownership Trust is dependent on the compliance by foreign owned companies and firms, although some of the firms have complied it seems that compliance is problematic. There is need for concerted effort by the state and general acceptance of the policy by the general populace. Considering the controversies surrounding the Community Share Ownership Trust and its implementation as well as its acclaimed benefits, there is a need for documented evidence base to validate or contest assumptions about the utility of trust in achieving community economic empowerment.

The government of Zimbabwe recently introduced the Community Share Ownership Trust legitimized by the indigenization and Economic Empowerment Act of March 2010, statutory instrument number 21. The indigenization Act is a national policy which stipulates that the native citizens of Zimbabwe should be the majority shareholders of almost every business entity operating in Zimbabwe. The policy precisely states that 51% of the shares should belong to Zimbabweans.

In addition to that, the policy also obliges the companies to take a leading role in the socio-economic development of the communities in which they are operating. This saw the emergence of the community share ownership trust schemes dotted around the country. According to Olson (2006) community Share schemes are tailored to compensate the communities of all the negative effects emanating from the operations of the private sector, particularly companies. It can also be seen as the social responsibility or obligation of the company to plough back to the community.

The facility is also an expression of good will by companies to capacitate communities to embark on their own socio-economic development initiatives. As such, companies cede 10% of the shares and depose the value of those 10% shares to the community trust.

The government came up with the concept of Community Share Ownership Trust as a tool to ensure that the people of Zimbabwe benefit from their resources and ensure sustainable development as well as the creation of secondary economies. However, some people are skeptical that the facility may be grabbed by the elite. Therefore people are suspicious that the facility may only work in areas where there are influential people. There is need for development to reach all areas in needy rather than being concentrated in areas where there are powerful political figures.

1.2 Problem Statement

While the Community Share Ownership Trust as a national program is a noble exercise meant to see more communities benefiting from the proceeds of resources in their areas, it is, however, pertinent to underscore that most people do not have enough knowledge of the intended purpose of these trusts. Huge sums of money have been deposited into the custody of the local authorities from various companies operating within their locality (Sunday Mail, 30 September 2012).

Ironically, even the custodians of these sums of monies are not really aware of what they should do with it. This has been witnessed by numerous reports that chiefs and local authorities are awarding themselves thousands of dollars from such funds as seating allowances. There are reports of abuse of funds at the expense of the community residence in dire need of food, health and education. Companies have since disbursed funds to the community coffers since 2010 but there is no visible development attributed to these funds in many communities where such initiatives have been undertaken.

1.3 Purpose of the study

The purpose of this study is to identify limitations and strengths of Community Share Ownership Trust, examine regulations and structures put in place for Community Share Ownership Trust and establish the level of community participation in development work. This will help to realize the expectations of the communities on the scheme.

1.4 Research Questions

a) What regulations and structures that are put in place to govern the operations of the Community Share Ownership Trust of Zvishavane?
b) What is the extent of community participation on Community Share Ownership Trust projects?
c) What are the strengths and limitations of Zvishavane Community Share Ownership Trust?
d) What are the expectations of the communities on the Community Share Ownership Scheme?

1.5 Objectives of the study

a) To examine the regulations and structures governing the operations of the Community Share Ownership Trust of Zvishavane.
b) To establish the extent of community participation on Community Share Ownership Trust projects.
c) To identify the strengths and limitations of the Zvishavane Community Share Ownership Trust.
d) To establish the expectations of the communities on the Community Share Ownership Scheme.

1.6 Significance of the Study

This study will assist in improving understanding regarding community share ownership trusts and the implications of community participation in development work. The study will also add to literature the value of community participation and the benefits of community share ownership trusts since at the moment little has been researched on the topic. Therefore it will assist future research on a similar or related topic by providing the baseline. The research results will be useful for both the local communities and the corporate world for development planning and implementation.

The research will also help policy makers to have baseline information about Community Share Ownership Trust in order to make informed decisions in addressing the development problems in the communities. It is useful for assessing both economic and social problems facing the two parties in the interest of preserving the natural resources of the communities and the country at large.

1.7 Delimitation of the study

The study was carried out in the community of Chief Mazvihwa, in Zvishavane district, Midlands province. Mazvihwa area lies between Runde and Ngezi rivers. On the northern side there is Chivi area of Masvingo and on the southern side there is Mberengwa area of Midlands. In fact, Mazvihwa area stretches from where Runde and Ngezi meet right to Mandava Township in Zvishavane town. The study targeted local authorities, community leadership and representatives.

The study focused on identifying limitations and strengths of the CSOT in Zvishavane. It also aims to identify the regulations and structures governing the operations of the Community Share Ownership Trust of Zvishavane. It will establish the level of community participation on socio-economic projects undertaken by trust. The study would wound up by establishing the expectations of the communities from the scheme.

1.8 Assumptions of the study

1.8.1 Community share ownership trusts/schemes would be effective if communities actively participate in all stages of development project.

1.8.2 Socio-economic development would be possible when communities are able to control socio-economic resources through Community Share Ownership Trust.

1.8.3 Legal instruments that encourage economic empowerment and safeguarding community interests is future backbone of Community Share Ownership Trust.

1.8.4 The researcher assumes that the respondents will answer the questions honestly and truthfully since the projects has no political connotations.

1.9 Limitations of the Study

Zimbabwe is fast approaching election time and very soon access to rural communities will be very difficult. In addition to that, in any rural research access to the communities is generally treated with suspicion. The researcher would use his good rapport with the chief and first seek permission from the chief and the local authorities. The researcher was born and bred in the Mazvihwa community so took advantage of that to conduct the study even in the face of election time. That exonerated the researcher from being treated with suspicion.

Respondents may be hesitant to participate in the study especially considering issues of confidentiality and privacy. The researcher therefore religiously maintain confidentiality and never use names or identification details on any of the questionnaires or interview guide. No respondent were forced to participate but however the researcher tactfully approached the respondents so as to appeal for their compliance. All human rights were observed.

The research involves probing on the issues of community participation in decision making and transparency, and mostly authorities and traditional leaders are uncomfortable with such issues. The researcher assured the authorities and traditional leaders that the study was not an awareness campaign but a research which could possibly enrich their operations in the future.

The other limitation which may be faced in this study is that the Community Share Ownership Trust are operating but they are not yet documented. This may force the researcher to depend on literature from other parts of the world instead of local literature. Fortunately neighboring countries like South Africa have well documented running Community Share Ownership Trust like the Bafokeng Trust and others. The study is based on community participation, transparence and accountability theoretical frameworks. Community participation is vital for sustainable development and it eliminates white elephants (Chambers et al, 1992). The strategy also abides or conforms with the theoretical framework of decentralization and devolution by letting communities manage their own resources in a manner beneficial to them (Yuliani, 2004). This gives communities autonomy to decide on their development strategy.

1.10 Definition of terms

For the purpose of this study, the following concepts are defined as follows:

Community Share Ownership Trust

It is a fund created for community development by a company operating within a particular community and the fund will be controlled by the local community. Lindeman in Tshukululu Social Investments (2010) defined it as:

“merely a device which makes it possible for a group of citizens in any community to create trust funds for educational, benevolent, and charitable purposes; the principal investment is placed under the administration of a selected financial institution and the expenditures are controlled by a local committee”.

Corporate Social Responsibility/Contract

It is good and responsible business practices that integrate social interests of the society into its core values. Hohnen (2007) and Crowther et al (2008) defined it as the way the business or industry integrate social, environmental and economic concerns into their values, culture, decision making, policy and operations in a transparent and accountable manner and thereby establish better practices within the business, create wealth and improve society.

Non-indigenous business

According to the Indigenization Act non-indigenous business refers to the foreign owned business entity. A business in respect of which fifty-one per centum of the shares or a controlling interest is not held by indigenous Zimbabweans.

Community

According to IFAD (2009) community refers to the locus where all members of a group of people, having some form of collective claim over a territory and recognizing some form of collective governance, can be given the opportunity to influence decisions in matters of public choice that affect their livelihood. That is, the locus where participatory democracy is a concrete possibility.

Empowerment

The World Bank (2002) defined empowerment as the expansion of freedom of choice and action, of assets and capabilities to participate in, negotiate with, influence, control and hold accountable institutions that affect their daily lives.

Devolution

Yuliani (2004) defines devolution as the transfer of natural resource management to local individuals and institutions located within and outside of government. Yuliani (2004) argues that the transfer of rights and assets from the central government to local governments or communities is a process that occurs within the context of national legislatures that set the limits within which any decentralization or devolution takes place. It is a gesture to capacitate communities to take full responsibility of their own development needs and natural resource management.

1.11 Summary

The first chapter discussed the background information on community share ownership trusts/scheme, the statement of the problem, research questions, and research objectives, assumptions of the study and significance of the study. Limitation, delimitation and definition of key terms were also highlighted. The next chapter will be review of relevant literature.

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1. Introduction

The chapter identifies and discuses relevant literature on the problem understudy, hence the main focus shall be to highlight what other writers and researchers have said about Community Share Ownership Trusts. The chapter was organized along the following subheadings:- the strength and limitations of Community Share Ownership Trust; structures and regulations of Community Share Ownership Trust; the level of participation on socio-economic projects undertaken by Community Share Ownership Trust and; expectations of the communities on the Community Share Ownership Trust.

This literature review considers the history, evolving roles and broader impacts of Community Share Ownership Trusts and similar entities in rural communities, while problematising the institutional role that Trusts have assumed or are expected to assume in rural development. It also nominates the theories of economic empowerment and rural participatory approaches as useful frameworks for investigating the utility of Trusts in the context of economic empowerment and social responsibility.

2.2 Overview

During the 1950s and 1960s, community development was introduced as an approach to rural development. It was made popular by the United Nations during the same period as many countries in the less developed world gained independence and were decolonized (Catley, 1999). The rationale behind community development was to educate and ‘remove the stigma of charity and involve local people in decision-making’ (Catley, 1999, 6). However, this approach was found to have flaws and in the late 1960s it was discovered that rural development was hindered by top–down approaches to development and hence the adoption of an approach that calls for more active involvement of locals in development issues. According to Catley (1999) aid agencies such as the United States Agency for International Development, World Bank and the United Nations started promoting community participation as early as the late 1960s and early 1970s. This approach was promoted to involve locals in decision-making, program implementation, sharing the benefits of development and evaluating the programs (Catley, 1999). Since the 1980s, Zimbabwe has been working on profit sharing schemes like the communal areas management program for indigenous resources (CAMPFIRE). However, in 2009 the government of Zimbabwe realized that the majority indigenous Zimbabweans were not benefiting from the national ‘cake’. The government of Zimbabwe then came up with the indigenization and economic empowerment act chapter 14:23 to regularize the implementation of local communities participation and empowerment through Community Share Ownership Trust. In terms of the Indigenization and Economic Empowerment Act Chapter 14:23, the foreign owned companies must cede 51% of their shareholding to the government. From that 51% shareholding ceded to the government, 28% shall be allocated to the employee share ownership, 10% to the Community Share Ownership Trust and 12% to the sovereign ownership trust.

2.3 Participatory theoretical framework (Bottom-up approach)

Local communities should define their common good. The common good should be defined in ways that enhances communities’ own sphere of influence. The local communities should join together around common interests or values through their organized activity they influence. The community participatory essence (bottom –up) approach (Muromo, 2004) is the degree to which communities emerge independent of political parties and specific industries increases their independence and ability to represent the interests of many people in negotiation of the public good or collective decision making process.

However the top-down approach has been attacked and opposed by radical thinkers. This hassled to a lot of criticism of ‘centralized’ development initiatives, favoring participatory rural approaches (PRA) to development. Participatory rural approaches are assumed not to create resistance, conflicts and program being seen as for externals, hence are bound to succeed. Participatory rural approach values the contribution of the populace and sees them as active social actors who strategize rationally about their future (Scoones and Thompson, 1994). Literature on ‘participation’ demonstrates that many different interpretations are attached to the concept (Hall, 1988 and Makumbe, 1996). Generally it has been taken to mean development by people rather than by elites, which is commonly known as bottom-up approach. This can be equated to democracy, which is rule by the people. Montgomery and Esman (1971) define participation as exerting influence on administrative behavior and on the outputs of official action. Uwakah (1981), define participation as a process of cooperative action, in which a group of individuals willingly share in the responsibilities and consequences of a common undertaking or the achievement of a particular task.

Participatory rural approach has recently been found wanting and criticized for being superficial, extractive, transitory, and unable to initiate change and build local capacity (Cook and Kothari, 2001). Critics have advocated for a new approach known as Community Visioning (CV). According to Sanginga and Chitsike (2005) CV is highly interactive as it engages communities in dialogue to identify their opportunities and facilitate community action planning. Thus, it facilitates development with what the community has at their disposal. This approach forms a new window towards rural development and research. PRA and CV have a lot of similarities but also differ significantly in their starting points and thrust.

Whichever participatory approach one uses, the question is who participates and to what extent is important for program implementation. There are three ways of viewing popular participation in development; mass contribution to the development effort, mass sharing of benefits and mass decision-making in development. Popular participation is considered severely limited when the masses are merely being asked to choose between alternatives initially selected for them (Makumbe, 1996). The assumption in consensus between government and the populace is dominant in Africa and communities are only expected to collaborate. Involvement of people is sought after major development parameters have been set by external institutions and the roles of all actors already prescribed (Hall, 1988). In the Zimbabwean case, community leaders like District Administrator, VIDCOs, councilors and chiefs have the final say and decide on the implementation and sharing of profits (Castillo, 1983). Makumbe (1996) argues that if representatives of the masses are used they have to be “truly people”, meaning that they have to be elected by people to represent their interests, values, aspirations, norms and goals, without any influence from the top. Appointed leaders owe their position to the one who appointed them and not to the people, thus do not represent interests of the masses.

When implementing development programs agents seek people’s participation in already-made plans, projects and programs. Due to this they often meet with stiff resistance as people feel left out of the initial processes which would have enabled them to acquire some proprietary values of the programs or projects (Makumbe, 1996). Programmes and projects fail to attain the expected goals, or they collapse as soon as they are handed over to the people for maintenance (Powell, 1988 and Makumbe, 1996). Authentic participation according to Hall (1988) involves a broad spectrum of the community in all phases of development activities from project selection, design, execution and evaluation. According to Hall ‘participation’ has been frequently used to manipulate the scheme members of development initiatives rather than allow them greater control over directed socio-economic changes affecting their lives.

Despite the vast literature on participation and constant mentioning of the concept, development initiatives whether undertaken by government or aid organizations remains overwhelmingly a top-down process characterized by the blueprint approach (Hall, 1988, Makumbe, 1996). The local leadership has only been used to rubber stamp policies and projects by external institutions. There is still a gap in literature on how Community Share Ownership Trust can be implemented in a participatory way. This dissertation goes a step further and questions the assumption that participatory approach in Community Share Ownership Trust is the answer to rural development problems.

2.4 Common Good Capitals

Participatory rural development is enhanced by the analysis of the relations of the major community institutions. As Community Share Ownership Trust seeks to bring about rural development among those communities which were previously marginalized it must involve all institutional sectors for it to be successful. Therefore, the random programs investing in single capitals with rural areas may not be cumulative and fail to bring about even the immediate desired results. The deferential spheres of influence and deferential structures of those sectors determine what is considered legitimate concerns for participatory local input, what is considered technical considerations and what is defined as public good. For rural areas which are often disadvantaged by distance and dispersion in terms of market, state and civil institutions, the focus on a single locus of development leads to further exclusion (Flora, 2001). One of the roles of Community Share Ownership Trust in rural development for checking and balancing government sectors, as well as inter-sectorial alignment. Therefore it is important for Community Share Ownership Trust to invest in the participation and empowerment of communities in the natural capital, cultural capital, social capital, political capital and financial capital management. All these sectors or assets are essential for community development.

Community Share Ownership Trust should assist in the exploration of natural capital. Natural capital determines the limits as well as the opportunities for human action. As different groups of people based on ethnicity, gender and social class have different access and control over natural resources, Community Share Ownership Trust can make access to natural resources more inclusive (Muromo, 2004). Through Community Share Ownership Trust intervention, communities hope to develop a healthy ecosystem with multiple community benefits where people act in concert with natural ecosystem rather than simply dominating the ecosystem for short term gains. Narayan (2005) admits that Community Share Ownership Trust intervention in rural development can help assure communities of potential multiple and inclusive community benefits. Hence Community Share Ownership Trust as natural convener can help those with conflicting uses of natural capital find common ground.

Participatory rural development brought in by Community Share Ownership Trust can assist communities to invest in cultural capital. Cultural capital dilutes the essence of what voices are heard and listened to (Narayan, 2005). Monitoring of conditions of community capitals allows the majority groups to participate in decision making on issues that affect their lives. If Community Share Ownership Trust is successful in investing in cultural capital, cultural differences are recognized and valued and help maintain local customs. By investing in cultural capital Community Share Ownership Trust maintain cultural diversity, bio-diversity and different ways of approaching change can be utilized to enhance all capitals.

Other studies on participation in Community Share Ownership Trust tend too suggest that Community Share Ownership Trust can help communities to develop a social capital (Jackson, 2000). Community Share Ownership Trust can bring natural trust, reciprocity, collective identity, a sense of shared future and working together. It brings communities together and creates ties that build community cohesion. Bridging social capital involves loose ties that bridge organizations and communities (Narayan, 2004). A specific configuration of social capital is entrepreneurial social capital (ESC) which is related to community economic development. It includes inclusive internal and external networks, local mobilization of resources and willingness to consider alternative ways of reaching goals (Narayan, 2005).

Community Share Ownership Trust can assist the community to influence their access to power, organizations, connection to resources and power brokers (political capital). This is the ability of a group to influence standards, regulations and enforcement of those regulations that determine the distribution of resources and ways they are used. When a community has high political capital, its people have the collective ability to find their own voice and to engage in actions that contribute to the wellbeing of their community (Narayan, 2004). Indicators of increased political capital to which Community Share Ownership Trust can contribute to through participatory rural development include organized groups working together for rural development, local people knowing and feeling comfortable around powerful people, and local concerns becoming the agenda in the regulation and distribution of resources related to sustainable development.

Community Share Ownership Trust can assist communities to realize the financial resources available for community capacity building, for business development, to support civic and social entrepreneurship and to accumulate wealth that can be used in future community development. Community Share Ownership Trust can use a number of measures that were used in other successful financial capital investment to create an appropriately diverse and healthy economy. These include poverty alleviation, efficiency, economic diversity and community infrastructure development. Community Share Ownership Trust should develop and identify these indicators as development indicators with the community, as often externally imposed indicators may hide the extraction of wealth that has over the centuries impoverished many rural people (TSI, 2010).

According to TSI (2010) Community Share Ownership Trust represent a problematic shift of social welfare and development responsibility from the state to private and civil institutions. This shift is precipitated by a contested ideology, which maintains that sustainable development is best achieved through trade activities in a free market. In the theory of sustainable livelihoods approach and community participation the literature offers a theoretical framework for not only the analysis of the utility of Community Share Ownership Trust to social transformation and development through economic empowerment, but also to developing workable models for the successful operation of these Trusts.

2.5. Regulations and structures

In 2009 Zimbabwe realized that it faces developmental challenges based on an economy which was dualistic with high unemployment and economic structure which was enclaved and concentrated around a few. The developmental challenges which reduce poverty, create employment, reduce inequalities across communities through participation and empowerment of the local communities became a prime driver of focus for the Zimbabwean government (Mpofu, 2010). These developmental objectives have been addressed at varying levels to a large extent by the government but it lacked a legal instrument that would regulate and consolidate its existence. Therefore the government of Zimbabwe came up with Indigenization and Economic Empowerment Act Chapter 14:23 to regularize its implementation. This is the legal framework that oversees the operation of Community Share Ownership Trust.

According to Mpofu (2010), in terms of the Indigenization and Economic Empowerment Act Chapter 14:23, the foreign owned companies must cede 51% of their shareholding to the government. From that 51% shareholding ceded to the government, 28% shall be allocated to the Employee Share Ownership, 10% to the Community Share Ownership Trust and 12% to the Sovereign Ownership Trust.

Karasek (2009) observed that the Community Share Ownership Trust regulatory instrument underscores Zimbabwe’s commitment to redressing injustices and economic imbalances of the past. Mpofu (2010) concurs with Karasek (2009) that Community Share Ownership Trust is a vehicle for participation in shareholding in various businesses by the communities. Research studies on Community Share Ownership Trust in South Africa suggest that the legal instrument that regularizes Community Share Ownership Trust in Zimbabwe is similar to the legal instrument that regularizes BEE in South Africa (Dingane, 2007). The BEE policy in South Africa creates a legal framework that promotes economic participation and empowerment of the black majority of the population who were previously and systematically disenfranchised and refused the right to participate in the economy due to unfavorable system of the past. However, Block (2010) urged that the Indigenization and Economic Empowerment Act chapter 14:23 in Zimbabwe and the broad based black economic empowerment policy in South Africa are counterproductive and ill-advised pieces of legislation that may damage the economy.

According to Mpofu (2010) the Indigenization and Economic Empowerment regulation stipulates that the proceeds from Community Share Ownership Trust are properly accounted for and are used in projects that benefit the communities. The accounts for the trusts are audited on an annual basis. The Indigenization and Economic Empowerment Act chapter 14:23 encourages participation of the indigenous people (communities) into the economy of the country. Karasek (2009) observed that the Indigenization and Economic Empowerment Act chapter 14:23 in Zimbabwe encourages that participation of the indigenous people into the economy of the country. Karasek (2009) further noted that the Indigenization and Economic Empowerment Act in Zimbabwe has the same objective with the BEE policy in South Africa which equally encourages the increase in the number of black people that manage, own and control enterprises and productive assets in South Africa. However, Tshikululu Social Investments (TSI, 2010) warned that Community Share Ownership Trust can potentially instigate racialism in South Africa especially in the context of broad based black economic empowerment and the white minority may be the victims of the policy.

Critics of Community Share Ownership Trust legislation in South Africa and Zimbabwe urged that the Community Share Ownership Trust legislation shall benefit a few elite blacks (Mazivisa et al, 2009). However, Karasek (2009) emphasized the need for a comprehensive restructuring of institutions and society to effectively alter power relations in the economic sphere than shifting blame to the elite blacks. For example, the Chiadzwa Community Development Trust chairman Mr Mudiwa (2012) complained that the Chiadzwa community does not foresee any meaningful development being spearheaded by the trust except the day-to-day rhetoric by the politicians in the area. Research studies on Chiadzwa Community Share Ownership Trust has revealed that despite being highly publicized the Chiadzwa Community Share Ownership Trust has nothing to show except a convoy of state of the art vehicles which visit the area when the politicians come again to deliver their empty promises.

According to Mpofu (2010) the Community Share Ownership Trust regulation states that Community Share Ownership Trust in Zimbabwe shall be managed by between five to eleven members of the community depending on the size of the defined community in relation to the business concerned. The Chief of the concerned area shall be the chairperson of the Community Share Ownership Trust, the Rural District Council (RDC) chairperson shall be a trustee and the chief executive officer (CEO) of the RDC. Karasek (2009) observed that money accruing to the trust from Community Share Ownership Trust shareholding in a business shall be used for the provision of social and economic infrastructure in line with the priorities of the communities concerned. This empowers the communities and enhances communities’ participation in the issues that affect their lives. This also makes it difficult for the funds to be abused (Manungo, 2010).

Mpofu (2010) observed that in terms of the Indigenization and Economic Empowerment Act, projects to be undertaken through the proceeds of the trusts include infrastructure development, gully reclamation, maintenance and development of water works and sanitation. Similarly, the broad based black economic empowerment in South Africa is equally regarded as an integrated and socio-economic policy that encourages and contributes to the socio-economic development of South Africa (Burke, 2001). Community Share Ownership Trust legislations in both Zimbabwe and South Africa enable communities to participate in the mainstream economy and contribute to the economic growth and development of the respective countries. Mazivisa (2010) observed that the Empowerment Acts in both Zimbabwe and South Africa are undoubtedly a progressive step towards achieving black community empowerment, however, the implementation of the policy in both countries may experience difficulties with other existing pieces of legislations like the Companies Act, the Income Tax Act, the Employment Equity Act and the Skills Development Act. However, Burke (2001) urged that the empowerment policies both in South Africa and Zimbabwe which regulate Community Share Ownership Trust are specific government policies which advance economic transformation in order to enhance the economic participation of the black majority in the mainstream economy.

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Details

Title
Problems Associated with Community Share Ownership Trust in Rural Development
Subtitle
On Corporate Social Responsibility
College
Lupane State University
Grade
2.1
Author
Year
2013
Pages
97
Catalog Number
V496048
ISBN (eBook)
9783346006554
ISBN (Book)
9783346006561
Language
English
Tags
problems, social, corporate, development, rural, trust, ownership, share, community, associated, responsibility
Quote paper
Nevison Shumba (Author), 2013, Problems Associated with Community Share Ownership Trust in Rural Development, Munich, GRIN Verlag, https://www.grin.com/document/496048

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