Pakistan is known to have one of the fastest developing economies in the world. At present, our economy is going through a political and economical turmoil. Recently, we went through a major financial crisis. Research by Bloomberg and Hess shows that the presence of a recession coupled with war increases the probability of internal conflict between two- and three-fold. Such dynamics are suggestive of a poverty conflict trap.
There are various channels and levels through which economic downturn affects social stability viz. Unemployment, ethnic violence, the role of political groups creating social unrest, association with religious intensity and migration (Internally Displaced Persons). The presence of all the above dynamics has had an adverse impact on the social stability of our country. We all benefit from a socially and economically stable country but the biggest beneficiaries are the businesses and companies of the country. The role of a business in an open market economy system is not only to create wealth for shareholders, employees and customers but also for the society at large. Global corporations have long supported humanitarian activities in regions hit by catastrophe similar to the Tsunami in 2004 and Kashmir earthquake in 2005.
It should become companies' business to play a vital role in promoting stability and preventing violent conflict in the country in which they operate. From a business perspective, social stability and the prevention of instability are of obvious importance. Social and economic instability represent significant threats to companies' growth prospects.
An economic solution may, however, make a contribution as there are basic human needs which need to be satisfied before higher level needs may be met. For this reason, there is an urgent need for humanitarian support through philanthropic programmes by companies for the IDPs in Pakistan. If these needs are not satisfied, desperate behaviour may occur, including aggression. Aggression may lead to further conflict.
The current crisis in Pakistan gives an opportunity for companies to re-examine their options and consider humanitarian activities in terms of Corporate Social Responsibility (CSR). Companies should enhance their interest in corporate humanitarian partnerships. They should take critical steps in building successful links between companies and humanitarian organisations and identify good management practices in these partnerships. When successful, these partnerships will have the potential to deliver fast, effective support during a crisis, help build capacity between disasters, and foster the exchange of ideas and best practices that benefit both businesses and humanitarian organisations.
Humanitarian organisations which regarded cash as the only useful corporate donation now recognise that businesses have more to offer in terms of goods, human resource services, expertise, and technology. Being a good corporate citizen should be at the heart of most companies. Companies continuing to help the unfortunate in our society will prove their commitment to the communities in which these companies operate.
(The writer is Financial Management Consultant, London.)
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