Over the past ten years or so, the term “Corporate Social Responsibility” has been bounced around the Armenian business community from time to time, often in news stories featuring beaming CEOs sharing projects that warm our hearts and boost their reputations. It still remains confused with short-term and low-impact philanthropy in Armenia. Meanwhile, the very term corporate social responsibility (CSR) has already been replaced in many countries with concepts like “sustainability” and “creating shared value.”
The purpose of this article is not to argue the semantics of the concept, nor is it to report on its application in Armenia. What I wish to demonstrate here is how responsible companies can solve problems that exist in society to create a win-win situation for both the country and the business itself.
The Code to the Future
Various reports have placed up to one-third of Armenia’s population below the poverty line, and some statistics suggest an unemployment rate of around 18 per cent. At a minimum full-time wage of 55,000 AMD (about $150US) a month and an average salary nationwide of only around 195,000 AMD (about $400US), even having employment is not a guarantee of being able to support a family with a decent standard of living. This makes for pretty bleak reading when it is examined on its own. But on the other side of the labor market there are around 3,000 high-paying jobs in the IT sector that local companies are struggling to fill. Ask any up-and-coming IT company in the country and they will tell you that finding skilled programmers in the country is a nightmare. Why is there this divide?
Simply put, the education system has not yet fully adapted to the reality of today’s technology-driven economy. Engineering schools in Armenia are not producing the quality and quantity of IT professionals required by the business sector. The sector is evolving at a rapid pace, but educational institutions continue to be rigid in the way they develop and modify their curricula.
The best way forward is for a meaningful partnership between IT companies and educational institutions. By working as a united sector and actively involving themselves in engineering education, the IT companies can dictate parts of the curriculum or whole programs, and even provide human resources to train instructors or deliver classes directly to learners. The educational institutions stand to gain by producing graduates who are better prepared to find well-paying jobs and hit the ground running when it comes to building their careers in IT. The companies gain by an enlarged labor pool that has been customized to meet their needs. And the state gains through an increase in employment and a growing middle-class that can afford to spend money and boost other sectors of the local economy. Such business-education partnerships are the cornerstone of CSR strategies around the world, and there is tremendous potential for growth in this area in Armenia.
Ask any up-and-coming IT company in the country and they will tell you that finding skilled programmers in the country is a nightmare.
My Data is Bigger than Yours
Around the world, the concept of “big data” is gaining more and more attention, as development agencies realize that surveys and government records are not informative enough and too slow to produce results. Take the “poverty snapshots” developed by the Armenian National Statistical Service. They provide quarterly data on some parameters such as “average nominal wages” but other indicators such as “average household income” are reported only on an annual basis. So if you represent a development agency or a government body and you want to measure the impact of an intervention designed to combat poverty, you would have to wait a few months, at best, to have any hard third-party data that would support or discredit your program. But there is a much better way.
Some business-to-consumer companies today have data that is far more valuable that the one held by government bodies or statistical agencies. This information can be anonymized and utilized to help development programs achieve better impact. Cellular operators, for example, have a vast amount of data on their customers, and some of this has the potential to inform and drive economic development. To illustrate this, we’ll use the same example of poverty. People with low salaries and unstable family incomes tend to be pre-paid mobile customers. This means that, instead of a regular monthly payment, they top up their phones only when they have the cash available to do so. In many countries, anonymized data from cellular providers have shown that a tendency for customers to top up with smaller amounts more frequently is an indicator of economic decline, while an improvement in livelihood leads to larger top ups that might happen with bigger gaps between them. So if you are running a government rural development program, and you’re hoping to see the economic impact of this year’s harvest on villagers’ pockets, you don’t have to wait for another six months after the crops have been sold. Anonymized mobile usage data can tell you within days whether the villagers of a particular region are better off economically now than they were last week, last month, or even last year.
Businesses do not tend to lose anything from sharing the data they have as long as it is done in a way that respects customer privacy. Society and the government have a lot to gain from this powerful resource. It’s a great way to create shared value that can help drive informed decision-making among Armenia’s development professionals.
Agriculture is a potentially big driver of economic development in Armenia, but one often gets the feeling that it has only realized a small percentage of its potential. Many farmers work on small plots of land that make little economic sense, and they do not have the money to invest in the technology that can increase their crop yield. Farmers with small crop yields, in turn, are less attractive as suppliers and have a harder time selling their products, which means that their incomes remain low and new technology continues to be out of reach. Agriculture cooperatives have proven to be a powerful way to overcome such issues. Farmers can pool resources and share tractors, sales channels and clients. This is different to the Soviet approach of collective farms (kolkhoz) because each farmer directly owns a share of the cooperative, based on the size of the land or other resources that they brought with them to the partnership.
But setting up cooperatives is not as easy as it sounds. Besides the negative legacy of the kolkhoz, many Armenian farmers do not have the organizational skills to come together in cooperatives, nor do they have the marketing and sales know-how to manage the business activities of these entities. Some local non-government organizations and international agencies are putting in time and money to establish cooperatives across the country, but their resources are not proving enough to make change happen at a steady pace.
Businesses stand to gain by actively investing in this concept in Armenia. More agricultural cooperatives mean a steadier supply of raw materials and less need to spend more time and money in contacting smaller farmers separately. The quality of the crops bought from cooperatives will also be better theoretically, since groups of farmers should have access to better seeds and machinery. So whether you’re a supermarket stocking up your shelves with the freshest vegetables from the country’s farms, or a cognac factory buying grapes for this year’s barrels, cooperative farming can save you time and money, while providing you with higher quality supplies.
There is also another big plus to developing agricultural cooperatives in Armenia. The concept dictates the need for collective decision making within a cooperative, which often means that over time, cooperative members learn to collect facts, weigh the evidence and debate various alternatives, before voting to choose a particular option. This makes them more politically and socially aware in general, suggesting that an increase in the number of cooperatives in Armenia would eventually lead to more mature voting across the country in future elections.
Tomorrow is a New Day
These were just a few examples of how businesses can embrace corporate social responsibility in Armenia and use the concept to positively impact society while solving their own business issues. None of the examples mentioned here are new. In fact, some initial steps have been taken in Armenia in each of these directions by one or two companies over the last couple of years. But we need more exposure on these possibilities in order to drive a new level of engagement by the business sector.
A rising tide, as they say, raises all ships. Conversely, a whirlpool will pull in all the vessels on the water’s surface. I’m looking forward to a day when the ships themselves help dictate the conditions, and the people of Armenia sail forward confidently to a brighter future.