Agenda Setting Paper

This report seeks to set the argument for creating a Corporate Social Investment Index (CSI Index) to understand the philanthropic nature of publicly listed companies in Zimbabwe. Zimbabwe currently has two stock exchanges

The Zimbabwe Stock Exchange (ZSE) with shares listed in the local currency
The Victoria Falls Stock Exchange (VFEX) with shares listed in United States Dollars (USD)

Currently, 40 companies are listed on ZSE and 13 companies on VFEX.

Corporate Social Investment Findings

This preliminary report shows the data that has been compiled of 22 companies across 7 industries. The table below shows the breakdown of the companies and the total Gross Revenues, Net Profits and Corporate Social Responsibility figures as reported in the company’s annual reports. *It must be noted that there are gaps in the dataset as some companies do not report the financial figures of their giving, but rather the projects or initiatives they are involved in. The second half of this report will dive into these projects.

Industry	n	CSR (millions)	Gross revenues (millions)	Net profits (millions)	Market Capitalisation (millions)
Manufacturing	8	8.6458301	11142.16556	1510.11308	11506.2041
Finance	5	9.2616065	1387.55628	1532.02317	5612.7995
Hospitality	3	1.2288333	2894.94959	317.93944	1482.6922
Mining	3	5.2920050	920.68091	241.54106	1766.8017
Real Estate	1	0.1423500	78.48691	36.86759	0.0000
Retail	1	0.1646267	2561.58147	94.31975	474.0153
Technology and Communications	1	0.0000060	3163.99055	378.08599	4783.2457

The table below shows the average across the various industries which will inform the rest of the report.

data %>%
  group_by(Industry, Company) %>%
  summarise(n=n(),
            csr=sum(`CSR value`, na.rm = TRUE),
            grossRev=sum(`Gross Revenue`, na.rm = TRUE),
            netPro=sum(`Net Profits`, na.rm = TRUE),
            marketCap=sum(`Market Cap`, na.rm = TRUE)
            ) %>%
  group_by(Industry) %>%
  summarise(n=n(),
            "CSR (millions)"=sum(csr/1000000, na.rm = TRUE),
            "Gross revenues (millions)"=sum(grossRev/1000000, na.rm = TRUE),
            "Net profits (millions)"=sum(netPro/1000000, na.rm = TRUE),
            "Market Capitalisation (millions)"=sum(marketCap/1000000, na.rm = TRUE)
            ) %>%
  # mutate("CSR Index" = round(`CSR (millions)`/`Net profits (millions)`*100,1)) %>%
  arrange(desc(n)) %>%
  kable() %>%
  kable_styling()

## `summarise()` has grouped output by 'Industry'. You can override using the
## `.groups` argument.

Industry	n	CSR (millions)	Gross revenues (millions)	Net profits (millions)	Market Capitalisation (millions)
Manufacturing	8	8.6458301	11142.16556	1510.11308	11506.2041
Finance	5	9.2616065	1387.55628	1532.02317	5612.7995
Hospitality	3	1.2288333	2894.94959	317.93944	1482.6922
Mining	3	5.2920050	920.68091	241.54106	1766.8017
Real Estate	1	0.1423500	78.48691	36.86759	0.0000
Retail	1	0.1646267	2561.58147	94.31975	474.0153
Technology and Communications	1	0.0000060	3163.99055	378.08599	4783.2457

Other findings

CSR by Industry

CSR for Manufacturing Industry

CSR for Finance Industry

CSR for Hospitality Industry

CSR for Mining Industry

CSR for Real Estate Industry

CSR for Retail Industry

CSR for Technology and Communications Industry

Let’s look deeper

Gross Revenues

Net Profits

CSR Index

The CSR Index is the percentage of net profits spent on CSR.

NB: If a company makes a loss but still engages in CSR, then their score is 100%.

The CSR Index scores are plotted below. The red line indicates 2% spent on CSR (limit adapted from Indian legislation which requires company to spend 2% of their profits on CSR) and the green line indicates 10%.

data %>%
  select(Industry, Company, Year, `Net Profits`, `CSR value`) %>%
  mutate(csrIndex = round((`CSR value`/`Net Profits`)*100, 1)) %>%
  mutate(csrIndexRev = ifelse(csrIndex<0, 100, csrIndex)) %>%
  mutate(csrIndexRev2 = ifelse(csrIndexRev>100, 1, csrIndexRev)) %>%
  ggplot(
    mapping = aes(x = Year, y = csrIndexRev2)) +
      geom_col(position = "dodge") +
      geom_line(y=2, colour='red') +
      geom_line(y=20, colour='green')+
      facet_wrap(vars(Company))

List of companies that have spent over 10% of their net profits on CSR

There are 5 companies that have spent part of their profits on CSR (over 10%). Below is a table of these companies and the year in which they gave.

Industry	Company	Year	CSR Index	net profits (millions)	CSR (millions)
Hospitality	African Sun limited	2020	100.0	-18	0.037
Mining	Caledonia mine	2023	100.0	-1	1.491
Manufacturing	Dairibord	2019	58.6	8	4.939
Manufacturing	Dairibord	2020	17.2	1	0.162
Manufacturing	Tanganda Tea Company Limited	2022	10.1	1	0.095
Manufacturing	Willdale	2020	35.6	0	0.005

List of companies that have spent between 2 and 10% of their net profits on CSR

There are 8 companies that have spent part of their profits on CSR (between 2 and 10%). Below is a table of these companies and the year in which they gave.

Industry	Company	Year	CSR Index	net profits (millions)	CSR (millions)
Hospitality	African Sun limited	2018	3.0	10	0.300
Mining	Caledonia mine	2020	6.7	25	1.689
Mining	Caledonia mine	2021	5.0	23	1.163
Mining	Caledonia mine	2022	3.9	23	0.898
Manufacturing	Dairibord	2018	3.0	6	0.197
Manufacturing	Hippo Valley Estate	2019	6.8	24	1.660
Manufacturing	Hippo Valley Estate	2020	2.7	30	0.820
Hospitality	Meikles	2021	5.3	7	0.379
Hospitality	Meikles	2023	3.2	3	0.106
Hospitality	Rainbow Tourism Group	2018	2.0	5	0.100
Manufacturing	Tanganda Tea Company Limited	2023	2.1	3	0.065
Manufacturing	Willdale	2023	2.0	2	0.030
Manufacturing	Willdale	2019	3.9	3	0.103

List of companies who have spent on CSR but not more than 2% of their profits

There are 16 companies that have spent part of their profits on CSR (between 0 and 2%). Below is a table of these companies and the year in which they gave.

Industry	Company	Year	CSR Index	net profits (millions)	CSR (millions)
Hospitality	African Sun limited	2019	0.2	11	0.019
Manufacturing	Amalgamated Regional Trading (ART) Holdings	2019	0.1	7	0.006
Manufacturing	Amalgamated Regional Trading (ART) Holdings	2021	0.2	7	0.011
Manufacturing	Amalgamated Regional Trading (ART) Holdings	2022	1.1	2	0.026
Mining	Caledonia mine	2019	0.1	50	0.047
Manufacturing	Dairibord	2021	0.2	2	0.005
Manufacturing	Dairibord	2022	0.8	3	0.020
Manufacturing	Delta Corporation Limited	2020	0.5	44	0.240
Manufacturing	Delta Corporation Limited	2021	0.1	76	0.050
Finance	FBC	2018	1.2	44	0.539
Finance	FBC	2019	1.5	22	0.332
Finance	FBC	2020	1.4	19	0.257
Finance	FBC	2021	0.6	40	0.224
Finance	FBC	2022	0.9	18	0.167
Finance	FBC	2023	1.4	478	6.468
Finance	First Mutual Holdings Limited	2018	0.1	4	0.005
Finance	First Mutual Holdings Limited	2020	0.1	29	0.018
Manufacturing	Hippo Valley Estate	2018	0.2	11	0.025
Manufacturing	Hippo Valley Estate	2023	0.3	19	0.050
Manufacturing	Innscor Africa Limited	2019	0.2	16	0.024
Hospitality	Meikles	2020	0.1	56	0.035
Hospitality	Meikles	2022	0.7	20	0.137
Retail	OK Zim	2021	0.9	13	0.111
Retail	OK Zim	2022	0.1	20	0.013
Retail	OK Zim	2023	0.7	6	0.041
Hospitality	Rainbow Tourism Group	2020	0.3	4	0.011
Hospitality	Rainbow Tourism Group	2021	0.9	2	0.017
Hospitality	Rainbow Tourism Group	2022	1.1	2	0.016
Hospitality	Rainbow Tourism Group	2023	1.0	5	0.046
Manufacturing	Seed Co Ltd.	2022	1.7	5	0.080
Manufacturing	Seed Co Ltd.	2023	0.1	17	0.019
Real Estate	West property Holding	2023	1.6	9	0.142
Manufacturing	Willdale	2021	0.6	2	0.012
Finance	ZB Financial Holdings	2022	1.6	51	0.792
Finance	ZB Financial Holdings	2023	0.1	109	0.155
Finance	ZB Financial Holdings	2018	0.1	218	0.300

Regression Model

What is more likely to impact the amount of CSR that is given? Is it industry, gross revenues, net profits or market capitalisation?

data = data %>%
  mutate(marketCap = as.double(`Market Cap`))
model <- lm(`CSR value` ~ `Net Profits` +
              `Gross Revenue` + 
              marketCap +
              `Industry` 
            , data = data)
summary(model)

## 
## Call:
## lm(formula = `CSR value` ~ `Net Profits` + `Gross Revenue` + 
##     marketCap + Industry, data = data)
## 
## Residuals:
##      Min       1Q   Median       3Q      Max 
## -1755508  -240773   -83022   108620  4741198 
## 
## Coefficients:
##                                         Estimate Std. Error t value Pr(>|t|)
## (Intercept)                           -6.721e+04  2.180e+05  -0.308    0.759
## `Net Profits`                          9.926e-03  1.787e-03   5.554 3.54e-07
## `Gross Revenue`                       -9.903e-05  7.210e-04  -0.137    0.891
## marketCap                             -4.153e-04  3.379e-04  -1.229    0.223
## IndustryHospitality                   -3.756e+03  2.909e+05  -0.013    0.990
## IndustryManufacturing                  2.171e+05  2.525e+05   0.860    0.392
## IndustryMining                         4.549e+05  3.121e+05   1.457    0.149
## IndustryReal Estate                    1.245e+05  7.736e+05   0.161    0.873
## IndustryRetail                         3.135e+04  5.315e+05   0.059    0.953
## IndustryTechnology and Communications -1.749e+05  4.514e+05  -0.387    0.699
##                                          
## (Intercept)                              
## `Net Profits`                         ***
## `Gross Revenue`                          
## marketCap                                
## IndustryHospitality                      
## IndustryManufacturing                    
## IndustryMining                           
## IndustryReal Estate                      
## IndustryRetail                           
## IndustryTechnology and Communications    
## ---
## Signif. codes:  0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 ' ' 1
## 
## Residual standard error: 742400 on 80 degrees of freedom
##   (42 observations deleted due to missingness)
## Multiple R-squared:  0.3864, Adjusted R-squared:  0.3173 
## F-statistic: 5.597 on 9 and 80 DF,  p-value: 5.696e-06

Net profits has the biggest impact on the amount of CSR that a company gives in a specific year.

CSI - prelim report

Rebekah Cross

2024-09-18