Should Coca-Cola Use its Power to Promote Social Justice in Swaziland?

It’s never dull at Coca-Cola. The company didn’t have much time to recover from its white polar bear can campaign fiasco and the accusations it tried to stop a ban on sales of disposable plastic water bottles in the Grand Canyon National Park before a new crisis arose. This time the negative attention concerns Coca-Cola’s presence in Swaziland, an impoverished country ruled by Africa's last absolute monarch, Mswati III, who is accused by local activists of stealing his country's wealth and committing human rights violations.

Coca-Cola is not just another company operating in Swaziland - according to some reports, its operations in the country accounts for about 40 percent of its GDP (export mainly). Although this figure might be a bit exaggerated (other reports claim it’s only 22 percent), it’s clear that Coca-Cola is a powerful player in Swaziland. Now Swazi activists are urging Coca Cola to use its power to start supporting the pro-democracy movement in the country and stop supporting the king. They claim that Coca Cola is providing the king with the economic strength to crush opposition and continue “milking the country.”

Coca-Cola began operating in Swaziland in 1987 after leaving apartheid South Africa. Coke built a plant dedicated to the production of concentrates used in Coca-Cola beverage products. The company chose Swaziland because of the favorable tax arrangement that the regime gives it, as well as the country's abundance of cheap labor and raw sugar, explains Peter Kenworthy, an activist with Africa Contact.

It was a smart business choice by Coca Cola and its operations in Swaziland seem to be key to its success in Africa, one of the company’s fastest growing areas in terms of sales. At the same time, the company’s success didn’t seem to have much of an impact on the life of the common Swazis. Swaziland, with a population of 1.2 million, is still a very poor country, 63 percent of the population lives in poverty (on less than US$2 per day), and 30 percent live in extreme poverty. Swaziland also has one of the highest HIV/Aids rates in the world, with an adult HIV prevalence of 26 percent, according to UNAIDS.

One Swazi though is very far from being poor – the king. According to estimations Mswati III, who succeeded his father as ruler of Swaziland in 1986, has a personal fortune of $200 million. He is known for his taste for luxury, including a $500,000 automobile and has also built separate palaces for each of his 13 wives.

The gap between the king and his subjects has become even a greater issue now as Swaziland is struggling with a severe financial crisis after a sudden loss in earnings last year from a regional customs union, its main source of income. According to the BBC, Swaziland has so far refused to accept a $355 million loan from South Africa to help it pay bills, after Pretoria demanded political and economic reforms. Add to that accusations about human rights abuses and you can understand why Swazi activists don’t like their king and ask Coca-Cola to stop supporting him.

Coca-Cola’s response was that it adheres to the "highest ethical standards" and aims to be "an outstanding corporate citizen in every community we serve." More specifically, the company provided three arguments: First, the king does not receive any profits or dividends directly from their plant. Second, they don’t determine what Swaziland does with the taxes paid by Coca-Cola’s plant (in other words: how much of it goes to the king’s pockets). Third, the population of Swaziland has benefited from Coca-Cola's contributions to their social welfare in the areas of water stewardship, health, education and entrepreneurship.

This is not the first time Coca-Cola has been involved in such a controversy. Remember the Killer Coke campaign over violence against union workers in some of Coke's international bottling plants? Or the accusations that the company’s bottling plants in India use too much water in drought-prone areas, thus leaving poor local villagers with too little? Yet, this case seems to be a bit different, as it raises the question if it is fair to ask a company to use its economic power to impact a country’s political system. In other words, how far should corporate social responsibility go?

I believe the answer can actually come from Coca-Cola itself. First, there’s the human rights issue. Coca-Cola has a human rights statement, which is guided by the UN Declaration of Human Rights and related international covenants. Looking at Amnesty International report on Swaziland, you learn that this country has human rights issues when it comes to women’s rights and fundamental freedoms, even though it has adopted the UN declaration half a century ago. Still, if you look at Amnesty International reports of almost every country where Coca-Cola has operations, I bet you can find human rights violations. As long as the UN has no issues with Swaziland’s human rights record, I don’t think we should expect Coca-Cola to demonstrate higher standards.

The second issue is the impact of Coca-Cola on the local economy. In its 2011 sustainability report Coca-Cola writes that “supporting local economies is both a matter of good corporate citizenship and good business. Through jobs, capital investment and targeted initiatives offering opportunities to residents, we are part of the global engine that keeps local economies humming.” Well, it doesn’t look like the Swazi economy is even close to humming. The gap between Coke’s success in the country and the poor people of Swaziland is certainly disturbing. If Coca-Cola really adheres to its own commitment to local economies, it should find ways to share their success with the people of Swaziland and not just the king.

Image credit: Globespotter, Flickr Creative Commons

Raz Godelnik is the co-founder of Eco-Libris, a green company working to green up the book industry in the digital age. He is an adjunct faculty at the University of Delaware’s Department of Business Administration, CUNY and the New School, teaching courses in green business and new product development.