Handley GS '03 discusses business responses to African economic crises

University College World Politics Fellow Antoinette Handley GS ’03 discussed the dichotomous responses of businesses to societal crises in Africa in a seminar on Wednesday afternoon.

Handley identified two key categories of African businesses’ responses to national crises in the context of the HIV/AIDS crisis in eastern and southern Africa, as well as the political turmoil and violence that plagued Kenya and South Africa at the end of the 20th century.

“What emerges from my case studies is striking, and contradicts a lot of our conventional expectations,” Handley noted. “Business can in fact be a key responder, sometimes even responding in advance of the state.”

According to Handley, these responses by business come in two forms: constructive and destructive. Constructive responses are those that both help the business resolve issues it faces as a result of the ongoing crisis, and also align with the broader goals of society of addressing the causes and effects of the crisis. Destructive responses are those that primarily benefit only the business, thus very clearly defining the business’ self-interest in the short-term.

“In particular, I’m interested in what I call a constructive response,” Handley said. “Namely, a response that not only helps the firm itself solve the issues specific to its workplace or its business operations, but actually does what we’ve talked about, which is to contribute to the broader societal attempts to resolve the situation.”

The responses of businesses to crises were also influenced by how the government of each state responded as well, Handley argued. She cited a two-by-two matrix of actor responses used in game theory to demonstrate her point, setting constructive and destructive business responses on one axis against adequate and inadequate state responses on the other axis.

In the context of the HIV/AIDS epidemic in Africa, Handley pointed to business responses in Botswana and South Africa as constructive responses to adequate and inadequate state responses, respectively. In these nations, businesses responded constructively to the epidemic in a variety of ways, from providing free antiretroviral drugs to their infected workers to instituting workplace sexual safety initiatives and community projects. This stands in contrast to the destructive responses of business in Kenya and Uganda, where businesses fired infected workers or forced them to continue working without sick leave.

“At the less constructive end of the continuum were all those firms that simply fired HIV-positive workers and sent them home to die,” Handley observed.

In the political turmoil example, constructive responses were found in South Africa, where key business leaders and business associations agitated for political reform, proactive endeavors, and peace initiatives. On the destructive response side in Kenya, businesses did little to address the ongoing political violence; instead, outside actors such as churches or international organizations were the ones instituting peace initiatives and working towards reforms.

Handley explained the discrepancy in overall constructive responses to crisis by South African and Botswanan businesses and destructive responses by Ugandan and Kenyan businesses by pointing to the business landscape in each nation. South Africa and Botswana share a much more developed business landscape, with large firms, strong business associations, and large mining and financial sectors. However, Kenyan and Ugandan businesses are small and entrepreneurial, with fragmented business associations and economies focused around agriculture and services.

According to Handley, business and class divisions overlapped in South Africa and Botswana, with large businesses mostly controlled by wealthy whites who were viewed as outsiders. Businesses, then, had a strong motivation to respond constructively to crisis, lest they be identified as exploiters of local labor.

“Part of my argument here is that it became increasingly critical for business to begin to demonstrate the way its interests were not aligned with apartheid, but were instead consonant with the interests of the majority of South Africans, that they were on the same side,” Handley added.

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This stands in contrast to the business landscape of Kenya and Uganda, where business was not controlled by white foreigners, but was primarily entrepreneurial and run out of people’s homes. In these situations, businesses was not viewed as “others,” and therefore had nothing to prove.

“The results is a social environment in which there was much less popular antipathy towards business,” Handley said. “Business as a consequence had no urgent imperative to begin to demonstrate or perform a way in which its interests were allied with those of ordinary Kenyans.”

Handley concluded her talk by making it clear that how businesses use their power is greatly intertwined with how it defines its own interests, and that those interests aren’t fixed. What might define a business’s interests in the short term may change in the long term, and it is the long-term interests that lead to constructive responses within society.

Handley received her Ph.D. in politics from the University in 2003. Prior that, she received degrees from the University of Oxford and the University of Natal in South Africa. She is currently an associate professor in the Department of Political Science at the University of Toronto.

The talk took place on Wednesday, April 26, at 4:30 p.m. in Corwin 127. It was sponsored by the Wilson School and the Princeton Institute for International and Regional Studies as part of the Democracy and Development Seminar Series.