The war against corruption in doing business in Africa

It is a fact that corruption is not unique to Africa. It is a fact that the impact of corruption in Africa has a greater impact on its people due to high levels of poverty, poor infrastructure and small sizes of its economies.

Thursday, December 10, 2015

It is a fact that corruption is not unique to Africa. It is a fact that the impact of corruption in Africa has a greater impact on its people due to high levels of poverty, poor infrastructure and small sizes of its economies.

Is this a black and white issue? It is choosing between what is right and what is wrong. At times, there is a grey area.

The issue is a far bigger concern for larger companies operating in larger markets where often certain business segments are crowded by few players and interaction with Government is huge. The temptation is high because there is this perception that when dealing with Africa it is normal business to do side business. This is a sad state of affairs. It’s sad because foreign investors show lack of respect to the Africans. There are good people in Africa by enlarge, there are people with great moral values, there are people in Africa who are on a crusade to make the continent a better place, to alleviate poverty and to enhance the living standards. There is this wrong belief that corruption in Africa is the norm as opposed to be the exception. Foreigners often believe by not indulging in corruption one cannot do business in Africa. This is plain wrong. When something is wrong it is wrong in any parts of the world. People in Africa are no different, there is convergence of values and ethics at all levels.

We have experienced the worse financial crisis of our lifetime. This financial crisis which happened in the developed economies has been the result of greed and unethical business practice yet legal. Countries, economies, businesses and many lives have been destroyed. Rich people have become poor and the poor have become poorer. Yet no one is saying that USA or Europe needs to go on a moral crusade. What these financial institutions did prior to the crisis were pure evil behavior. The regulators, the Board of directors, the audit committees, the auditors, the investors, the pressure group, have all failed. They all took the unethical behavior as normal business practice. There has been a rude awakening since but you still see large multinational banks being singled out for fines. The same issues have been exposed by large multinational petroleum companies in compromising safety and environmental norms. Large pharmaceutical companies have also trade off their dominant business position for malpractices. These too are bad behavior, equally bad as corruptionWhy is Africa being singled out? This is unfortunate. The reason being that African policymakers by enlarge have not taken legal actions. They have not made their intent clear. A country like Rwanda has been clearer in their intent and you will not mess things up in Kigali. Unless such behavior is uprooted and there is a clear message that such practice will not be tolerated, they will continue to be treated as normal practice. The fish rots from the head and fortunately or unfortunately, the corruption fight starts from the top. This is a long battle which cannot be won in the short term. There must be a start, there must be a small step which will be a leap for Africa.

Good investors will not be scared if rule of law is applied. Investors want to play by the rule book as long as the rules are clear, unambiguous, transparent and consistently applied.

However, we are never safe that an individual in any organization does cross the line. There is always risk that a good apple can turn bad. This is a human nature risk.

If we have firm belief in our own values and we allow our personal values and professional values to converge, we will not be doing a wrongful act. There is much pleasure and satisfaction in doing good business, in doing sustainable business. Engaging in corrupt practice in today’s environment exposes oneself big time. There is no such thing as the perfect crime nor is there the possibility of secrecy. Corruption involves more than one party and there is no trust among partners in crime. There is just vested interest which can change side as often as you change shirts. Will you take this risk in a foreign country? Are you prepared to jeopardize your business brand name, reputation when dealing in a foreign country? The laws are changing fast in the banking sector and there is no place to hide however creative you may think you are. There is always someone out there who can outsmart you and will outsmart you. Good people are by enlarge the smartest people and at the end of the day, they win. This is the divine law.

The writer is BDO’s Deputy Managing Partner for Mauritius and East Africa.