Running a business in Sub-Sahara Africa (SSA) can generate tremendous financial reward particularly if your organization targets strategic growth markets. Abundant opportunities are there to be exploited, however, navigating the economic environment requires skill and local market intelligence.
Most African countries are ranked in the lower quartile based on the latest rankings for the ease of doing business provided by the World Bank Group. In comparison to developed Western economies, most African entrepreneurs take the ‘easy’ treacherous route by paying bribes to win tenders, to operationalize their businesses quicker and to ‘get protection’ from corrupt senior local government officials.
Corruption is deeply rooted in African culture
Corruption is of one the main causes impeding innovation, business growth and economic prosperity. This has exacerbated poverty, exclusion and brought suffering to 300 million Africans.
Powerful leaders continue to enact porous organisation architectures (including systems and processes) that enable them to fatten their wallets at the expense of wider development. The fight for survival forces many poor people to participate in corrupt activities to access basic needs like water, education, shelter and medication.
There is a school of thought that corruption opened the floodgates to colonialism by European settlers. Although all African countries gained independence from their colonial masters, modern exploitation is common. Multinational companies, powerful nations and rich individuals continue to bribe African leaders to gain access to natural resources, trade and in some extreme cases facilitating overthrowing governments by sponsoring coups.
Furthermore, extreme corruption is slowing development and causing leakage across value chains. For example, senior Zimbabwean government officials made a public announcement that US$15 billion revenue from diamond sales had vanished from government coffers over a period of four years. Surprisingly, no one has faced charges for embezzlement, however, a Christian pastor Evan Mawarire who mobilized millions of Zimbabweans to condemn corruption was arrested and will likely spend more than ten years in prison unless he is acquitted.
It’s not all doom and gloom
Contrary to general perceptions, not all African countries are corrupt. Mauritius and Botswana have low incidences of corruption with rates on par with developed countries in Europe and North America.
Paying bribes destroys long-term value
Paying bribes does not guarantee success. Whilst paying a bribe might deliver short-term benefits, this strategy exposes your organization to financial and operational volatility in the long-term. Paying bribes increases upfront costs to launch a business and generates ongoing trail expenses to ‘assist your organization to remain in business’.
Don’t pay bribes
Over the past thirteen years, l have heard many sad stories from APAC investors who have lost money from bad deals. The majority attributed compounding expenses resulting from paying bribes as the major cause for losses. When things go wrong, you cannot recover a bribe by lawful means. So why do many foreign investors pay bribes in emerging markets when they don’t commit similar acts in their home countries? Based on my humble opinion, ignorance, greed and stupidity are common traits.
Maintain high ethical standards and integrity
Strive Masiyiwa is one of the most successful entrepreneurs in SSA who has a strong reputation of shunning corruption. Strive launched a billion-dollar mobile telecommunication company called Econet in Zimbabwe in 1998. Despite resistance from the local government, Strive persevered and won a legal battle to launch Econet, resulting in the liberalization of the telecommunication industry.
Econet’s footprint continues to grow and now has business operations and investments in more than 20 countries in Africa, Europe and Asia Pacific. In addition to good stewardship, Strive attributes the refusal to pay bribes to vendors or government officials as one of his key success criteria.
Transparency also underpins Econet’s success. The organization provides full disclosure about product features, pricing and financial performance. Consequently, Econet continues to deliver superior business performance by leveraging its strong brand power to win new customers and drive loyalty from brand advocates.
Winning the battle
- The first step in fighting corruption is knowing that the giver is equally as guilty as the receiver of the bribe.
- All foreign investors must avoid paying bribes if they want to sustain business growth and enhance their organisation’s brand value.
- There is evidence of government reform. For example, Senegal created a National Office to fight corruption and fraud. The government enacted laws in April 2014 that requires elected officials to declare their assets.
- African leaders should lead by example by promoting transparency, accountability and respecting the rule of law. Ali Mufuruki, CEO of Tanzania’s Infotech Investment Group mentioned that solutions abound in ethical leadership, strong and enforceable laws against corruption, severe sanctions for corruption underpinned by a national culture of promoting ethics from family to national level.
- Shifting mindsets will uproot corruption, currently embedded in African culture. All Africans must question their own personal stand on corruption before taking the fight to the national level.
How can Sub-Sahara Africa reduce or eliminate corruption?
Jo Chidwala is an experienced business leader with proven record of accomplishment to transform businesses by formulating and executing product and pricing strategies that generate value. He is a strategic thinker with strong analytics, modelling and communication skills; can lead and motivate teams to drive projects to completion.