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Send  Share  RSS  Twitter  29 Apr 2012

VENTURES: How To Do Bribery-Free Business In Africa


Recent Western Cape Business News

Contrary to the stereotypes, it is possible to do business in Africa without paying bribes or being drawn into any other form of corruption.

It can be done. Although there is a perception that corruption is necessary for companies to do business in Africa, that is not always the case in our experience,” says Abel Myburgh, Africa Desk Coordinator at BDO, the accounting, auditing and business advisory firm with a presence in all African nations except Somalia.

Myburgh says BDO has assisted a large number of clients from across the globe to set up and operate in Africa, including in countries at the bottom of Transparency International’s Corruption Perceptions Index. “Our experience is that if a company has done its homework properly, it can avoid falling foul of corruption or bribery.”

Interestingly enough, the people who initiate a corrupt encounter are not always the locals but investors themselves. “First of all, some companies simply assume that you must bribe from the start so they go in with the mindset that bribery is the ‘African way’,” Myburgh says. “Secondly, they go in without preparing properly and with unrealistic expectations, which opens the door for bribery and corruption.”

For instance, some investors are reluctant to wait the prescribed time for companies to be registered. In some African countries, such as Rwanda and Uganda, the registration process takes about three days. In others, such as Chad, it can take six months.

Different countries have different procedures, requirements and timelines, and investors need to understand that,” says Myburgh. “If you go in guns blazing with an impossible deadline to meet, you are probably more inclined to cut corners or pay a bribe. In effect, by having unrealistic expectations, a company creates the opportunity for corruption.”

He says investors setting up shop in Africa also expose themselves to paying bribes when, through haste or ignorance, they do not follow the correct procedures or breach local tax laws, including indirect taxes. They will then resort to paying bribes to fix the problem because it is perceived as the way things are done in Africa.

You can’t generalise about Africa being corrupt,” says Myburgh, pointing to countries such as Botswana, placed 32nd out of 183 countries in Transparency International’s 2011 corruption index.  (On a scale of 0 to 10, Botswana is on par with Portugal and slightly below Spain but well above Italy and Poland.)

Also, there are always two parties involved in bribery and corruption: the party paying the bribe and the party accepting the bribe,” he says. “It all comes back to our own moral standards, which should not evaporate when we leave our home ground. As the Investment Minister for Ghana once remarked, why do companies not take their corporate morality with them when they cross the border into another country?”

Myburgh says the first step in fighting corruption is for companies and investors to change their attitude when operating into Africa. “We must make sure we apply the same corporate governance in the host country as in our home country. That way, we can educate the person in a position to take the bribe so that they realise the negative impact that bribery has. Kenya is a prime example of a country that was low on the Transparency International list but has pushed itself up the ranks through education.”

Here are a few do’s and don’ts that Myburgh recommends for doing clean business in Africa:

·         Prepare properly before setting up in a country. Have all the correct documentation in place and make sure you understand the tax laws, registration procedures and key business regulations. The easiest way to do this is to have a trusted in-country expert who knows the business landscape and speaks the local languages.

·         Make educated decisions and be realistic about what can and can’t be done within the desired timeframes. If necessary, reset the timelines to match the requirements of the country concerned.

·         Respect the laws and regulations of each country and don’t be tempted to cut corners. Besides being unethical, this could open the door for bribery.

·         Don’t underestimate the level of transparency in Africa. Some companies have recently been fined for corruption by in-country anti-corruption agencies or international crime prevention organisations. Also, the growing ubiquity of social networks and online forums means that perpetrators of corruption are quickly named and shamed.

·         Apply the same standards of corporate morality in the host country as at home. Don’t allow factors such as poverty or joblessness to be used as excuses for bribery and corruption.

·         Wherever possible, use the ‘one-stop shops’ that countries such as Benin have established to interact with investors.  Myburgh says the strength of these agencies is that they make it easier to do business while minimising direct contact with officialdom. As a rule of thumb, the less direct contact an investor has with officials, the less the opportunity for corruption.

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