Charting a New Path of Anti-Corruption in Africa: Bringing the Private Sector in from the Cold
Charting a New Path of Anti-Corruption in Africa: Bringing the Private Sector in from the Cold
Tahiru Azaaviele Liedong
In Africa, corruption has become a way of life. It is pervasive in the private and public sectors alike, and permeates almost every aspect of society. However, corruption in the public sector underscores most of Africa’s developmental problems. Such corruption manifests in various forms, including politicians demanding kickbacks and diverting public funds to personal use, or even public officials asking for informal payments to render basic services.
Efforts to fight public sector corruption are mainly championed by civil service organizations and international development agencies, and they largely entail higher-order initiatives such as institutional strengthening, regulatory reforms, and whistle-blowing facilitation. Despite a vast array of these initiatives implemented for decades in many countries across Africa, corruption is still a major bane of the region’s socio-economic development. Africa continues to be the worst performer in corruption league tables. It was unsurprising therefore that Africa Union made corruption its theme for 2018.
The limited success of past and present anti-corruption campaigns can be attributed not only to low political will to change the status quo, but also to the exclusion of other key players in the discourse, particularly the private sector. The sector’s importance in the fight against corruption is two-fold. First, businesses enable corruption by willingly paying or initiating bribes. In Nigeria, Ghana and South Africa among many other countries, some of the most egregious corruption cases involve private firms. Second, corruption adversely affects businesses. It increases production and transaction costs, causes operational inefficiency, and raises the overall cost of doing business by about 10% on average.
Essentially, businesses are on both the cause and effect sides of corruption. This, coupled with the over 80% production and 90% employment contribution that private firms make to Africa’s economy, should give the private sector not only the motivation to curb bribery, but also the impetus to push for reforms that address systemic corruption. Unfortunately, the sector has shown a laid-back attitude towards national policy issues.
Understanding the Private Sector’s Low Anti-corruption Involvement
Three major reasons explain why the private sector is often silent about corruption. First, fighting systemic corruption requires more than upholding idiosyncratic ethical and moral values. In other words, the refusal to engage in corruption does not go far enough to arrest the canker. Rather, instigating public policies which have broad-based outcomes is a better way to rid Africa of systemic corruption.
However, business leaders seem to lack the political skills needed to engage government actors or instigate policy change. Whereas they know the implications of political actions and inactions for their operations, they do not have the capability to influence political processes and outcomes. For most managers, business-government relations are a direct means to rent-seeking and superior financial performance through preferential treatment, subsidies, contracts and tax or duty exemptions.
Second, the pervasiveness and institutionalization of corruption in Africa has made it difficult for any individual firm to stand up against the tide. Due to inefficient structures, bribery is normal, and goes on unabated. Businesses are unwilling to disrupt the status-quo because they could suffer legitimacy loss or politically-motivated discrimination and witch-hunt. Consequently, they remain quiet to avoid the potential repercussions of anti-corruption activism.
Third, most business leaders in Africa seem to believe that public management issues are not within their sphere of control. This belief is similar to earlier arguments that businesses do not have responsibilities to society mainly because it is governments’ job to ensure social welfare. At best, business leaders may show interest in bribery, but that’s how far it goes. Their dormant approach to fighting corruption in Africa can be attributed not only to a poor understanding of their corporate citizenship roles, but also to the lack of formal structures that allow or facilitate private sector participation in policy making in developing countries.
How to Involve the Private Sector in Anti-Corruption Campaigns
Currently, most business students and managers are taught how to navigate and exploit political environments only for their idiosyncratic gain, and not how to change these environments for broad-based prosperity. Hence, involving the private sector in the fight against corruption will require capacity development. Managers and business leaders must be trained and equipped with political skills for influencing public policy. To do this, business schools in Africa will have to revamp their curricula and introduce courses on business-government relations or corporate political strategies. These courses should aim to develop institutional entrepreneurs who will push for policy changes, checks and balances.
Some business schools in Africa already teach ethics. Others have integrated UN-sanctioned anti-corruption toolkits into their programmes. However, these initiatives only go as far as training morally astute business managers whose personal ethicality can hardly withstand the force of systemic corruption in Africa. In this sense, the way forward is macro change through political processes.
International development partners and donors have crucial roles to play in developing business leaders’ political capabilities. The World Bank, for instance, has many education projects in Africa. However, these projects either focus on promoting access to basic education, improving the quality of secondary education or promoting higher education research. If stakeholders are really keen about fighting corruption, then it is necessary to broaden the scope of educational priorities and projects to support the development of political capabilities and institutional entrepreneurship.
Unlike in advanced countries such as the U.S and Canada, where the public is often invited to have a say in regulatory reforms, frameworks for private sector participation in policy making are barely existent in most African countries. Governments and other stakeholders should therefore work together to streamline policy making processes and create windows for advocacy, comments and input from the private sector. Rules, systems and structures should also be implemented and maintained to make corporate political activism transparent.
What the Private Sector Can Do to Fight Corruption
Private sector advocacy for public procurement reforms and political party financing transparency are two things that can stem the tide of systemic corruption in Africa. Through grand schemes such as create-loot-share in Ghana, fictitious and inflated contracts in Kenya and Nigeria, or dubious contracting in South Africa, opaque public procurement processes in most African countries present a conduit for misappropriating public funds. Businesses can take bold steps to stop being partners for fraudulent procurement contracts and push for transparency in public bidding.
Also, the private sector can drive reforms for transparency in how political parties and candidates are funded. Political financing underpins corruption in Africa, but has been overlooked in past and current anti-corruption campaigns. In Nigeria for instance, wealthy individuals popularly called “godfathers” sponsor political candidates, peddle opaque influence and recoup their investments through corrupt and illegal means. Bringing sanity to political financing will reduce money laundering and inappropriate influences on public governance, and help to steer African politics away from vote-buying to pragmatic issue-selling.
In sum, the private sector is affected by bribery, but it is also part of the problem. Businesses must therefore take their rightful place in the fight against corruption in Africa. Doing so will require capacity development and enabling institutional frameworks, which can be provided and supported by governments and international development partners. Involving the sector will go a long way to reduce systemic corruption in the region.
Tahiru Azaaviele Liedong is Assistant Professor of Strategy and International Business at the University of Bath