8 September 2012

Kenya: Is Doing Business Ethically Possible in Africa?

Counterfeit eggs were a thing that worried the good PS Bitange Ndemo. He sent around a YouTube clip showing how a Chinese man made fake eggs - allegedly cheaper than raising chicken. Ndemo concluded: 'We need better scanning of all containers coming into this country and possibly monitor movement of all foreigners who have dodgy incomes.

I'm not so worried about fake Chinese eggs in Kenya yet - I suspect the mindbogglingly creative additives to local alcohol will keep killing more people than questionable food imports from China. But yes, it's a good thing to keep an eye on what's coming into the country. Eggs? Maybe less so.

But there are plenty of amusing tales of cars that exceed the official age limit, and vastly more illicit substances than eggs, and anything in-between. Smuggling and counterfeiting are not Jua Kali, but big business, run by big people. Who you may or may not see in parliament, amongst other places.

And obviously Kenya should be sensible and not allow dodgy foreigners in. Not letting the clearly dodgy non-Armenian non-brothers in would have been a good start. When people start pulling guns in the baggage and customs area, and get away with it, you know you're looking at something dodgy.

But then the thing with foreigners of the dodgy sort is that they usually can't do that much dodgy business without some local co-operation. British arms and aircraft company BAE Systems were utterly laughable when they fussed about possibly corrupt government spending of the massive fine they had to pay to Tanzania for, umm, corruptly selling them a wildly over-dimensioned air traffic control system in the first place.

But Tanzania's government was just as laughable when they claimed that no Tanzanian could have possibly been involved in this transaction. They have a ghost procurement department? So I found it incredibly refreshing when I discovered an article on 'Managing Ethically in a Corrupt Environment' on the London Business School website.

It was authored by John Mullins who distilled 'a set of creative and systematic tactics (...), developed the hard way by the business development team at Celtel International. (...) The tactics were developed because Mo Ibrahim, Celtel's founder and CEO and an African native (and now the Mo Ibrahim Foundation's principal donor and board chair), was adamant that business could be done cleanly and honestly in sub- Saharan Africa despite the region's corrupt reputation. And Ibrahim and his team wanted to prove that doing so was both possible and profitable.'

Anyone who does business in sub Saharan Africa knows that the challenges can be formidable, never mind all the recent good news. Siemens, Mullins argued, dove headfirst into the dodginess, and this turned out to be difficult to fix afterwards: They have to 'pay about EUR1 billion to American and German authorities for engaging in a systematic pattern of bribing government officials to win infrastructure contracts in ten countries between 1999 and 2007' - presumably there were willing recipients for those bribes on the ground. And they also had to reverse what had become an institutionalised culture of corruption in the company.

Celtel chose a different approach, and the article is full of insightful approaches to dealing with requests for bribes. When dealing with governments, companies often face obstruction from government officials. Celtel found that building the right board, an 'ethical board', helped to navigate this.

Representatives from development finance institutions were useful not just because of their contacts to government, but also because they were effectively gatekeepers for foreign capital, which helped to exert some pressure. With a pan-African footprint, Celtel could probably also afford to be choosier: Rather than beg and scrape for a license, the company tried to signal to governments that they were in competition for Celtel's investment.

And Celtel say they published what they paid, and paid transparently: everyone was put on the payroll, and it was evident how much the company paid where, and how much they contributed in taxes. When hit on for bribes to speed things up by customs officials, Celtel staff would calmly tell them that they would wait - and with no bribe forthcoming, customs officials would often lose interest.

Alternatively, the company would create a big media event involving senior officials who did not want to have this exposure obstructed by minor players. There are more interesting suggestions on building ethical teams and dealing with local communities, and it's well worth checking out the full article here: http://bsr.london.edu/lbs-article/690/index.html.

I had been underwhelmed by Mo Ibrahim's post-Celtel reincarnation - with his foundation, I felt he ventured into an already crowded field where his foundation had little new to contribute. This analysis of how to run an ethical business, however, is exactly what I had hoped for from someone with his stature and experience: not more waxing lyrically about business in Africa, but pragmatic, insightful tips on how to deal with the massive challenges of e.g. corruption.

I'd like to see more of this, much more. Corruption is an international game. But you don't have to play it. Also: I miss Celtel. Can someone revive the brand?

Andrea Bohnstedt is the publisher of Ratio Magazine, an East Africa online business magazine, and works as an independent country risk analyst for several international firms.

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