Control Risk reveals the corruption index in African entrepreneurship ecosystem

Control Risk reveals the corruption index in African entrepreneurship ecosystem

Recent revelations clouding around the African entrepreneurship ecosystem continues to show that aside from problems associated with funding, poor information, and inadequate infrastructural access, another major problem beleaguering the growth of private businesses in the continent is corruption. Control Risks, the global business risk consultancy recently published its annual survey of business attitudes to corruption,

Recent revelations clouding around the African entrepreneurship ecosystem continues to show that aside from problems associated with funding, poor information, and inadequate infrastructural access, another major problem beleaguering the growth of private businesses in the continent is corruption.

Control Risks, the global business risk consultancy recently published its annual survey of business attitudes to corruption, comprising interviews with 824 companies worldwide. You’ll be amazed at what we found from the survey! Here is a peek at what we found:

  • 34% of respondents from Africa reported missing deals to corrupt competitors.
  • 30% of Investors say they have decided not to conduct business in specific countries because of the perceived risk of corruption.

 

  • Overall, 30% of respondents said they have failed to win contracts where there was strong circumstantial evidence of bribery by the successful competitor

 

  • 55% of African respondents reported that the risk of corruption was the primary reason they pulled out of a deal on which they had already spent time and money.

So even when you struggle to raise that fund, the coast is not clear yet.

To affirm this, Zimbabwean billionaire, Strive Masiyiwa revealed how having managed to put up a “a consortium of 22 investors” that raised $285 million to obtain the license to float Econet Wireless in Nigeria, a top government official killed the operation of the telecommunication company because Masiyiwa refused to ‘settle’. Masiyiwa whose disclosure helped clear the assumption that the telecommunication giant packed up because of debts claimed a former governor demanded he pay $4.5 million as settlement fees. (Read full story here)

Just as the report revealed, corruption in entrepreneurship clime dons many garb; from ‘facilitation payment’ to ‘intentional bureaucratic onslaught’, the list is endless. A scenario different from Masiyiwa’s encounter but nonetheless gruesomely damaging is the sudden closure of the world’s largest digital mall. Many thanks to corruption still.

Chams City, a Nigerian digital mall acclaimed to be largest digital mall with the highest number of PCs recently stopped operations having suffered government bureaucratic onslaught. According to reports, the parent company Chams had reached a concession with the Federal government to… (Read full story here)

Commenting on the survey’s findings, Daniel Heal, Senior Managing Director East Africa at Control Risks, said:
Too many businesses are still losing out on good opportunities to corrupt competitors, or choosing not to take a risk on an investment or entering a new market in the first place for fear of encountering corrupt practices.

However, despite these daunting revelations, Control Risk suggests five ways businesses can navigate this deleterious phenomenon:

  • Integrate corruption risk into strategic planning

The first requirement is to integrate corruption risk assessments into strategic planning, rather than adding them on incidentally.

  • Seek out low-risk opportunities in high-risk markets
  • Scrutinise deals early on in the process

It is essential to access the best possible information when making the decision whether to go ahead with a major deal. External due diligence provided by an objective outsider is often the most valuable.

  • Give your front-line people the support they need

A clear anti-corruption policy is an important form of support, because it gives employees the authority to say “no” to demands for illicit payments. However, this is only the first step. Individuals’ personal targets need to be realistic too.

  • Take a planned approach to “zero tolerance”

Here is a full glimpse of the report.

Oladipo Oladepo
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