African small and medium-sized enterprises (SMEs) are currently facing the dilemma of whether to stand firm against bribery and corruption, with a large proportion believing that doing so could cost them their business.
A new report from the Association of Chartered Certified Accountants (ACCA), titled ‘Bribery and corruption: The hidden social evil on your doorstep’, shows deep concerns about the damaging impact of bribery and corruption on SMEs, with 66% of SMEs in Africa and their advisors believing that standing up to bribery and corruption will cost them business opportunities. This is high compared to the global figure of 59%.
However, the survey also revealed a strong understanding of the benefits of standing up to corrupt practices. A total of 64% of respondents from Africa agree that having a strong anti-bribery policy boosts customer confidence, as opposed to 77% globally, and 85% say it increases their chances of getting lucrative contracts with big businesses and public sector bodies, compared with 68% globally.
ACCA Director for Africa Jamil Ampomah said: “Corruption is a poison; it distorts markets, stunts economic growth, and deters investment. Many very small businesses don’t have the bargaining power to refuse when bribes are demanded of them. Entrepreneurs have to choose between paying the bribe or losing the business and often that is no choice at all for someone trying to support a family.”
Ampomah added that ACCA hopes this report will serve as a catalyst for change, encouraging entities across all sectors to evaluate their practices and align with the best standards of business conduct.
Report author Jason Piper, ACCA’s Head of Tax and Business Law, said: “Our report aims to arm businesses and regulators with the necessary insight and tools to root out corruption and foster an environment of transparency and trust. This could include the use of the latest digital tools. Just as technology is being used by criminals, so regulators and enforcement agencies should embrace it in the battle to detect, prevent and respond to them.”
Drawing from a broad spectrum of global data, expert opinions, and real-world case studies, the report explores the multifaceted impacts of corrupt practices on SMEs and economic development. It highlights the severe consequences that businesses could face, including legal penalties and damage to their reputations.
The report also considers the effectiveness of current anti-corruption laws and policies across different countries, suggesting that while some progress has been made, much remains to be done to align international efforts.
Read the report here.
Implications
Jabu Matsilele, Chairperson of the Small Tourism Enterprise Association, told Tourism Update that bribery and corruption either limits SMEs' opportunities or forces them to part with their hard-earned cash, hampering their chances of becoming self-sufficient and being sustainable.
“Bribery and corruption disrupt the fair market opportunity and competition trajectory, thereby giving opportunities to low-performing SMEs that are not even market ready, let alone known,” he said.
“It poses a very real challenge to the way that SMEs operate. Moreover, it threatens their existence altogether, leaving small business owners feeling powerless. Corruption makes it almost impossible for SMEs to make meaningful contributions to the economy.”
Possible solutions
There is an urgent need to support SMEs by providing access to opportunities that do not compromise their integrity, Matsilele suggested.
“We need campaigns to alert SMEs to the dangers of bribery and corruption. The campaigns must include regular interactions with business owners to discuss and find innovative ways to fight corruption. It must be made patently clear, in word and action, that corruption is not tolerated,” he said.
He said that steps need to be taken to ensure that business owners are protected when they report corruption, and made to feel confident that action will be taken.
“To this end, effective and independently managed anonymous tip programmes should become the norm. These must be supplemented with other anti-bribery and corruption mechanisms like lifestyle audits and staff rotation with a very strong and organised procurement office that has systems and procedures in place. Needless to say, the law must take its course.”
Dr Salifou Siddo, Chief Executive of SME TradeLinks, highlighted that the scourge of bribery and corruption was the root cause of poor service delivery, underdevelopment and poverty.
He said that it would be naive to suggest that the job should be left to regulators and law enforcement agencies when it is often people working in these institutions demanding and taking bribes before delivering the services that SMEs are entitled to in the first place.
“Small businesses in Africa need to embrace a values-driven approach to doing business, and one of the fundamental values is ethics. They must determine for themselves what is morally acceptable or unacceptable behaviour when conducting business. SMEs need to draw the line and be guided by that line in all their business dealings. This is not always easy, but it is the only way they can build sustainable and reputable businesses.”
Septi Bukula, founder and director of Rendzo Network, a collaborative network of tourism SMEs in South Africa, said that it is against this backdrop that Rendzo Network has partnered with leading SME advisory organisation, the South African Institute of Professional Accountants and other partners, to host the eighth International Institute of Certified Forensic Investigation Professionals Global Conference in Johannesburg from July 16 to18.
“We want to drive an open conversation on this matter because there is, in our view, too much silence on it from a public point of view. We talk a lot about various impediments faced by SMEs. But we hardly ever talk about what is the biggest elephant in the room, namely the negative impact of crime and corruption on SMEs in terms of access to markets, finance, growth, productivity and competitiveness,” Bukula concluded.
The conference aims to highlight the crucial role of forensic investigations in combating all forms of crime and corruption.
