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, an 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.)
Article continues on page two: it takes two to tango and a few do’s and don’ts when aspiring to do clean business in Africa...