Turning Corruption into Purpose: Bribery in Angola: BCG to Forfeit $14 million

As an entrepreneur with two decades of experience in emerging markets, particularly in Africa, I lead my life with a strong recognition of Western legal frameworks. However, my deep understanding of these markets has shown me that lasting solutions come from implementing realistic approaches that genuinely address the issues at hand and benefit all stakeholders.

There’s a troubling reality where governments, by collecting significant fines from companies, may have little incentive to solve the underlying issues.

These fines become a source of revenue, leading to a system where problems are perpetuated rather than resolved. Instead of merely benefiting from penalties, I advocate for solutions that promote sustainable economic practices. These practices should have positive commercial implications for both the West and emerging nations, encouraging investment that aids in development rather than perpetuating a narrative of corruption.

By shifting our mindset and focusing on constructive solutions, we can build and develop mutual trust and growth on both sides.

I’ve been doing business in the telecom space of the emerging markets, especially in Africa for many years, particularly during the early days of 2G when European leaders were in charge.

Back then, at my level of dealing as a Western SME With counterpart of the largest telecom operators in those regions, business was conducted transparently and straightforwardly, much like in Europe.

However, over time, even with all necessary disclosures signed, small companies found themselves sidelined, receiving only superficial deals designed to create the illusion of Western involvement. Meanwhile, the substantial contracts were increasingly awarded to BRICS countries that had no qualms about engaging in practices others might avoid.

As a result, companies that refused to participate in such activities were gradually erased from the market.

In light of these developments, I’ve advocated in my mind, and now I’m sharing it , for a new approach:

1. Acknowledge Reality:

Traditional anti-corruption efforts, while well-intentioned, have had limited success. Corruption remains deeply embedded in the business culture of certain regions, making it difficult for Western companies to compete fairly.

Recognizing this reality is the first step toward developing effective strategies.

2. Reframe the Approach:

Instead of fighting a losing battle against corruption, we should reframe these payments as a “cost of improving local business” or “area development.”

This would involve formalizing these payments, ensuring they are declared, regulated, and directed toward local development projects such as schools, infrastructure, or healthcare facilities.

This approach aligns with the urgent need for tangible infrastructure improvements, such as roads and railways, which are critical for Africa's economic growth and integration.

3. Ensure Transparency and Accountability:

Implement strict monitoring and reporting mechanisms to guarantee that these funds are used as intended.

By making the process transparent, we can ensure that the money from large companies directly benefits local communities rather than vanishing into the pockets of a few individuals, or later as legal fees to foreign governments.

Digitization can play a crucial role here by providing tools to measure the impact of these funds effectively and ensuring that contracts bring jobs both locally and to the West, with a higher level of management oversight[1][4].

4. Benefit All Stakeholders:

This approach could appeal to those who currently benefit from these practices.

By formalizing and redirecting these funds, they could legitimize their income and position themselves as key contributors to local development, enhancing their social standing and reducing the risk of legal repercussions.

It would also level the playing field for thousands of Western companies, who often find themselves excluded from contracts due to their refusal to engage in illegal corrupt practices.

5. Pragmatism Over Perfection:

While no system is perfect, succeeding in 50% of cases is better than not at all.

Corruption may never be fully eradicated, some may consider it as golf tournaments or lobbing in the west, but this approach offers a practical way to ensure that at least some of the funds are used for the greater good.

It’s preferable to see money from large companies going directly to transparently managed local projects rather than into the pockets of one individual who misuses it, traveling on private jets, wearing lizard and crocodile shoes and expensive LVMH briefcases.

6. Shift Responsibility and Encourage Local Pride:

By involving private corporations in rebuilding efforts, we shift some responsibility from traditional institutions like the “World Bank” to the private sector, which can often act more efficiently.

This approach reduces the burden of legal battles on society and encourages local individuals to take pride in their contributions to development. As these individuals pay taxes, everything becomes easier to monitor and disclose, fostering a culture of accountability and development: this is the recipe of a good society, this is what sustainability means developing from inside out, organically. Crocodile shoes are not included !! [2][3][5].

In essence, this strategy not only reduces wasted resources on futile legal battles but also aligns business practices with the development needs of the region, transforming a persistent issue into a positive force for societal improvement. By focusing on both digital and physical infrastructure, and acknowledging the cultural complexities involved, we can work towards a more inclusive and sustainable development model that benefits all stakeholders.

Footnotes

Trade Relations Between Africa and the Western World

1. Historical Context:

Historically, Africa's trade relations with the Western world, particularly Europe and the United States, have been significant. These relationships were often shaped by colonial histories and trade agreements that favored Western economies.

2. Shifts in Trade Dynamics:

Over the past two decades, there has been a shift in Africa's trade dynamics. While Europe -France- remains a major trading partner, accounting for a significant portion of Africa's trade in goods, its share has been declining as Africa diversifies its trade partners.

The United States, once a leading destination for African exports, has seen its influence wane as China and other BRICS countries have become more prominent.

3. Economic Influence:

Despite the decline in trade volume, Western countries continue to exert influence through investment, AID and development programs.

However, the increasing presence of China and other emerging economies in Africa has altered the balance of economic influence.

4. Challenges and Opportunities:

The Western world's engagement with Africa faces challenges such as competition from China and the need for more equitable trade agreements.

Opportunities exist in sectors like renewable energy, technology, and infrastructure development, where Western expertise and investment can play a crucial role.

Trade with the EU and US

- EU as a Major Partner:

The EU remains Africa's largest trading partner, accounting for 33% of Africa's exports and 31% of its imports in 2020. The trade involves a mix of manufactured goods and primary commodities.

- US Trade: US exports to Africa were about $28.69 billion in 2023, with a focus on merchandise and raw materials.

Comparison with China

- China's Growing Influence:

China has become a significant trading partner for Africa, with exports to Africa reaching approximately $145 billion in 2021.

China's trade with Africa has grown rapidly, with imports from China increasing twentyfold between 2000 and 2019.

- Trade Composition: Africa primarily exports raw materials to China, while importing manufactured goods and machinery

Key Trends

- Shift in Dynamics: While Europe and the US remain important partners, China's role has expanded significantly, challenging traditional Western influence.

- Trade Balance: Africa often runs a trade deficit with China due to the nature of exports and imports.

Sources

[1] Digital Transformation KPIs that Measure Impact - Ultra Consultants https://ultraconsultants.com/erp-software-blog/digital-transformation-kpis-measuring-impact/

[2] [PDF] Improving the World Bank's Development Effectiveness https://ieg.worldbankgroup.org/sites/default/files/Data/reports/development_effectiveness_0.pdf

[3] [PDF] Impact of Public and Private Investments on Economic Growth of ... https://arxiv.org/ftp/arxiv/papers/2105/2105.14199.pdf

[4] [PDF] Using a digitization index to measure the economic and social ... https://business.columbia.edu/sites/default/files-efs/imce-uploads/CITI/Articles/using-a-digitization-index-to-measure-the-economic-and-social-impact-of-digital-agendas.pdf

[5] [PDF] Business and International Development - Harvard Kennedy School https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/programs/cri/files/report_5_edelman_survey.pdf

[6] [PDF] The Effectiveness of Private Sector Development Interventions in ... https://documents1.worldbank.org/curated/en/113211506499860917/pdf/120073-WP-Systematic-review-of-PSD-interventions-in-FCS-PUBLIC.pdf

[7] IEG Insights: The Private Sector in Fragile and Conflict-Affected States https://ieg.worldbankgroup.org/ieg-insights-private-sector-fragile-and-conflict-affected-states

[8] Private sector engagement - Oxfam America https://www.oxfamamerica.org/explore/issues/economic-well-being/private-sector-engagement/