By Janine Erasmus
Big corporates have systems in place, personnel and financial resources to deal with legal and ethical challenges. They can absorb both planned and unexpected costs, including those related to corruption, with relative ease. But what if you are running a small business – how easy is it to stick to your standards, when you are aware that it might slow the growth of your company? Part three of our business series profiles a small female-led company grappling with this problem.
There are more small and medium-sized businesses in the world than there are large – a publication by Unido (UN Industrial Development Organisation) and UNODC (UN Office on Drugs and Crime), titled Corruption Prevention to Foster Small and Medium-Sized Enterprise Development (Volume 1), points out that “of the 75 million companies existing across the globe, around 90% are small and medium-sized enterprises (SMEs)”.
Lulama Duma is a co-director, with her sister Nenzeni, of one of these. Como Blue, a management and business consultancy that operates in Southern Africa, is now four years old. One of Duma’s challenges, as a small business owner, is dealing with corruption and at the same time, ensuring that the business is sustainable. The company operates mostly in Zambia but is planning to soon branch out to Namibia and Botswana.
Don’t do corruption
“Big companies do have more resources, but many of the interventions we’re talking about don’t cost much,” said General Electric’s Brackett Denniston at the recent Corruption Watch business colloquium. “The right tone at the top – that doesn’t cost a lot; or appointing an ombudsperson in the company.”
No matter what the size of the operation, there should be no question of rejecting corrupt ways of doing business. A 2007 publication from the Centre for International Private Enterprise, titled Business Without Corruption: An Action Guide, asks why businesses seem to be reluctant to choose this “exotic” strategy. Reasons cited include the absence of a strong and just government; the inconsistency and unenforceability of laws; a shortage of non-corrupt methods to solve problems; and the more immediate results obtained from greasing a palm here and there.
But going down the unethical road can have consequences that might not show up immediately. “Perhaps the short-term effectiveness of corrupt practices is the best argument in their favour. But the usual result is that in the medium and long term, corrupt practices return like a boomerang and strike a blow against business,” warns the publication. “Violating the law always places the businessperson in a position of dependency on government bureaucrats, who can apply the law as they see fit and for their own purposes.”
Duma doesn’t plan to put her business in that position, but it’s an ever-present challenge. “We have encountered corruption in our operations – often it’s subtle rather than explicit. We find it difficult, as a small company, to report it, and we don’t have mechanisms in place to pick it up early enough to stop it,” she says. “It’s quite rampant.”
She cites an example of her company approaching a Zambian government ministry for possible work. The initial meeting went well and they thought there was a possibility they would get the job. “But then they said that there was a need for people to come and see us in South Africa and the next thing we knew, we had to arrange their accommodation, shopping, etc. You feel that you can’t refuse [if you want the work].”
Luckily, she says wryly, her company doesn’t have those financial resources and it couldn’t entertain potential clients – and their families – in grand style even if it wanted to.
Moving away from doing business with the government
Duma feels that it is all too easy to get away with corruption these days. “Once the contract has been signed the costs for these perks are often built in, as entertainment expenses and the like. It promotes an environment where government officials feel they can’t deliver unless there is something in it for them.”
Because of this, says Duma, she prefers to work with private sector companies. “To me it seems that there is less corruption than in the public sector.”
This is an informed opinion – Duma has held several government jobs in South Africa and the US, where she grew up. Her roles include a stint as a senior legislative analyst in the Legislative Analyst’s Office, California, and chief of staff in the Gauteng premier’s office after she relocated to South Africa.
“We now think carefully before we decide what activities we want to be involved in, and this is one of the reasons we’re veering away from working with [the] government, although we can’t do that completely. We’ve also partnered with a credible big company, as its voice is stronger than ours. It’s like a shield for us.”
She is frustrated by the notion that corruption is simply business as usual, that there’s more to gain than to lose by participating in it. “One doesn’t get the sense that there’s leadership at the top. Because of this, resources are diverted away from where they are most needed.”
However, she concedes that not only the government is to blame, but that business too is complicit. “I understand that it’s a difficult environment, but if a lot more people said no, it would become easier.”
Like Corruption Watch, Duma believes that ordinary people can make a difference. “Citizens mustn’t fear to report corruption – this is where organisations like Corruption Watch have a role to play in encouraging whistleblowers.”