More than 30 per cent of companies responding to a survey admitted to losing deals due to corrupt competitors.
This statistic comes from a survey by global risk consultancy company, Control Risk. The survey interviewed 824 companies worldwide.
The senior managing director of Control Risks West Africa, Tom Griffin, spoke to CNBC Africa about the underlying factors leading to corrupt businesses. “It takes two to tango, there’s a supply element and there’s a demand element to corruption,” he said.
Griffin shared that in these latter days, the West African region has seen a greater shift to compliance led activity and strict regulation driving corruption to the fore and in the same breath making companies “more emboldened” when operating in higher risk markets.
What has been interesting is seeing the risk aversion of some countries, said Griffin. “Within the survey, we saw 46 per cent of companies coming in from the UK, who were very uncomfortable when venturing into higher risk locations such as Nigeria and Kenya.”
Griffin said it is undeniable that this impacts on investment because companies are not willing to be part of this “Africa Rising” story that we see.
Nigeria has suffered in the energy, power and infrastructure sector due to corruption and bribery, a practice that further robs the country of certain tariffs and in most circumstance the deliverables by the bribing companies are not equivalent to the money they are being paid, he explained.
Corruption has been ingrained in the business style of some companies. The culture of “backing out” and walking away from corrupt business practices may not be sustainable for businesses with targets and objectives to be achieved. Although according to Griffin, this may be the only way.
“The key thing we advise companies and governments is that change takes time,” he said on the backdrop of Nigeria President Buhari’s administration and the first steps towards greater scrutiny on government parastatals.
The notion on the levels of “impunity” within leaders in Nigerian government and business is slowly changing. “In the survey, African respondents do feel that the situation is getting better and a lot of that is driven by international regulations and legal frameworks.”
Griffin made note that only 55 per cent of respondents talked about undertaking any form of due diligence into the reputational risks and associated risks of third parties.
While many companies have compliance frameworks, Griffin criticised that what the frameworks don’t do is ensure compliance. “What’s key is making sure the message that trends at the top trickles down to the soft underbelly of the middle management and likewise to the foot soldiers.”