Third World Corruption & New World Morality
by
H. Kent Craig
©1998
It's a fact of life as well as an anchor of reality that a
lot if not most business done in Third World countries,
especially regarding any aspect of imports/exports, is
"lubricated" by baksheesh, by small bribes to
various Custom Agents, Inspectors, and other Government
officials. It doesn't matter that these bribes payed to
allow the more or less free flow of goods are payed on
perfectly legal goods, goods that normally have all the
correct paperwork and documentation necessary attached with
them, goods which are borne by honest businesspeople that
don't want to cheat any Government on either side of a
given transaction out of a single nickle, bribes in almost
all cases must usually be offered and/or extracted.
Among the many factors which hinder economic growth and
development in Third World countries, especially on the
African continent where it's virtually universal,
"nod-and-a-wink" corruption on imports/exports, on getting
official permits to do business in a given country, on
obtaining the most basic services for a business office in
a given country like telephone, sewer, water, etc.
services, is so stifling, is so against the grain from a
gut-level point of view that many businesses take, that
many US and European businesspeople simply decide not to
bother with Third World nation smaller markets. These
decisions by those who control the capital and the business
expertise not to invest in smaller national markets because
they feel it's simply not worth the hassle for what
potential ROI might be there continues to keep Africa and
other Third World markets in an economic ghetto which shows
no sign of gentrification.
It's important for US and other New World capitalists to
invest in Africa in particular, in the 3rd World in
general, for a whole host of economic, political, and
social reasons. When a US business sets up a branch office
in, say, Tanzania, they normally bring in a core staff of
expats from the States to set up beachhead operations and
begin the process of establishing a business presence. This
core management then hires locals and begins to train them
in their particular corporate culture, and more
importantly, infuses the local office with a capital base
of salaries, new equipment purchases, and expenditures for
local services. As this is happening, a melding of
cultures, a climate of (hopefully) cross-continent
understanding is shaping up. As monies are spent, as
markets for a company's products are developed, profits are
reinvested back into the community, creating wealth for the
local and regional and national economy of the host
country, helping to create a higher standard of living for
all that country's citizens, helping to ensure a stable but
progressing towards democratic ideal political climate
where there's an equal measure of economic and political
freedom, one being unable to coexist without the other.
Yes, wealth is also being created for the business and/or
individuals that took the risk to initially invest, but
that's the capitalist system. Most of the wealth created by
such local investment stays in the community, in the
country it was created in, giving jobs and opportunity a
widening net of individuals and peripheral resident
businesses; just look at how the Japanese and Germans work
their investments in the US, for a similar model.
Into this machinery of hope of 3rd World prosperity and
growth, though, almost always is thrown the monkey wrench
of corruption. Other than the fact that it's illegal (US
businesspeople have gone to prison for paying more-or-less
officially sanctioned if not legal bribes to Government
officials in certain 3rd World countries), New World
capitalists don't like the climate and culture that fosters
official or unofficial but tolerated corruption for two
main reasons: unfamiliarity and uncertainty.
Unfamiliarity because, outside of certain pockets of
more or less tolerated official corruption in a
less-than-handful of certain building and other departments
of certain major metropolitan municipalities, the average
US businessperson doesn't encounter anything that even
hints of corruption, let alone have to deal with it on a
daily basis. Sure, official taxes and permits and fees
might seem like official corruption, but everyone
knows that monies raised go into a collective political
coffer to support a given governmental entity, not into a
private pocket to support some official's vacation home.
Living in a society virtually free of having to slip a few
dollars here and a few dollars there to get your phone
service installed, your newspaper delivered regularly, your
stuff delivered from Eddie Bauer through your UPS man to
your home without routine possibility of theft, to have
police come when you call them in an emergency, to have
your mail delivered intact without the contents being
rifled, when you live in a society where a high level of
expectation of ethicism and morality from public servants
and private service contractors is the norm, having to
deal in a polarly-opposite culture where those aren't given
facts of life and business, is often more than many New
World businesspeople are willing to put up with.
Uncertainty because businesspeople need and like to
know the facts, the facts on how much something's going to
cost, whether that's overhead, raw product cost, R&D,
service cost, or corruption. Because corruption even when
legal and/or unofficially tolerated is not a fixed-fee item
like an official Government levy, that uncertainty of how
much to figure in a company's Third World branch office
core overhead cost for the actual dollars involved in
paying bribes just gives a typical Branch Manager for that
expatriate division fits. Whether it violates or doesn't
the laws of the country where the primary business is
located aside, how does one figure a reasonable percentage
of gross expenses as part of 3rd World branch office
overhead for the needed baksheesh that will enable
one to operate said branch office? Unless one has had prior
experience in that or a similar cultural and political
environment, then really, one can't, one doesn't, which is
a core reason for the genuflective hesitancy of many US and
New World businesses to invest in Africa and the Third
World.
The solution? There is but one, and it's common sense; if
the Third World wants New World money, business expertise,
and venture capital, then each individual country in the
Third World will have to clean up its act. I'm not saying
any country has to change its political system, its
cultural heritage, or its overall official government
structure as it relates to regulating domestic and foreign
business enterprises within its borders. All I'm saying is
that our instinctive human morality tells each one of us
that corruption is wrong, no matter what religious or
political belief system we hold, and that the political
collective of a given country needs to enforce that basic
human tenet of shared ethic. Those countries that do rein
in at least the worst and most penurious cases of official
or unofficially tolerated corruption the quickest will be
the ones to reap the benefits of the New Global Economic
Expansion the soonest. In you don't believe me, look at
what's happened with Singapore, as compared with say, its
neighbor Indonesia.
Example Addenda
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East African Business News Headlines Service 14 September, 1998
mail to, or (un)subscribe: news@newbizage.com
KENYA
The Finance Minister said that the World Bank intended to reduce its commitments to Kenya, from the current USD 200-250m to USD 75-150m per annum, unless there was a successful implementation of the medium-term expenditure framework and a sustained political commitment to reforms. The World Bank alleged that misappropriation of funds and the poor state of the economy reduced the country's capacity to absorb aid.
+++++++++++++++++++++++++++++++++++++++
East African Business News Headlines Service 20 August, 1998
mail to, or (un)subscribe: news@newbizage.com
UGANDA
MIRDOC, the Ethiopian company which had won the bid to buy 80 per cent stake in the Sheraton Hotel, and subsequently failed to pay for it, defended its actions on the grounds that it was being pressured to pay bribes to 'third parties'. It urged the government to apprehend the corrupt parties. However, the government maintained that the deal remained cancelled and stated that it was considering other options to achieve the divestiture of the hotel.
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