Collective action between businesses and Government will help tackle Africa's widespread bribery issues 

Bribery is rife in Africa and has been for some time. But with many African countries experiencing strong growth and regional organisations becoming increasingly ambitious, this situation may be changing. Happily, the change is not just being driven by outside pressure. Individual African countries are beginning to develop their own anti-corruption laws and the continent's burgeoning middle class is increasingly questioning, and indeed shunning, the bribery culture that has prevailed for so long.

That said, bribery still exists. It is still very much a feature of daily life for consumers and, for now at least, should remain an important consideration for any organisation thinking about doing business on the continent.

Even though it is possible to do business in Africa without paying bribes, organisations need to make important choices about how they deal with corruption and address the issue in their business planning. First off, operational costs can be higher if bribes are not paid and timelines may extend without facilitation payments to speed up Government processes. As such, profit can at times end up being lower than would have been the case if bribes had been offered. This can lead to some difficult scenarios where companies have to walk away from deals that could have been good for their business simply because the corruption risk was too great.

Another important area of risk lies in the retention of third parties and, in particular, making sure you have safeguards against the risk of corruption when using agents. To deal with this, effective due diligence of third parties is essential alongside robust anti-corruption policies that set out strict standards to be followed by those representing the business in each jurisdiction. Particular care also needs to be taken when dealing with Government representatives of any type.

Anti-corruption policies are also paramount when briefing the workforce because those employees who have been brought up in Africa may not consider facilitation payments as wrong. The same is true when dealing with hospitality or 'travel' expenses, where notions of what is reasonable and proportionate need to be emphasised. 

The entire workforce should be trained in how to identify corruption concerns ('red flags') and be told the importance of creating a documentary record of the issues they considered and the conclusions reached. This training is particularly important for those employees who may have responsibility for reviewing and/or sanctioning items of expenditure where difficult considerations arise. Retention of the documentary record could be crucial if it becomes necessary to justify a particular decision at a later date.

Level playing field

With the heavy inflow into Africa of investment from China and India, an additional concern for western companies is the danger of losing out on business to other countries. These jurisdictions do not have the same anti-corruption culture that exists in the West and this can leave businesses based in the UK and US at a disadvantage. Despite some notable efforts to level the playing field for all participants, this is unlikely to happen any time soon.

Regardless of the risks of additional costs, or even losing out on business, a hard-line stance on avoiding corruption is the only sustainable way of doing business in Africa. Furthermore, it is an approach that will probably pay dividends as the bribery landscape in Africa continues to change.

Quite apart from local reputational factors, businesses are rightly more conscious of their increased exposure under statutes such as the UK Bribery Act and the longer-established US Foreign Corrupt Practices Act, both of which have extra-territorial application.

Such regulation is causing multinationals to be more diligent about their business operations to make sure that they mitigate their exposure to corruption risk, particularly so given the robust track record of enforcement by the US. The recent introduction of the UK Bribery Act has undoubtedly raised the stakes in the UK over accountability on corruption. But there are still concerns about when its enforcement will begin, while the absence of case law makes it more difficult to establish the parameters of the new legal framework.

Looking to the future, there are great hopes about the potential for collective action as a valuable tool for further tackling the problem. Businesses attempting to reduce corruption risk are joining forces with other organisations and Government institutions to raise corruption awareness and establish appropriate levels of ethical conduct. It will take time to see whether this approach can ever truly become embedded and effective in Africa.

Ultimately, corruption is an ingrained and sensitive issue, resulting from a myriad of socioeconomic and cultural practices that are likely to change over the years. Now that more of the global commercial fraternity is willing to see Africa as a profitable business opportunity, it is important that the issue of corruption is discussed openly to make sure market participants minimise the associated risks and continue to flourish in this continent of opportunity.

Andrew Legg is the senior litigation partner and Emma Gordon is a litigation partner in the fraud and investigations group at Eversheds.