It’s Time for Internal Compliance Systems in Ghanaian SMEs
“It’s incredibly difficult to be an honest entrepreneur in this country. People in government agencies expect you to pay them a bribe to do what they are paid to do, otherwise they sabotage you. These things make me wonder if Ghana can really work.”
This statement, posted on Facebook recently by a young entrepreneur in Ghana, aptly captures the moral struggle of entrepreneurs doing business in a corruption-ridden business environment. Such expression of frustration is borne out of encounters with bribe-seeking public officials. Above all, this post is a reminder of how public sector corruption eats away at the efforts and motivation of young entrepreneurs who are helping to alleviate Ghana’s youth unemployment problem through private enterprise.
It is rare to find small businesses with a steadfast interest in avoiding corrupt behavior. That’s because of the widespread perception that corruption is prevalent in Ghana and that public officials cannot be purged of their proclivity to be corrupt.
The familiar pattern in Ghana has been that, after undercover investigators like Anas Aremeyaw Anas release reports of corruption in a public institution, all attention is directed at the specific agency implicated in the investigation. Accusations and debates run through the media and public discourse, but then things return to normal after a while and corruption again becomes the order of the day.
For many small and medium-sized enterprises (SMEs) this environment seems to disincentivize creating internal anti-corruption compliance systems. When corruption is seen as the best way to do business, it is known as the “corruption as efficiency” economic theory.
The gist of this theory is that sometimes the most effective means to obtain basic public services is to pay a bribe so as “to sidestep ludicrous bureaucracy.” Faced with the option of either paying a bribe to a public officer to expedite a service, or not paying and getting delayed as a result, an entrepreneur will ordinarily prefer the former.
Taking advantage of complaint hotlines to report bribery demands to higher officials is rarely an option. This is because, as one Facebook commentator put it, the person hearing the complaint “will ask you to pay before accepting your complaint.”
Nevertheless, with SMEs in Ghana already struggling to access credit, corruption will only serve to increase their business costs. This reinforces the case for adoption of well-structured internal compliance systems at the nascent stage of business.
Currently, the laws governing Ghanaian companies do not mandate companies to consider internal ethical compliance as a key aspect of their business structure. The creation of internal compliance frameworks remains a decision for individual businesses. Generally, there is low awareness of the benefits of robust compliance programs. These are the kinds of challenges CIPE is trying to address through its Anti-Corruption Compliance Training of Trainers program for SMEs in sub-Saharan Africa.
CIPE’s program supports local SMEs by:
- Teaching them how to mitigate corruption;
- Equipping them with tools to set up internal compliance programs;
- Training them to monitor and evaluate compliance programs; and
- Extending access to a network of ethically-compliant local and foreign companies for entrepreneurs to forge business ties.
These activities are designed to lead to collective action by SMEs to push for changes to their operating environments. CIPE’s vision is that SMEs working in unison can help identify public agencies prone to corrupt conduct and exert pressure on governments to take meaningful steps toward eradicating public sector corruption. The first step, however, is helping entrepreneurs like the one who posted on Facebook, to develop internal anti-corruption compliance programs.
Erica Nkrumah, Extern, Africa