When working with investors you'll have to do some cross-cultural translations which go beyond language.
It took me 5 years to learn so maybe I can save you some time... useful for both foreign and African founders.
Once upon a time I arrived in Africa as a 23 year old ready to fix Africa’s rural energy (how hard could it be, right?). Among other plans, my goal was to never give a bribe. As westerners we believe avoiding bribes is sacred--it's part of our secular religion that we never think to question.
But after some time I realized, Democracy came to Africa on a boat. Before white people, Africans had a perfectly fine system that involved patronage to the local chief. They didn't need a complex system of millions of pages of writing. People back then didn't even need a writing system; they didn't have one.
Now Africa has a mixture of the traditional systems and Democracy. We call it corruption.
Years ago in Africa I joined a business group which I won’t name to protect the innocent. (The group is widely known for its strong moral values.) I was the only white guy and the youngest.
We visited the businesses of each of the other members. This was eye-opening. They all had wonderful businesses. And giving bribes was not something some of them did. It was something all of them did. For many, strategically giving bribes was a core competency.
Bribes in the US only become important at the level of Boeing, Pfizer, Halliburton, etc but in Africa it’s part of everyday life for startup founders right from the beginning.
Now I understood better. Or I thought I understood. Because one day an African guest lecturer came to the business group who had founded and ran a huge local company. "I've never paid a bribe," he said. "The other week I was caught by the police. They said ‘pay a bribe or go to the police station.’ So I said 'Let's go to the Police station.' "
Afterwards I talked to my groupmates, impressed. "Wow! so he has never paid a bribe," I said.
They all laughed. "Kyle, of course he has paid bribes. You don't get where he is without paying bribes. Everyone pays bribes. When an African says that in front of an audience we are winking at eachother. He must be trying to raise money from some Americans so he needs to impress them with his purity. Look how impressed you are." Sure enough, he soon sold the company to an American PE fund.
"So how do you record bribes? You have to say how you spent the money in your accounting system, no?"
" 'Facilitation fees.' "
"Facilitation?" said another. "That's old school. Everyone knows that means 'bribe.' Use 'bush clearing.' If anyone asks 'where's the evidence of this bush' you can say 'It was cleared.' Or 'Pest control': if anyone asks you say 'we had a huge infestation, but now, as you can see, the pest control was very effective.' " Everyone laughed.
But are bribes bad? If you were driving a truckload of food to starving people and at a police check point they asked for $1 or else turn around and let people starve. Is that wrong? wouldn't it be wrong not to pay? What if you were bringing food to hungry people and the bribe was $10? Where is the line?
And considering the police man makes $150/month and has a wife and children to take care of, is it really wrong to pay him on a "base plus commission" structure?
And considering he paid a bribe to become a police officer.
And considering democracy could be considered modern colonialism...
This is not such a hypothetical example. It is argued (by Alex de Waal in Famine Crimes: Politics and the Disaster Relief Industry in Africa) that the genocide in Darfur was funded by International NGOs and multi-laterals like the UN; they paid Khartoum for “permits” to treat the people that Khartoum was killing. Big NGOs give bribes but entrepreneurs are held to a different standard. This article is not meant to complain about the unfairness of the situation, but merely for you, dear entrepreneur, to not feel alone.
To add to the irony, investors want companies to “synergize public-private partnerships,” and yet government contracts awarded without a bribe are as rare as a white rhino. Funders know this and yet encourage Public-Private Partnerships anyways.
Allow me to translate for the uninitiated: Don’t ask; don’t tell.
Until I became more African I realized I could never compete head-to-head in the business world with my group mates. At that time I moved to Silicon Valley to learn sales.
In a tale as old as the continent, white boy tries to change Africa; Africa changes white boy.
Westerners want Africa to transition from a traditional patronage system to democracy, as if it’s a binary thing.
But what if a third option—an authentic African governance system—is possible? One that encourages Africans’ warm, communal, capitalist nature rather than trying to make every transaction a cold process with a mountain of paperwork.
Let’s be honest, paperwork came on a ship.
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I know this too well having worked in the accounting profession, this norm has touched down the very Fibre of business. Today people have come to expect it as a right. Infact, you have a choice, to either give a small amount at the lower cadre or larger amount at the higher cadre.
Though it's possible to run a business without giving bribes, the growth rate and the level of effectiveness, market penetration and reach will be very slow. A good example is where you get an opportunity to supply the government which is the largest consumer of any service or products you will have to part with significant resources to get the business, leave alone getting paid.
I agree with you, this culture has a traditional roots to it but at the same time, the insatiable desire for wealth creates an even larger barrier.
I remember this issue being addressed in the Brown magazine article where I first found out about your work ~10 years ago (specifically the story about your offer of a 'discounted price' *wink wink* for one of your biogas digesters in lieu of paying a bribe). Not surprised that you have had to accept this in the long run as I've heard at least one story of (in this case) a Nigerian who had to pay lots of bribes just to get basic paperwork sent over to the U.S., and this was not even related to business...
Here, in Sydney, Australia, a friend drove his car 11 kms over the speed limit. The road was empty at night, but a camera on a metal pole, by the roadside, took a photo of her car. A week later, a letter was sent to him. It demanded he pay over $500 to the government, for speeding. If he doesn't pay it, they will take him to court, and he could lose his license. He is lucky it wasn't on a holiday, as the fines can double on holidays. Australian fines, fees, licenses, are worse than bribes.
In the US you can just go to court to challenge the speeding ticket and usually the police officer doesn't bother to show up so the ticket is dropped. Not sure about Australia.
In Australia the government demands that all commercial activity subsidize the large government bureaucracy, so they demand bribes for everything. You cannot run a business without paying their bribes. Only Australians don't use the word "bribe" they use "licence" or "regulation" or "permit".
I know this too well having worked in the accounting profession, this norm has touched down the very Fibre of business. Today people have come to expect it as a right. Infact, you have a choice, to either give a small amount at the lower cadre or larger amount at the higher cadre.
Though it's possible to run a business without giving bribes, the growth rate and the level of effectiveness, market penetration and reach will be very slow. A good example is where you get an opportunity to supply the government which is the largest consumer of any service or products you will have to part with significant resources to get the business, leave alone getting paid.
I agree with you, this culture has a traditional roots to it but at the same time, the insatiable desire for wealth creates an even larger barrier.
I remember this issue being addressed in the Brown magazine article where I first found out about your work ~10 years ago (specifically the story about your offer of a 'discounted price' *wink wink* for one of your biogas digesters in lieu of paying a bribe). Not surprised that you have had to accept this in the long run as I've heard at least one story of (in this case) a Nigerian who had to pay lots of bribes just to get basic paperwork sent over to the U.S., and this was not even related to business...
Wow! You have very good memory. Yes, you're right.
Haha, it was easy for me to remember because it was a clever way to handle the situation! ;)
Our Delivery team pays bribes of over $500 monthly to Police.
We record it as drawings.
It's a wrong one though.
Here, in Sydney, Australia, a friend drove his car 11 kms over the speed limit. The road was empty at night, but a camera on a metal pole, by the roadside, took a photo of her car. A week later, a letter was sent to him. It demanded he pay over $500 to the government, for speeding. If he doesn't pay it, they will take him to court, and he could lose his license. He is lucky it wasn't on a holiday, as the fines can double on holidays. Australian fines, fees, licenses, are worse than bribes.
In the US you can just go to court to challenge the speeding ticket and usually the police officer doesn't bother to show up so the ticket is dropped. Not sure about Australia.
In Australia the government demands that all commercial activity subsidize the large government bureaucracy, so they demand bribes for everything. You cannot run a business without paying their bribes. Only Australians don't use the word "bribe" they use "licence" or "regulation" or "permit".