Corruption is a small business killer
By Harry C. Alford
I was so proud and inspired to speak before the United Nations last week. It was kind of a peak in my public speaking career. Included within my content was my concern of international corruption. To my surprise many came up to me and expressed their appreciation for my comments on the evils of corruption. When I returned home, I did a little researching on the UN’s attention to this subject. Surprisingly there was some written material on it. One of the publications is entitled “Corruption Prevention” from the UN Office on Drugs and Crime. The following is the beginning paragraph:
“Corruption hurts all, but the pain is greatest among small and medium-sized enterprises (SME’s). They are usually the first to suffer in a marketplace where corruption exists. For reasons outlined in this report they are more vulnerable to corruption and, as a result, their profit margins and very survival are at stake when corruption takes hold. Since these companies are often the motor for development in societies vulnerable to poverty, the effects of corruption can be devastating.”
Records show that a significant amount of new businesses will fail within two years of existence. That hurts local as well as large, international businesses. It drives unemployment up by large dimensions. Poverty is sustained as oppose to a larger and rising middle class. There is not one nation exempt of corruption. Democracies as well as dictatorships are infected with corruption. From goods entering or leaving our sea ports to those immersed into our interior communities it exists without exception. This will not be a strong economic and vibrant world until we all address this economic plague and wipe it out.
According to the World Bank Institute in an article entitled “The Costs of Corruption”: “Corruption within and between public and private sectors has become one of the leading problems for businesses all over the world. The recent inclusion of an anti-corruption principle in the United Nations Global Compact, endorsed by more than 3,800 members, further emphasizes the ever-growing importance of the private sector in the global fight against corruption. Just to get an idea of the dimensions of corruption, it is worth mentioning that, according to the World Bank Institute, more than $1 trillion dollars are paid in bribes every year, which means that each year the cost of corrupt activities is equal to a full 3 percent of the world’s gross domestic product.”
On our first Trade Mission to Ghana, we brought up our concern about bribery to the current Minister of Trade. He replied that he is distributing his business card to each of us to show any official who attempts such a crime. It didn’t take long that one of our beauty products distributors was being hit up by a port supervisor. “You want to drive off with your imports to my country? Good now pay me a decent gratuity.” She remembered our meeting and pulled out the minister’s business card. The guy broke down and started crying. He pleaded that it was only a sick joke and please proceed with your products.
I once had a conversation with the President/CEO of Dudley Hair Products. He was so excited to finally break into the Brazilian beauty supply market. Most women had African roots and this would be a breakthrough for them and the new bustling beauty salons that were growing almost daily. He flew to the Port of Rio de Janeiro to greet his maiden supply. He was quickly told by the chief of the Port that he had to provide him with a $250,000 cashier’s check before he would release the shipment. Enraged, he hired a local law firm and sued for the release of his product, worth a few million dollars. It took more than six months before the crook relented and Mr. Dudley’s product was released. However, it sat outside in the tropical Brazilian sun and the ingredients became rancid. It was one big heap of trash
and he had no recourse. The millions of Black females and their beauty shops would have to wait a good while longer.
Yes, the actions of corruption are real. Large firms simply pay the bribes and pass it along to the consumers or have connections that bring fear to the culprits of bribery. Small and medium sized companies usually must pay the price which will cause serious pain and perhaps lead to bankruptcy.
From here on, the National Black Chamber of Commerce is going to act like a “customs police”. We will seek written commitments from Ministers of Trade that they will protect our members who export/import their products. Like our FBI who has a “Public Corruption Hotline” we will demand the same for our traders. If they see a US flag on the ship or American markings on the containers they will be fore warned “Don’t mess with an American entrepreneur”.
Mr. Alford is the Co-Founder, President/CEO of the National Black Chamber of Commerce®. Website: www.nationalbcc.org Email: email@example.com