Global war on graft shifts to private sector and how firms can eliminate rot

The United Nations Global Compact is an initiative to encourage businesses to voluntarily adhere to ethical standards.

Launched a decade ago, the initiative now has about 7,700 corporate participants and stakeholders in 130 countries, including 297 firms in 29 sub-Saharan African nations.

Africa Renewal spoke with Executive Director Georg Kell about the Compact’s anti-corruption work.

The Global Compact adopted its 10th principle, on fighting corruption, in 2004. In much media coverage of corruption and in some official anti-corruption programmes, there seems to be an assumption that corruption primarily concerns the public sector. Yet you focus on the corporate world. Could you discuss corruption as it relates to both the private and public sectors?

Often there is a blame game. The private sector blames the public sector. The public sector retorts that it is the private sector which is the initiator. The truth is that there is supply and demand and both are complicit.

But it is also true that the more the involvement of government in economic activity in general, the higher the degree of abuse of power and corruption. Several recent reviews have confirmed that.

In principle, if the rules of the game are clear and they are enforced strictly, if there is a distinction between private sector competition on the one hand and rule making and government entities on the other, then there is less opportunity for corruption.

Corruption, experts agree, is a systemic issue which involves society as a whole. It involves both private and public sectors. It involves education, the basic economic system, the regulatory system, how the economy is run and more generally the ethical values which are in place.

Some analysts of corruption in developing countries argue that it is a question of too much government involvement. Others that the involvement is not of the right kind. In Africa, the state is generally very weak, with little effective regulation. Can you comment?

The perfect balance between regulatory efficacy on the one hand and private sector entrepreneurial-driven activities on the other hand is always the ideal.

I don’t think there is one size that fits all. Different economies have come from different historical trajectories and are defined in different ways. But one can say that the clearer the rules of the game and the better that regulation actually works, the less corruption there is.

In most countries today, since the adoption of the UN Convention Against Corruption [in 2003], corruption is subject to criminal law. The problem is effective implementation. That is true not only of corruption but also many public domain issues, be it environmental issues, health and safety and so forth.

The efficiency of public institutions in enforcing and implementing what governments at the highest level have ratified is partly a function of institutional capacity. But it is also a function of priority setting, what is considered important.

What is new today, unlike 10 years ago, is that business is actually calling for clear signals on the rules of the game. Ten years ago, business would pursue a purely liberal agenda and argue that any form of regulation is bad. Today that is no longer the case. They say that we need technical standards that reward good, efficient policies and practices. They say that if corruption enforcement is not working well, not much else will be working either.

Do African businesses share that view?