Corruption rears its ugly head in 2 days among 3 entrepreneurs, during Global Entrepreneurship Week

By Fiona Mati

On the week that marks Global Entrepreneurship, I haven’t even gotten half way and yet I have met three entrepreneurs (one social) who told me about the impact corruption has on their lives.

The first is at the aspiring stage. He just finished a business plan to sell liquor on the outskirts of Nairobi. His reason for consulting me was not just to take a look at the plan and let him know if he could proceed. The plan was great: projections, cash flows, inventories … but missing were what are commonly called indirect costs.

The aspiring entrepreneur wanted to know where he would put the cost for “protection” that was to be paid to the police as well as the local gang. He asked, does that go under miscellaneous costs?

The next day I met two other entrepreneurs. The first a social entrepreneur with a brilliant concept has been at the contract signing stage for a grant from an NGO. In his case, though the boss at the overseas headquarters has said that the project should commence, the local officers seem to have problems preparing the final documents so the grant can be disbursed. The weary social entrepreneur asked: do you think they want a bribe?

The final entrepreneur I met has been in business for two years, and is making money. When I asked him how easy it was to secure contracts with his large business clients, he didn’t even waste a second in responding that you have to be friendly with the person in charge of procurement, then not only do you get local purchase orders, but you also get paid without the headache of having to chase for the money long after the invoice due date has passed.

And indeed these three entrepreneurs show that corruption and cronyism are the shadowy elephants in the room that need to be addressed. Most times the assumption is that corruption is prevalent in the public sector. But it can be just as rampant in the private and third sectors. Youth entrepreneurs by their very essence of being young and not as connected socially and financially are vulnerable to unfair business practices against them. This means that they too often like the last entrepreneur frequently engage in bribery and it eventually becomes just another operational cost, though not inserted as glaringly into the audited accounts of their enterprises.

The loss they face in terms of business is also shared amongst the larger corporations with corrupt procurement officers. They wind up paying heftier prices though they probably never learn about it. In the case of the NGO sector, the loss is probably even more fatal in terms of projects that could save lives never taking off because of corrupt fund managers.

Food for thought during this third Global Entrepreneurship week whose theme this year is “dismantling barriers”.

Fiona Mati is the founder of the Youth Interactive Portal for Enterprise a social enterprise that provides free information and resources to youth entrepreneurs in East Africa. For more information, visit www.yipekenya.org, and follow @yipeorg on Twitter.