Tribute to the late Prof. Wangari Maathai

This article below was first published on June 4^th 2009, and is republished as a tribute to the late Prof. Wangari Maathai. Founder of the Green Belt Movement as well as the first African Woman Nobel Laureate, Prof. Maathai was indeed a trail-blazer. Her life and courageous achievements will always serve as a role model for us all. Let us continue to fight Disempowerment.  R.I.P. Prof. Wangari Maathai - Ed

 

An ethical business revolution is emerging

Kenyan Nobel Peace Prize Laureate Prof. Wangari Maathai has written a fascinating article posted on opendemocracy.net titled “An African future: beyond the culture of dependency”.

Prof. Maathai writes that as a result of the G20 London meeting where leaders pledged more funds for development aid to Africa, she was concerned that this injection may not be effective in enabling Africans to rise out of the poverty, as the money may not in this case be spent effectively.

Prof. Maathai goes back to one of the root causes of poverty naming powerlessness or disempowerment as a key factor in its perpetuation. African leaders in the past (and some today) have been deified to the point where they took all the power, leaving the common African dependent on them to make all the decisions.

This resulted in a feudal scenario where the common man was beholden to the ‘mweshimiwa’ (Honourable person) for almost everything ranging from allocation of relief food, to obtaining jobs for relatives and school fees handouts.

Prof. Maathai posits that this disempowerment has infected the psyche so that even one’s self esteem and dignity have been derogated. She writes:

“Disempowerment - whether defined in terms of a lack of self-confidence, apathy, fear, or an inability to take charge of one's own life - is perhaps the most unrecognised problem in Africa today. To the disempowered, it seems much easier or even more acceptable to leave one's life in the hands of third parties (governments, aid agencies, and even God) than to try to alleviate one's circumstances through one's own effort.”

She terms this as a syndrome that has been so far neglected by policy makers and development pundits. And it is this same alienation of the common man, that has allowed corruption to seep right down to Africa’s (grass)roots.

A matter of survival

Prof. Maathai in the Open Democracy article tells the story of the macadamia nut farmers in her constituency (pre-2008 when she was a Kenyan Member of Parliament) who approached her for assistance. The macadamia nut industry is indeed a lucrative sector, and not only for the nut’s edible attributes. The nut’s active ingredients have been used for many products ranging from cosmetics to sexual dysfunction aids. Kenya is in the fortunate position of being climatically suitable for growing macadamia trees, so of course it was not surprising that many farmers have entered this sector.

This should have been the vehicle to prosperity for the farmers who approached Prof. Maathai when she was their Member of Parliament. However and this also applies to the plight of Africa’s youth entrepreneurs, disempowerment is what caused their macadamia nut project to flounder and is also what causes enterprise death amongst the majority of young enterprises.

Brokers, middle men and “connections” agents

Due to their lack of resources, most small enterprises have to go through brokers, middlemen or whatever other names they go by. For the macadamia farmers they had to go through a broker to link them to an exporter. In the case of the young entrepreneur starting out, if they want to get work from a large company or even the government, they too need a middleman who sub-contracts the work out to them. They are thus not masters of their own business, having to share profits with these brokers, who for the most part hardly incur any costs of their own.

However, as is also the case in the macadamia nut farmers story, asymmetry of market knowledge in the broker’s favour translates into a higher “brokerage” fee which if not paid means the end of that enterprise.

The green eyed monster

Prof. Maathai’s macadamia farming constituents also complained that as their standard of living began to overtly manifest the effects of increased household income, they became targets for theft from neighbours. This theft had serious repercussions. She writes:

“… the farmers were unhappy. When we met, they explained that, because there was so much money to be made in the macadamia nuts, their neighbours, also farmers, had begun to steal. Now, macadamia nuts need to be fully ripe to be ready for processing, and they are not fully ripe until they fall to the ground. But some people (the farmers told me) had started shaking the trees before the nuts were ripe, in order to make them fall … In the end, the greed had become so enormous that some individuals had simply crept onto the farmers' land at night, cut down the trees, and hauled them away, so they could harvest every single nut for themselves.”

This same avarice and wanting to reap where one has not sown is what has brought many young businesses to come to an abrupt end. In a scenario where an entrepreneur is climbing the financial ladder, they also have to face their peers ostracising them. Comments such as “I wonder how so and so made so much money in such a short time … they must have stolen it ...” begin to emerge.

Jump aboard and hijack the product

Eventually as even the macadamia thieves started selling poor quality nuts, the middle-man told the farmers he wouldn’t buy any more nuts from them. So what began as a very promising income generating activity that would have eventually enriched the entire community simply died.

Taking a walk through African cities, one notices that the enterprises operated by the youth tend to fall within a narrow category of retail business types. There is hardly any manufacturing and even more disturbing is the lack of innovativeness on the part of youth entrepreneurs. Just how many pirated DVD shops can a city have? The answer to that question depends on how many young entrepreneurs there are. This may sound cynical, but if one just strolls through Africa’s business districts patterns of mobile phone accessory shops, small clothing stalls and the emerging number of cramped cyber café’s tell the story of an over-saturation of enterprise but no individual firm growth. It’s no wonder most of these outfits hardly last a year.

The failure of a colonial developed education system

Education has also failed Africans. In countries such as Kenya and Nigeria, the education system was geared towards creating employees and not employers. Farming and agriculture have also been variously frowned on as backwards. Prof. Maathai writes:

“Such farmers may have little or no formal education, and may therefore be functionally or actually illiterate. Even if they are able to read or write, they lack access to written materials or the internet to inform themselves about the crops that are their primary source of income.”

Likewise, the formal education system has let down young entrepreneurs. By not inculcating financial literacy, business and personal management skills, how then can a person of say 19, 25 or even 35 years be expected to start and grow a profitable enterprise?

Working together for the greater common good

Apart from institutional challenges the macadamia farmers faced, ultimately Maathai writes that it was “own failure to understand the consequences of its self-destructive actions. Instead of working together to further the common good of their communities, each person pursued his individual interests - and all lost.”

Just as the macadamia thieves ruined this entire industry, so have unethical entrepreneurs also sullied the name of business. So often cases are brought to our attention at Yipe of ruthless middle-men who give out work to young entrepreneurs and yet do not pay them their just dues.

Similar to the macadamia thieves, as Prof. Maathai writes this is corruption, nothing else. It doesn’t matter whether it is at the farm level, the local kiosk or State House. Living off the sweat of another is corruption.

However there is a ray of light beginning to emerge. Groups are now being formed leveraging social media to fight this corruption by raising awareness of these rogue entrepreneurs.

So as Prof. Wangari Maathai writes, there is an ethical revolution in the making. And young entrepreneurs are sure to be in the fore-front of this change.

The standoff at Kenya’s Youth Fund does not serve the youth

On Wednesday 21st October 2009, the Minister of Youth Affairs and Sports, Hon. Prof. Hellen Sambili reinstated the Youth Enterprise Development Fund’s former CEO Mr. Umuro Wario, after a - yet to be made public - Kenya Anti Corruption Commission investigation report that cleared Mr. Wario of any criminal culpability in his activities prior to his suspension and subsequent termination by the Youth Fund’s Board.

In June 2009, the Partnership for Change released a report (published here on this blog) questioning the true reasons for Mr. Wario’s dismissal from the fund, in addition to queries concerning:

• Single sourcing of contracts prior to and during Mr. Wario’s tenure as CEO.
• The contentious partnership with Enablis East Africa, that Mr. Wario himself claimed was the main reason behind his termination, and
• The corporate governance structure of the Youth Fund's Board with regards to conflicts of interests among named members.

So far the Youth Fund’s Board has not deigned to acknowledge nor respond to the questions, despite the Partnership posing the queries not only in the mainstream media but in youth forums. As Yipe.org’s work is focused on the youth entrepreneurs, we too tried to ask questions when given the opportunity, only to be met with the response that our enquiries lacked any substance, and were based on fallacious reports.

As a result of the Fund's deafening silence, sadly we have become fully aware that the Youth Fund’s Board is only interested in retaining full and complete control over this most important national fund; so much so that the Board will go to any lengths (at whatever cost and detriment to its reaching the 3 million of unemployed youth that require it’s assistance) to ensure that Mr. Wario is not allowed back into the Fund’s secretariat.

To spend in the range of millions of precious Kenya shillings  to reiterate what has been roundly publicized on our television screens and radios to endear Kenyans to their point of view, has exposed the high handed attitude by the Youth Fund’s Board. Why run to the media now, when in June 2009 the Board fronted by the Chairperson disparaged the same media as being in cahoots with political enemies?

Nevertheless, the Youth Fund’s public statement and extract of the auditors investigation published on Wednesday October 28th, brings onto the fore further questions. 

On reading the two page - full colour advertisements* placed in yesterdays Daily Nation and Standard newspapers, it is indeed stupendous that the Kenya Anti Corruption Commission (KACC) exonerated Mr. Wario if the Commission’s investigators were aware of the damning evidence of the State Corporation Inspectorate’s office outlined in the published extract. Surely the KACC investigations would have involved interviewing the Fund’s staff and Board members in addition to the State Inspectorate?

The Youth Fund's Board has stated that it never referred Mr. Wario’s case to the KACC, though in their published statement released yesterday, Mr. Wario is guilty of a wide range of derelictions and/or omissions of duty that would have landed any other public officer in an interrogation room at Integrity House. Yet the Board was benevolent enough to not forward Mr. Wario’s case to the KACC even as they accused him of mismanagement of funds and assets.

Indeed the extract from the report by the Inspectorate of State Corporations confirms the Board’s allegations of gross violations that are in contravention of both the Anti-Corruption Economic Crimes Act 2003, as well as the Public Officers Ethics Act.

1.    The Anti-Corruption and Economic Crimes Act, 2003 (ACECA)

The Youth Fund by virtue of being a State Corporation is a public body as per the 2003 Act; and Mr. Wario by virtue of his employment at the Youth Enterprise Development Fund fell into the category of a public officer.

The Act defines corruption as including abuse of office or breach of trust. Mr. Wario’s disregard for financial and recruitment procedures (concern #4), attempted diversion of funds without adherence to due process (concern #6) and non-transparent use of financial resources (concern #8) would have surely made him culpable of being charged with corruption.

Furthermore, Mr. Wario’s acts regarding procurement outlined in the advertisement are in breach of the ACECA 2003 s. 45(2), which states that:

(2) An officer or person whose functions concern the administration, custody, management, receipt or use of any part of the public revenue or public property is guilty of an offence if the person —
 (b) wilfully or carelessly fails to comply with any law or applicable procedures and guidelines relating to the procurement, allocation, sale or disposal of property, tendering of contracts, management of funds or incurring of expenditures.

According to concern #5 of the extract from the report by the Inspectorate of State Corporations, Mr. Wario was guilty of flouting established procurement rules, and as such is liable under ACECA s. 45(2)(b).

2.     The Public Officer Ethics Act, 2003. (POEA)


Under the POEA 2003, Mr. Wario flouted s. 8 which states that:

8. A public officer shall, to the best of his ability, carry out his duties and ensure that the services that he provides are provided efficiently and honestly.

According to the published extract of the Inspectorate’s report, Mr. Wario was guilty of insubordination (concern #1), had a dismal performance in discharging his duties (concern #2) and lacked strategic direction and execution (concern #3).

This raises the following questions:

• Why did the YEDF Board not forward Mr. Wario’s case to the KACC seeing that in their paid advertisement they claim that he is responsible for the loss or mismanagement of tax payer funds? This points to the Board’s failure in stewardship of public funds and accountability not only to the Exchequer, but to all Kenyan taxpayers and most importantly to the nation’s youth entrepreneurs.
• The KACC should also answer how it found Mr. Wario not culpable in the face of the damning report by the Inspectorate of State Corporations. If the Commission was diligent in its duties, surely it would have discovered the report; or have they investigated the report and subsequently dismissed it?

However one cuts it, due process of the law must and should be followed. Instead of publishing expensive advertisements in the local dailies, the YEDF should press for Mr. Wario being charged and if guilty convicted under ACECA.

Justice can still be done. Under ACECA 2003, the YEDF can now forward their evidence to the KACC which stipulates penalties under  section 48:

48. (1) A person convicted of an offence under this Part shall be liable to —
(a) a fine not exceeding one million shillings, or to imprisonment for a term not exceeding ten years, or to both

Section 35(4) of the Act further allows the Board to pursue Mr. Wario even after they terminated his services, which is what any steward of public resources would have done.

Mr. Wario can only be judged in a court of law and not in the public court. To spend money that COULD and SHOULD have been used to empower young business people, only makes the Youth Fund look just like what they accuse Youth Minister Hellen Sambili of – acting with impunity!

Read the Youth Fund Board's statement

* A phone call to the Daily Nation this afternoon quoted Kshs. 437,000 per full colour full page. Advertisements were also placed in the Standard thus costing approximately 1.5 million shillings. Such a sum could have been invested at Kshs. 50,000 per venture in 30 youth owned enterprises

A good story sells

A recently published blog post by David Roodman titled “Kiva is not quite what it seems” has been causing quite a stir in cyber space. Not so much because of the provocative title mentioning Kiva - a pioneer and probably the best known Person to Person (P2P) micro-credit organisation; Roodman’s post also questions the real intentions why people choose to fund a micro entrepreneur from Cambodia, Kenya or Guatemala for that matter.

Roodman posits that a reason for the success of Kiva and similar internet based lending portals is because for as little as US$ 25, more people can become benefactors. Helping others has become a cheap commodity and not only the super-rich Bill Gates and Warren Buffett’s can now claim the title “philanthropist”.

Similar to the P2P lending model, goods from developing countries that sell on western supermarket shelves bear stories – some of them wild. This has been largely propagated by fair trade products. However, nowadays even a pesticide sprayed beetroot from Bulawayo must carry a story. A honey product from Kenya cannot just simply be labelled “Kenyan honey”. What’s required is a long tale weaving in a tapestry of sensory words probably going along the lines of “…this honey comes from the honey bee whose hives are in Africa’s savannah plains ... The scents from the eucalyptus ensure a wild …”.

Indeed, the more evocative the story about the terrain or about how poor the farmers who produced it are, the better.

This is what consumers want – a feeling that when they put a spoon of honey in their morning tea, they feel part of that savannah so alluringly described on the product label. And it is these stories that add a couple of dollars or Euro’s onto the unit retail price. On some e-commerce websites selling African “ethnic” products, 2 kgs of maize flour which is the staple food for most East and Central African countries goes for US$ 10. The same product in an upmarket supermarket in Nairobi costs less than a quarter of that price. The point is that with good marketing, consumers pay more for the “story” than the product itself.

With rampant corruption constantly being reported in Africa, an ennui among citizens of western nations has emerged. Commonly people question why donor aid is poured into large infrastructure projects such as roads and geothermal plants yet there are numerous instances of money being siphoned off by corrupt public officials in Africa. Just last week it emerged that World Bank money earmarked for free primary education in Kenya had been stolen; thus begging the question why fund such a project when if you gave an entrepreneur a bit of money they could then be empowered enough to send their children to a fee paying school?

Media stories on Africa which in most instances focus on crises’ or the potential for crisis have made people who would otherwise dip into their pockets to alleviate hunger on the Continent averse. Thus when one sees a picture of Mary from a village just outside Kampala who has a banana kiosk, the need to assist Mary overrides the need to assist Fatma in a refugee camp in Eastern Congo.

In an age where people are sponsoring small businesses’, children and even guerrillas in Rwanda, what does this all mean for entrepreneurs either seeking funding or wanting to sell their products on the export market?

In a nutshell there is a palpable and growing demand for “virtual tourism” – a state where one can experience a lifestyle from the comfort of their seat in front of a computer monitor, or perhaps when they hold the honey jar from somewhere in Africa, gently open the lid, and smell the scent of the wild.

Read “Kiva is not quite what it seems” here

Africa’s business competitive disadvantages don’t have to adversely affect corporate social accountability

In a landmark case settled this week, the family of the “Ogoni 9” executed in 1995 received a US$ 15.5 million payout from Royal Dutch Shell company. The case goes back to the 1990’s in Nigeria where it was alleged that Shell had a long history of closely working with the Nigerian government to quell popular opposition to its business operations in the Niger Delta region; home of the Ogoni people.

Even though Nigeria is an oil-rich nation, environmental and human rights activists claim that oil and oil companies have brought nothing but poverty, environmental devastation and widespread incidences of severe human rights abuses to the inhabitants of the Delta. Oil spills, gas flaring and deforestation have stripped previously agricultural fertile land of its environmental resources, further impoverishing local communities by making traditional income earning activities such as small scale farming and fishing virtually impossible.

Thus, the Movement for the Survival of the Ogoni People (MOSOP) was founded in 1990 to non-violently agitate against the repression and exploitation of the Ogoni people and their resources by Shell and the Nigerian government. One of the founders, noted author and playwright Ken Saro-Wiwa worked tirelessly to raise worldwide awareness of MOSOP and the plight of the Ogoni people. MOSOPs activism resulted in Saro-Wiwa’s nomination for a Nobel Prize and he was also awarded a Right Livelihood Award as well as the Goldman Prize for his environmental and human rights activism.

In early 1993, Shell requested military support to build a pipeline through Ogoni territory. Karalolo Kogbara, a local farmer who protested over the bulldozing of her crops, was the first victim of the Nigerian military’s violent eviction. She was shot by Nigerian troops and lost an arm, spurring mass agitation in the Niger Delta.

In 1994, Saro-Wiwa and other MOSOP leaders were prevented by the Nigerian military from attending a gathering to air their views. It was at this gathering where four Ogoni chiefs were murdered. The military governor promptly announced that Saro-Wiwa was responsible for the deaths, forgetting that his own troops prevented Saro-Wiwa from attending. These murders were used as a pretext to conduct raids on 60 Ogoni villages, where several hundred men suspected of MOSOP involvement were beaten and detained.

Saro-Wiwa and his co-accused henceforth known “Ogoni 9”, were thereafter tried by a tribunal for the murders of the Ogoni chiefs. The trial itself was a travesty of justice. The Ogoni 9 were denied access to due process, as well as an opportunity to appeal death sentences proclaimed on them. The Ogoni 9 were executed on November 10 1995. A month after, Shell signed an agreement with Sani Abacha’s junta to invest US$ 4 billion in a liquefied natural gas project.

On behalf of the families of the Ogoni 9, the Centre for Constitutional Rights (CCR) and EarthRights International (ERI) flanked by other human rights attorneys sued Shell for human rights violations against the Ogoni people. Amongst the plaintiff’s allegations was evidence that Shell provided monetary and logistical support to the Nigerian police, frequently calling on them for “security operations” that often just amounted to raids and terror inflicted against the Ogoni people. Other allegations of meddling in the Ogoni 9 trial emerged, where in one instance, Shell Nigeria reported to headquarters that Saro-Wiwa would be convicted.

The Shell case is by no means a unique phenomenon, where companies are sued for corporate social unaccountability. Chevron, another oil multinational has been sued by the Bowoto for gross human rights violations including extrajudicial killing and cruel, inhuman, or degrading treatment in the Niger Delta region. The case originates in May 1998, when unarmed residents of the Niger Delta protested at Chevron’s offshore Parabe Platform, demanding that the corporation contribute more resources to the development of the impoverished oil-rich region. On May 28^th, the protestors were shot and some killed by Nigerian soldiers and Chevron security personnel who were transported to the platform on Chevron-leased helicopters. Chevron is also being sued for causing the destruction of riverbeds, natural ecosystems, and contributing to extreme land erosion.

As more oil and extractive resources are being discovered, such reports of human and environmental violations are now setting a precedent. Cases of uranium workers in Namibia and gold miners in South Africa, where mining companies have been accused of not providing safe and healthy working environments, are cases in point. News reports of miners in Tanzania dying as a result of mines caving in have also been reported. The use of child labour has also been brought to light.

The recent settlement of the Ogoni 9 case further endorses the global trend towards corporate social accountability, that has pushed businesses to adopt internal codes of conduct. And this paradigm shift is not only directed at large multinational companies, even smaller businesses in Africa are under scrutiny.

The recently published Africa Competitiveness Report 2009 (ACR) arrives against the backdrop of the global economic crises whose effects are now being felt all over the Continent. Although Africa previously registered average annual growth rates of 5.9%, the global economic meltdown has meant that for 2009, GDP on the continent is expected to be below 3%.

Competitiveness of African businesses (their ability to create value) is both affected by the business environment, as well as internal factors (mainly production costs). Ultimately, profit minded businesses compete on the market on the basis of prices of their goods and services. Production costs (mostly wage related) are thus of fundamental concern when starting up or managing an enterprise, where business decisions centre on how efficiently to convert inputs into sales. The ACR is particularly useful in this respect as it analyses the direct, indirect and invisible costs African entrepreneurs’ face, with the conclusion that African firms experience higher costs as shares of sales in comparison to its most aggressive global competitor, East Asia whose operational costs are said to be almost 20% less expensive.

In terms of basic requirements for sustainable enterprise, sub-Saharan businesses face numerous challenges in accessing loans and venture capital. Efficiency enhancers such as public trust of the political class and government officials, also leave a lot to be desired. For instance, favouritism in government decision-making has been listed in Kenya as a factor that hinders local enterprise competitiveness. As far as innovation and communication goes, internet penetration rates are low in Africa compared to its Asian business rivals; and in an era where the knowledge economy is gaining more primacy, low levels of internet access in schools translates into higher training costs for employees compared to other regions.

Individual African firms in many African countries, also significantly suffer from a constraint in electricity availability as a result of a spatial terrain that impedes access to energy resources, un-affordability of energy, coupled with a regulatory environment that limits the number of investments for such technology. Even SMEs and co-operatives that venture into electricity generation and transmission through wind and solar power, are faced with a multitude of barriers from regulatory authorities and laws that give monopoly power to state corporations. In Tanzania, the quality of electricity supply has severely hindered local firm competitiveness, both regionally and throughout the continent.

High transport costs due to the poor quality of road and railway networks, also adversely affect the profitability of African enterprises. The railway that originates from Mombasa has been a sore thumb for enterprise for decades. Even recent concessions have failed to bear any fruits in terms of increased inland trade. The ACR also cites a lack of competition in the trucking industry that keeps transport costs exorbitantly high. In West and Central Africa, trucking cartels keep market prices high, both affecting consumer purchasing power as well as producer profitability. The report proposes such cartels should be abolished to promote enterprise in addition to fiscal incentives that encourage entrepreneurs to venture into the transport sector.

Cross border trade has also been an impediment to free enterprise within Africa. Exorbitant freight costs and delay prone border posts not counting the numerous police barriers speckled on Africa’s highways mean that inland trade is unattractive for new entrepreneurs.

In terms of the external business environment, the ACR reports that Africa retained the lowest global ranking in terms of its regulatory environment. Entrepreneurs face copious regulatory barriers including business startup rules, difficult registration of property requirements, a minefield of customs and excise policies, so much so that according to the ACR, the Continent stands out as a difficult location in terms of time and/ or the cost of doing business. The extent and effect of punitive corporate and value added taxation in countries such as in Kenya also act as a deterrent to business, keeping many entrepreneurs within the informal sector.

Even for technological savvy African firms keen to exploit business processing outsourcing opportunities, constraints in technological costs are involved. For those engaged in development of agri-business, the prohibitive costs from local research institutions mean that their innovative capacity also suffers. Competitive advantages such as Africa’s market size which ideally should offer vast economies of scale, are virtually wiped out by invisible costs such as corruption and security costs.

Thus, in order to remain profitable, the first cost in production to be guillotined by local firms are commonly labour related costs. Instances include the curtailment of training opportunities, not providing medical insurance in countries where it is mandatory, keeping wages at the barest minimum, resorting to unethical practices such as using child or illegal alien labour and refusing to put long-term employees on contract, amongst others. Another major social cost is environmental, where entrepreneurs face serious choices between keeping costs at a minimum as opposed to more expedient ways of processing that may cause environmental degradation. Even in African countries that have environmental bodies to monitor business activities and their environmental implications, these agencies are limited both in their capacity to detect violations, whilst environmental legislation is still nascent, and doesn’t empower them with vigorous enforcement rights.

Though these measures may pale in comparison to what the oil companies in the introduction have been charged with, they do still violate the rights of not only the people working for the enterprises; they also impact on the wider community in terms of lower income.

All businesses regardless of size, need to be aware that just as in the Ogoni 9 case, it is possible for them to be tried for corporate social unaccountability. It matters not whether the country of operation has such laws. The Ogoni case was filed under the Alien Tort Statute (1789) which gives non-US citizen the right to file lawsuits in US courts for international human rights violations. The Torture Victim Protection Act, empowers individuals to seek damages in the US for torture or extrajudicial killing, regardless of where the violations take place.

Nevertheless, business founders also need to be aware at the startup stage of the legacy they want their enterprise to have. This goes beyond a five year strategic plan. A business legacy is the impact an entrepreneur wants their venture to have 100 years from now. It matters not that Shell for instance began drilling oil in Nigeria in the 1950’s. It matters even less that the company was in existence way before then. The company will forever be linked to the case of the Ogoni 9.

African business does not operate in an isolated state, as seen by the local impact of the global financial crisis. As such, now is the time for African entrepreneurs think more long-term and in turn lobby for policies that emphasise competitiveness which will enable them to manage price shocks and economic uncertainty more competently; without having to resort to unethical measures.

Advocating for such competitiveness focussed reforms will not only promote business profitability, but will ultimately act as a catalyst for long-term growth and prosperity for Africa. Individually, we as entrepreneurs can educate ourselves and others on the importance of business integrity.

Son of murdered writer and Ogoni activist talks, Ken Saro Wiwa Jnr about his father, Ken Saro Wiwa.

An ethical business revolution is emerging

Kenyan Nobel Peace Prize Laureate Prof. Wangari Maathai has written a fascinating article posted on opendemocracy.net titled “An African future: beyond the culture of dependency”.

Maathai writes that as a result of the G20 London meeting where leaders pledged more funds for development aid to Africa, she was concerned that this injection may not be effective in enabling Africans to rise out of the poverty they live in, as the money may not in this case be spent effectively.

Maathai goes back to one of the root causes of poverty naming powerlessness or disempowerment as a key factor in its perpetuation. African leaders in the past, and some today have been deified to the point where they took all the power, leaving the common African more or less dependent on them to make all the decisions. Almost forgetting the power they yield through the ballot in those countries that allow democratic elections, even at the grassroots level any form of community self-help had to be led by a local or national leader either as Chairperson of the Committee or Patron.

This in turn resulted in a feudal scenario where the common man was beholden to the mweshimiwa (Honourable person) for almost everything ranging from allocation of relief food, to ensuring jobs for relatives in the public sector (which through this nefarious nepotistic activity resulted in the disintegration of many civil services) to handouts for school fees.

Maathai posits that this disempowerment has infected the psyche so that even one’s self esteem and dignity have been derogated. She writes:

“Disempowerment - whether defined in terms of a lack of self-confidence, apathy, fear, or an inability to take charge of one's own life - is perhaps the most unrecognised problem in Africa today. To the disempowered, it seems much easier or even more acceptable to leave one's life in the hands of third parties (governments, aid agencies, and even God) than to try to alleviate one's circumstances through one's own effort.”

She terms this as a syndrome that has been so far neglected by policy makers and development pundits. And it is this same alienation of the common man, that has allowed corruption as Maathai says to seep right down to Africa’s (grass)roots.

A matter of survival

Maathai gives an example of the macadamia nut industry where a group of farmers in her constituency (pre-2008 when she was a Kenyan Member of Parliament) approached her for assistance. For those who care to look, the macadamia industry is a growing sector and not only for its edible attributes. The nut’s active ingredients have been recognised as being able to be used for many products ranging from skin lotions to sexual dysfunction aids. Kenya is placed in the fortunate position of being climatically suitable for growing macadamia trees, so of course it was not surprising that many farmers have entered this sector.

This should have been the vehicle to prosperity for the farmers who approached Maathai when she was their Member of Parliament. However and this also applies to the plight of Africa’s youth entrepreneurs, disempowerment is what caused their macadamia nut project to flounder and is also what causes many young enterprises not to last more than 12 months.

Brokers, middle men and “connections” agents

Due to their lack of resources, most small enterprises have to go through brokers, middlemen or whatever other names they go by. For the macadamia farmers they had to go through a broker to link them up with an exporter. In the case of the young entrepreneur starting out, if they want to get some work from a large company or even the government, they too need a middleman who then sub-contracts the work out to them. They are thus not masters of their own business, having to share profits with these brokers, who for the most part hardly incur any costs of their own.

However, as also in the farmers case, asymmetry of market knowledge in the broker’s favour translates to a higher “brokerage” fee which if not paid means the end of that enterprise.

The green eyed monster

Maathai’s macadamia farming constituents also complained that as their standard of living began to overtly manifest the effects of increased household income, they became targets for theft from neighbours. This theft had serious repercussions on sales:

… the farmers were unhappy. When we met, they explained that, because there was so much money to be made in the macadamia nuts, their neighbours, also farmers, had begun to steal. Now, macadamia nuts need to be fully ripe to be ready for processing, and they are not fully ripe until they fall to the ground. But some people (the farmers told me) had started shaking the trees before the nuts were ripe, in order to make them fall … In the end, the greed had become so enormous that some individuals had simply crept onto the farmers' land at night, cut down the trees, and hauled them away, so they could harvest every single nut for themselves.

This same avarice and wanting to reap where one has not sown is what has brought many young businesses to come to an abrupt end. In a scenario where an entrepreneur seems to be climbing the financial ladder, they also have to face their peers ostracising them (though not always to their face). Comments such as “I wonder how so and so made so much money in such a short time, they must have stolen it” begin to emerge.

Jump aboard and hijack the product

Eventually as even the macadamia thieves started selling poor quality nuts, the middle-man told the farmers he wouldn’t buy any more nuts from them again. So what began as a very promising income generating activity that would have eventually enriched the entire community simply crumbled.

Taking a walk through African cities, one notices that the enterprises being operated by the youth are generally service oriented, and fall within a narrow category of retail business types. There is hardly any manufacturing and even more disturbing is the lack of innovativeness on the part of youth entrepreneurs. Just how many pirated DVD shops can a city have? The answer to that question depends on how many young entrepreneurs there are. This may sound cynical, but if one just strolls through Africa’s business districts patterns of mobile phone accessory shops, small clothing stalls and the emerging number of cramped cyber café’s tell the story of an over-saturation of enterprise but no individual firm growth. It’s no wonder most of these outfits hardly last a year, when the young entrepreneurs venture into the next big thing in small business.

The failure of a colonial developed education system

Education has also failed Africans. In countries such as Kenya and Nigeria, the education system was geared towards creating employees and not employers. Farming and agriculture have also been variously frowned on as backwards. So as such as Maathai writes: Such farmers may have little or no formal education, and may therefore be functionally or actually illiterate. Even if they are able to read or write, they lack access to written materials or the internet to inform themselves about the crops that are their primary source of income.

Likewise, the formal education system has let down young entrepreneurs. By not inculcating financial literacy, business and personal management skills, how then can a person of say 19, 25 or even 35 years be expected to start and grow a profitable enterprise?

Maathai also decries the state of support from the Kenyan government for farmers in her words to “empower him in the international marketplace". For the youth, yes the Youth Enterprise Development Fund (YEDF) is a great initiative to empower the youth, however, young entrepreneurs need some form of ongoing business support, not just financial. Also the Fund can be a conduit to push youth-owned products and services both onto local and international markets.

Working together for the greater common good

Apart from institutional challenges the macadamia farmers faced, ultimately Maathai writes that it was “own failure to understand the consequences of its self-destructive actions. Instead of working together to further the common good of their communities, each person pursued his individual interests - and all lost.”

Just as how the macadamia thieves ruined this entire industry, so have unethical entrepreneurs also sullied the name of business. So often cases are brought to our attention at Yipe.org of ruthless contractors or middle-men who give out work to young entrepreneurs and yet do not pay them their just dues.

However mainly due to a sense of powerlessness, young entrepreneurs who believe they are at the mercy of these thugs and on the promise of more work remain silent, writing off these debts by taking on more expensive loans to service them. Similar to the macadamia farmer case, as Maathai writes this is corruption, nothing else. It doesn’t matter whether it is at the State House or the local kiosk, unethical business where one lives off the sweat of another is corruption.

One new media group in Kenya has stood up to fight these criminal entrepreneurs by forming a facebook group called People Against Corruption in Kenya. The group is a platform for any person that has been cheated or defrauded out of their just dues to place a complaint so as to assist other young entrepreneurs from falling into the same trap.

Because most young entrepreneurs are small fish compared to the big fry that conned them in the first place, this group is a more user friendly way of at least ensuring justice in the form of awareness raising and preventing fellow entrepreneurs being conned. It beats waiting for the judicial system which takes too long, and is itself prone to corruption, and once it grows, it will probably serve as an business integrity rating system.

So as Wangari Maathai writes there is an ethical revolution in the making. And young entrepreneurs are sure to be in the fore-front of this change.

Where your business reputation precedes you…

“He who has relatives in other people's lands should make sure that he lives in peace with other people. Otherwise he exposes his children to the wrath of the other people should he misbehave against people from those areas in whose lands his children live”. - Taban Lo Liyong, Jan. 18, 08 (Juba)

This week an article on Kenyan business in South Sudan was posted on Breaking News Kenya. The article said Kenyan entrepreneurs are taking advantage of the 2005 Comprehensive Peace Agreement and moving to Southern Sudan in large numbers to open businesses. These run the gamut of enterprise, ranging from kiosks, wholesale businesses, road repairs, cargo and insurance, amongst others. Most traders narrate tales of success and are optimistic that Sudan's economy will continue to flourish.

However, the article also goes on to say that this prosperity was not going unnoticed by the locals who though admiring Kenyan business gusto, generally see our compatriot expatriate entrepreneurs as “dishonest, greedy and plunderous”.

This perception was even discussed a year ago by the well known academic and author, Taban Lo Liyong. In a presentation reported in New Sudan Vision, (The Professor of Controversy: Taban Lo-Liyong warns South Sudanese after Kenyan violence), Prof. Liyong warned his people not to let Kenyan businessmen and women take the lead in Southern Sudan.

According to him, Kenyan business practices of dishonesty and greed were mainly culpable for promoting the obscene inequality in wealth distribution in Kenya, sowing the seeds of hatred amongst poor Kenyans against the elite which were in part responsible for the post election violence experienced early last year.

Prof. Liyong (who lived in Kenya between 1968-1975) also tries to trace the roots of Kenyan business practice and attitude. In his presentation he writes that lucrative government contracts have always been the preserve of those linked to the government of the day. Tribalism has also played a key role in the monopolisation of business opportunities by the head of state’s tribe, creating “instant millionaires”.

This has led to the Kenyan expatriate entrepreneur greed and arrogant bravado in South Sudan, which in turn seems to have also been passed onto local businessmen and women. Prof. Liyong recounts an outburst in a Juba bank by a GOSS-beneficiary of government contracts instant millionaire:

“The instant-millionaire: "Give me US$ 50,000. I want to go abroad with my family for holidays?"
Bank teller: "We do not have dollars!"
Instant millionaire: "How can you have no dollars? Have I not recently brought here US$ 5,000,000 in cash?"

All this (Liyong continues) for someone whom only a short while ago did not have a bank account!”

The lack of financial control by the GOSS government in Liyong’s estimation has also promoted the impunity evidenced in business. In a predominantly cash based economy, the temptation to evade taxes has become ever more possible and appealing. The Professor accuses Kenyan entrepreneurs of showing local business people how to siphon money out of the country as well as evade company taxes by misreporting their earnings. To quote the Professor: “though Kenya has some things to show South Sudanese, Kenyan greed, callousness and bad business habits should not be copied.”

So is Prof. Liyong’s view of Kenyan business practice shared?

Unfortunately yes. Negative perceptions about Kenyan entrepreneurs and indeed Kenyan business ethics also occur within our borders. Cultural stereotypes have prevailed (even before independence) of entrepreneurial-minded communities particularly Kikuyu and Asian entrepreneurs.

“Kazi ni kazi”

In September 2007, the Mashada forum even had a debate on whether “the myth about Kikuyu's entrepreneurial genius can be debunked”. Kikuyu entrepreneurs were listed as hardworking and primarily motivated by money. They were also described as generally more focused, determined and daring in business, apart from being renowned for their opportunity recognition skills. However, some forum members also accused them of operating their business in an aggressively ambitious manner where the end justifies the means, to the detriment of all else.

In a blog post by african bullets & honey titled "The Pain Machine: The Collapse of the Gikuyu Social Contract” Kikuyu entrepreneurs were portrayed as being individualistic, grasping, conniving, driven, entrepreneurial and migratory.

Kenyan Indian entrepreneurs have been accused of preferring to keep business opportunities within their community.

Blogger kenyanentrepreneur in a post writes that the community is insular, arrogant and racist. Regarding business, Indian entrepreneurs have been especially accused of mistreating their African employees. A different Mashada forum discussion described Asian entrepreneurs as proficient at underpaying employees and overworking them plus failing to guarantee permanent employment. About their propensity to ship in Indian nationals (the so-called “rockets”) to handle sensitive dockets such as finance, kenyaentrepreneur writes “a Kenyan would never be able to open up a business in India. Never. Who is giving these people work visas?”

Another popular accusation is Asian entrepreneurs do not like competition especially when it comes from an indigenous i.e. black Kenyan and have a predilection for evading taxes (the same thing Liyong accuses Kenyan entrepreneurs of doing in South Sudan).

Regrettably such opinions seem likely to continue because for every Manu Chandaria and Aga Khan group business, there are also the Kamlesh Pattni’s, Somaia and most recently Devani (Triton) that give this community’s entrepreneurs a bad name.

The Tanzania Experience

On the foreign scene, it’s not just in south Sudan where concerns have been raised about Kenyan entrepreneurs. In 2007, as a result of a spate of bank robberies Kenyan business men and women faced the brunt of a backlash of local mistrust. Blogger ritch-kentanz posted in October 2007:

“Kenyans, in Tanzania speak, are a byword for armed robbers; illegal immigrants; conniving schemers (perpetrators of pyramid schemes and other such hair brained ideas); sticklers for diligence and industry on the job (the trump card they save for the opportune moment!); opportunists (who are out to wrench and wrest job opportunities from Tanzanians’ hands); possessors of a rude and uncouth disposition and a host many more”.

So are Kenyan entrepreneurs the only group of business people who are unpopular both at home and abroad?

China which also has vast business interests in Sudan has often been accused of only acting in its national self-interest regardless of human rights and good governance issues.

According to Stephanie Hanson’s in a Council on Foreign Relations article “China, Africa, and Oil”, Chinese companies see Africa as both an excellent market for their low-cost consumer goods, and a burgeoning economic opportunity. However, concerns about Chinese companies have been voiced with them being accused of underbidding local firms and not hiring Africans (Chinese infrastructure deals often stipulate that up to 70% of the labour must be Chinese).

Chinese immigrants have also been accused of forcing local entrepreneurs out of business in both Kenya and Lesotho. Transparency International the anti-corruption watchdog has also investigated the way expatriate Chinese entrepreneurs do business—particularly their willingness to pay bribes.

So, what lessons can we learn here?

Probably most important, is that stereotypes are a sticky phenomenon, which as seen by the Kikuyu and Indian entrepreneur experience locally will probably take generations to change.

As growth oriented as the South Sudan economy seems to be, Kenyan entrepreneurs should take Prof. Liyong’s words seriously. The Tanzania experience has vividly shown how devastating to business and personal security, negative beliefs about Kenyan business practices can be.

Finally, we need to face reality. Kenya is not like China – there are not many countries opening their arms wide to welcome our small business entrepreneurs. This means that our expatriate entrepreneurs must ensure their business practices show the best of what Kenyan entrepreneurship is: hard work, passion for innovation, and of course a (healthy) regard for money!