Today, challenging the relevance of business integrity, business growth and survival is pursued by many in frontier markets by any means possible reinforcing the decay in values and standards observed in many of such locations – Nigeria is no exception.
National transformation suggests a total departure from an old negative order to a new positive order with deliberate effort over the medium to long term to yield visible positive outcomes – it is the attempt to create nationwide change involving significant alteration over time, in behaviour patterns, cultural values and norms. Business Integrity on the other hand is the strict adherence to a moral code (an ethical, accountable system for makingdecisions, carrying out actions and other interventions) through which business discharges itscommitments and obligations to each of its stakeholders, reflected in its levels of transparency, honesty andcorporate harmony. In the global business world, integrity is one of the most sought-after qualitiesnot only of individual employees, but of companies. However, this cannot be divorced from theprevailing levels of ethical conduct in the context where business operates.
The 10:10:80 principle suggests that in most societies, 10% of the people will always do the right things and do things right regardless of the difficulties found in the context. Another 10% will always do the wrong thing regardless of the ease found in the context however, there is an 80% who see this as a matter of business growth and survival and are therefore driven by the incentives they perceive rather than principle. Data from 2016 NBS-UNODC study of Crime and Corruption in Nigeria published in 2017, suggests that per 100 bribe payers in Nigeria, 20% will refuse to pay, 30% will pay and 50% would be undecided suggesting the ratio could be more like 20:30:50 in the case of Nigeria. National transformation in Nigeria would then depend on encouraging the 20% to continue doing right on the basis of their principles and incentivizing the 50% to do right through appropriate triggers for them to consider alternative behaviours.
One key trend becoming noticeable in the global business sector is the campaign to change
the rules of the game from (negative incentives) sanctions-based compliance alone to (positive incentives) rewards-based compliance, or at least a mixture of the two. Over the years, companies were guided by the rule of doing right mainly because of the fear of sanctions. Some evolved this further to include doingright to retain the resulting positive image enjoyed with some of their publics. However, where the threat of sanctions is not credible due to inadequate will, skill or capacity on the part of regulators, business has tended to question the value of acting in any way not directly instrumental to the maximization of their profits. Today, challenging the relevance of business integrity, business growth and survival is pursued by many in frontier markets by any means possible reinforcing the decay in values and standards observed in many of such locations – Nigeria is no exception.
How should this be approached in Nigeria? First, big business players are role models whether they intend to be or not. So, ensuring these role models behave properly is crucial to influencing transformation in the private sector. Transformation doesn’t have to be driven by the public sector since they often are not able to find the will, skill or incentive to push it through, but the private sector does. When Sea Ports or Terminals are inefficient, and corruption is high, the private sector suffers through high costs and unbearable delays. When public procurement is corrupt, the private sector suffers as believe it or not, corruption only works for a few, not everyone. When SMEs in their supply chains are corrupt, there is a heightened risk of collusion between their staff and such partners threatening value creation for shareholders. When intermediaries such as accountants, bankers, lawyers and so on are corrupt, illicit flow of funds is possible and such activity threatens the very growth and existence of the company. We have tended to see transformation as a solely public sector affair requiring sanctions and enforcement whereas it might be more effective to have private sector driven approaches.
For example, the Corporate Governance Rating System (CGRS) by the Nigerian Stock Exchange and the Convention on Business Integrity incentivizes listed companies in Nigeria to choose the paths of integrity over corruption, the behavioural insight of Relative Ranking that “we are influenced by how our performance compareswith others’, especially those with similar characteristics as ourselves.”It uses a rating system (basedon that designed originally by CBI for use by its signatories) to gather compliance information and, by liking it to instruments of the stock exchange such as the Premium Board and the CorporateGovernance Index, it promises a direct connection between quality of board decisions and thefortunes of the listed company, thereby working towards a mechanism for behaviour modification. This initiative could assist in due diligence by investors around selection of possible
partners/investment partners in Nigeria.
As Independent Facilitator of Collective Action against corruption for SMEs appointed by the Nigeria
Local Network of the UN Global Compact, The Convention on Business Integrity has developed a self-assessment guide and toolkit for SMEs based on the 2013 COSO Framework for Internal Controls.This was validated March 2018. It promises to help SMEs (who do not see the need to be constrainedby Business Integrity Principles nor see its value) gain better access to finance (as most banks areparticipating in the CGRS and have come to value the work done by CBi and will thus trust thisinitiative) and it should help multinationals reduce exposure to corruption risks from the SMEs in theirsupply chains.
As facilitator of the Maritime Anti-Corruption Network’s activities in Nigeria, CBI has been training
officials at some of Nigeria’s sea ports on professional ethics and why it is important to adhere to their
Standard Operating Procedures (SoPs) developed as part of the Port Services Reforms that are ongoing.So far, about 1000 officials were trained 2016/2017. Thereafter, CBI will carry out ratings of Nigerian Sea Ports and Terminals against aspects of their Standard Operating Procedures. The ratings will beused as quick feedback tools to help Ports Agencies monitor their performance against the StandardOperating Procedures they have articulated.
The catalytic role of the private sector in curbing corruption should not be underestimated and we strongly implore the government to seek corruption prevention in similar ways. What do you think?
Olusoji Apampa is the CEO of The Convention on Business Integrity. Twitter: @sojapa E-mail: [email protected]
