An interesting article in The Guardian (UK) recently expressed concern over the threat the corruption in Uganda could play in dismantling its otherwise strong National Development Plan. Development experts have commended the plan, but cautioned that its success is strongly predicated on transparency and accountability.

Corruption and the country’s rapid population growth risk hindering the economic growth forecasted in Uganda‘s recent National Development Plan (NDP), according to a report in the Observer newspaper.

The report warns that without proper monitoring and evaluation, the ambitious plan, unveiled earlier this month, would surely fail to deliver.

[...]

“The NDP’s successful implementation will in many ways hinge on the government’s ability to ensure compliance with internal government reporting requirements,” Theophane Nikyema, the United Nations Development Programme (UNDP) resident coordinator, told the Observer.

As a Whistleblower Protection Act (protecting whistleblowers from incrimination and offering 5% of money recovered) makes its way through Parliament, the bill is met with skepticism and a national sentiment that corruption is endemic and a “way of life” in Uganda. A recent World Bank report estimates that $250 million is stolen by government officials every year in Uganda. According to a separate report by the Public Procurement and Disposal of Public Assets Authority, $184 million are lost annually in procurement scams — a number that accounts for approximately 70% of the national budget and more than what the country receives in annual foreign aid!

“Corruption is one of the most serious problems hindering development in Uganda,” says Mukotani Rugyendo, senior advocacy and communications officer, at Uganda Debt Network, an advocacy and lobbying coalition against corruption.

While the Whistleblowers Act above would be a great step in the right direction, the government needs to make a public example that it is willing to prosecute corrupt colleagues. Another necessary step is making sure that villagers know how much money in government contracts was given to build a local school, for example, so that they can account for how the funds are spent. Access to information, a cultural shift in understanding the misdeeds of corruption, the tools for M&E as well as reporting, and the political strength and willpower to prosecute corrupt individuals and institutions are all needed to help stymie corruption in Uganda.

While the goal of the National Development Plan to become a middle-income country in 30 years is reasonably feasible, it could just as reasonably be sunk by the selfish graft and corruption that haunts the country and the continent’s development.

[Photo Credit: Flickr User International Rivers]

A great article called “The Corruption Eruption” was published in The Economist over the weekend. The article hit on the rising attention around corporate corruption and makes the argument that combating corruption within your organization is not just an ethical issue — it makes strong business sense as well.

The ethical case against corruption is too obvious to need spelling out. But many companies still believe that, in this respect at least, there is a regrettable tension between the dictates of ethics and the logic of business.

False: Bribery Is the Price You Must Pay To Ender Some of the World’s Most Difficult Markets

The article cites the examples of Reebok, Google, Novo Nordisk, and IKEA as Western companies that have successfully prospered in emerging markets without engaging in corruption. In fact, “IKEA has gone to great lengths to fight corruption in Russia, including threatening to halt its expansion in the country, firing managers who pay bribes and buying generators to get around grasping officials holding up grid connections.”

“What is more, Mr Nichols argues, it is misguided to dismiss entire countries as corrupt. Even the greasiest-palmed places are in fact ambivalent about corruption: they invariably have laws against it and frequently produce politicians who campaign against it. Multinationals should help bolster the rules of the game rather than pandering to the most unscrupulous players.”

False: Bribery Can Speed Up The Otherwise Glacial Pace of Bureaucracy

According to a World Bank study by Daniel Kaufmann and Shang-Jin Wei, companies that pay bribes actually end up spending more time negotiating with bureaucrats. Furthermore, the cost of borrowing tends to be much higher for corrupt companies because of regulatory fluctuation.

In fact, standing up against corruption can help speed things along for your organization! The article cites Texaco as a great example of this:

“Texaco, and oil giant now subsumed by Chevron, had such an incorruptible reputation that African border guards were said to wave its jeeps through without engaging in the ritual shakedown”

The Hidden Costs of Corruption

1.) Slippery Slope - Once you give into corruption the first time, more solicitations will invariably follow. Word will quickly spread to others that you are willing to “pay”, and the ingenuity of bribe-takers will quickly come up with new ways to solicit payments. Many corrupt businesses and organizations open themselves up to blackmail.

2.) The Psychological Toll – The article cites Philip Nichols of the Wharton School explaining that “corrupt business people habitually compare their habit to having an affair: no sooner have you given in to temptation than you are trapped in a world of secrecy and guilt.”

Increased Visibility, Legal Pressure Being Applied

With increased methods for rapid and anonymous communication (Blogging, Twitter, E-mail, etc.), more public pressure is being applied to companies and organizations to act in an ethical manner. Corruption is much more difficult to hide these days, and the likelihood of getting caught is much higher today than even just 5-10 years ago.

Legal pressure on pursuing cases of corruption is also on the rise. Legislation such as the Foreign Corrupt Practices Act (FCPA) and Britain’s Bribery Act has been revamped with stricter authorities and increased attention. Legislation has been left open to interpretation, allowing prosecutors to pursue even less-blatant cases of corruption (eg. lavish entertainment). Under the legislation, senior managers can be held personally liable for corruption on their watch — risking both massive fines and prison time.

The Department of Justice is actively pursing 150 FCPA-related cases today, as opposed to only 8 in 2001. 38 countries have signed onto the OECD’s 1997 anti-corruption convention (opening the door for cross-border prosecutions). Several high-profile cases including Britain’s BAE Systems being fined $140m, Daimler paying out $184m in fines, and Seimens being fined $1.6 billion has set a new tone in the fight against corruption.

The Next Steps…

According to a survey of 500 prominent firms by Transparency International, the average company only scored 17 out of a possible 50 points on “anti-corruption practices”. The article reads:

Companies need to develop explicit codes of conduct on corruption, train their staff to handle demands for pay-offs and back them up when they refuse them.

Explicitly standing up against corruption through your organization is not just a piece of “Corporate Social Responsibility” or ethical standards. It can literally strengthen your organization and ability to conduct business in the market you are trying to reach!

I published a blog post the other day quoting an excerpt from the book “Rework” by the founders of 37Signals. Here’s another excerpt that stood out and I think applies to the work that we all do (emphasis added):

You don’t create a culture. It happens. This is why new companies don’t have a culture. Culture is the byproduct of consistent behavior. If you encourage people to share, then sharing will be built into your culture. If you reward trust, then trust will be built in. If you treat customers right, then treating customers right becomes your culture.

Culture isn’t a foosball table or trust falls. It isn’t policy. It isn’t the Christmas party or the company picnic. Those are objects and events, not culture. And it’s not a slogan, either. Culture is action, not words.

As we create the change we want to see, we must lead by example! Stop writing 50-page policies that nobody is going to read, much less embody! Demonstrate through your actions the culture you want to create, and people will follow!

If you haven’t read it yet, check out the book Rework — it’s really great!

InVenture Fund is an organization taking a “Micro Venture Capital” approach to provide entrepreneurs in the developing world with growth-capital rather than the debt-capital provided by microfinance. This allows these small business owners to focus on building profitable and sustainable businesses without burden of debt and high-interest payments.

InVenture has, on its own, made concerted effort to be a leader in integrating transparency and accountability into their model. Through a partnership between InVenture and Transparency Solutions, we will be working on developing best practices and accountability systems to lower the risk and maximize the impact that InVenture makes on-the-ground.

We’re excited about this partnership and the doors that this work will open for both of our organizations, and for the microfinance sector as a whole!

I just finished reading Rework, written by the founders of 37Signals. It’s a brilliant book all about re-thinking how we approach work and business — something I’m passionate about, myself! I read this passage on the bus this morning and wanted to share it with all of you! It’s all about “Owning Your Bad News”:

When something goes wrong, someone is going to tell the story. You’ll be better off if its’s you. Otherwise, you create an opportunity for rumors, hearsay, and false information to spread.

When something bad happens, tell your customers (even if they never noticed in the first place). Don’t think you can just sweek it under the rung. You can’t hide anymore. These days, someone else will call you on it if you don’t do it yourself. They’ll post about it online and everyone will know. There are no more secrets.

People will respect you more if you are open, honest, public, and responsive during a crisis. Don’t hide behind sping or try to Keep your bade news on the down low. You want your customers to be as informed as possible.

[...]

Here are some tips on how you can own the story:

• The message should come from the top. The highest-ranking person available should take control in a forceful way.
• Spread the message far and wide. Use whatever megaphone you have. Don’t try to sweep it under the rug.
• “No comment” is not an option.
• Apologize the way a real person would and explain what happened in detail.
• Honestly be concerned about the fate of your customers — then prove it.

These principles certainly apply to nonprofits and for-profits alike. For nonprofits, sub-out “customers” for “donors” or “stakeholders”. My friend Kjerstin Erickson, who runs a nonprofit called FORGE, has been a strong advocate for what she calls “Radical Transparency” — a term I’ve adopted into my own vocabulary. Check out this cool WSJ excerpt on her story! Transparency and honesty are the brick-stones that pave the way to relationships built on trust – the strongest kind of relationship you can have! When your customers, investors, donors, and/or stakeholders trust you, they will be by your side through thick and thin. There’s nothing better than having an army of loyal supporters!

Do you have a story of how “Radical Transparency” or “Owing Your Bad News” affected your organization? Please share it in the comments below!

I had the privilege of attending AfricaGathering in DC over the weekend, and it quickly topped my list of favorite events! Just the pure passion and energy in the room could have provided continuous electricity for the entire African continent! The lineup of speakers focused heavily on the creative-end of social innovation: technologists, entrepreneurs, and artists. A common theme among the speakers was the power of transparency in creating a force for effective aid, opportunity, and dignity.

Effective Aid: VaxTrac

One of the first speakers of the day was Shawn Sarwar from VaxTrac — an organization that is developing ways to track and maintain medical records and the distribution of vaccinations throughout the developing world. Millions of dollars every year are invested in purchasing medicines and vaccinations for the developing world, but a lack of proper distribution systems and record-keeping lead to a great deal of waste and over-estimation of dosages. According to the VaxTrac website, “For every $100 in new vaccines purchased, $50 will never go into the arm of a child in need.” VaxTrac is seeking to develop automated systems to track and monitor vaccination supply-chains and distribution systems. By created increased transparency, they enabling and environment for more effective aid and greater social impact!

Opportunity: Transparency Sells!

Sean Coetzee is a South African entrepreneur who understands the marketing power of stories and transparency. Sean is the founder of Woodsmoke Africa — a distributor of Made-in-Africa products ranging from wines and coffees to jewelry and textiles. He purchases his products from artisans and farmers in Africa, and associates their individual and personal stories with the product. “We can’t compete on price, so we have to compete on story,” he shared with me at the event. In a very much “If only you could see what I see” fashion, Sean has made his business about the people that inspire him. When you purchase a product made by one of the artists (see featured artist profiles here), you become a part of their lives and their families. This personal and emotional connection not only helps drive additional support for the artisans and their families, but it does wonders for business as well.

Dignity: “You can’t be credible if you are not visible” – Marieme Jamme

I think one of the strongest quotes out of the event that resonated with me was when AfricaGathering organizaer Marieme Jamme said of Africa, “You can’t be credible if you are not visible”. This struck right at the core of why I started Transparency Solutions: to help bring visibility and credibility to the amazing people and organizations already doing amazing things across the continent and around the world. There are artisans, entrepreneurs, and leaders across Africa and around the world who do not have access to certain growth opportunities merely because of where they were born or where they live. This is not just an issue of untapped market potential, but at its core it is an issue of dignity. “Poverty Porn” mischaracterizes Africa and the developing world, and ignores what those who have been or lived in Africa have seen first-hand: the inspirational stories, innovation, opportunities, and potential of the African continent.

We have a responsibility and an obligation to share these stories with the world, because as Marieme said: “You can’t be credible if you are not visible”. And this is an issue of basic dignity.

This is what AfricaGathering is about. This is what Transparency Solutions is about.

When you hire Transparency Solutions, you hire a network consultants who are experts in their respective fields. We are currently reaching out to prospective partner organizations and consultants to expand our capacity and extend opportunities to both the consultants and to our clients.

What kind of partners are we looking for? You name it! Here are a few ideas to get things rolling:

• Nonprofit Management
• Due Diligence / Risk Management
• Anti-Corruption
• Microfinance / Micro-enterprise

If you have a skill or area of expertise that can bring value to our clients, than we want to hear from you!

Why join Transparency Solutions’ Consultants Network?

• Opportunities to work on new and exciting issues!
• Expand the reach of your business!
• Surround yourself with creative people!
• Help social change agents “Do Good, Well”

So what does it mean to be a part of the Transparency Solutions Consultants Network?

• Free Marketing! You or your organization will be featured on our website with a logo and blurb about what you do!
• New Business! You will be invited to lend your expertise either as an advisor or sub-contractor for specific projects!
• Make a Difference! Our clients are doing amazing things around the world to create social change, and we want you to be a part of creating a better world!

International Transparency Solutions has been a work in progress for over three years now! The business was born out of the simple idea that access to credible and reliable information can dramatically change how we engage the developing world: allowing for more effective aid/investment, greater social impact, increased confidence in emerging markets, and a fundamental shift in the economic cost-benefit relationship that currently drives corruption and fraud.

Almost one year ago, we set out to create our vision of developing a global network of in-country Transparency Professionals to provide due diligence and investment oversight services to social investors (individuals/families, nonprofits, and government agencies). While the overall concept was there, the strategy for bridging the divide between concept and pilot proved elusive without major financial backing. After a year of traveling the country and meeting with entrepreneurs and social innovators from all over the world, Transparency Solutions has really matured and transformed into an amalgamation of feedback and input from some of the smartest people we know!

We’ve refined our business strategy to focus on how we can create value today, so that we can work towards our goal of creating the business and the world that we want for tomorrow! We’ve moved to Washington, DC so that we can be right in the mix of things — close to amazing prospective clients, supporters, advisers, and mentors. Our new strategy is focused on helping both nonprofit and for-profit social ventures develop strategies to combat risks such as corruption and mismanagement. We will be working to be on the cutting edge of developing innovative strategies for monitoring and evaluation, and putting those strategies to work here in DC. And we will continue to work towards our ultimate goal of radically transforming the investment landscape for emerging markets by creating systems of accountability, trust, and confidence.

As we move forward, we invite you to:

• Give us constant input and feedback!
• Tell your friends and colleagues about what we are doing!
• Subscribe to our Blog, Facebook Page, Twitter, and E-mail List!
• Join Our Team!

We’re really excited about this relaunch, and hope that you will help us change the world!

Global Integrity posted this video on their blog, Global Integrity Commons, a while back and I wanted to make sure I share it with our readers as well. The following documentary was put together by The International Budget Partnership and shows how community members in Kenya are standing up to challenge corruption in their district by demanding access to information and conducting their own “social audits”.

This is a process that has been taken up in many countries across the globe, where ordinary citizens or councils of elders are taking charge of holding those with the discretion of spending taxpayer money to account through social/communal audits. It’s an awesome trend to see, and this documentary does a great job of capturing the movement!