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Business needs to be more engaged in the fight against corruption

15th July 2011

By: Bradley Dubbelman

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Business in South Africa needs to be more proactive in the fight against corruption, Institute for Security Studies director Hennie van Vuuren said at a Frontier Advisory seminar on managing risk in Africa, in Johannesburg on Thursday.

Van Vuuren argued that organised business needs to take a greater stand in ensuring transparent business practices when dealing with governments on the African continent.

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He identified the campaign against the Protection of Information Bill, largely led by civil society lobby groups, as an example of where business showed a lack of resolve in projecting a unified voice.

Creating a climate of transparency and open governance, he said, was key to managing business risk and would go a long way to encourage foreign direct investment on the continent.

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One of the main problems facing investors in managing risk on the continent was the lack of planning and research in the specific country of interest. Industrial Development Corporation Africa Unit head Thokoane Tsolo argued that their generalisations about Africa as a region were the cause of several investors’ failure in Africa.

“Africa is not [made up of] the same country, but is rather a fragmented continent with a patchwork of risks,” he said. Further, he emphasised that different African countries had different dynamics, different cultures and different business practices, which all contribute to unique risk profiles.

Munich Reinsurance Company of Africa CEO Junior Ngulube argued that the best indicator of risk in a country’s investment climate is its long-term political trajectory.

He said that Tunisia and Egypt, once considered stable governments, serve as a reminder that political regimes once thought to be resilient might not be so. In this way, risk perception sometimes does not match risk reality. Closing this gap is the key challenge to mitigating and managing risk when investing on the African continent.

Speakers at the seminar identified the burgeoning unemployed youth on the continent and increasing social inequality as the biggest political risks currently facing Africa.

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