Members of a CIPE-supported business association network attend a meeting in Abidjan.
Business associations contribute immensely to economic growth, development, peace, and prosperity. They play a key role in building inclusive entrepreneurship ecosystems and can bolster the ability of firms of all sizes to grow and create jobs.
Business associations are integral to the democratic process, as they represent the entrepreneurial interests of the middle class, thereby making them essential vehicles for popular participation in a democratic society.
Participants at Ethisphere’s 2014 Europe Ethics Summit.
In today’s global business environment, corruption poses a risk that companies with operations around the world must understand and manage effectively. Those that do reap the benefits. As the Ethisphere Institute points out, the business case is clear: the five year annualized performance of the World’s Most Ethical (WME) Companies Index was 21 percent, beating S&P 500’s 18 percent. Similarly, the ten year annualized performance of the WME Index is, at 11.4 percent, significantly higher than that of S&P 500 at 7.4 percent.
The key to success in ethical business is placing ethics at the center of corporate culture and building strong compliance programs that can mitigate corruption risks. That was the overarching theme of the recent 2014 Europe Ethics Summit: Leadership through Ethics and Governance, hosted in London by the Ethisphere Institute and Thomson Reuters. The Summit was Ethisphere’s first such event in Europe and gathered nearly 150 compliance experts, professionals, and stakeholders.
Corruption is a systemic problem that plagues many transitional countries across the world, rooted in weak rule of law and lack of private property rights. Not only does corruption erode trust in public institutions, such practices also hinder economic growth and weaken democratic governance.
The corruption challenge can be addressed by building responsive institutions that offer basic assurances of private property rights and ensure law and order. CIPE programs address the root causes of corruption through a multi-pronged approach. CIPE programs mobilize the private sector to raise anti-corruption standards and advocate for reforms; streamline regulations and reduce implementation gaps to limit opportunities for corruption; improve corporate governance to strengthen firm-level integrity; facilitate collective action to level the playing field and coordinate company efforts; and equip small and medium-sized enterprises to resist bribery and meet the requirements of global value chains.
Two recent case studies, described below, show these CIPE approaches in action.
Coalition members meet with political parties. (Photo: @sentellbarnes, IRI)
Nigeria’s upcoming elections have been attracting a lot of international attention because of the country’s population, economy, and political status, which are among the highest on the continent. Over the course of a few weeks in early 2015, Nigerians will elect state and national level leaders, including governors and the president.
While Nigerian civil society and the private sector have had difficulty in the past moving national political dialogue towards substance and policy, recent success has been seen at the state level. It is hoped that success will continue in the rhetoric surrounding the state elections, so much so that there can be spill-over into the national dialogue.
Over the past few years, the Center for International Private Enterprise (CIPE) has partnered with coalitions of business and professional associations in seven states across the North Central Zone and Enugu State. The partnerships have been centered on building the advocacy capacity of the various coalitions. Because Nigeria is has a federated system, civil society can attempt to effect change at the state level when it would prove too costly, inefficient, bureaucratic, or in a few cases too corrupt, at the national level.
Business associations need strong governance systems and guiding principles in order to effectively serve their members and act as advocates for policy change. In Pakistan, business associations are mostly struggling to adapt effective governing mechanisms that could ease the path to successfully achieving their vision, mission, and objectives.
Societal norms are changing, the business environment is getting more complex and challenging, and following the principles of corporate governance should now be one of the foremost issues that business associations must address.
CIPE has a huge online library of resources and publications through which business associations can get instant guidance and support. In order to facilitate good governance principles within business associations, CIPE and the World Chambers Federation (WCF) developed a guide on Governance Principles for Business Associations and Chambers of Commerce. The guide was originally published in English and subsequently translated in to Arabic, French, Russian, Spanish and Dari languages.
To support and further simplify good governance principles in the country, CIPE Pakistan has produced an Urdu Translation of these principles (available here) for the benefit of business associations all across Pakistan that can be further guided with local language clarity.
Emad Sohail is a Senior Program Officer at CIPE Pakistan.
Zimbabwean economist Daniel Ndlela shares his thoughts on economic recovery as part of a conference hosted by the Southern Africa Political Economy Series Trust and the National Endowment for Democracy in May 2014. The conference, entitled “Zimbabwe Going Forward” featured Zimbabwean think tanks, private sector representatives, government and civil society. (l-r: Kupukile Mlambo, Deputy Governor of the Reserve Bank of Zimbabwe, Ndlela, and Abdulwahab Alkebsi, Regional Director for Africa, the Center for International Private Enterprise).
While 50 African heads of state prepared to visit Washington for the U.S.-Africa summit held earlier this month, one president who wasn’t invited decided to throw a party of his own. In Zimbabwe, President Robert Mugabe invited dignitaries and government officials to the State House on July 31 to mark the one year anniversary of his party’s victory over the opposition in national elections whose legitimacy was questioned by domestic and foreign observers alike.
The 90-year-old Mugabe, restricted from entering the United States due to targeted travel and financial sanctions, welcomed government friends to his official residence in Harare with a banquet and live music. Unfortunately, given Zimbabwe’s economic outlook, throwing a party is the last thing the President should be doing.
Yesterday was the first day of the inaugural U.S.-Africa Leaders Summit in Washington, DC. Representatives from CIPE’s partners in Africa – including association and chamber leaders from CIPE’s KnowHow mentorship program – in addition to 200 other government, private sector, and civil society leaders from Africa attended the summit’s Civil Society Forum.
With seven of the world’s fastest growing economies and a fast-rising middle-class, no one can doubt the potential for economic prosperity in Africa. What’s questionable, however, is how African nations will achieve this prosperity. And the answer should be through inclusive democracies. Global initiatives like the Open Government Partnerships are already building momentum towards open governments that empower citizens in Africa.
Moreover, as Secretary Kerry and Vice President Biden noted in their remarks yesterday, sustainable economic growth can only come from accountable and transparent societies that address corruption. For more African nations to take advantage of opportunities and accelerate growth, governments, civil society, and the business community must confront corruption.
This is where CIPE’s partners in Africa can come into play. Situated in between the private sector and government, business associations and chambers of commerce can best represent the private sector to improve governance and eliminate corrupt practices that impede market development. The Kenya Association of Manufacturers, for instance, partnered with CIPE and Global Integrity to engage relevant stakeholders in developing recommendations for the local governments to improve service delivery and minimize corruption.
It will be interesting to see what happens next after these high-level business, government, and civil society leaders return to their home countries. Certainly, going beyond rhetoric will be a requirement to systematically tackle corruption and help countries meet their potential.
Maiko Nakagaki is a Program Officer for Global Programs at CIPE.