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November 14-16, The Cape Town Convention Centre, Cape Town, South Africa

 

On Corruption
by Stephen Hayes.
Corporate Council for Africa

I am happy to be back in Cameroon for my third visit. It was, in fact, in this room more than four years ago that we addressed the potential of the African Growth and Opportunity Act (AGOA) for US-Africa trade. I remember the hundreds that were here in this room, and who represented to me the enormous level of hope for business opportunity.

It may be surprising to many of you, as it was to me then, that the United States was then and still is Cameroon's largest trading partner. Then, nearly all the trade was in oil, and four years later, although it is still largely in oil and oil services, trade between the United States and Cameroon is significantly broadening into other sectors. There, of course, remains much more opportunity.

Perhaps not coincidentally, four years ago when I was here, Cameroon was rated by Transparency International as having the most corrupt business environment in the world. I am often troubled by such rankings as I believe them very arbitrary and shallow. They can also be unnecessarily damaging to a country such as Cameroon. Nevertheless, the rankings, at least on the extremes, are indicative of major problems or major opportunities. Yet, as I was reading the new rankings out last week, I note that Cameroon is no longer on the list of the top ten most corrupt nations in the world. Conversely and sadly for me, I noted that the United States is no longer on the list among the top ten least corrupt nations. It seems that we might be headed in opposite directions. Clearly there is room for improvement among all of us.

In Cameroon there is reason for hope, and in my own country, as the results of the elections are showing, there is growing concern not only regarding our international relations, but also about corruption. CNN exit polls cited corruption, even more than the Iraq War, as the single most concern among voters polled. It is clear the American populace is holding its government and its representatives accountable for its actions. This can only serve the best interests of all people.

We can argue that the degrees of corruption may be significantly different between and among countries, but no one can argue that improvement is needed by all of us.

Some may also argue that trends are only indicators of the present based on the past, but we cannot dismiss them as indicators of the future as well. Certainly there is reason for hope in Cameroon and in many other nations of Africa. Progress is being made and I think that such programs as our own Millennium Challenge Act and AGOA are helping to improve the climate for investment and trade. Yet it remains to be seen whether other relatively new trading relationships being rapidly developed throughout Africa will be such that greater economic opportunity for all through improving investment climates will continue to develop, or whether some nations will return to the old way of doing business, which included a very uneven playing field. We should encourage and be happy by new business investment in Africa by all nations of the world, but we should also remain committed to economic trade and change that bring greater opportunity for all citizens of Africa, and that does not maintain the status quo of inequality and poverty.

Let us look at those countries that are showing the greatest area of economic growth. Tanzania is booming. Mozambique is showing exceptional growth, as is Madagascar. So too are Benin and countries like Mali and Burkina Faso. Change for the better is not limited to only one region but is spreading throughout the continent. Change is not limited to any one region or culture but is becoming possible for all. What are the factors that these very different nations, with different cultures and histories have in common?

First, let me say that I am not one to automatically encourage an American-style democracy for anyone. Our form of democracy is a product of our own history and a combination of our own mixed cultures. By and large, it has worked for us, admittedly as an imperfect and evolving system, and it has its own challenges and disadvantages. Again, I would not necessarily wish our own system on anyone. It is for each country's citizens to choose their own directions and ways of being.

However, what is clear is that governments and their economies and businesses work best when they are held accountable to those they serve---the citizen and the consumer. Without accountability we cannot assure the quality of products available to us. Without accountability we cannot assure that those in charge of governments are providing us as citizen-consumers the best service-product available. Governments and businesses must be accountable to the consumer-citizen, and to all consumer-citizens.

For businesses, if they do not provide a product desired by the consumer, the business ultimately fails. That, too, is a form of accountability. The company that provides the best product gets the sale, just as in a democracy, the leader that provides the best sales pitch wins the election. Generally, true and open competition creates a better environment for economic and political success.

Of course, this is a bit simplistic, for strong democracies do not suddenly happen, nor do businesses suddenly happen or appear at your doorstep and become successful. Our own democracy, with all of its successes and faults, has been evolving now for 230 years, and our own constitution for 217 years. Developing and writing an idea is one thing. Making the idea work is another.

For businesses to work --- for my business and your business to work --- there must be a proper climate in which that business has the opportunity to survive and do well. We have seen that governments cannot work well in hurricanes. Neither can businesses work well in seas of instability. If business laws are inconsistent, like bouncing waves on a stormy sea, businessmen cannot feel secure sailing through trade waters. If the terms of doing business change daily, or seemingly daily, how can anyone plan for the future? How can anyone feel secure enough to take the risk of setting sail?

Businesses must know the laws under which they operate. Indeed, it is the responsibility of businesses to know and obey the laws of a country. But they must also have a reasonable idea of all the costs of doing business or they simply cannot survive and prosper. They cannot provide jobs for others if they have no idea of true costs. They must be able to count on some consistency and certainty in the legal environment so that they will know the true costs of doing business.

No wise fisherman would set sail without a weather prediction report. Why, then, do some governments expect a business to invest in a country in which he cannot at least reasonably predict the costs of doing business? Businesses will not invest in such uncertain conditions. The fisherman knows he has no guarantee of catching fish, even under the fairest of skies, but he must have a reasonable assurance that he has, at the very least, good opportunities under fair skies. The potential business investor must know he at least has a chance to make a profit, so that he and others may feed, under fair business conditions, and it is the role of government to create those conditions.

It is also the role of governments to enforce these laws that are designed to create fair conditions. One certainly must read and understand the laws of government, but he must also have the assurance that the laws are not simply symbols on a page. He must know that he is reading a true recitation of the law and not a creative work of fiction, just as the fisherman must not simply rely on the weather report, but must also be able to see the atmosphere for himself, to best judge whether to set sail on an ocean of opportunity or return to the port. Good businesses read the laws, and they also judge the climates in which these laws operate.

A nation must consistently operate under its own rules of law. It cannot change the Constitution every time there is a new administration and still expect the people to truly believe in it. The people of a nation must believe and know that the law is designed to improve their life of opportunities, whether at sea or on land. They must have a stake in the system in which they are expected to believe. There must be a strong judiciary system committed to upholding the law equally and consistently for all. Every system, every investor, must know that the law will be upheld. No person can be outside the law. No person can be above the law, and just as importantly, no person can be below the law. The law must be the ocean upon which we all sail. The enforcement of the law is then the weather system that determines whether we set sail or whether we invest or not.

It is true that there will always be the adventurer, and sometimes the pirate, who will ignore the weather and ignore the laws, taking far greater risks---and sometimes those risks will pay off. But for many more, those risks will prove the risks of fools, and their boats will sink to the bottom, below the waves of the sea of opportunity.

A nation has far more to gain by assuring an equal opportunity for all and by creating the conditions for those opportunities to net their products and goal, for investors, and by creating opportunities for its citizens to participate in the economy. The great many, including the great many investors and businesspeople, do not necessarily have the resources, nor the temperament for such extreme risk-taking. They realize that true human and economic development occurs when the many and not the few benefit. Collectively, the resources of the many are far greater than the resources of the few. A nation has far more wealth to gain through reaching out to the many and not only the few.

It is the rule of law and the faith of the people in that law that must provide the stability and consistency for economic development and opportunity for all. Cameroon has a great opportunity ahead of it. May its people sail will on the seas of opportunity upon which they now so closely and nearly touch. We in the United States look forward to sharing this growth and hope with you

Speech presented by Stephen Hayes to the Cameroon Investment Forum of The Commonwealth Business Council
Yaoundé, Cameroon, November 9, 2006

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