Diary of an African Entrepreneur

Top in ICT in Sub-Saharan Africa -Mauritius, South Africa and ...The Gambia?

2011-04-13T14:56:00.005-04:00

Sub-Saharan Africa did very poorly on the latest World Economic Forum’s Networked Readiness Index (NRI) with the majority of the region lagging in the bottom half of the 138 countries being ranked in the report. Exceptions were Mauritius (which ranks 47th) and South Africa (which ranks 61st).
Burundi (137th) and Chad (138th) were the worst ranked of all countries on the list.
Rwanda, which probably would have fared pretty well within Sub-Saharan Africa, was not ranked. This is rather strange since Rwanda’s ICT efforts are mentioned in the report. Moreover, Rwanda’s government has set the country on a fast-lane to technology growth.
The ranking holds some surprises. The Gambia and Senegal rank higher than Kenya even though Kenya did rise 9 places since the 2010 report. Hmmm. How much did The Gambian and Senegalese governments pay? :)
Here are the rankings of Sub-Saharan African countries

Country	Rank	Notable Improvement
Mauritius	47
South Africa	61
Gambia	76
Senegal	80
Kenya	81	up 9 spots since 2010
Namibia	82	up 7 spots since 2010
Cape Verde	84
Botswana	91
Ghana	99
Zambia	102
Nigeria	104
Malawi	105	up 14 since 2010
Mozambique	106	up 10 since 2010
Uganda	107	up 8 since 2010
Côte d’Ivoire	113
Benin	114
Tanzania	118
Mali	120
Lesotho	121
Burkina Faso	122
Ethiopia	123
Cameroon	125
Mauritania	130
Zimbabwe	132
Angola	133
Swaziland	134
Burundi	137
Chad	138

The full report is available of the World Economic Forum website for download (pdf)

Technorati Tags: Africa,Africatech,ICT,NRI,WEF,INSEAD,Sub-Saharan Africa,report

Senator Inhofe, Glenn Beck and the Christian Right: Why are you supporting a Socialist Bigamist? (#civ2010)

2011-04-08T10:55:00.001-04:00

The only reason you are supporting Laurent Gbagbo in the current Ivory Coast crisis is that you think you are supporting a Christian against a Muslim (Alassane Ouattara). Without getting into the politics of who won the election (since that is not your motivation anyway), here are some facts that you should probably consider:

Laurent Gbagbo, is a die-hard Socialist. His party was a member of The Socialist International until they finally dropped it from his roster after much criticism when Gbagbo would not cede power after losing the elections. During his years in opposition, much of his support came from the French Socialist party where he still has close friends.
Laurent Gbagbo is a Bigamist. His first wife Simone Ehivet Gbagbo, a trade union activist, is a Christian. In 2001 while still married to Simone, he married Nadiana Bamba, a Muslim, in a traditional animist ceremony following Malinke customs. He is still married to both and they both earnestly campaigned for him during this last election. (Gbagbo and his two wives pictured above)
Alassane Ouattara is a Pro-American Capitalist. In fact,the main accusation people have made against Ouattara is that he is too close to the West and is considered to be a puppet. Ouattara studied in the US, where he got his Bachelors, Masters and Doctorate. He was married to an American and lived in the US for many years. His current wife, Dominique Nouvian Folleroux whom he married in 1990 after divorcing from his American wife, is a French Jew. She is an entrepreneur with business interests in the US (the Jacques Dessange franchises). (Dominique and Alassane Ouattara pictured here)

Religion was not a campaign issue during the Cote d’Ivoire elections which was more a choice between prosperity (Ouattara) and Nationalism (Gbagbo). Should you want to support Gbagbo for political reasons or because you really believe he won the election, then argue away.

Neither Gbagbo nor Ouattara is a saint. But if you think that in supporting Gbagbo you are supporting a fellow Christian, then you are mistaken, you are simply backing a Socialist Bigamist.

Picture credits: Sanogo/AFP - L. Gnago/Reuters - DR

Technorati Tags: Gbagbo,Ouattara,Ivory Coast,Glenn Beck,Inhofe,Christian Right,Pat Robertson,Cote d'Ivoire,#civ2010,#tcot

African Innovation Needs Real Venture Capital

2011-04-07T18:14:00.001-04:00

I came across this Forbes article today by Mfonobong Nsehe in which he decries the absence of venture capitalists to support the technology innovators on the continent:

Africa has its own Mark Zuckerbergs, Andrew Masons, Mark Pincuses, Larry Pages and Sergey Brins. But it lacks its own Yuri Milners, John Doerrs, Vinod Khoslas and Y Combinators.

He adds:

Africans can create hugely successful tech products that will sweep the world off its feet. There are several entrepreneurs out there waiting to break through, but their ideas might never see the light of day because of a lack of seed finance. This is the reason Africa might never produce a Facebook, Groupon, Zynga or Google: There are no venture capital firms in Africa to fund these ventures.

Nsehe is right. When it comes to African technology, there is no, or little venture capital available to African entrepreneurs. The financing that is available generally comes from “social’ or ‘development’ type funders, not from venture capitalists wanting to get a huge return on investment. As a result, the funding comes in very small increments of $10,000 to $25,000. This is a lot of money in Africa but it cannot help African innovation compete at a worldwide scale.

Ushahidi is a perfect example of this. This revolutionary technology, whose founder is Kenyan woman entrepreneur Ory Okolloh (pictured). The technology has received worldwide acclaim and has been used around the world. But their funding mostly came from this social/development community. In fact, the funders listed on the Ushahidi web site almost all end in “Foundation.”

Sure, you could argue that Ushahidi has a “social benefit” aspect to it and therefore, it is normal that the funding would come primarily from the development or social funding community. But I wonder if the funders’ list had been different, if the technology could not have evolved into a profitable business venture as well.

A few years ago, I ran into a VC firm that had raised money from Vivendi and other big players. Their sole objective was to fund African technology. This was exciting. However, they were only interested in these mom and pop tech firms that had a ‘social’ benefit. The VC firm soon disappeared.

As an African woman, it is worse. You say funding, and the automatic reaction is “Micro-Finance,” a real pet peeve for me. As if African women entrepreneurs were incapable of managing anything more than a $50 loan. (Don’t let me get going on the women and finance thing here…). Development, social and micro-finance are not evil. They have their role and do help keep millions out of poverty. But Africa cannot develop by simply trying to not be poor. We need real multi-million dollar financing for African innovation. Is there risk? Of course there is, but no more than funding an online pet shopping site in Silicon Valley.

Technorati Tags: African technology,venture capital,africa entrepreneur,Forbes,Ushahidi

, Mfonobong Nsehe

One Day Without Shoes – One Day without Sense…

2011-04-05T17:54:00.001-04:00

I would like to do a whole blog post on ill-conceived good intentions but for now, I will focus on the AOL/TOMS/Microsoft One Day Without Shoes campaign. The goal of the campaign, as they describe:

One Day Without Shoes is a global event designed to encourage people to go barefoot for a day to draw attention to the plight of children in developing nations who face injury, illness and missed opportunity because they don't have adequate protection.

The idea about walking barefoot in support of poor kids who can’t afford to wear them doesn’t sound so bad but who is it helping? There might be a feel good factor but in all honesty, if this had come up on April 1, I would have sworn it was an April Fool’s joke. Arianna Huffington, with a very serious face, explains how you will ‘raise awareness of the millions of children who have to go barefoot.’ Really – that is the whole point of the campaign. Here is the video:

OK. Now there will be million more kids going around barefoot in the halls of AOL, Microsoft, TOMS and shopping malls. The only awareness it raises is that of how silly we can be under the pretense of ‘helping people.’

Worse is the amount of money it looks like they spent on the campaign. I don’t have the dollar amount but they have a dedicated web site, iPhone and Android apps, lots of tools, resources and advertising. The hundreds of thousands of dollars spent on this meaningless project could have financed thousands of mobile phones for poor kids and that would have made a real difference in their lives. TOMS says that if you buy shoes from them, they will ship shoes to the poor. Thousands more dollars for shipping costs for ridiculously expensive shoes when you can buy lower cost shoes in these poor countries and support local entrepreneurs.

Others have also reacted negatively to the Day Without Shoes campaign including Gawker Put Your Shoes Back On, Privileged Techies:

No one's saying this isn't a laudable cause. What sort of cold-hearted bastard could be against shoes for poor kids? But the implementation looks like something out of an Arrested Development episode. Maybe, instead of exposing their bare, sweaty feet to whatever microbes have accumulated on their office floors or even—and we shudder to think about this—New York City sidewalks, AOL and Google employees could do slightly more good for the world's teeming, shoeless masses by instead redirecting a small portion of the resources used to fund their $1,000 cash bonuses and 10 percent raises, multi-million dollar stock grants, or company-sponsored human servants.

So ill-conceived was this initiative that Good Intentions Are not Enough decided to do a counter-campaign A Day Without Dignity to raise awareness about wasting good intentions. They have a whole list of suggestions on their site for promoting their own counter-campaign:

On or around April 5th – the same date as A Day Without Shoes – we’re asking aid workers, the diaspora, and people from areas that receive shoe drops and other forms of charity to speak up in blogs, on twitter, or at school.

Someone should please tell Arianna and TOMS and whoever else is behind this thing that the idea should be to raise MONEY to fund local entrepreneurs in developing countries so that they can raise themsleves and their communities out of poverty.

Technorati Tags: #withoutshoes,day without shoes,day without dignity,arianna huffington

Managing my Psychology

2011-03-31T19:55:00.001-04:00

I read and re-read the post by Ben Horowitz today: What’s The Most Difficult CEO Skill? Managing Your Own Psychology. I kept reading it over and over because I finally realized that I was not alone. As an African entrepreneur, I am confronted with challenges that CEOs in developed countries don’t even know exist. But they have their own challenges and in the end, the psychological ‘condition’ and the internal struggle are the same. Horowitz says:

‘The first rule of the CEO psychological meltdown is don’t talk about the psychological meltdown.’

This is so true. Because who do you talk to? As well meaning as they might be, friends, even employees simply cannot understand. It is like a White person not knowing what it is like to be Black. I mean, they feel for you. Intellectually, they understand that it might be different but in the end, they really don’t know. As a result, I spare my friends and my family with the gory details of entrepreneurship in Africa and I save them for my blog.

I remember one time, I had several members of my American family together for Thanksgiving and they really wanted details about my life in Africa. So I started to tell them a story and seeing their bewildered look, I stopped and brought the story to an end. Even then, they were wondering why I just didn’t come back to the US where I could lead a more ‘normal’ life. Another time, I met with members of the World Bank’s “Doing Business” staff as they were getting background information on my country to compile their yearly report. After three hours, they looked at me and said: “Why are you still there?” A ‘normal’ person simply cannot understand what drives an entrepreneur, nor understand, as Horowitz so perfectly describes, the loneliness of being a CEO.

But my favorite quote from Horowitz’s article is:

Tip to aspiring entrepreneurs: if you don’t like choosing between horrible and cataclysmic, don’t become CEO.

I often say that leadership involves choosing between bad and worse and you will be judged on making the bad choice. Few, if any around you understand that you had few options when making an important decision or that all of your options were bad ones. In the end, they will simply conclude you made a bad choice. Having made some over the more than 11 years since I started my company, I have a soft spot for all leaders, be they business or political when people second-guess their decisions.

Horowitz ends with some nice suggestions on how to manage your psychology. His final advice:

'Don’t Punk Out and Don’t Quit As CEO, there will be many times when you feel like quitting. I have seen CEOs try to cope with the stress by drinking heavily, checking out, and even quitting. In each case, the CEO has a marvelous rationalization why it was OK for him to punk out or quit, but none them will every be great CEOs. Great CEOs face the pain. They deal with the sleepless nights, the cold sweat, and what my friend the great Alfred Chuang (legendary founder and CEO of BEA Systems) calls “the torture.” Whenever I meet a successful CEO, I ask them how they did it. Mediocre CEOs point to their brilliant strategic moves or their intuitive business sense or a variety of other self-congratulatory explanations. The great CEOs tend to be remarkably consistent in their answers. They all say: “I didn’t quit.”

I will re-read his advice every time I feel overwhelmed and the very next time I feel like a mad woman. I still think that being an entrepreneur in Africa is harder than it is in the developed world. Last week, Columbia University held its annual African Economic Forum and one of the speakers said that to be an entrepreneur, you had to be a little crazy. I responded: ‘To be an entrepreneur you have to be crazy. To be an entrepreneur in Africa, you have to be raving mad.

Well, after reading the article from Horowitz, I am still convinced that I am raving mad, but at least I know I am not alone.

Doing Business in Africa: Who is the Mad Man – or Woman?

2011-02-03T16:57:00.002-05:00

We have a common saying in this country: “if you are swimming in the river, a mad man comes and steals your clothes and you leave the river naked to run after the mad man, who is really the mad man?

I am feeling a lot like the man (in this case woman) running naked after a mad man to get my clothes back. That is what it feels like to try to do business ethically in this country.

When crooked competitors win contract after contract while you struggle do make ends meet, who is the mad man?

When a customer tears up a payment because you refuse to bribe the accountant and says “see how you will get paid now,” who is the mad man?

When thugs working for an “enemy” are allowed to break down your door and assault you, the police comes and tells them “go home” without any punishment because you don’t bribe them, who is the mad man?

Perhaps what makes me even more the “mad woman” is that I still think something is wrong with the way the system works but I still persist in going against it.

I run after the mad man when I speak out about the lost contract, raising examples of unethical behavior – when the decision makers were certainly in on the deal.

I run after the mad man when I sue the customer to get my payment – in a corrupt judicial system that will drag the case on for years before eventually awarding me a judgment I can’t execute.

I run after the mad man when I protest to high level police officials – who tell me to go get my own thugs.

The examples are many. The point I am trying to make is that running counter-culture means running after the mad man. In the end, you are the one that looks stupid, the one that doesn’t get paid, the one that doesn’t get the contract, and the one that can’t get help from the police. I have frequently gotten laughed at to my face for refusing to bribe. And honestly, I begin to wonder if I am not the crazy one.

Fight for your Principles, Fight a System

2010-10-18T08:40:00.000-04:00

I have learned that the more I am able to get around corruption, the more I am able to overcome systematic hurdles, the more attacks I should expect. At first, I anticipated that my adversaries would be the ones to launch these assaults, and they have. I remember in one legal dispute, my opponents took out full page ads in all the country’s newspapers and ran them an entire week, attacking my company’s integrity. Those types of attacks are normal and expected.

What I did not imagine is that people outside of the dispute would also join in, in a kind of a multiplier effect. You are not battling against an entity or a person but battling against a system. And those who rely on that system will fight you not because they have a particular problem with you but because the outcome of your dispute might shatter their whole structure. If one individual can actually win court cases, win contracts and do business without corruption, this could encourage others to do the same and jeopardize an entire system.

I try to do what is right under my circumstances. And while I do hope that the decisions that I make will have a positive impact beyond my personal situation, I don’t have the ambition to change the whole environment. Yet, the mere sense that someone – anyone – could get around their system causes collective panic and leads to numerous forces working to protect this order of things.

As a result, just staying in a corner, trying to survive while maintaining one’s ethics and principles can be an invitation to what I call “invisible forces.” Doing the right thing is so costly, so exhausting that it becomes a luxury. Not many can withstand the barrage of assaults that result from trying to operate outside of the system, and many don’t. It is just so much easier to just go along with the flow lest one become the target for destruction.

Even though I don’t promote this openly, it is pretty well known that I don’t engage in corrupt practices. But the environment survives and thrives on corruption. As a result, I am an enemy before I even decide to enter the ring.

As I mentioned in earlier posts, my father died a couple years ago and there has been a real battle surrounding his estate. My legal status happens to make me his primary heir even though he had lots of children. To avoid any battle, I thought that it would be best to simply share equally with everyone and stay out of the courts. As rational as this might seem, it was a huge mistake.

In fact, when there the potential for a dispute, especially when it involves significant amounts of money, the system needs a battle; lawyers need to get their fees; judges need their bribes; law enforcement authorities too. Therefore, the more fights they can create and the longer they can keep them going, the more they benefit. So the various forces will actually fuel the fight – this until there is nothing left to fight over, and then they move to another case. While I have understood this, many of my siblings have not and they have fallen hook line and sinker into the system’s trap.

More importantly, the “forces” know full well that they will not benefit from me and that if I have my way, the disputes will end. So I unwittingly become the target for their attacks with my siblings used as mere instruments. Unwittingly because I chose not to engage in the battle so they brought the battle to me. My offices have been physically attacked by dozens of thugs with the police, when called, just watching as our doors were broken down and locks changed; innumerable criminal complaints have been brought against me, simply because I chose to stand up for the truth; I am on trial for purportedly being a CIA agent and there are two eviction proceedings against my company because we are “a cover for the CIA.” A local police station even issued a warrant for my arrest for “espionage,” amongst other ridiculous accusations.

Of course, these are all ludicrous and unfounded attacks and those who brought the complaints know that there is no basis for them. But because I am brought into the ring, I have to defend myself, and therefore, I have to surrender to their system.

One of the many times I had to respond to law enforcement, they straight out told me that they knew that I was really the main heir but that my half-brother had shown them money and that I should show that I have more. I walked out, suggesting that if they had anything on me, they should simply arrest me.

Last week, I received a call from a friend of a magistrate that has one of the cases; again, he stated that others had made “offers” and that he wanted to give me the opportunity to make an offer of my own, suggesting that the decision would favor the highest bidder. Again, my response was simply that the judge simply do what he thought was right; I would not be “bidding.”

Because of the legal circumstances, it is very difficult for judges to outright decide against me, or for law enforcement to charge me with a crime. However, they drag the cases or investigations for as long as possible, hoping that the pressure and the financial cost of multiple lawsuits, complaints and disruption to my business will cause me to relent.

If I have been able to withstand the attacks so far, it is only through God’s grace. This does not mean it has been easy. It has taken a toll both on my personal and on my professional life. It has also caused me to put on hold many of my projects and other more constructive endeavors. So in that respect at least, the system has been victorious. Although it has not yet destroyed me, it has limited my ability to function normally – meaning against the system's interests.

I am an optimist and believe that good overcomes evil. I cannot allow the system to change what I believe in or to dilute my principles. I might lose a lot in a material sense but at least, I will maintain the very essence of who I am. This doesn’t sound very pragmatic but as some say, “pragmatism is the enemy of principle.”

Overcoming Corruption, Just this once... Maybe. Just Maybe.

2010-07-16T17:12:00.000-04:00

A few years ago, our company was ordered to pay the current equivalent of $350,000 in an employment lawsuit. I blogged about it at the time. “Do me A Favor, Don’t do me any Favors.”

The case reeked with corruption from day one. The judge in the original case even mentioned to us that “If I were a judge in a bigger city, you would need to pay $10,000 (equivalent) just to talk to me.” He added that if we heard that he had met privately with our opponents that we should know that he is open to meet with everyone (for those not used to corruption lingo that means “I am open to an offer from you if it is better than theirs.”) We were naïve and had not understood the message. In any case, he rendered judgment against us without any basis in law or fact. After the judgment, he suggested that we should find a suitable settlement amount. We chose to appeal.

To handle the appeal, we so distrusted the lawyers in that area of the country that we decided to retain a lawyer in Europe who was also a member of the local Bar Association. We were right to do so. While preparing the appeal, our lawyer discovered that our counsel in the lower court case had actually been the lawyer for the opposing side during the period the case had been hidden from us! This had never been disclosed by either the lawyer or the judge.

During the appeal, our European based lawyer just could not understand how the judge had rendered such an obviously incorrect judgment. To assist him, he had a local partner. But he did not have full confidence in his own partner. So at each hearing, he sent us the submissions and asked us to send a representative to the court…. Just in case.

For the final arguments, our European based lawyer flew in and very eloquently pleaded our case for over an hour. The opposing counsel never said a word. Strange. The case was sent for deliberation by the panel of three judges.

Then month after month, the decision was postponed. No reason, just postponed. This went on for 8 long months. We know that long delays in rendering decisions are usually a call for the highest bidder. We also know that our opponents were willing to be very generous with judges and were not overly bothered with pleading their case or submitting evidence. Our lawyer's intense pleadings had seemed quite out of place in en environment where law and facts are not usually part of the equation.

After some time, we stopped sending our own representative to the Court because it was a waste of time and travel expenses so we relied on our European counsel’s local partner. So when a hearing was scheduled yesterday to announce the decision, we did not send anyone.

For a reason that we will better understand one day, our European counsel’s local partner decided not to show up. We had no idea therefore, if a decision had been rendered, and if so, what it was. Worse, the local partner stated that he would be unavailable to check on the decision until next week. It is important to note that the local partner is based in the area where the court is located and he could have easily sent someone or called the court to get the information .Our European based lawyer also got worried. We were afraid that judgment had been rendered against us and that the local partner was colluding with the opposing side to give them time to execute the judgment. Paranoia.

So we decided to send someone to the court today. Unbelievably, the court clerk had decided not to come to work and our file was locked in her office. Reached by telephone, she said she was “tired.” Yes, judgment had been rendered yesterday, but she could not remember what it was (our case was the most important employment case in several years..but she did not pay attention as she was writing out the decision). She asked that we return on Monday.

In a normal environment, one would just go away and come back but it our own legal system, court clerks never miss work unless they are paid to do so by a party in court’ Usually, to allow them to either execute the judgment or to allow an application for a stay of execution. (I have learned a lot since 2006).

Thinking quickly on his feet, the person we sent to the Court explained to her colleagues that he would need to send for a bailiff to record that on a business day, he was unable to obtain information on a judgment from the Court of Appeals. He said that since he had been paid travel expenses, his bosses would never believe that no one could give him the information. Within 5 minutes, the Chief Registrar called the Court clerk and she showed up 30 minutes later.

Strangely (and happily of course), the judgment was in our favor. The judgment from the lower court was set aside. We don’t know what the games were about but we will surely discover eventually. One can become so paranoid that it really could be that the local lawyer was unavailable and the court clerk was too tired to come to work. I would like to say that our mind has become so twisted that we think everyone is corrupt and the whole legal system is set against us but somehow, something still seems fishy. Update coming…

Bidding for World Bank Financed Project: An Exercise in Futility

2010-06-09T12:47:00.000-04:00

Any company or organization that has submitted a bid for to a large organization, especially when the funding comes from international sources, is aware that the results are often decided before the RFP is even drafted. The Request for Proposal (RFP) is generally designed so that only a pre-determined bidder can meet the requirements. This does not only happen in Africa. We have seen this occur even in the US and Europe. I remember a seminar for Federal government contractors in the US during which the main speaker said that “if you’re not 70% sure that you will win, don’t bother to bid.”

Usually though, there is some pretense that this is a real RFP and that all bidders have a chance. This way, they can justify awarding it to the “pre-selected” company by showing that X number of companies responded but none met the technical requirements.

I remember finding this out the hard way, working round the clock for weeks to finish a proposal on time, getting the bank guarantees, audited financial statements to respond to a very complex proposal. When it became clear that from a technical and financial standpoint our proposal was the best, they simply cancelled the process. When the new RFP came out, we did not meet the administrative requirements. :)

Still, even when we know we have little or no chance, we sometimes respond anyway. The process is important for our team to go through for practice and from a marketing standpoint, our company name should come out from time to time. So, when we recently saw a notice in the official newspaper for an RFP from a government owned agency for a system we have lots of experience with, we decided we would bid.

This decision was not one that the agency was very pleased with. According to the notice in the newspaper, anyone could consult the bidding document between certain hours. However, when we tried, during those very times, we were never able to see the document. The person who had the document seemed to always be gone as soon as we showed up.

Not to be discouraged we decided to blindly purchase the bidding document. The newspaper indicated a bank and account number to deposit the equivalent of roughly $50 to buy the document. So we went to the bank to make the deposit. Account number invalid. Indeed, the newspaper showed an account number with just 6 digits when all account numbers here have 13.

Then we tried to get information by attending a meeting announced in the newspaper notice for which there is a date, but no time. We sent someone who spent all day. The meeting was never held.

Finally yesterday, we were able to get the right bank account number. We deposited the funds and took the receipt to the agency to get the RFP. They are unable to give it to us because their copy machine is out of paper! I am not making this up.

We have lost already three precious weeks while the agency continues to play games with us. We are only more determined than ever to respond. Since this is a World Bank financed project, we will certainly get the RFP (which we paid for) just in time for our name to be added to the list of expected bidders but too late to obtain the required bank guarantee and to meet the other administrative conditions listed in the document.

The World Bank is meant to be a development organization but most of their funded projects are awarded through a process that is often less than equitable and is sometimes the result of blatant corruption. The World Bank seems to be aware of this. They have an elaborate system of reporting on the procurement process: http://web.worldbank.org/WBSITE/EXTERNAL/PROJECTS/PROCUREMENT/0,,contentMDK:20251613~pagePK:84269~piPK:84286~theSitePK:84266,00.html. But under what category would you put Copy machine out of paper?

Being Blackmailed into Tax Fraud

2010-05-26T06:05:00.000-04:00

In this African country I am in, tax officials do everything within their power to push honest taxpayers into fraud. They do this so that the taxpayer becomes out of compliance and can then be blackmailed into bribes.

A couple weeks ago, our company signed a new corporate lease for the building we are in. We extended the lease term to 10 years and we expanded the amount of space we were in. Our contract calls for our rent to be paid monthly in advance.

The law requires that all contracts be registered with tax officials within a 30 day period from signature. The registration fee is equal to 5% of the yearly lease amount and it must be paid every year and in advance.

So when we went to the tax office to register our new lease yesterday, we went prepared to pay the 5% of the yearly lease amount. Let’s say our rent is $1,000 per month, which comes to $12,000 per year. That would be a $600 registration fee.

After looking at the content of the lease, the tax officials told us that since it was a commercial lease, the tax is 10% annually and not 5%. So this morning, we returned to the tax office with the 10% fee which, based on our example, is $1,200.

Well, as if that is not enough of a hindrance for taxpayers, the tax officials informed us today that since the lease is for 10 years, we must pay in advance, the tax for the 10 years. In our same example, this would mean $12,000 in taxes to comply to register a lease for which monthly rent is $1,000!

We don’t think this is true. But the tax officials are refusing to register the lease. They will probably continue to refuse until the 30 day period is passed. After the 30 days, there is a 100% penalty. This means that whether we have to pay the registration tax for 1 year or 10 years, the fee will be doubled. So we will have to pay, under the example, $2,400 or $24,000 to make legal a lease for which rent is $1,000 a month.

Of course, the tax officials will then propose an easier, less expensive way, through bribery. We have decided not to give in to the blackmail. We will pay an amount equivalent to 10% in tax and get our receipt, even if they don’t register the lease itself.

It is exhausting to try to fight corruption day in and day out. It would be so much easier to go with the flow. We are continuously “punished” for trying to do the right thing. I wonder how much longer we will be able to resist…

Judicial Software

2010-03-25T13:47:00.001-04:00

I have started working on my project to develop a software application to manage court systems. See earlier blog post: Judicial Corruption and What Can Be Done About It:

I have started to put together a team and we are in the early design stages. We are designing the application as a multi-stakeholder system with access for court clerks and other court staff, judges, judicial officials, lawyers and individual parties. Initially, we will limit the application to civil cases that fall under OHADA (an organization that harmonizes business law across 16 African nations) law and extend it later to other types of cases.

We expect to be done with the first phase of the project by the end of 2010.

If you know of any similar application currently being used in an African country, can you please post a comment?

When Your Employees and Customers Unite to Defraud You

2010-03-25T13:32:00.000-04:00

Our main Cisco router recently died. We have had it for many years and it was due for an upgrade. We contacted a few of our current suppliers to get quotations. One, we’ll call ABC, sent their regular sales representative who spent some time discussing our needs. Within a couple days, we received a quotation from the sales representative. Interestingly, it was in the sales rep’s own personal name! He has a small business on the side, doing exactly the same thing that his employer ABC does.

Surely, ABC is unaware that we received this quotation from his employee. The employee probably told his superiors that we no longer wanted the router or that we had purchased it elsewhere. He was quite confident that we would buy the router from him and never tell his management, an indication that he has done this several times before.

Another local IT company developed some industry specific software and customized it for their primary client. They trained their main developers extensively, even sending one to North America for classes. The client then unexpectedly decided to cancel the contract. The IT company felt protected by the fact the client would eventually be forced to honor the contract or cease operations since this was a mission critical application and they could not operate without it. Unbeknownst to them, the client had already purchased the source code from the IT company’s developer, who, with a still valid visa, had fled to North America. Given the state of the judicial system in this country, there is not much recourse for this IT company.

We complained once to our former internet provider about slow bandwidth even when there were few of us connected at once. They kept checking their system and said that we were using all of our allocated bandwidth. After an investigation, it was discovered that one of their employees had given other customers access to our bandwidth paying the employee directly for the extra bandwidth.

We have also been on the other side of employee/customer fraud. A few years ago we did some training for a very large customer. We did not get the purchase order up front since both their IT director and their training manager came to our office to confirm the training, promising to bring the purchase order during the training. Well, even after the training was over, we still had not received the purchase order. For the next year and a half we waited for the purchase order. The salesperson responsible for the deal on our side was very active in keeping in contact with the client and updating us with the internal problems the client was having, asking us to be patient. The client’s IT director also came to see us several times asking us to hang in there and that there were larger projects down the road for us if we remained patient. They were a very large customer and the potential was huge so we waited.

Eventually, we decided to send a fax to the customer’s CEO to state that we were walking away from the $26,000 in revenue and wanted them to acknowledge our “donation.” We first called his office to get his fax number. Hearing the name of our company, the secretary said that she had seen a payment document come through with our name on it. She transferred us to accounting. The accountant confirmed that she had just issued the payment. She confirmed our invoice number, the invoice description and other details, all of which were correct, then added. “We just ordered a wire transfer to your account at 123 Bank.” Well, we didn’t have an account at that bank. She insisted that the account information was on the invoice and faxed us a copy of the invoice.

The invoice had been copied exactly from the one we had submitted with one exception: the payment details were the account number of a company our salesperson had set up with the customer’s IT director! Even after the fraud was discovered, we still never got paid in full. The purchase order had been issued in the name of the other company and we had to negotiate a lower payment. As part of the agreement, we had to pay the salesperson her commission!

One of my friends also owns an IT company in this country. They have devices that secure revenues for a government agency. The devices are all connected to a server which reports on the revenues generated by the devices. One of his employees, in complicity with agency employees, took one of the devices offline. The device continued to collect revenue but none of it was reported. When my friend uncovered the subterfuge, he immediately notified the client and fired his employee. The agency had my friend briefly arrested and his employee's accomplices within the agency kept their positions! Obviously, the agency management was in on the fraud. Had my friend kept quiet, everyone would have been happy.

I am not sure what the solution is to this disease that permeates business relationships in this country. The judicial route is risky at best and no one wants to take customers to court, even when they acted improperly. You can of course fire your employee or file criminal charges for theft but you are again left to the mercy of the judicial system.

Some employees use the excuse that they are not well treated by their employers but in all the examples I listed above this was not the case. Our salesperson earned $1,000 a month before commission and had $300 in monthly telephone credit which is quite decent, especially since she was not full time. In the other cases, the employees were some of the highest paid and best treated in their respective companies, some even having company cars and expense accounts. This really just boils down to the general business climate in the country. Anything goes. There is no right or wrong, just a quick way to make money.

I feel very blessed with the staff I have right now and I am confident that they don’t engage in this type of behavior. At least… I think.

Judicial Corruption and What Can be Done About It

2010-02-20T07:32:00.000-05:00

The judicial system in this country is one of the most corrupt segments of society. Yet, I have never heard of a judge being arrested or charged with corruption.

This is even when it is abundantly clear that the judge was influenced in rendering a decision. If these magistrates were “massaging” the law in an effort to be fairer than the law is, this would be legislating from the bench which is still wrong but certainly more tolerable. But fairness has nothing to do with it.

Technically, judges are independent from the government and judges seem to take this independence quite literally. They are also independent from the law; independent from the facts; and independent from any semblance of ethics or propriety.

I asked an official in the ministry of justice why it was that despite the recent anti-corruption drive in the country, no judge had ever been charged with corruption. He explained that corruption was very difficult to prove since the judge could always justify his decision by stating is was judicial error. The most the government can do is to transfer them to a less desirable court or, in very rare cases, revoke them. Basically, incompetence is a judge’s best defense.

Because there is no fear of real sanctions, most judges are not afraid to render blatantly wrong decisions. The attraction of the bribe, which amounts in many cases to more than the judge can earn in an entire career, is much more potent than the fear of being transferred to some remote town where they will be handling disputes over goats.

In fact, the amount a judge was bribed in a case is often an open secret. My father died about a year and a half ago and as in most inheritance situations, siblings have been battling each other in court. One of them convinced a judge to order a marriage certificate to be drawn up for his mother, after getting the judge to order a birth certificate be issued to him. So after my Dad died, he mysteriously reemerged to have a 50 year old son and to get married. The marriage certificate clearly states:

On this day ….[3 months after my Dad died] Before us, appeared publicly….

The judge signed and certified the birth and marriage certificates. Some of my siblings who heard about this immediately petitioned the court to have the order nullified. Unfortunately for them, they ended up before the same judge who of course, stuck to his guns. This case created enough scandal that the judge was sanctioned pretty quickly. Although he was not transferred, he was sent cases of no significance. This meant that his bribe income dropped significantly. He complained to whoever would listen that he had jeopardized his career and had only received less than $3,000 for that court order and now realized it was not worth it.

In another case, a different sibling was able to get access to a bank account that held more than $2 million in it. In this case, he went judge shopping which is always a risk because the judge that doesn’t get the deal will spread the word. He first went to the only judge that had territorial jurisdiction over the matter. We don’t know all the details but the arrangement broke down and the sibling moved to another judge in another court. This judge, who was outside of the proper jurisdiction, requested about $20,000 to sign the court order. My sibling borrowed funds and came up with a $4,000 deposit, promising the rest when the order was signed. Days turned to weeks, and the order was still not signed. Eventually, the sibling realized that the judge had no intention of ever signing. He couldn’t very well ask for a refund.

He then found a judge, again who was completely outside the jurisdiction. Imagine a New York court having jurisdiction but you manage to get a Washington, DC judge to sign your order. This judge unfortunately was much more expensive but he came with a guarantee. He would get the President of the Court of Appeals of his jurisdiction in on the deal which would ensure that the decision would not be overturned. For that, he would require $80,000. After much negotiation, they agreed the judge would be paid when the funds were released from the bank. $80,000 to get $2 million seems like quite a deal.

Another sibling (the one with the birth and marriage certificate) filed criminal charges and tried to get his brother arrested. He paid about $16,000 for that arrest. The sibling who was arrested was later released pending the rest of the investigation. Since he had not been able to spend all of the $2 million before getting caught, there is still over $1 million blocked. Recently, he received a call from a government official offering to have the funds released and his case closed for a mere $40,000.

What I find truly remarkable is that I don’t see or speak to either of these siblings and received none of this information from them. I only know the details because they are just not a secret. These details are out in the public domain. I could go tell officials in the ministry of justice but I might just end up with the one who offered to fix everything for $40,000.

Besides, I will get the same response. Even though they know that corruption was involved, this is impossible to prove. Unlike in the US or Europe were you could talk about wire fraud and follow the money trail through various front companies and financial institutions, we live in a cash society. Unless any of them got a receipt for the money they gave these judges, the cash will be difficult to trace.

Not all judges are corrupt but the honest ones are becoming more and more frustrated. I have a friend who is a judge. He has never been involved in any of my cases but I often go talk to him because he always has good advice. I remember the first time I went to see him I was in tears because my case had been dragging on for so long it was going to bankrupt my company. His advice was to try to find a way to take the case outside of the country! Usually though, he is quite supportive and encourages me to persevere.

This last time, I spent two hours in his office trying to console him. He was discouraged, disgusted and even despondent over the state of the judiciary in the country. Judges he had always respected and admired were now involved in some of the most corrupt cases in the country. There was no incentive to be honest. No incentive to apply the law. In fact, judges who try to remain ethical are more and more ostracized by their colleagues.

This society is broken to its core. The lack of a fair judiciary impacts all segments of society. How do you enforce a patent for innovative technology you have developed? How do you enforce a contract? How do you obtain justice when victim of a physical crime?

For the last few years, I have been mulling about developing a software application for the judiciary. I know they won’t buy it but if I can build it and donate it, they won’t be able to refuse. This won’t stop corruption but it might help to bring more transparency to the system. For example, there would be systematic checks and balances in the system. Gone would be the judgments which are registered and executed before they are rendered (that has happened to me twice!). We could build a system that would be accessible to judicial authorities so that they could monitor cases from their desks instead of waiting for reports that might come too late. We could build in business intelligence that displays in charts and graphs how long cases are taking from beginning to end. The reporting could be by judge, by type of case, by jurisdiction, by lawyer, by party. This will not stop particular lawyers from always going to particular judges but at least this would more obvious.

Perhaps if God led a technology entrepreneur into the jowls of judicial corruption, He intended for me to do something about it. Perhaps God has nothing to do with it and I am still living in denial, hoping that the system can change, despite the evidence that it doesn’t want to. That’s the problem with entrepreneurs. Passion often overrides logic and leads to all sorts of justification for charging forward, blind to the reality around them. That is our greatest fault but it is also our greatest asset.

So I better start forging ahead with my judicial application…

Finally! A Change in the Tax Law That Makes Sense

2010-02-18T08:16:00.001-05:00

One of the things that has most frustrated me about this country over the years is that a company cannot file its yearly tax return itself. To submit your tax return to the tax authorities, it must be certified by an approved chartered accountant.

We generally don't have many transactions over a period of a year even if the amounts of each transaction can be substantial for the country. Our tax returns are therefore pretty straight forward. We employ chartered accountants who could very well have prepared our returns but the law did not allow this.

As a result, we have always had to use an outside accounting firm. This can become very expensive. They charge you one amount to prepare the return and another to certify it. On an average, we end up with a bill of between $6,000 and $10,000 for a very straight forward return.

Last year, we thought we would be smart and have an accountant prepare the return and then just get the certification from the accounting firm. The accountant works with a network of accounting firms and she gave us a quote of roughly $600 for the certification. We already found that amount excessive but this would be cheaper than having the accounting firm do both.

When the accountant completed the return, she took it to the accounting firm for certification. They wanted $3,000. Why? Because the accountant had underestimated our income when she quoted the $600 and these accounting firms base their fee on the client's tax revenues and not on how much work is involved. We tried other firms but they were all in the same range or even higher.

I just noticed in the new 2010 tax laws that this certification is no longer required. This is really excellent news. There are many small business who simply can't afford to submit a tax return even if they owe little or nothing simply because they cannot afford to get the return prepared by an accounting firm or get it certified.

Some people (the accounting firms) point out that this will result in increased fraud. I disagree with this entirely. First of all, the accounting firms just sign and stamp. They don't really look at the document. These are not audited by the accounting firms, just certified. Moreover, more companies will now be able to afford to file their taxes which reduces, not increases fraud.

I also think that the accounting firms will have to provide added value (like tax advice or revising the tax return) rather than simply certifying it for a fee.

I have not looked at all the provisions in the new tax laws and I am sure to find some that I will cry over. But at least this one is really quite positive.

Paying for Air or a New Utilities Billing Concept

2010-02-16T06:04:00.000-05:00

Our office here just received its monthly water bill a few days ago. About $30. This is a lot for an office and it is twice what we were paying about a year ago. Worse, the water service is so infrequent that we often go several days with no running water. I asked our accounting manager why the sudden jump in the cost when we were using less water.

The accountant explained that we were paying for air. Yes. Really. After noticing that our bills were unusually high given the usage, the accountant and a plumber did a test. They checked the water meter when there was no service and noticed that the meter was running. After some tests, they realized that whenever we opened any water faucet or tried to flush the toilet, the meter would count that as water used! I thought this was impossible.

A couple days ago, I ran into the water meter reader. He seemed friendly and I asked him about this strange billing. He actually admitted that this was indeed the case and that many people were complaining about it but that there was nothing he could do.

The water utility was privatized a couple years ago as one of these World Bank / IMF imperatives. The quality of the water has not improved; the service has gotten worse and the prices have increased. I was in the office of the CEO of the water utility once and I thought it was very telling that he had bottled water on his desk!

I have not seen the new financial results for the water utility. I would not be surprised to see that their profitability increased substantially. After all, they are the exclusive distributor of paid air in the country.

Business Insider Article on Corruption in Africa

2010-02-08T10:20:00.000-05:00

http://www.businessinsider.com/ recently published an article on corruption in Africa.

I don't have the other side of the story but this is a very common tale which is certainly not unique to Senegal. Few, if any, of these large licenses or concessions occur without corruption. I am not saying this happened in Millicom's case and I certainly have no inside information but a lot of times these stories become a scandal only when "corruptor" and "corrupted" stop seeing eye to eye.

I read comments that Millicom's license had been revoked for number of years ago but they were still able to do business. Under what agreement? Why didn't Millicom protest then? I am not in any way defending the government of Senegal but in the game of corruption, it takes two to play....

This should serve as an example to other companies who tend to close their eyes when they first want to get in and then are surprised when their former partners come begging for more. I remember meeting a delegation of one of the largest US telecom companies coming to the country I am in. They were really interested in the market. They eventually decided that the risk was not worth it. As they explained to me in private, they were not "experienced" enough with the business environment.

African nations should understand that by requiring foreign investors to bribe officials to get these licenses and concessions, they will get a type of investor that is not necessarily a good corporate citizen. Real investors shy away and sharks come in to do business.

Treading the Muddy Waters of Corruption

2010-01-27T07:46:00.004-05:00

People often ask me how I manage to keep my "no corruption" stance in an environment in which corruption is the rule and not the exception.

1. My first strategy is to "sell" this concept to my staff.

Most people from this country are accustomed to business being done in a corrupt way. Even when they don't like it or agree with it, they often go along with it just because the alternative seems too hard. The way I sell it is by example; and over time, they see the benefits of the strategy. For instance, taxation officers tend to drop by on Friday afternoon and threaten to seal the office if they are not given their "weekend allowance." We simply say no and agree to be shut down. Others who fall into the trap do give the "allowance." Sure, the tax officer who received the gift will not come back for a few weeks but he will send the word out to his colleagues and they will visit one at a time to get their piece of the pie. In our own case, after a few times of not getting anything, they simply stopped coming. They really don't bother us anymore.

There are many other examples too of employees seeing that a no corruption rule can be beneficial. We have actually won contracts because of our policy (although we have lost more than won).

I also try to position our policy in a greater context to our staff. We often have discussions on the ills of corruption and how this negatively affects the development of our country. I explain how we are too good to participate in that game and if any company can have such a stance, it is us. If we can't, how should we expect companies with fewer resources to do so?

This staff by-in is essential to make the policy work. They are on the front-lines and are getting the push back. They lose deal after deal as a result. If they do not firmly believe we are doing the right thing, then we cannot succeed.

2. I am always ready to walk away from a deal

Sometimes, the corruption is more insidious. You think that you are dealing with people with integrity and you proceed with the proposal with that in mind. At some point, even far down the line, some clients become strange. There are unforeseen delays; they are having personal financial issues; the client boss wants to meet the supplier boss in person... There are a number of signs that point to clients wanting you to come forward with an offer for a bribe. When I see such signs, I just walk away. It is just better that way. If they want a bribe at the proposal stage, even if you get around that somehow, they will get you at the payment stage. Just not worth it. We lose lots of deals this way.

3. I try to maintain relationships unrelated to deals or services

The best time to offer a gift to a client or a government official is when you don't need them for anything. Even here you need to be careful with the gift so that it is not misconstrued. I will personally select a book or other inexpensive item that is of personal interest to the person receiving it. People love pens. We had some nice logo pens made and we give them out as gifts. If there is a deal on the table, no pen. This is simply because some clients might interpret this as an incentive and the beginning of bigger and better things. When you don't follow the pen with a more significant "gesture" they see this as an insult.

Another present people just love is Obama gear. So I brought some back after the inauguration and they were thrilled.

I am not a phone person. I hate the phone but I do try to call government officials from time to time just to say hello. People really appreciate this. I prefer email so when I know that they read their email, I will send a quick hello from time to time.

Another one of my favorite gifts is prepaid phone cards. This is not expensive and people really appreciate it. I usually tell them that I would love to hear from them from time to time but that I know it is expensive for them to call. They still "beep" -- beeping is calling briefly to let their number appear on your caller-ID and then hanging up before you pick up as a sign for you to call since only the caller pays -- but they will often do so to give heads up on a matter of interest to you.

4. Do Say Thank You (and not just with words)

There have been times when people have gone out of their way to help us. This is both in the business sector and in government. Although this is not allowed in the US, we do sometimes say thanks by offering a gift, sometimes even cash. (I know!!! Not me!!!). This is very delicate and has to be done very carefully. First, this can only happen if there is no expectation of any type. If there is an expectation, then it can't work and you get caught up in the game.

Second, it must be separated in time enough from the act that it is not seen to be a pay-for-play deal. Let me give you an example. Court judgments here take sometimes months to get typed up and registered. Until that happens, you just can't execute. We had some a judgment that we needed typed. The court clerk, who had been very friendly with us offered to stay after hours to type it. He said that this was because he had followed the case and really felt bad for us. No expectation. More than a year later, I purchased a cell phone and gave it to that Clerk. It was my way to say thank you. I am his hero now.

Third, this is usually only for lower level staff that are not implicated in the decision-making. This is a secretary, or a security guard, or a similar position where they assisted you in making something happen faster or giving you pointers. For example, with one client, there was a guy working in the IT department with no real title. The guy really liked our solution but he was not part of the decision-making process and had no authority. In fact, he knew from working with that agency, that we would never be selected. He gave us a few tips on how to make sure that our proposal got to the right people so that the decision-makers would be forced to explain why we had not been considered. Using his advice, we won. Well after the project was done and over with, we thanked him with a cash gift. He was getting ready to leave the agency and try to set something up on his own. The cash was what he needed.

There are even times when we have provided a gift to a decision-maker (I know... I know, digging deeper into the mud). This happened twice. In both instances, they were no longer in their capacity when we "thanked" them. They were very surprised and very grateful. And in both cases, they had really helped us a great deal, even at personal cost when everyone else seemed against us. Each time also, they never asked for anything or acted in a manner which led us to believe they had any ulterior motive.

I know a lot of people will say that it is a form of corruption. I struggle with it myself to be very honest. I worry that the recipients of the gift might expect us to do this every time. We have not run into many problems but it is still a concern.

5. Little Corruption is Big Corruption

One of the most annoying type of corruption in this country is what they call the "mange-mille" which translates as "eat-1,000." These are the police who are on the side of the road and will harass you until you give them the equivalent of $2 or more. I have sat in my car for over an hour refusing to give in before they finally let me go. Once, they stopped me and when they saw I had all my documents, they asked for my yellow-fever vaccination certificate. Believe it or not, I had it with me much to their displeasure. Another time, they wanted to cite me for having a suitcase in the back seat. They said that this required a special license to carry mixed cargo (people and goods). I refused to pay. I missed my plane.

This is such an annoyance that most people just pay. What I find though is that once you start justifying the bribe with "it saves me time" arguments, it becomes easier to use those same arguments when the stakes are higher. I know lots of fellow Diasporans who returned to this country with the same "no corruption" philosophy. Then they gave into the police to avoid the hassle; pretty soon it was the customs officials at the airport to avoid paying custom duty; then they started to justify paying the phone company technicians to install a line faster; and then it goes on and on and on... Within a year, they are fully in the system.

6. Be Beyond Reproach

You can't very well complain about police harassment when your papers are not in order; can't complain about courts being unfair when you are on the wrong ; can't complain about tax authorities when you don't pay your taxes.

As a result, you have to ensure that you are always on the right side of the law. In this country, dual-citizenship is not allowed. I have a US passport. I could get one from this country in a day. But that would set me up for being in an irregular situation. Therefore, I apply for and pay $500 for a residency permit every two years. All our employees, including our cleaning staff and security guards are registered with the government. We cover all their withholdings so that their net salary is what it would have been had they been paid under the table. We file our tax returns
monthly no matter what, even when we can't pay them right away. If we are in a legal dispute and we are wrong, we settle. Sometimes even when we are right we try to settle because Court in this country is HELL (see justice heading for more on that).

The beauty of being beyond reproach is FREEDOM. It is wonderful. We are certainly poorer in financial terms for it but nothing can match the feeling of being FREE. I sleep well at night. My conscience is clear and I know that I am doing my part, as small as it might be, to try to make this country a better place.

Some Progress with Internet Availability

2010-01-27T07:10:00.005-05:00

One of the greatest frustrations in living and working in this African country is access to internet at decent prices. About a year ago, a new provider came in with a huge campaign for the mass-market. Others have tried before but this company seems to have been quite successful. In fact, in a little over a year, they have signed over 25,000 customers. This may not seem like much but when you consider that there are only 100,000 total fixed telephone lines after 50 years, you can quickly see how 25,000 customers becomes important.

A customer first has to buy the equipment; a book size modem for about $150 or a small USB flash card sized modem for about $20. The smaller modem is definitely cheaper but the reception is not as good. Then customers buy prepaid cards denominated between about $2 and $50. the $50 card gets you unlimited usage for 30 days. The other cards have a per minute cost. For about $10 you can get about 16 hours of usage. This is really not bad at all.

The modems work in the three cities and there are plans to deploy to several other smaller towns within the next few months. The speed is pretty slow but fast enough for basic browsing and email.

The other day, I was passing by some security guards. One should note that security guards here make about $60-80 per month so they are on the very low end of the salary grade. But I overheard one explaining to the others how this modem worked and how he could connect for about 30 minutes at a time and get everything he needed done. That is the most exciting part of this solution. It will allow greater internet penetration to sectors of the population who could simply not afford to have the internet installed at home.

Since internet use is "socialized" one connection will serve several people. In one study I saw, one internet connection served an average of 12 users.

This important price decrease has not extended to the business sector where prices still seem exceedingly high. The provider I mentioned in this post recently extended its offerings to the business market. We asked for a quotation. They sent us a proposal for a one year commitment at $900 a month before tax (almost $1,100 including tax) for a 256k connection! Come on y'all.

So as you can see, there is still some ways to go but I am pleased that we seem to be heading in the right direction.

Twitter

2010-01-27T07:09:00.002-05:00

I finally broke down and created a Twitter account. You can follow me on @africatechie.

Electric Hell

2008-04-10T08:15:00.005-04:00

Not a day goes by when we don’t have to deal with issues that are just not issues in the US. Between the tax guys, the water guys, the Internet guys, and the electric guys, you need a whole team of administrative folks just to spend time dealing with them.

Electricity is very erratic; blackouts and brownouts are common. We estimate our direct losses due to power surges at over $30,000. This is mostly computer equipment but also air conditioners that were damaged or destroyed after frequent power surges

In any case, it is not bad enough that we lose money to their power surges or from days of going without power or the cost of buying and maintaining a generator, the day-to-day service is even worse and the cost is excessive, not to say abusive.

Our average electric bill is roughly $1,200 a month. This is for about 4,000 kwh. Of that, about $245 is fixed. This means that if we use absolutely no power, we still have to pay for the meter rental (about $5 a month) and a “fixed premium” ($240 a month) which no one will explain to us. The bills are payable within 10 days. Cash or certified check. There is no late notice. They just disconnect your service. The problem is that the date on the bill is usually a week or more before you actually get the bill (they are hand delivered and not mailed) so in fact, you have a day or 2 to pay your bill before facing disconnection. And despite their inefficiencies in providing poor service all around, they are extremely effective is sending out teams of disconnection agents who go as far as removing the meter.

In March, we received a bill that was much higher than average. It was about $1700. It was dated on the 2nd but we received it on the 10th. On the 12th, we wrote to the electric company asking for an explanation for the excessive bill, an explanation for the so-called “fixed premium” and for additional time to pay. They refused to take the letter. Simply refused. After spending hour after hour, day after day at the neighborhood branch trying to meet with the branch manager or getting a letter delivered, we finally gave up and tried to pay the bill. We couldn’t. Our account had been cancelled. No reason. No explanation. A couple days later, technicians from the electric company came with a note from the branch manager requiring we prove that we had a legal connection. They wanted to remove the meter since we had “no account”. We gave them all the required documents and they eventually left.

Still unable to meet with the branch manager and unable to have any letter accepted by the receptionist, we took a bailiff with us to the branch. We were allowed in and were able to meet with the branch manager. After a long discussion that was going nowhere, we still did not know why or when they cancelled the account. The branch manager asked us to fill out an application for a new account and pay the required fee, almost $900 to get the same subscription load we have now.

So let me get this straight. You cancel my account for absolutely no reason and for me to get another account I have to REAPPLY and PAY AGAIN!!!! I was trying my best not to reach over his desk and slam his face into his PC. The colleague I was with stayed calm and the bailiff was just shaking his head in disbelief. Seeing our “reluctance” the branch manager went so far as to suggest we could hand write the application not to waste any time.

We asked that they give us a written explanation for the cancellation of our account as well as putting in writing that we needed to sign up for and pay for a new account.. We told them that we would have to justify to our “management” why we needed a new subscription when we had already paid for one in the past. He refused saying the receipt for the new connection fee would be the only thing we would have and that we could send that receipt to our management if they wanted. In the meantime, his agents were coming around to our office to remove our meter since we are using it illegally. Fortunately, we locked the main access to the building and have refused to let them in. They can disconnect us from the pole but it is more complicated and it will take them a few days.

After leaving the branch yesterday, we wrote a letter to the branch manager and had it delivered by our bailiff this morning. Our bailiff spent over and hour and a half listening to the branch manager’s explanations. He came back saying that the branch manager told him that he had received instructions from his head office to cancel our service and that since it was cancelled, the only solution was to reapply and pay again. He “generously” offered to give us some time to pay for the connection fee as long as we reapplied now. Of course, this was unacceptable to us. We managed to get the branch manager on the phone and we asked him for the contact at his head office we could get the explanation from. He completely changed his story and now claimed that the head office had nothing to do with it.

Since our last letter was delivered by bailiff, they will have to answer. In the meantime, we are illegally using electric power which we paid over $2,400 at the time to get installed and we could lose power at any moment.

This place is truly hell.

Changing Internet Providers

2008-03-11T12:44:00.003-04:00

We decided to change internet providers. Our current provider does a pretty good job but at the US $ equivalent of almost $2,000 a month for a 256k connection, it was just too much for our budget. We found another provider (call them OW) that could provide a dedicated 128k connection at a little more than $400. Since the connection is dedicated, we should get roughly the same bandwidth with OW as with the 256k shared we got from the current provider.

We had contacted OW a few months ago and they had given us a quotation that was even higher than our current provider. When we decided last week to look for alternatives one of our interns told us his dad could get us a connection very fast. It turns out that his dad was merely an unofficial reseller for OW. But since our name was not mentioned by the Dad when OW gave him the quote, he was able to get a much better quote than we ever could (people just assume that we are incredibly rich and quotations here are often based on who is buying and not what is being sold).

OW was definitely a little disappointed to find out we were the client. They thought they could have gotten a much higher rate from us. Anyway, their claim to fame is to get you up and running the same day. We placed the order on a Thursday. No installation. They promised to do it on Friday. No installation. Then they promised to come on Saturday. No one showed up. Yesterday, we finally wrote a letter to them saying that if the installation was not complete by 3 PM, we would cancel and they would have to refund the entire installation fee and one month prepayment we had paid (installation cost was over $700 even after negotiations). Their manager agreed to have everything done by then. No one showed up until 2:30 PM. They started working on the roof to set up their equipment. Until 8 PM they were still on the roof. They promised to come this morning by 7 AM to continue. They did not arrive until 10.

A couple hours later, the technical manager comes to see us to explain that they would not be able to install the equipment after all. Their installation requires line of sight and there was a tall building between us and them (I guess they had never noticed it before now) and their equipment would not be tall enough to overcome that. So we have this gigantic beam on our roof that they now have to remove.

We had already cancelled service from our previous provider and we have no internet. Our second choice was with the state owned telecom. They are the exclusive provider of fiber optic service to the other ISPs and are themselves providers using ADSL. The paperwork to get a connection reads like a loan application. In addition to certified copies of this and that, they want photographs of the top manager as well as a copy of his national identity card. We have been customers forever since they have exclusivity over land lines but we don’t exist in their internet system and have to apply like everyone else. The application has to be accompanied with payment (cash or certified check) for the installation charge and one month of service. Then, they send the application to another city where their headquarters are for processing. The application then comes back and we wait until they have an “available port” to connect us to. They are suggesting two or three weeks. That is civil servant speak for “You will get connected in a few months if you are lucky but if you give me enough money I can move your file up and you will get your connection in a week.”

I am not sure what we will do. We might bite the bullet and go back to our previous provider. So frustrating. Such an essential element of development is incredibly expensive and difficult to obtain. There must be a better way.

Update: We went back to our original provider. Unfortunately, the new provider had sabotaged the original installation (removed the antenna, cut cables, disabled the radio) and after 2 weeks, our former provider is still working to fix the problem. So still no Internet.

Fiscal Tyranny (Part 1)

2008-02-14T06:12:00.005-05:00

Yesterday, our tax adviser stopped by for a meeting to discuss our monthly filings. A meeting that was intended to raise her concerns about hotel bills turned into a philosophical discussion about taxes in this country.

Our tax advisor’s specific concern was that we had paid hotel bills for some people but that our records did not reflect a contract for those people or any consulting payment to them. Our explanation to her was that these people were company staff in the US and Europe who had travelled to our country to provide sales and technical assistance just made it worse. That meant that we needed to pay a technical assistance tax of 15% for those individuals. We explained that they were employed by our US and European entities and therefore there was no fee to be paid by our local entity and 15% of 0 was 0.

She explained that this would never fly with the tax authorities. We needed to draft a technical assistance contract for their work with an estimation of the value of their services even though the services would not be paid for. She also warned that without those contracts, we would likely have to pay for payroll related taxes for those individuals even though they are not on our payroll. Of course, once a contract is established, it needs to be “registered” with the tax authorities and the “fee” is 2% of the value of the contract. If the contract was registered late, then there is a 100% penalty for the fee. There are also taxes on the fees which are about 50%. So really you are paying 3% or 6% if you register more than 30 days after the work is performed. If the amount is under the $US of $10,000 then the registration “fee” is actually 5% plus the taxes, all doubled if you are 30 days late.

So because we wanted to reinforce our local activities with resources who came in from overseas we now had to pay thousands of dollars in taxes for services which we never had to pay for out of our local coffers.

This was insane but very logical to this poor tax advisor who was just doing her job. She was so enmeshed in the tax code and the way of doing business in this country that she was oblivious to the madness of the tax code and surprised that we objected to it. She really believes that this is the way business is done all over the world and she said that we were the first to complain not just about the process (will blog about that another time) but about the tax structure itself.

And that is the real problem. It is impossible to make real progress when most stakeholders do not understand that business as usual in this country is detrimental to our development. Everyone focuses on enforcing the current system and or complaining about the heaving handed collection process. But what is needed is a complete change in mentality. Taxes, fees, duties are not elements of progress for business but elements of repression. This by itself is not unique to this country. Business people all over the world complain about taxation and regulation. The state of Maryland, where our business was started, has just instituted a sales tax on computer services amidst an uproar from the tech community. Where this becomes insidious in a developing country like the one I am in is that the complexity and multiple layers of taxation are taken as an opportunity for tax officials to personally enrich themselves. The more complicated the tax structure is, the more repressive it is, the more taxpayers will look for ways to cheat and tax officials are all too happy to assist them in that manner… for a personal fee.

OLPC's Fatal Flaw

2008-01-28T18:40:00.000-05:00

I have a lot of admiration for Nicholas Negroponte and the OLPC (One Laptop Per Child) team. By in large, they got the technology right. They brought the right partners together and created an unbelievable product. The technological advances that are found in the $100 (OK, $300) laptop will certainly impact the way computers are built tomorrow.

OLPC has not had the expected success. There is nothing technically wrong with it. The pricing is reasonable. So why hasn't the laptop caught on in the developing world it was designed for?

The name says it all: ONE laptop PER child. The idea might be appealing to the western world but it is not a cultural fit for the developing world, or at least Africa where I am blogging from. Africans are very communal in nature. Outside of the wealthy elite that is not the target of the OLPC anyway, Africans don't individually own things, especially not children. Whoever has a radio or a television shares it with not just the immediate family, but the entire community. One never watches TV alone and one does not sit in a corner and read alone or get on a computer alone. People still do things together. Not because they are forced to but because that is the way they prefer it.

How do you reconcile this communal culture with the OLPC technology? Probably through a new approach. As well intended as the project sponsors are, I simply cannot imagine any African politician buying into the idea in any meaningful way. It is one of those things that are difficult to explain. Kind of like explaining to a white person what is it like to be black. You can't really put it into words.

Maybe they could rename it "laptops for all" and set them up for multiple users. Maybe they could change the target from children to families. It might not sound very politically correct but a business owner could leverage the technology a lot more and turn the laptop into increased revenue. By keeping track of inventory, accounting, communicating with customers and vendors electronically, the businessperson would use it in the day and his/her kids could use it in the evening. You could then have the government partially subsidize the computer and set up a loan through credit union or other micro-credit institution to finance the rest. Then you would have "One Laptop per Family" which is more in tune with our culture.... and, because it is contributing to economic growth, would be more sustaining long term.

Africans Don't Trust Africans with Technology

2008-01-28T09:55:00.000-05:00

One would logically think that the most likely consumers of African technology would be Africans. Not so. Africans do not trust each other to provide quality technology.

Last year, we heard that a large company that is almost across the street from us wanted to implement a CRM (Customer Relationship Management) system. Since we are one of the few companies with experience in that area and given that we worked with several of this company's sister companies in various countries, including the US, we thought we had a good shot at getting the project. We approached them and offered to make a presentation. They explained to us that we were way too small for them and that they were going through an invitation only bidding process. Only European companies would be invited. Because there are few CRM implementations in this country, we thought that we would offer to assist them, at no cost, so that there would be a reference for a CRM project in the country. They refused. They were hiring consultants from Europe to provide project support. OK. Even free, our services are not worth it. Jeez.

A few months later, we received a call from a European company that was bidding on a CRM project in Africa. They did not have any experience and did not have any resources and they wanted to know if we would partner with them. You guessed it. Same client. Same project. We agreed.

We had to prepare the entire proposal and provide OUR references. Our partner company prettied up the proposal with their logo and made no reference to us. They redid the resumes so that our name would not appear anywhere. The proposal was shortlisted and the client requested a presentation. Oops. Our partner's sales folks flew in but, unable to answer any technical questions, had to include us. So we accompany them across the street for the presentation. Client did not hide their surprise. Our proposal turned out to be the best one. We (our partners) won. So here it was. We were not allowed to interact directly with the client so our partner sent a "project manager" to this country. Over a period of six months, we actually saw 4 different ones.

So here we were in this ridiculous process of having to send the project manager emails that he then copied and pasted into his emails to the client. The client would answer and he would forward the emails to us. Then, in the fine European tradition, our partner's project manager had to go on vacation so the project was at a standstill while he went on holiday. Then they sent someone new (after all, this is an African country, you send the people none of your European clients would accept). We lost 4 months on a project that should have lasted 3 as a result of the project management problems.

We would get sign off, send it to Europe, send them our bill. They would send their bill (our bill multiplied by 3) to the client. Client would wire the money to Europe and then, eventually (sometimes months later), partner wired money back to us. We eventually finished the project and the client was very pleased. Of course, our partner gets the reference and they profiled their success on their web site. As logical as it might seem for the client to contact us directly next time, they probably won't. They are too ashamed.

This was not the first time we faced the distrust of an African client. Before this subsidiary opened, we were contacted in the US by a large American software company for training on their technology in an African country. They knew that we had resources that could train in French (language of the client) and asked for some resumes. We sent the resume of our most qualified instructor. I got a phone call from the software company's African training manager. She asked if there was another resume I could send because our instructor's name sounded African. She said the African client complained that for the daily rate we were charging they "expected a White person." We did not do the training.

We do expect some push back from American and European clients when we, Africans, show up telling them we can provide them the best technology. Africans are poor starving people, not innovators or technology experts. We are prepared for that and have been succesful selling to large multinational clients or government entities outside of Africa.

To get this from our own African brothers and sisters is all the more frustrating. And we are no exception. Many other African entrepreneurs have shared similar stories with me. How can we progress if we so distrust our own people?

Yellow Journalism: African Style

2007-01-19T18:24:00.000-05:00

You know when you have really made it when you get trashed in our local equivalent of the National Enquirer. I got two full pages in last week's edition. I just found out today because no one I know really reads that paper (or admits to reading it). Someone finally called one of my colleagues to tell him.

I haven't seen it myself but my name in block letters was in the headline. The story goes into detail about how I swindled my business partner and how he sued me in various places and won. Of course, I have never had a business partner and the person mentioned as my business partner was in fact an employee who did indeed win a labor case under dubious circumstances as described in an earlier post: Do me a favor: Don't do me any favors.

I am torn as to how to react to the article. My business side laughs it off and won’t waste time worrying about it. My human side is distraught not necessarily that I am a victim of this latest attack, but that this is what has become of our struggle for freedom of the press.

Years ago, as a student, I was very active in the struggle for democracy and human rights for Africa. I organized and attended many demonstrations, led letter writing campaigns, and other activities to effect change. For this?

Our newspapers have been filled with sensational stories dragging everyone from business people to political authorities, from singers and to sports stars. There is a common expression in the Country today: “He is a Top 50.” This means that the person is gay. The expression originated from an article in one of our tabloids that listed the Top 50 homosexuals from the Country based on their own personal “analysis.”

This trend is not just bad journalism meant to sell newspapers; it is much more insidious than that. Most of the newspapers that engage in the “decimation” business don’t sell any advertising. It is clear that the revenue from the sales of the paper does not cover the cost of printing, so why would journalists risk jail time (defamation is a criminal offense here) to print stories that completely invented? MONEY, of course.

In my case, the newspaper published a teaser a couple days before they printed the whole article. “Coming Soon.. the underside of [me].” This was meant to attract me to the publisher so that I could offer him a larger sum than what had been offered by the person who brought him the article. Unfortunately for them, I did not bite.

This goes the other way too. A few years ago while I was visiting the country, I made the cover of two newspapers the same day with pictures and information culled from various sources. They were extremely kind to me. One article focused on my personal wealth and stated that I was the richest woman from that Country. I remember one sentence that read that “She does not talk to you unless it is in Billions.” I thought it was very funny at the time (I am very far from being the wealthiest anything). When I got back to the US, a bill for $2,000 was waiting for me from one of the publishers. I also remember my father’s comment when he saw a cover article on me in a US Magazine. “It must have been very expensive!”

You pay for negative stories against your competitors or opponents, pay for positive stories about you or your business, pay to keep your name from being dragged through the mud.

We end up reading the government official newspaper to get information. How sad. Is this what we fought for so hard? What will happen when the next journalist gets arrested for what is really a violation of his rights? Who will stand and fight for him?

Update:

Looks like China's journalists are also in the "cash business." This article is in today's Washington Post: Blackmailing By Journalists In China Seen As 'Frequent'. It is all the more serious in China because of the real struggle of real journalists.

It's the About the Application of the Law Stupid!

2007-01-12T17:12:00.000-05:00

The Managing Director of the IMF recently visited the country I am in. I read and re-read his concluding statement and it seemed very on-point:

"...Creating an environment conducive to private sector development is another priority area. In this context, strengthening governance, including a sound and predictable legal and regulatory framework, and an efficient judiciary is important."

It sounded almost as pertinent as the New Year speeches our President makes every year. Just as the Director of the IMF, our President really does seem to understand what is wrong with the country. The problem with him is the same as the problem with the Director of the IMF, they are either powerless to do anything about it other than making speeches that give people like me a half an hour's worth of hope that things will change, or they want to look the other way.

A few years ago, our President, in his New Year's speech announced the passage of a law eliminating taxes and duties on all information technology products. I was still living in the States then. About a month after his declaration, I landed in this country with computers, printers and other equipment for our local subsidiary. The customs officers were quick to tell me that we had to pay an inordinate amount of customs duty. We reminded them that the Head of State had announced that there was no more customs duty. They said that they had heard the speech as well and the law had been passed but that the “texts of application” of the law had not yet been drafted so we still had to pay. Of course, they offered a "discount" to keep it off the books. I thought that the receipt would be a weapon to use in the struggle to improve the business environment so we paid up.

A month later, the “texts of application” were published. Before anyone had a chance to take advantage of the new law, they repealed it. Taxes and duties were back on. No speech, no announcement, just those nasty “texts of application” that cancelled the law. Imagine the consequences for a company that placed a large technology order from overseas that had not yet received its merchandise? Not a nice surprise, especially not when the taxes and duties are about 50% of the value of the technology.

Back to the recent IMF visit. Of course, high on the list of the discussions was the fight against corruption. As in the President’s New Year’s speech and in many other political speeches, the government reiterated its commitment against corruption. But that little problem of the “texts of application” of the law creeps up again. In their Letter of Intent following the visit of the IMF, the country stated:

In April 2006, the government enacted a law defining the modalities for application of [the law], which refers to the disclosure of assets by senior government officials. Nevertheless, the commission that was to have been set up under this law to receive the asset declarations has not yet been established because the legal texts governing the application of the law have not yet been prepared. Similarly, the National Commission to Fight Corruption, created in March 2006, is not yet operational as its members have not yet been named, given the considerable time needed to ascertain the integrity of potential members.

Given that corruption is the government’s top priority, you start to understand why nothing changes here. And every time the World Bank, the IMF or US Government officials come in, our government will proudly display the laws on the books to fight corruption, to improve the environment for the private sector, to fight poverty, improve education, etc. And the World Bank and friends will have their conscience relieved that their admonitions were effective and that finally the Country is "behaving." The laws are well written and sound great. The problem is not just that they are not applied but that there is no consequence for not applying them. The judges can see the laws and chose to ignore them with no consequence, same with the police, the custom agents and all other public servants. Until the Country has to account for the non-application of its laws, it will not establish mechanisms to enforce them.

New Technology Initiative in Africa

2007-01-07T13:27:00.000-05:00

There is a really great story about another starry eyed entrepreneur who is wiring up Rwanda. http://www.spiegel.de/international/spiegel/0,1518,457000,00.html.

"Africa offers many investment opportunities," says an enthusiastic Greg Wyler, a boyish-looking man in his mid-thirties. "We simply have to bring the Internet into each of these huts, and the rest will fall into place." Wyler, an American entrepreneur, hopes to launch an "African Renaissance" with his project.

His optimism reminds me of mine, a few years ago. I want him to succeed because I want the me of a few years ago to be right about Africa's potential and our ability to come back from very far. I remember that when we were looking for a motto for our non-profit, we chose "beyond the digital divide." The point was that we should not try to catch up but to leap forward. This meant that we should not be accepting old PCs that could not utilize the latest in technology but try to acquire and develop cutting edge technology which would bring Africa to the forefront of the digital age.

To make this happen, we developed a project called the African Center for Technology Innovation and Ventures (ACTIV). This center was to be a sort of incubator for high-tech entrepreneurs and a place where all types technologies from Africa and elsewhere could be showcased. The ACTIV offices are open and wired up but the center is non-operational because our business was funding the project and we could no longer fund ourselves, let alone this project. It is a pity but the experiences we have had in the country on the business side will help us in better guiding the entrepreneurs once the project is able to launch again. The most important lesson we have learned is that the main impediments to the development of technology are not infrastructure and lack of skills, but corruption and government intervention.

I am still hoping that we will one day be able to make the project happen. The Rwandan example is one of an American entrepreneur contributing to development in Africa through technology. As much as we encourage the Gregs of the world and welcome their initiatives, we also want to empower Africans themselves to build technology businesses. Just wish our governments were not so against us.

My Virtual White American Bosses

2007-01-07T06:54:00.000-05:00

When the government agency called last week with the emergency order, they begged me to try to convince my hierarchy in the US to allow us to deliver. I told them I would see what I could do but that given all the problems we have had with collecting from clients in this country, it might be difficult. Of course, I have no hierarchy or let's say that I am the hierarchy. But as a Black African woman in the world of technology, I am often faced with similar situations. No matter what my business card says, I cannot possibly be the boss. I try to use it to my advantage as often as I can. In the case of the government agency, our bosses were putting "tremendous pressure" on us to get immediate payment, if not, they would cancel the order and there was nothing I could do. "You know how Americans are. They don't understand all these administrative hurdles." I even got one of my employees in the US to send an email threatening us for having accepted the order... It actually worked. Where payment generally takes 60-90 days, the payment order is ready and we will get paid next week. Never could I have accomplished this without my virtual White American bosses.

It ain't over 'til its over..

2006-12-30T13:19:00.000-05:00

I thought that 2006 was over; at least from a business perspective... This afternoon the last Saturday of the year, I get a call from a project manager with one of the government agencies. He is desperately trying to reach one of my colleagues who is busy at a wedding. He explains that the minister and the head of this government agency are in town and they want to sign the contract today.

Background:
For the last year or so, we have been trying to get in on a project financed by an international organization for this government agency. For about six months, we could not even get in to submit a quotation which was for a small part of the overall project (software licenses). Finally, we wrote to the international organization that was sponsoring the project, and a couple weeks later, we were called by the agency to submit a quote. Our very first quote, for the exact same products as our competitor, without any discounts on our part, was less than one third what our competitor's was. That got us a meeting. During this meeting, and a few working sessions after that, it became clear that the list of products that the client wanted and the quantity of each, was excessive. We actually had to convince them that they did not need everything they said they wanted. In our normal naïveté, we explained that as much as we wanted to sell, this was also an act of citizenship since we knew that this part of the project was paid out of the agency’s budget, thus out of the country’s own funds. Our final quote was for less than 10% of the quote from our main competitor.

For months, we never heard anything back. There were suggestions that we needed to “motivate” the decision-makers but we resisted and decided that we would prefer to lose, rather than to engage in any form of corruption. Then around the end of August, we get an urgent call from the agency saying that we need to bring them our administrative documents immediately, and that we should come “personally” to deliver them. This issue of administrative documents is one that I will definitely address in a future blog because it is a definite impediment to doing business, at least doing business ethically. In any case, one of our guys immediately took over the administrative documents. While there, the project manager begins asking him about whether or not we are sure that our quote is final and wants to know if it “includes everything.” Since the person responsible for that account had traveled out of the country, the guy that we sent called me urgently to come join him in the meeting.

I hate these types of meetings and I avoid them at all costs. But our guy was not familiar with the account so I had to go. As soon as I walk into the project manager’s office, I realize something is up. Our guy seems confused. The project manager meets me with a snake-like smile. I hate him already. Our account manager had told me about his very first encounter with him. During their meeting, the project manager had turned his computer screen towards him showing him the picture of a BMW X5, suggesting that it was the “gift” he expected. Our guy pretended not to understand. That is our general strategy, “act stupid.”

After niceties, the project manager tells us that of all the vendors, they chose us. He repeated that several times, mentioning the names of our competitors. He was uncomfortable. He was not getting to the point. I thanked him for the trust his team had placed in us. “But,” he says “are you sure that you included everything in this quote? Because, you know, we have an additional $30,000 (equivalent) in the budget.” I answered that everything was included. He insisted again. “You know, the government is not like the private sector, it might take time to get paid, did you add a provision to account for collecting your payment?” I understood full well what he was trying to do but I put on my naïve American hat and answered that the amount was before tax so that with tax, it would even exceed the $30,000. I offered to give a discount to get the amount under budget. “NO, NO, NO, don’t do that!” he answered. “You obviously do not have experience with government accounts; let me school you with government deals.” I continue to act stupid, and so does my colleague. I thank him for offering to “teach us.” He instructs us to go back and redo the quotation, adding the tax and a “little something extra.” We smiled, said ok, and left. The next day, we sent the new quote with tax, and nothing extra.

By then, our account manager had returned. The project manager called him for an urgent meeting. We knew what it was about, and decided that the three of us would go (the colleague that took the documents, the account manager, and me). We spent an hour in the project manager’s office and he never really said anything. He was beating around the bush. We played stupid. Finally, he said that this was a direct deal that would not go through a normal tender process and that HE would be the one that would draft the letter to explain why we should be selected. We offered to provide references. “NO, NO, NO, you don’t need that. I am the person that makes the decision.” We pretended not to get it. Eventually, there was no more small talk to be made and we left.

The following day, they called our account manager and insisted that he should come alone. It might be useful to know that the other colleague and I both spent many years abroad so the account manager was the only “local” guy which meant he would better understand "local" business practices, at least, in the eyes of the project manager. During that meeting, the client went straight to the point. How much would go to the project manager? Our account manager maneuvered his way through by saying that he would not want to insult someone of the project manager’s stature by offering him money. He flattered him and added that in these times (anti-corruption drive by government) it would be exposing the project manager and we wanted to protect him. The project manager thanked him profusely for wanting to “protect” him. Our account manager came back happy that he had convinced the project manager that a bribe would be against his interests.

Well, we did not hear back from that project manager until today, five months later. Our letters and phone calls during these months were left unanswered. About three weeks ago, they announced the launch of the project on television and in the press. The project would go live on January 1, 2007. They still did not have the software licenses. Last week, we finally called the minister himself to warn him that if they launched without acquiring the software licenses, they could face penalties. He said he would look into it. I guess he did.

The project manager was panicked as he spoke to me today. The minister did not want them to be in a situation of illegality and he absolutely wanted to sign today. Unfortunately, they could not prepare a purchase order and would not be able to make any advance payment. However, he asked that we prepare a letter that included the terms we wanted and the minister would sign it. So I pulled my colleague out of the wedding, we prepared a letter where the minister promised payment in full by Tuesday, January 2, 2007. In the midst of the reception for the launch of the project, the minister signed the letter without changing a comma. We delivered the software licenses. Of course, we know that we won’t get paid on Tuesday but hopefully we will get paid soon after that.

Today is a victory of sorts. This agency is known as one of the most corrupt ones in the country. We got a contract without any bribe. It is a miracle and no one will ever believe us, but we held our ground and we won. That’s one for the good guys… Now hope we get paid.

Optimistic about 2007

2006-12-29T12:19:00.000-05:00

I wonder if it's an entrepreneur's disease to always believe things will be better tomorrow than they are today. Every year I am convinced that the following year will be the best and this time is no different. I am really looking forward to 2007, and not just because 2006 was so difficult.

I don't think business will get any easier but I do believe that it will be easier to deal with. I am more mature; I better understand the environment and know better how to protect myself. I have also learned not to stress myself out as much.

In January 2004 I came to this country to handle an issue I thought would take two weeks and I am still here almost three years later. Now I understand that certain issues, no matter how simple they may seem, cannot be resolved in two weeks, or two years, or at all. I have learned to choose my battles and have not just accepted the daily struggles but have embraced them.

From a non philosophical sense too, I am more confident about 2007. The last couple of weeks I have actually spent most of my time on our core business. Working on proposals, meeting with clients... This is quite different from the rest of the year where 90% of my time was dealing with problems that had absolutely nothing to do with our core business which is technology.

So from now until Tuesday, I will set aside reality and dream about how fantastic 2007 will be...

Illegal Arrest

2006-12-27T04:37:00.000-05:00

Our plumber is in jail right now. Last night around 10 PM, some gendarmes (police) picked up up from his house and locked him up. Motive: none. One of his neighbors with whom he has recurring disagreements saw a group of gendarmes patrolling the area, he gave them a little cash to have his neighbor put in jail.

This morning, we sent a bailiff to the jail to report on the plumber's presence there. There is no written record of the plumber being held. There is no police report. There is not a single document to attest that he was arrested, why he was arrested or that he is actually being held.

Upon seeing the bailiff and one of our employees who went to the jail, the gendarmes tried to explain that he they arrested him for being drunk and that they would release him as soon as he is sober. Hen? You arrest someone in his house, half dressed because you say he was inebriated? No complaint filed, no report?

We are doing what we can to have the plumber released and we will likely succeed. Unfortunately, this is a story we hear all too often. Police officers will arrest anyone with just a few dollars. There is a new criminal code that goes into effect in a few days that is supposed to prevent such arbitrary arrests. But like everything else in this country, the problem is not the law, it is the application of the laws. The current laws do not allow people to be arrested for no motive, yet our plumber has already spent one night in jail.

In a recent Transparency International report on corruption in this country, the police was held as the most corrupt institution, followed closely by the judiciary. If the two institutions that are there to uphold the law are the ones most responsible for breaking it, what good is the law? I have never heard that any police officer has ever been arrested for corruption. A couple judges were disciplined for being corrupt. They were placed on early retirement and for the most egregious case, without pension. Basically, total impunity.

Until police officers and judges are made to pay for their crimes, they will continue to disregard the law.

Our plumber is lucky. We are around to help him. What about the others who have no voice and no possibility to speak out?

This place is nuts... Or is it me?

Have a Merry Crocodile!

2006-12-22T06:14:00.000-05:00

I live in a small apartment in a high-rise building that has no garden. My cleaning lady decided that since it was the holiday season, she would bring me a gift. The next day, I come home and there is a LIVE crocodile on my balcony.

I had never heard of anyone giving anyone else a live crocodile. What was I to do with it? If I gave it away, it would probably be eaten but I could not possibly keep it. She had tied the mouth so that it would not bite but that also meant that I could not feed it.

I kept it for a couple of days but it kept struggling all night long to get away and the noise was simply haunting. I finally took the easy way out and sent it to my Dad who has a yard. He also has dogs but I just don't want to know.

This place is nuts... Or is it me?

Do me a favor: Don't do me any favors

2006-12-22T04:10:00.000-05:00

A couple weeks ago, a judge in a small town in this country, awarded the US$ equivalent of over $330,000 in a labor matter against us.

Beyond the obvious jurisdictional issues of a former "employee" who is based in Canada and had a contract with our parent company in the US; beyond the fact that we heard about the lawsuit by happenstance six months after it had been filed, that it was not filed in the city we are in; beyond the fact that this former employee was not eligible for any commission, the judge awarded him commission because "it was as a result of [employee]'s sister who worked for the [client]" that we got the contract.

In the judgment, the judge explains that if employee's sister had not given him inside information, we would not have had the contract and therefore, we need to pay him a commission.

I won't get into the fact that the commission was based on amounts that we never even received, or that it was an international tender that took us six months to respond to with a team of 8 full time employees working on the tender alone, or that the sister was a secretary who did not really provide information that was not widely available.

Back to the issue at hand. In the judge's mind, and in the minds of many people, if someone does you a "favor," it automatically generates a financial obligation towards that person that is a percentage of the benefits you might have received from that "favor."

A couple years ago, after we had won the first procedures in a big lawsuit, we started to be visited by all sorts of folks who claimed that it was thanks to them that we had won. We had never even met most of these people. And they all wanted money. One of them claimed to be the President's nephew. He said that he called someone at the Presidency and that official had called the judge. He said that the official had sent him to collect his due and that if we did not comply, we would be forever blacklisted. I told the nephew to tell that official that he should call back the judge and instruct him to do the opposite of what he had done, we would not pay.

Another young person introduced by a friend of mine did make a few calls for us. He said that he thought that what was happening to us was unfair and that he really wanted to help. Well, of course, story is now that we are ingrates because we never gave him any money after everything he had done for us.

About 5 years ago, while on a business trip here, I was asked to appear on a national television program. It was an hour long interview and it went well. A couple months ago, I met the father of the employee who had arranged the interview. He went on and on about how he (the father) had arranged the interview and how he had not even asked for any money. The suggestion was that we really owed him money but he was not forcing us to pay him.

And the amounts are not small. Once someone told us that he realized that we did not have much money but that $60,000 would be enough. Another offered his assistance if we gave him $400,000. One of our neighbors is a Certified Public Accountant. We needed someone to certify the arithmetic on an excel spreadsheet for the court. We offered to pay him at the time. He said no, it was nothing and in a few minutes, he certified the calculation. When we won the lawsuit, we received a bill for the equivalent of $175,000 for services rendered but as he stated, it was "negotiable."

There are many more similar stories. As a result, not only do we never ask for favors but even when offered, we refuse. It seems like such a sad way to operate but it is self preservation.

This place is nuts. Or is it me?

Private Sector Corruption… win/win?

2006-11-08T08:47:00.000-05:00

Earlier today, one of my business development guys (let's call him JM) went to follow up on a quote he dropped off a couple days ago to be signed by the number 2 executive at a large company. JM had met with this executive a couple times and the executive had introduced him to the IT manager for follow up. JM and his direct supervisor met with this IT manager a number of times, including as recently as two weeks ago.

Today, the executive requested that the proposal which had been given to the IT Manager months before be attached to the quote so that he could approve it. The IT Manager was called and, forgetting that it was this same executive who had introduced him to JM, he claimed never to have met JM, never to have received any proposal, and basically, he had never heard of our company. The executive asked the IT Manager to go look for the proposal. JM waited, and waited for over an hour before deciding to come back to the office to get another copy.

In another context, one might interpret this incident as perhaps a personal problem the IT Manager might have with JM. But in the context of this country, we understand exactly what the problem is. The IT Manager gets his products/services from companies who give him a percentage of the deal. He is in fact known for that. If you don't play the game, he punishes you.

The case of this IT manager is not unique. We experience private sector corruption on almost all the deals that we are faced with. There is an expectation that you have to increase the amount of the invoice between 10 and 50%, sometimes more, and give the extra to the decision maker. They call it "surfacturation" or overbilling in English. Sometimes part will go to to the decision maker and he will split with others along the line like the accountant who will hold up payment if he does not get his share.

We have made a conscious choice not to go that route but it has come at a cost that we never expected would be so high. In one case, a manager at a company for which we had already signed a contract threatened us with making our life "hell" if we did not "thank him" for his committee vote in our favor. We did not comply. He followed through with his threat. Certain purchases for which we already had written orders were passed to competitors. Certain of our invoices approved for payment ended up torn and in the trash. And so on and so on.

Trying to go through the top is not a workable option either. You might be close the owner or General Manager and he might like your proposal. However, if he is not an IT expert (which most are not), he will ask for the opinion of others in the company. If these people decide that they want to block you because they don't have a personal interest in the deal, they will make up all sorts of excuses to prove to the boss that your proposal is not a good one or otherwise badmouth your product or company.

Sometimes, the person at the top is worse than those working for him. We have been asked a number of times what "envelope" was planned for the General Manager. Even expatriate managers play the game. It does not take them long in this country to discover how to increase their income exponentially.

A couple weeks ago, about two dozen private sector companies in this country signed an Ethics charter. Nice initiative but the companies read like a Whose Who of the most corrupt private sector companies in the country! The specific examples I listed in this blog were in companies which signed the Charter.

When I came back to this country to do business, I specifically avoided government clients because I expected to face corruption and it was important to me not to do business that way. I wanted to prove that ethical business practices could also lead to success. I was laughed at more times than I can recall.

The shock came not from the expected public sector corruption but from the corruption in the private sector, including – especially - multinationals. After a while, you begin to wonder if you are the one who is wrong. Educated and successful business people will justify their corrupt practices in saying that it is a win/win. The client gets the product; you get the contract and get paid; because you increased your price by the amount of the "commission" to the decision makers so you don't lose any money; the decision makers are happy, you are happy, the company is happy. I have had a number of arguments with friends and sometimes staff who feel that my intransigent style is hurting our ability to do business. They are right in the short term anyway but I just won't bend.

One of my parent's friends told me when I arrived that "honesty is a luxury." I did not really understand what she meant at the time. Today, I understand. Is it selfish to pass up contracts for ethical reasons while employee salaries are late? Can you operate in a vacuum avoiding accepted business practices?

Those are not easy questions to answer when you can't meet your obligations and you begin to wonder if it is worth it. Many of my friends who decided not to bend went back to the US. Others decided to stay and play the game. A few are like me, stubbornly idealistic and believe that in the long run, honesty will pay off. I sure hope we are right...

Lessons for Africa on the US Elections

2006-11-08T03:39:00.001-05:00

People can celebrate or grieve over yesterday's mid-term elections in the US depending on their political leanings. Continental Africans tend to favor the Democrats over the Republicans. The reasons for this preference are generally linked to Africans' feelings about US foreign policy in the Middle East and elsewhere in the world and really do not reflect US policy in Africa which does not change significantly from one administration to the next.

But what does the election mean for Africa with the Democrats in power? The African American politician with the closest link to Africa, Barack Obama, a Democrat who was not up for re-election, has been rather outspoken against African dictators and corruption and perhaps he rings in a new era for relations between African American politicians and African. This is a notable change from the past when our African American brothers and sisters in the US Congress enjoyed canoodling with African dictators. We saw this with Jesse Jackson, Carol Mosley Brown, and more recently with William Jefferson.

The message that the Louisiana electorate sends to us here in Africa, after re-electing Rep. Jefferson who was found with $90,000 in cash in his freezer is a dismal one. Our African leaders will point to this example and say "see, even in America..."

But there is very positive lesson for Africa that comes out of the mid-term election. The US has been under one party rule for the last six years with both houses of Congress under Republican control for 12 years. The US electorate, in its vote, protested against this one party state. They want a balance of power and the checks and balances that come with it. The message is loud and clear.

Some countries in Africa, including the one I am in, have been in a virtual one party state for decades. Even those who have "free" elections are controlled by a single party. This is never good for democracy as we have seen in the US with the increase of corruption scandals and the general arrogance of the Republicans and the Bush administration.

The difference is that in Africa, one party control also means that the State itself is used to campaign. Public servants, government funds and often, state-owned corporations are used as campaign assets for the party in power. During elections, public servants are given paid time off to campaign for the party in power and often even receive Per Diems and travel expenses at taxpayer expense; state owned corporations are forced to pay out substantial sums of money to support the party in power's campaign. This makes it virtually impossible for any opposition party to make any significant inroads in elected office and there are therefore no checks and balances.

We hope that the new Congress will remember how it came to power and help our governments in Africa do away with the one party state mentality and understand the importance of checks and balances. We also hope that the new Congress is made of of more Barack Obamas than of William Jeffersons...

This is probably where I need to add a disclaimer: While in the US, I voted Republican in almost every race except for one election for the US. House of Representatives. I stayed up all night yesterday to watch the election returns. I am kind of dissapointed about a couple of races but I think this is a good thing for democracy.

Transparency Corruption Report - Improvement for Africa

2006-11-06T16:26:00.000-05:00

Transparency has just released its 2006 corruption index. Based on the report, the bottom 20 are not all African countries. In fact, only two African countries make up the worse five and we make up less than half of the worse 20.

It may not seem like much but this is a significant improvement over previous years where the bottom 20 were almost all African.

I guess I should be happy but somehow I am not. Our politicians will brandish the reports to show how they are making progress and we will fill up the bottom 20 next year. And I cannot imagine how things are getting better given that I can't see how things can get any worse. I am confronted with corruption daily. There are few situations where corruption IS NOT an issue. How does it possibly get worse than this? I am almost afraid to find out.

Well congrats to the few African countries that made it to the top 50 like Mauritius and Botswana. Other countries should take note that these two show up in the top economic success stories in Africa too.

An American subsidiary has no rights -- How corruption leads to absurdity

2006-11-06T16:17:00.000-05:00

When we registered our company in this country in 2002, we registered as a wholly owned subsidiary of the US based company. We took this decision for purely management reasons as we wanted to maintain control over the subsidiary.

A couple of years ago, the subsidiary had to take a large client, one of Africa's largest companies, to court after they would not pay their bills. After a year, many many court hearings, and lots of adventures I will eventually post about, we finally won a multi-million dollar judgment. Yea, we thought, finally! Our celebration was short lived. This client had better understood the legal environment than we had. Getting a judgment is one thing, enforcing it is a whole other.

The defendant filed multiple procedures to prevent us from collecting on the judgment. Their argument? Our company is a registered subsidiary of an American company and therefore we lack the judicial identity permitting us to appear in this country's courts.

What?! You can sign a contract with this subsidiary; use the product you bought from this subsidiary; you partially pay this subsidiary; this subsidiary can obtain a judgment; but when it comes to enforcing the judgment, this subsidiary has no rights. As absurd as the argument was, it took the lower court 6 hearings to render a decision (in our favor, thus against the "no rights" argument). The defendant took the case to the Court of Appeals which took 5 months to finally agree with the defendant. Yes, as a registered subsidiary of an American company, we have no rights.

Obviously, this is a huge loss for us but the repercussions of such an absurd decision are much farther reaching than our case. Indeed, all investors, local or foreign, must feel confident that their investment is protected. And, in case they have recourse to the courts, these will be impartial. If an investor from the all powerful USA cannot count on the judicial system in this African country, then who can?

There is evidence that the decision was reached after large sums were paid to certain judges by the defendant. We actually obtained proof of some of the transactions and submitted the evidence to authorities who did absolutely nothing.

We knew going in that in case of subjectivity, we would most certainly lose to this very wealthy and powerful defendant. This is why we sued only for contract based invoices, no damages. We thought that since the case had received so much attention, the judges would not risk taking decisions which were blatantly unfair. We were wrong. When faced with enough cash, the judges showed no shame.

How many investors will shy away because of this decision? How many jobs will be lost? The consequences of corruption don't end with immorality. There are economic consequences as well.

Unpatriotic?

2006-11-05T03:09:00.000-05:00

I started this blog a year ago and have not had the courage to post. This has not been for lack of interesting stories or material. Not a day goes by without something happening that would discourage any entrepreneur anywhere in the world.

Somehow I feel guilty about posting anything negative about Africa. If I post the truth, undoubtedly it will contribute to Africa's negative image. I have always been involved in promoting a new image for Africa. Is my relunctance to say anything negative about having to admit that I was wrong or is it really about not wanting to add to Africa's woes?

Is keeping my country anonymous really fair to those countries in Africa who are making real efforts to turn things around? So many questions.

I justify my action in saying that the truth should always prevail. And after all, as much as I might criticize the environment I am in, I am there, doing it, day after day. I have not given up. So my message is one of frustration, but also one of hope.

American Dream, African Reality

2005-11-26T11:07:00.000-05:00

I am an African born entrepreneur. In 1999, I founded a technology company in the US. The company grew and turned into one of those "American Dream" stories. Wanting to replicate my success in Africa, I opened a subsidiary in my native land. My American Dream soon turned into an African nightmare.

In January 2004, I traveled to visit my African subsidiary to relsove a dispute with a large client that was not paying its bills. Almost two years later, I am still there, experiencing first hand the reality of African entrepreneurship

This is my story...