Sudanese-born telecom billionaire and entrepreneur, Mo Ibrahim, asked American companies to promote and practice “clean business” in Africa, saying the rule of law in Africa is not as bad as it is perceived to be by Western companies.
Ibrahim spoke to an audience of business people at the U.S.-Africa Leaders Summit, hosted in Washington, D.C. last week.
The rule of law is often better in Africa than in most countries within the BRIC (Brazil, Russia, India and China) economic group, Ibrahim said, according to a report in HowWeMadeItInAfrica.
“In my own business I sued three (African) governments in the local courts, and I won every case. I challenge any businessman here to sue China in a Chinese court,” he said.
He talked about recent allegations that some foreign companies from wealthy countries are
manipulating the system to avoid paying taxes in their African operations through lack of transparency and complex management models.
Billions of dollars are leaving Africa through secrecy around company ownership and revenue flows, unfair pricing practices and tax avoidance and evasion, according to a report published by the Africa Progress Panel (APP) in 2013. APP estimates that around $38 billion US leaves Africa each year through trade mispricing alone.
“You are absolutely welcome (in Africa),” Ibrahim said. “Make as much money as you can, but can you please pay your taxes, because this is a major problem. Transfer pricing is causing huge problems in Africa. Fancy corporate structures are causing us huge
problems too. You have better lawyers, you have better financial advisors and you can draw rings around our officials in Africa – but please don’t do that for the sake of decency (and) also for the sake of your long term perspective in Africa.
“If you want to succeed in the long term you have to do clean business. Otherwise it comes and bites you in the backside… so please behave.”
Ibrahim founded Celtel, one of Africa’s first mobile network operators. In 2005 he sold the
company for $3.4 billion and his share was $1.4 billion, according to Forbes, HowWeMadeItInAfrica reports.
Ibrahim was asked to share some of his secrets to business success in Africa during the panel discussion. His reply: spend time getting to know and understand the African markets you want to enter. “Like with any investment, anywhere… You really need to do your homework before you go in.”
He also said he believes Celtel was successful because it was designed to be a pan-African company from the start, and he suggested that foreign companies include a regional expansion plan for their business on the continent, HowWeMadeItInAfrica reports.
To attract more foreign investment, Ibrahim proposed the establishment of a pan-African stock exchange on the continent.
“Before any investor goes into any country, he is looking for the exit door,” Ibrahim said. “We have only six or seven liquid exchanges in Africa (and) that doesn’t work. We need to have regional exchanges, or a pan-African (exchange). It’s not difficult – it’s easy and simple, and the existing exchanges could also be shareholders in that exchange… It would afford cheap funding for companies, and an exit for investors.”
