BusinessDay 25 Oct 2017

Wednesday 25 October 2017
COMMENT
OLUWOLE OLUYEMI, FCA, FCTI, CIA
Oluyemi is a director at Roedl & Partner,
a global firm that provides accounting,
tax, advisory, business assurance, business
process outsourcingand company
secretarial services to SMEs, mid-market
and large enterprises in West Africa. He is
also a director at AGRIKO, a fast growing
agro-allied company with a focus on
the production, processing, storage and
distribution of healthy fruit drinks, fruits,
vegetables, grains and related products.
He is a chartered accountant and a doctoral
researcher at Cranfield University,
focusing on Corporate Political Strategies
in Emerging Markets. He can be reached
at @WFOluyemi on Twitter.
Atul, Rajesh and Ajay
Gupta arrived in South
Africa in 1993 just as
the country was emerging
from the unpopular
apartheid regime that saw the legendary
Nelson Mandela becoming
the first post-apartheid President.
The Gupta brothers started business
in South Africa with a shoe shop and
then progressed to have a computer
business, before building an empire
in mining and media.
It is easy to link their business
successes to the growing democracy
of the country that is referred to
as the Africa’s most sophisticated
economy, as the economy is repositioned
after the dark days of the
apartheid rule. Unfortunately, the
Guptas are now being seen as the
symbol of the inefficiencies in the
transition from apartheid to a form
of democratized oligarchy system,
far from the self-touted “rainbow
nation” that the country’s leaders
ascribe to it.
The growing criticism of the
Guptas is their strong connections
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BUSINESS DAY 11
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How three brothers captured the soul of South Africa
to the politicians and political appointees
in South Africa, especially
President Zuma and his family,
with which they had had increasing
closer ties since 2009 when he
became the President of the African
nation. The relationship grew
to a situation where the Guptas are
alleged to be able to influence the
appointments into key positions in
government, state-owned enterprises
and the bureaucracy, thus
able to significantly influence the
development and implementation
of public policy and regulations.
The Guptas allegedly positioned
ministers and other political
appointees through President
Zuma to bring in policies that
enhance their businesses in South
Africa. The Guptas focussed on
major ministries such as Finance,
Public Enterprises, and Mines.
These helped them to control how
public resources are accessed,
moved and distributed, including
the ability to withstand any
changes in the social, political and
economic environment of business
in South Africa. They literarily
created, managed and operated a
strong patronage network to facilitate
the distribution of benefits to
sustain and develop their power.
As expected, to ensure the success
of such patronage networks,
the network of cronies and sympathizers
must be developed and
maintained to move resources
within their networks and ultimately
control the movement
and access to those resources.
The professional group that might be
coming worst off from this saga are
the bean counters – the accountants.
In the recent weeks, several
partners and managers of the South
African office of KPMG have been
exiting the firm in droves, following
KPMG’s acknowledgment of shortcomings
in its audit work for the
Gupta family and the South African
Revenue Service (SARS)
The access to such networks is only
made possible through the informal
political marketplaces where support
is traded through the exchange of
information, access to resources and
proof of continued loyalty.
It is not surprising, therefore,
that the Guptas are alleged to have
been behind the removal of some
political appointees such as PravinGordhan
and ThembaMaseko who
openly resisted the influence of the
Guptas. Pravin’s Treasury department
publicly opposed the alleged
infiltration of public enterprises.
Such opposition figures in government
were systematically removed,
redeployed or pressurized out based
on questionable intelligence reports
against them.
The recent email leakage from the
Gupta company server has exposed
the family’s alleged “capture” of the
President Zuma’s government by the
Gupta family and their cronies. This
email leakage has sparked off an
anti-corruption campaign against
the Gupta family for using their
friendship with President Zuma to
exert undue influence to win businesses.
While the family denies the
authenticity of the leaked emails,
the British PR firm Bell Pottinger
has apologized over the work it
did for the Guptas. During the past
week, Oakbay, an investment holding
company owned by the Gupta
family lost a court bid to stop one
of their bankers from closing its accounts.
This ruling allows the bank
to join several other organizations
that have distanced themselves
from this mess.
The professional group that
might be coming worst off from this
saga are the bean counters – the
accountants. In the recent weeks,
several partners and managers of
the South African office of KPMG
have been exiting the firm in droves,
following KPMG’s acknowledgment
of shortcomings in its audit work
for the Gupta family and the South
African Revenue Service (SARS).
The firm said its internal inquiry
showed that they had fallen “considerably
short” of their standards.
This incident has cost the firm at
least three clients and several other
large companies are evaluating their
continued relationship with KPMG
in South Africa. The South African
Institute of Chartered Accountants
(SAICA) is also planning to take action
against accountants who are
proven to have acted unethically
based on the professional codes,
after “due investigative and disci-
plinary process.” The South Africa’s
Independent Regulatory Board for
Auditors (IRBA) is also investigating
some former KPMG employees.
This alleged scandal is gradually
evolving as a great ethical lesson in
the field of corporate political strategy.
Corporate Political Strategy is a
set of activities performed by firms
to influence the development and
implementation of government
policies and regulations, in order to
create an economic advantage for
an organization. Relational strategies
are the most recently discussed
corporate political strategies, and it
is usually deployed through the development
of political ties with politicians
and government officials.
These types of informal networks
and relationships are particularly
critical in contexts where formal
legal and regulatory institutions
are underdeveloped or missing,
especially in the emerging markets
like those in Africa, with weak
institutions, political and social
instability, and haphazard government
interventions in the economy.
However, the absence of structured
corporate political strategies that
exist in developed countries tends
to support the view that the use of
political and social connections is
more for corrupt practices, as is being
alleged in this scandal involving
the Gupta family.
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INNOCENT NWANI
Innocent Nwani is a communications
specialist with Hill + Knowlton Strategies,
Lagos
iSON: Leading Pan-African youth employability
According to the International
Labour
Organization’s (ILO)
World Employment
and Social Outlook 2016,
the global labour market remains
troubled, and is likely
to worsen in coming years.
These prospects are particularly
worrisome for the youth,
whose unemployment rate
reached 13.1 percent in 2016.
This translates to an estimated
71 million unemployed
youth worldwide. The ILO
further estimated that some
156 million employed youth,
or 37.7 percent of the working
youth, in emerging and developing
countries were living in
poverty in 2016 (living on less
than US$3.10 a day).
The global gender gap is
unfortunately also a determinant
in youth employability.
Global labour market indicators,
such as unemployment
rates, labour force participation
and employment figures,
show that wide disparities do
exist between young men and
women. In 2016, for instance,
the labour force participation
rate for young men stood at
53.9 percent, while that favouring
women was only 37.3
percent, resulting in a gap
of 16.6 percentage points.
This is a major challenge in
Africa. While the unemployment
rate of women is lower
than that of men in Europe
and America, the reverse is
the case in Africa, Asia and
Arab states.
Regrettably, the world’s
highest rate of working poverty
people who are employed
but earning less than
US$2 a day, is in Africa. The
continent continues to report
the highest youth working
poverty rates globally, at
about 69.4 percent in 2016.
The youth unemployment
rate in Africa was around
20 percent in 2016. Despite
being Africa’s most educated
generation to emerge from
schools and universities,
a youth in Africa is twice
as likely to be unemployed
when he/she becomes an
adult. The prime challenge
for the youth of today is
simply the lack of decent job
opportunities.
Finding productive jobs
for young people is critical
to the continent’s future. An
educated and skilled population
is attractive to many
employers and prospective
investors. Many employers
across Africa have been critical
of the lack of basic, technical
and transferable skills
of graduates from the continent.
Others have developed
philosophy and management
practice that has led to accelerating
youth empowerment
for sustainable development
across Africa.
A classic example of companies
that have developed this
philosophy and leading pan-
African youth employability
is iSON Group, one of Africa’s
largest IT and ITes companies
with presence in 25 countries
in Africa. It has over 10,000
employees in Africa where its
workforce comprises 99 percent
African nationals. As part
of the company’s Corporate
Social Responsibility program,
it employs youths from marginalized
sectors, allowing
iSON and its dedicated employees
the opportunity to develop
its communities through
socio economic empowerment
and skills development.
In addition to the focus
on local employment, iSON
is passionate about gender
diversity, maintaining a ratio
of 48 women in every 100 employed
which is exceptional
by global standard. The company
has high turnover of call
centre agents because it is a
strenuous job and many people
are able to manage only
for a short duration. However,
the company trains the
agents that chose to leave so
they can be better equipped
for another job in other services
industries.
Interestingly, many companies
will baulk at the concept
of training their staff for
future jobs but iSON sees this
as a contribution to the African
economy. The company
has set up three state-of-theart
facilities in three different
cities in Nigeria; Ibadan,
Abeokuta and Ilorin. Each facility
is fully equipped with a
functional and contemporary
Skill Development Centre for
youths.
The centre continues to
provide skills trainings for
thousands of graduates employed
by the organization.
iSON can proudly boast of being
one of the top generators
of employment opportunities
and capacity builders of
talents across its footprints.
Each year, iSON provides
a series of rigorous training
programs to build and
improve the skillset of its
workforce. This intensive
series targeted at each cadre
of its workforce is designed
to ensure that skills are fully
harnessed, optimized and
transferred.
These endeavours by iSON
are comforting in the wake of
the rapidly growing working
age population in Africa. This
is a wake-up call for African
governments, universities,
and employers to collectively
take action to boost job creation
and employability in the
formal and informal sectors.
Young people must be
prepared for jobs in today’s
globalized economy to ensure
a smooth transition of graduates
into the global labour
market. Quality education
would yield significant benefits
for both African young
people and the society, as a
whole; better employment
opportunities and job prospects,
will improve quality
of life, and ultimately result
in greater economic growth.
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