Accounting technology attacks roots of corruption

The standard rationales that technology vendors give for implementing their products are competitive advantage, efficiency or striking new features.

Pastel director, Jeff Lewis, makes a heartfelt case for another reason, especially in developing countries: promoting good practices in corporate governance in Africa, to allow companies to compete internationally, and to break the death spiral of corruption leading to dodgy business practices that need “flexible” accounting systems, creating the environment that corruption can thrive in.

Speaking at the annual Pastel International World Conference, held at the Spier wine estate in Stellenbosch, Lewis outlined a case for transparent, rigorous accounting systems that meet GAAP standards in southern Africa.

“So much of the continent is going through the democratization process. We are trying to educate the market to promote the reality of doing business in a global environment,” he says. He sees the move to international levels of accounting practices being driven by both government and business, although in each country the balance of these forces differs. “Some businesses are pushing for it because they want to trade internationally, and put the emphasis on running themselves so that outside organizations will be interested in doing business with them.”

There is also pressure by business and media on government to be more transparent — Lewis gives the example of recent newspaper articles asking why Nigeria’s President Obasanjo has not published national financial figures in 13 years. In Mozambique, on the other hand, the drive to regularize accounting practices is coming from the government down.

The problem in the past is that accounting in most developing countries is done on paper, making it easy to “cook the books.”

Pastel sees government in Africa as a key market, because, even though Pastel is focused on the medium enterprise sector, many African government organizations have very limited computerization, and operate on relatively small scales, making Pastel’s systems extremely appropriate. The company customizes solutions for different governments, such as having business rules specifically for a country’s legal system or needs. Lewis gives the example of Zambia, where the government organization concerned asked for certain flexibilities in the invoice/payment system to be taken out, to prevent any attempts at malfeasance.

A massive opportunity for Pastel and its competitors in Africa lies in the extremely rapid computerization in cities. While Lewis estimates that only around nine per cent of businesses and government departments are computerized today, he sees this figure jumping to 50 per cent within two years (he is very much less optimistic about computerization in rural environments).

Pastel’s strategy to drive its business in Africa is heavily based on education. “Last year we gave training to over 1,300 people, teaching accounting principles, and, also, why they should be doing the right thing (in running above-board accounting systems),” he concludes.

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