Okay unveils plan to tackle it

Amid the mounting challenges faced by Small and Medium Enterprises (SMEs) globally, legal expert Racheal Akinloye has shed light on the disproportionate impact of corruption on these vital contributors to economic growth.

Speaking at a policy roundtable on sustainable development in Abuja, Nigeria, Racheal underscored the urgent need for reforms to protect SMEs from the crippling effects of corruption.

“Corruption disproportionately affects SMEs because they lack the financial and legal resources to navigate or resist unethical demands,” Racheal explained. Unlike larger corporations with established compliance systems and influence, SMEs are often left vulnerable to exploitative practices such as bribery, extortion, and unfair regulations.

She highlighted how corruption imposes direct and indirect costs on SMEs. “Direct costs include financial burdens like bribes or excessive fees, while indirect costs manifest as lost business opportunities, inefficiency, and reduced competitiveness,” she said. Akinloye pointed to research showing that corruption costs SMEs in developing economies up to 5% of their revenue annually, a loss that could be reinvested into business growth and innovation.

Drawing from her extensive legal experience, Racheal noted how SMEs operating in highly regulated sectors face the highest risks. During her tenure at Bonajo Badejo & Co. Legal Practitioners, she advised small businesses struggling to comply with convoluted licensing and tax regulations exacerbated by corrupt practices. She stressed that the prevalence of such practices discourages investment, stifles innovation, and ultimately slows economic progress.

Racheal also touched on the psychological toll of corruption on SME owners. “When entrepreneurs are forced to navigate opaque systems and unethical demands, it undermines their confidence and discourages long-term planning,” she said. This lack of stability, she argued, creates an environment where businesses are more likely to fail, particularly in developing economies.

To address these challenges, Racheal proposed practical solutions aimed at both SMEs and policymakers. For SMEs, she emphasized the importance of adopting robust internal controls and compliance mechanisms. “Even small businesses can implement basic measures like transparent financial tracking and whistleblower policies to reduce risks,” she noted.

She also urged governments to prioritize the needs of SMEs by streamlining regulatory frameworks and increasing transparency in public procurement processes. “Governments must simplify business registration, licensing, and tax filing procedures to minimize opportunities for corrupt practices,” she added.

Racheal emphasized the role of technology in combating corruption affecting SMEs. “Digital tools such as e-procurement platforms, blockchain for transparent transactions, and AI-driven fraud detection systems can significantly reduce corruption risks for small businesses,” she explained. She cited successful examples from countries like Estonia, where digital transformation has drastically improved the business environment for SMEs.

Capacity building and education, Racheal argued, are also essential in empowering SME owners to resist corruption. “Workshops, legal aid, and mentorship programs can equip business owners with the knowledge and confidence to operate ethically,” she said. As a mentor, Racheal has guided several aspiring professionals and business owners, helping them understand the importance of integrity and strategic planning.

Reflecting on her advocacy, Racheal pointed to her active role in anti-corruption initiatives, including her involvement with the Anti-Corruption and Advocacy Network in the United States. She noted that cross-border collaboration is critical in addressing corruption that transcends national boundaries.

Racheal also highlighted her ongoing research at the Onero Institute, where she explores the intersection of governance, economic resilience, and anti-corruption movements in Africa. “Understanding the systemic factors that enable corruption is key to developing effective solutions,” she remarked.

Her publication, The Cost of Corruption on Small and Medium Enterprises (SMEs) and How to Address It, delves deeper into these issues, offering actionable recommendations for stakeholders. In the e-book, Racheal emphasizes that supporting SMEs is not only a moral imperative but also an economic necessity.

Closing her remarks, Racheal called on stakeholders to recognize SMEs as the backbone of economic development. “We must create an enabling environment for SMEs to thrive, free from the constraints of corruption,” she stated. She stressed that addressing corruption is a collective responsibility that requires the commitment of governments, businesses, and civil society.

Through her work and advocacy, Racheal Akinloye continues to champion the cause of SMEs, offering practical solutions to foster transparency, accountability, and sustainable growth in the global economy.