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The East African : July 14th 2014
The EastAfrican 42 BUSINESS JULY 12-18,2014 DRC ≥eadmitted to ext≥active body By KENNEDY SENELWA Special Correspondent THE DEMOCRATIC Republic of Congo has been readmitted to a global organisation that promotes good management of oil, gas and mineral resources. The Extractive Industries Transparency Initiative (EITI) suspended Kinshasa a year ago for failure to make full disclosure of revenues earned from its mining sector. EITI tallies revenues declared by governments and makes comparisons with payments that mining firms declare. DRC was readmitted on July 2, after the Congolese government addressed issues that were raised in a 2010 report that led to the country’s suspension on April 18 last year. “Despite the challenges Workers at a Coca Cola depot at Nairobi’s Ngara Market. Picture: File Why an in-house sales fo≥ce is bette≥ than an outsou≥ced one W hen you set out to do business while still employed, there is this temptation to outsource the marketing of your product or services to third parties. This happens mostly so as to disguises your activities from your employer’s roving eyes. However, marketing com- panies can make or break you. As a consultant with a full plate, I once outsourced the marketing of some of my programmes. I was sold on the idea because I was not required to pay any upfront fees: It was purely on success commissions. I handed over all the required marketing material and also had product knowledge training sessions over several days for my marketers. The results were disap- pointing. The marketing firm went out of its way to compete with my products using many of the contacts that I had given them as business leads. The same company was freelancing its services to many other customers and hence could not maintain progressive focus on expected results. I knew that things were not right when the key man kept avoiding scheduled meetings and alltogether stopped e-mail com- COMMENTARY DAVID MUGUN “Consultancy services such as training and strategy are best sold by the principal and not an intermediary.” munication. My plans were now in disar- ray and I needed to do something drastic. So I played the fool and never contacted my supposed marketer. I went door to door on my own and got a pleasant surprise. Consultancy services such as training and strategy are best sold by the principal and not an intermediary. Everywhere I went, I got a warm welcome and in some instances, I was able to customise some of my offerings instantly at the client’s offices. Producer-driven I now call this type of mar- keting producer-driven. The intermediary-dependent one, I call non-producer driven. The results are divergent. The former lets you understand your market first hand while the latter denies you the same understanding. An in-house sales force is better than an outsourced one any time. The newspa- per and bread distribution models heavily rely on commissioned networks that only augment the main company’s efforts to reach customers. In both cases, the products will be transported by their own distribution staff to locations convenient for the local intermediaries to effectively reach desired markets. So, in this case the newspaper and bread companies keep a high level of control. Many marketing compa- nies prefer less supervision but at their own peril. To be fair to firms that market services on behalf of others, there is a sifting process that one can use to ensure that quality is experienced. First, be absolutely sure that engaging a marketing outfit is a value-add to your business from a time, money and energy perspective. Second, never be the guin- ea pig. Do not enlist the services of a greenhorn that has no references for you to en- quire from about their services. You have passed the stage of experiments. Before anything happens, sign a contract that protects both parties while stating everyone’s obligations. Your lawyer comes in handy and what you pay him is far less than what you may lose in the absence of an agreement. Ensure that your service provider has a fixed abode, for it is difficult to keep up with briefcase traders. Tie your agreement around productivity benchmarks so that ambiguities on performance are eliminated. It is preferable to have a firm that specialises in specific sectors so that the freelance concept is eliminated. Specialisation also ensures that you benefit from their sectoral knowledge and hence get faster results. East Africa is quickly be- coming an economic hotbed for people fleeing winter economies and with this, come all manner of “consultants” that we must be wary of. David Mugun is the CEO of Business Pe≥sons Mento≥ Ltd and the autho≥ of “How to Undo Life’s Ai≥locks” and “10 C≥itical Success Answe≥s fo≥ SMEs” Workers at a gold mine in North-Eastern DRC. Picture: File facing the country, Congolese people have been working together to bring transparency and accountability to the management of their natural resources,” said EITI board chair Clare Short. DRC has vast deposits of minerals worth trillions of dollars including cobalt, gold and tin. But a cycle of violence in the east of the country, coupled with many years of corruption and mismanagement especially in the mining sector, have left the majority of its citizens living in extreme poverty. DRC was ranked 154 out of 177 countries in Transparency International’s 2013 Corruption Perceptions Index. “EITI cannot solve all problems in this big country, but it is clearly bringing transparency and accountability to a complex sector that has been badly managed in the past,” said Jonas Moberg, head of EITI’s secretariat. The EITI board last year wanted independent audits of mining firms and tax agencies as well as monitoring of revenue and spending from a $6.3 billion venture between DRC’s state mining company and a Chinese consortium. “The next step for Congo is to reveal the ultimate owners of its mining and oil concessions, which are often held anonymously through offshore companies,” said Nathaniel Dyer of Global Witness, a body that campaigns against corruption. In the East African Com- munity, Tanzania is the only member of EITI. Kenya and Uganda have discovered crude oil but are yet to sign up with the initiative. Accountability The World Bank last year recommended that Kenya begin the process of promoting accountability in managing revenues following the discovery of oil onshore and gas offshore ahead of production. Hunton & Williams of the US and Challenge Energy Ltd of Britain were contracted by World Bank and the Kenyan government as consultants to review the Petroleum Exploration and Production Act of 1986. “Lack of transparency at any one point in the petroleum value chain may result in a spread of misinformation and growing mistrust. We would urge Kenya to proceed in its effort to become EITI compliant, joining countries such as Tanzania, Mozambique and Ghana,” said the consultants. Hunton and Challenge said transparency and accountability could be addressed through competitive issuing of licences with competent non-corrupt institutions.
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