Corruption poses a significant barrier to growth for SMEs, stifling their potential and undermining their success

A recent global survey by the UK-based Association of Chartered Certified Accountants (ACCA) has shed light on the significant impact of bribery and corruption on small and medium-sized enterprises (SMEs) worldwide.

According to the survey, 59 percent of SMEs and their advisers believe that adopting stringent policies and public stances against bribery and corruption could result in lost business opportunities.

Despite these potential drawbacks, many respondents acknowledged the ethical imperative and potential long-term benefits of standing firm against corrupt practices.

Notably, over three-quarters (77 percent) of participants felt that such policies would bolster customer confidence, and 68 percent believed it would enhance their prospects of trading with larger corporations or public entities.

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Jason Piper, ACCA’s Head of Tax and Business Law, highlighted the difficult choices faced by small businesses, noting that many lack the leverage to refuse small bribes without jeopardizing their livelihoods. “Entrepreneurs often must choose between paying the bribe or losing the business, which is no real choice for someone trying to support a family,” Piper remarked.

The survey, encompassing feedback from ACCA’s extensive network of over 247,000 members in 181 countries, also highlighted the unique challenges SMEs face compared to larger companies. Without the structured management and reporting lines typical of big firms, SMEs rely heavily on personal relationships, making it harder to detect and address corruption early.

Nearly half (49.8 percent) of respondents noted that bribery and corruption negatively affect the business environment, and 66 percent viewed it as a significant concern. While awareness and enforcement of anti-bribery laws are generally seen as effective, compliance has increased operational costs for 48 percent of SMEs.

The survey underscored the severe repercussions for SMEs involved in bribery. Unlike major multinationals, small businesses lack substantial financial reserves and assets, making every dollar spent on bribes a direct hit to their profitability and growth potential. This diversion of funds not only stifles investment but also detracts from the broader economic contributions SMEs could make to their local economies.