East Africa ranks high on PwC fraud list
February 28—Half of the top 10 countries who reported the most economic crime come from Africa according to the latest PricewaterhouseCoopers (PwC) biennial Global Economic Crime Survey with South Africa heading the list and Kenya in second spot as the world’s leading culprits.
However Uganda, Zambia and Tanzania come in as fifth, sixth and tenth respectively while France (3rd), Russia (4th), Belgium (7th), China (8th) and Mexico (9th) complete the top 10. The survey examined over 7200 respondents from 123 countries.
Efforts to get an official comment were rebuffed, but a programme director with one of Uganda’s major bilateral donors told 256BN, “There is no real surprise about Uganda’s ranking. The unfortunate factor is that these kind of surveys cause serious investors to be ever more cautious which prevents the much needed FDI to come to Uganda and instead go somewhere else,” she said.
Sh said, “You are deepening a negtive perception rather than changing it for the better if no concrete efforts are made to tackle the issue. Yes, countries like France and China are also on the list, but they also have deeper pockets than Uganda.”
South African organisations reported the highest instances of economic crime in the world with incidents reaching the highest level over the past decade, coincidentally during the presidency of Jacob Zuma who was ousted earlier this year.
The percentage of South African organisations that have experienced economic crime reached 77%, followed in second place by Kenya (75%), and thirdly France (71%). The survey shows that for Uganda the figure is 66% and 65% for Zambia while Tanzania recorded 57%. The PwC survey comes soon after the publication of the 2017 Transparency International Corruption Index where East African Community countries except for Rwanda also did badly.
Didier Lavion, Principal, Global Economic Crime and Fraud Survey Leader for PwC US said, “Today, fighting fraud has moved front and centre to become a core business issue. Long gone are the days when it was viewed as an isolated incident of bad behaviour, a costly nuisance, or a mere compliance issue.”
“That’s because the scale and impact of fraud has grown so significantly in today’s digitally enabled world. Indeed, it can almost be seen as a big business in its own right – one that is tech-enabled, innovative, opportunistic and pervasive. Think of it as the biggest competitor you didn’t know you had,” he said in an introduction to the report.
Results from the question: has your organisation experienced any fraud and/or economic crime within the last 24 months showed across Africa, the rate of reported economic crimes has gone up from 57% during 2016 to 62% in 2018. In comparison the figures for Asia Pacific are 30% to 46%; Eastern Europe, 33% to 47%; Latin America, 28% to 53%; Middle East 25% to 35%; North America, 37% to 54% and Western Europe 40% to 45%.
Asset misappropriation continues to remain the most prevalent form of economic crime reported by 45% of respondents globally. It involves the theft of assets (including monetary assets/cash or supplies and equipment). Embezzlement and deception by employees or theft of company property or assets by outsiders are the leading examples.
This year, 49% of respondents said their companies had been victims of fraud or economic crime, up from 36% in 2016. This rise can be explained by a combination of growing global awareness of fraud, a larger number of survey responses, and greater clarity about what ‘fraud’ actually means. But according to the report every organisation – no matter how vigilant – is vulnerable to blind spots. And because those blind spots usually only become apparent with hindsight, throwing light onto them as early as possible can vastly enhance fraud fighting efforts.
While the overall rate of economic crime reported was indeed the highest for South Africa, the period-on-period rate of increase for South Africa and Africa as a whole was below that of our American, Asian and European counterparts. From a regional perspective, the biggest increase in experiences of economic crime occurred in Latin America, where there was a 25% increase since 2016 to 53% in respondents who indicated they had experienced economic crime. The US was a close second with a 17% increase over 2016 to 54% of respondents, while Asia Pacific and Eastern Europe experienced increases of 16% and 14%, respectively.
Two types of fraud – consumer fraud and business misconduct – have grown in prominence to such an extent that this year’s survey is measuring them as separate threats for the first time. Of the respondents who indicated their companies had experienced fraud in the last two years, 29% said they had suffered from consumer fraud and 28% said they had suffered from business misconduct (making these, respectively, the 3rd and 4th most frequently reported frauds this year, behind asset misappropriation at 45% and cyber-crime at 31%).