Fraud in Africa

LTHOUGH fraud of more than $1-trillion was reported in Africa last year, it need not mean fraud in Africa is worse than in other emerging markets, Petrus Marais, global head of KPMG forensics, said after the release of KPMG’S new Africa Fraud Barometer this week.

“The big difference is the likelihood of detection and the strength of institutions that govern and regulate different regions,” he said.

“The UK, for instance, has a bigger, more effective police force and a criminal justice system that most probably functions better than in most African countries.

“The whole regulatory envi- ronment is probably better policed compared to Africa.

“The ability to deal with the risk of fraud is more inhibited in an African country than in a first-world context.

“But African countries are not any worse than India or China or Brazil. Countries with high-growth economies, high poverty levels and underdeveloped regulatory environments all face similar challenges.”

The barometer, compiled by analysing articles from about 50 different publications in Africa, showed 875 reported cases of fraud last year.

Of these, 355 were in the first half of the year and 520 in the second half.

Although there were substantially more fraud cases in the second half than in the first, the value involved in fraud decreased from $7.17-billion in the first half of the year to $3.70-billion in the second half.

South Africa had the highest number of reported fraud cases in both the first and second half of the year, followed by Nigeria.

In the first half, SA also had the highest value of fraud per- petrated, at $4.2-billion, but in the second half Nigeria had the dubious honour at $1.64-billion. Zimbabwe had the second-highest value of fraud perpetrated in the second half, a total of more than $1.2-billion.