KPMG Barometer reports continuous decrease of fraud risk

In January 2013, KPMG released its findings of the third Africa Fraud Barometer.

The KPMG Africa Fraud Barometer is an initiative that was launched in April 2012 and is aimed at measuring fraud on the African continent. The Barometer has been developed to provide a bigger picture of fraud prevalence on the African continent. The data is compiled by accessing all available news articles on Africa and fraud from designated databases.

The Barometer distinguishes between the number of reported fraud cases, type of perpetrators, victims of fraud, type of fraud, countries, and targeted industries. Data currently available captures the entire year of 2011 and 2012. Findings are compared to those of the previous six months to map trends.

KPMG Africa Fraud Risk Barometer

According to the Fraud Barometer, the occurrence of reported fraud has decreased from 503 in the first half of 2012 to 348 cases in the second half of 2012. It’s the third consecutive period where a decrease in reported fraud and corruption related cases have been recorded.

In the same period however, the value of fraud increased from US $2 billion to US $4 billion. About three quarters of all fraud cases in Africa are reported in NigeriaKenyaZimbabwe and South Africa.

Risks related to investment in Africa

The term ‘fraud’ is used generically to describe all offences of dishonesty. Says Petrus Marais, KPMG’s Global Leader of Forensics, who developed the barometer:

The number of incidences has again shown a marginal decline. I believe it is a positive sign and I am certain that it will be welcomed by businesses operating in Africa. With the recent BRICS summit, risks related to investment in Africa enjoy a lot of space on the global corporate agenda.”

At the same time, Africa’s image in the world is increasingly improving. Investors have started to believe that the risk of investing in Africa has become more manageable. We are helping potential investors to assess the risks of doing business in individual African countries.”

Internal fraud tops the list

The Barometer indicated that most fraud is committed by employees (22%), replacing government officials (14%) previously topping the list.

These results suggest that there is a high level of internal dishonesty. As in the previous reporting period, government remains hardest hit by fraud and corruption. According to Marais:

I think that we can already pick up various trends. Certain types of offences of dishonesty remain dominant, such as general fraud and misrepresentation. We have noted the same in the category of offenders, where employees and government officials are dominant.

In Africa, an increasing number of countries have been introducing anti-corruption legislation. While it is too early to predict the long-term impact of this, we also see multinational corporations taking corruption a lot more seriously, which may also be contributing to the positive results we are seeing. International donors such as the World Bank or the European Union are also increasingly demanding adherence to anti-corruption standards before disbursing funds to countries.

How do you think Africa can overcome fraud and corruption, already on the decline?
Download the full report: [download id=”5″]
David Okwara

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  1. The Cost of Fraud - KPMG South Africa Blog - December 20, 2013

    […] deception intended to result in personal or financial gain – not to be taken lightly. In the KPMG African Fraud Barometer, the term is used generically to indicate all such offences of dishonesty.  According to the […]

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