This is according to the latest PwC report on global crime and fraud, which also says that the financially motivated nonviolent crimes mostly committed by business and government professionals, reached an all time high in 2017.
The other countries that make Africa the global leader in asset misappropriation and high-level corruption are South Africa, which is ranked as the most notorious country in the world when it comes to non-violent crimes committed through deceptive practices, followed by Kenya.
On the list too, are Uganda and Zambia whose global rankings are fifth and sixth respectively. Globally the third position is held by France, Russia is fourth whereas Belgium is number seven, China eighth and Mexico number nine.
“The 2018 Global Economic Crime and Fraud Survey showed that economic crime has increased across the world, with companies spending significant amounts of money fighting it,” PwC says in a statement on the report.
“African countries have some of the world’s highest reported rates of white-collar crime. In Africa, asset misappropriation and high-level corruption made the continent home to five of the world’s top ten nations with reported economic crimes,” it adds.
Among many other things, PwC’s 2018 Global Economic Crime and Fraud Survey finds that 49 per cent of global organisations say they’ve experienced economic crime in the past two years up from previous level of 36 per cent.
Another major finding was that 64 per cent of respondents said losses due directly to their most disruptive fraud could reach US$1 million (about 2.25bn/-). The other is about 31 per cent of respondents saying they suffered fraud indicating they experienced cybercrime.
“Since fraud hides in the shadows, one of the most powerful weapons in a fraudster’s armoury is a lack of awareness within organisations. It’s time for all businesses to recognise the true nature of the threat: not as just a nuisance or cost of doing business, but a shadow industry with tentacles in every country, sector and function,” reads the report.
In its sixth year, the survey released by PwC on February 23 put the economic crime rate of South Africa at 77 per cent and Kenya’s at 75 per cent. PwC, which spoke to 7,200 respondents from 123 countries before making its conclusions, said the two ratios were much higher than the global rate of 49 per cent.
Ranked 10th globally, Tanzania’s score of 57 per cent is also above the world average and so are all the other countries in the top 10 list with Mexico being the other country scoring less than 60 per cent. The marks for the other countries on the leading chart are as follows: France (71 per cent), Russia (66 per cent), Uganda (66 per cent), Zambia (65 per cent), Belgium (65 per cent) and China (63 per cent).
On February 27, Quartz Africa reported that the types of white collar crimes in South Africa are indicative of the kind of corruption that’s been a blight on its economy and damaged its reputation. According to it, asset misappropriation was the most prevalent, followed by fraud committed by consumers and procurement fraud.
“This indicates that the entire supply chain in South Africa is fraught with criminality,” PwC notes in the report.
According to the survey, the most common types of reported economic crimes and fraud are asset misappropriation (45 per cent), cybercrime (31 per cent) and fraud committed by consumers (29 per cent). The report also has it that 52 per cent of the reported frauds were committed by internal actors.
Another finding was that 68 per cent of external perpetrators, who were responsible for 40 per cent of fraud, are frenemies of the organization. These are businesses’ agents, shared service providers, vendors and customers.
Frauds committed by senior management increased the most in 2017, jumping from 16 per cent to 24 per cent. One interesting and positive aspect was the fact that 91 per cent of the most disruptive frauds were brought to the attention of boards or senior management.
On incurred financial losses, PwC says that nearly two thirds (64 per cent) of respondents said losses from the most disruptive frauds they experienced could reach up to US$1 million; 16 per cent said between US$1 million and US$50 million.
“This year, 49 per cent of respondents said their companies had suffered fraud, up from 36 per cent in 2016 – a rise driven by rising global awareness of fraud, a more robust response rate, and greater clarity around what ‘fraud’ actually means,” the audit firm notes in the report.
“But every organisation – no matter how vigilant – is vulnerable to blind spots, which usually become apparent only after an incident. Throwing light onto those blind spots before anything happens can open up opportunities for big improvements in your fraud-fighting efforts,” it adds.