PwC Kenya has today released the PwC Economic Crime and Fraud Survey report – Eastern Africa for the survey undertaken in 2022. The report covers six Eastern African countries – contrary to the PwC Global Economic Crime and Fraud Survey (GECS) 2022. The report themed ‘Protecting the Perimeter: The rise of external fraud’ shares insights on the areas impacting organisations in the region in terms of both risk and their responses to economic crime and fraud. The areas covered include the effectiveness of fraud prevention methods; supply chain fraud in an evolving world; corruption and accountability; ESG fraud; and cybersecurity risks and their exposure.
The 2022 GECS survey introduced several economic crime categories corresponding to global developments not covered by previous issues. These include supply chain fraud, disinformation and misinformation fraud, ESG reporting fraud, and government relief fraud. This report dedicates several sections to covering some of these new economic crimes and developments related to traditional financial crimes, such as asset misappropriation, money laundering and cybercrime.
Kenya looks to FinTech to supercharge financial inclusion: PwC/ TheCityUK Report
Muniu Thoithi, PwC’s Deals and Consulting Leader in Eastern Africa, says,
“Today’s fraud landscape is more complex than ever, presenting continually evolving challenges for organisations to contend with. Our 2022 survey results provide first-hand insights from those confronting these challenges in the region, highlighting new and emerging areas of risk that require attention to protect against economic crime.”
The level of fraud experienced within organisations is notably high, with 63% of Eastern African respondents having experienced fraud within their organisation in the last two years, against 46% of respondents globally. Eastern African respondents reported higher incidence rates for more prevalent crimes such as Customer fraud, Asset Misappropriation, Procurement Fraud, Bribery & Corruption and Supply Chain fraud. For less prevalent crimes such as HR fraud, Tax fraud, Government Relief fraud and ESG Reporting fraud, respondents in Eastern Africa generally reported a lower incidence rate than their global counterparts.
Looking back at the results of GECS for the last ten years provides a fascinating insight into the movement and evolution of economic crime over the years in Eastern Africa. The incidence rate for Cybercrime has not changed significantly over the last ten years. In contrast, the disruption resulting from these types of fraud has escalated dramatically. Between 2018 and 2022, reported Cybercrime incidence has reduced by 4% despite the number of respondents having registered it as the most disruptive economic crime, almost doubling. This might suggest that cybercriminals are becoming more sophisticated and perpetrating fewer but more lucrative cyber-attacks.
John Kamau, Forensics Leader, PwC Kenya, concludes, “When it comes to actual experiences of fraud and corruption, we continue to see a widening gap between respondents from Eastern Africa and the rest of the world. We trust that our in-depth analysis of the survey results, informed by our experience working with clients in fraud and corruption prevention and response, will provide value to local organisations when managing their fraud and corruption risks.”
A significant 70% of global respondents experienced new types of economic crime due to Covid-19. The new types of crime experienced are primarily related to cybercrime and conduct risk. Conduct risk stems from individual actions and includes customer and supply chain fraud. In Eastern Africa, only 30% of respondents indicated that they had suffered new forms of economic crime attributable to the Covid-19 pandemic. These reports appear harmonious with the WHO global Covid-19 prevalence reports, where Africa is reported to have experienced far fewer infection incidents than the rest of the world, which would ostensibly translate to less business disruption.
Conclusion – critical takeaways for protecting your perimeter
Fraud and corruption risk evolves with the evolution of the business environment in response to emerging areas, such as the current focus on ESG and increased digitisation of supply chains and in reaction to internal control measures. Continuous risk management is essential to mitigate the emergence of new types of economic crimes or the evolution of existing typologies. Maintaining robust oversight with the flexibility to shift focus when unknown risks emerge is critical in protecting your perimeter.
