Bribery, theft and other kinds of fraud cost African governments and companies at least $10.9 billion last year, auditing firm KPMG estimated in a study on Wednesday.
South Africa and Nigeria had the highest number of reported cases of fraud, but the study noted that fewer cases were reported in the second half of the year than in the first in both countries,.
Zimbabwe has the highest value of fraud perpetrated in the second half of 2011, amounting to over US$1.2 billion.
KPMG said it arrived at the figure after scouring English-language news reports and databases of fraud cases from 2011.
The actual cost of fraud is likely much higher, given that the study was limited to information in the public domain, said Petrus Marais, a forensic investigator with KPMG.
However, he said many governments appear to be making headway in fighting fraud and other types of corruption.
“There is a strong sense that the tide is turning. More and more countries are making combating corruption an issue of government” he said.
The inaugural “Africa Fraud Barometer” found a total of 875 cases of fraud in Africa last year.
Accounting for 29% of perpetrators, company employees committed the most fraud during the second half of 2011, according to the report. That is an increase of two percent from the first six months.
Management were responsible for $4.5 billion worth of fraud, or 40 percent of the total for the year.
Governments and the public sector were the most frequently impacted by fraud, accounting for 44 percent of all cases in the first half of 2011 and 39 percent in the second half.
“Fraud occurs most where money enters and exits a company or institution. At the interface of financial transactions, perpetrators tend to be most successful in defrauding funds,” says Marais.
General fraud is the highest reported fraud type at 29%, while misappropriation and theft come second.
The role of a free press in digging up corruption was critical to fighting fraud, Marais said, adding that “over time, we expect to get a clearer picture about the different types of fraud committed, which will allow us to propose to our clients various types of measures against fraud.”
KPMG developed the Africa Fraud Barometer to form a bigger picture of fraud prevalence in Africa. The initiative is a first effort to measure fraud on the African continent and expose the risk of fraud for companies in their day-to-day operations.
KPMG compiled data for the Africa Fraud Barometer by accessing and analysing all available news articles, as well as reviewing fraud cases from designated databases. This methodology has been successfully used in the United Kingdom. The data is captured, processed and will be disseminated in a press release every six months.