2020 Global Economic Crime and Fraud Survey By PwC: More Kenyans Invest In Programs To Combat Bribery & Corruption

2020 Global Economic Crime and Fraud Survey: More Kenyans Invest In Programs To Combat Bribery & Corruption

PricewaterhouseCoppers, PwC, has released the 2020 PwC Global Economic Crime and Fraud Survey. The survey cuts through 5,000 stakeholders across 99 territories, making it one of the largest and the most comprehensive surveys on economic crimes globally.

Kenya wasn’t left out either. The report drew insights from experience, perceptions, and knowledge of economic crime from 102 respondents. Of the 102 respondents, 35% represented the private organizations, 21% listed companies, 15% NGOs, 9% Government Enterprises, and 4% private equity funds.

2020 Global Economic Crime and Fraud Survey: More Kenyans Invest In Programs To Combat Bribery & Corruption
The report revealed that 58% of the respondents from Kenya experienced economic crimes in the past two years, down from 75%, although the number is still higher than the global average, which is 47%.

In terms of monetary cost, 44% of companies have lost an estimated 5.5 billion while a third of all respondents from Kenya have lost an excess of 10 million shillings up from 23% in the 2018 survey.

“Economic crimes are of interest to all of us, as they have an impact on businesses and the lives of citizens either directly or indirectly. It's clear from this report that economic crime continues to be a concern for organizations of all sizes, across all regions and in virtually every sector,” said Peter Ngahu, PwC’s Regional Senior Partner in Eastern Africa.

The decreased incidence rate, especially in the context of the current economic environment, provides an opportunity to reflect more on the impact of economic crimes on Kenyan organizations as well as businesses around the globe. The levels of awareness are increasing, and we note that many organizations are adopting a proactive approach to tackling the vice, which continues to morph and evolve.

“We continue to see heightened risk emanating from third-parties, including customers, agents, intermediaries, and vendors/service providers. Of concern is the fact that half of the companies surveyed reported not having a mature third-party risk management program.”, said Muniu Thoithi, PwC’s Eastern Africa Advisory, and Forensics Services Leader.

The report also shows that most perpetrators of economic crimes in the last 24 months were internal actors at 36%, with external actors accounting for 27% of the reported incidences. The report also notes that one in three respondents reported being victims of collusion between the internal and external actors. This is against what the global respondents reported, where external fraudsters were the foremost perpetrators of fraud.
Procurement, Bribery, and Corruption fraud, according to the report, were the most costly and disruptive types of economic crimes experienced mostly by organizations in Kenya. The report shows that Bribery and corruption rose to 42% from 30% in 2018, while procurement fraud increased from
34% to 39% in 2020.

The 2020 report has observed encouraging trends in Kenya where 8 out of 10 Kenyan respondents that reported having suffered economic crime conducted forensic investigations, 63% instituted
disciplinary proceedings, and terminated services of the implicated employees, and 61%
implemented enhanced internal controls.

Another aspect that the report addresses is customer fraud. Customer fraud has been on the rise across the globe and remains high in Kenya, especially in the financial sector, insurance companies, consumer market segments, and banks. The report recognizes that customer fraud and cybercrime were the most disruptive forms of economic crimes globally being solely caused by third parties in organizations.

So far, organizations have put in place disruptive fraud-fighting techniques to counter the increased threat of external and technology-driven frauds. The survey found that more than half of the respondents found the communication and transaction monitoring to be of the most significant value. At the same time, a third of those that reported using Artificial Intelligence (AI) noted Biometric Authentication as the most widely and beneficial AI technology in fighting crime.

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