Zimbabwe has been ranked as one of the four countries in Africa with the highest cases of fraud, according to the findings of the second Africa Fraud Barometer released by KPMG.
Zimbabwe, Nigeria, Kenya and South Africa account for 74 percent of all the fraud cases reported in Africa, which totalled US$2 billion in the first half of this year.
This was, however, a decline of $1.3 billion from the second half of last year.
Fraud has been increasing in Zimbabwe especially after the dollarisation of the economy.
“With the dollarisation, the basic economic fundamentals started to apply, resulting in significantly reduced income streams for certain classes of the society who were engaged mainly in the informal sector where returns were quite significant” says Emilia Chisango, partner at KPMG Zimbabwe.
“Those with reduced sources of income tend to resort to fraudulent activities to sustain their lifestyles.”
According to KPMG, there is a lot of procurement fraud where process custodians inflate prices for personal benefit.
In some cases custodians of financial records fraudulently misrepresent reported figures to the regulators.
Also, due to the tight liquidity in the market, there has been significant mushrooming of fraudulent microfinance institutions that lend money at inflated interest rates and in turn accept deposits at attractive interest rates.
While there are a number of genuine such institutions, fraudsters have preyed on this by purporting to own microfinance institutions and offering rates which are significantly higher than the market. Once they collect a sizeable amount of deposits they often disappear with it altogether.
“There are more fraudulent transactions involving individuals, though the ones where companies are affected tend to be of significantly higher values. We believe that the level of reported cases is actually indicative of the actual levels of fraud happening in the country,” says Chisango.
Currently, the government is not directly addressing fraud as there is no known targeted response. However, business has stepped up awareness of fraud and fraud prevention through workshops.