FRAUD cases in Zimbabwe topped $1.2 billion in only six months to December last year, while patterns of household income growth remain markedly poor in the country.
According to the KPMG report, the value of fraud cases in Zimbabwe in the six months to December 2011 soared to $1,2 billion, which is 32 percent of the overall value of fraud cases in Africa at $3,7 billion.
It was ranked second to Nigeria, which had fraud cases of over $1,6 billion.
The recent Africa Fraud Barometer 2011 released by KPMG and the Ernst & Young Africa Attractiveness survey 2012 all cast a negative outlook for the country, especially in a period where most of the African countries have bucked the downtrend.
This raises the spectre that it will become increasingly more difficult to attract Foreign Direct Investment (FDI) into the country.
However, it was not all gloom and doom as the country ranked higher than some BRICS countries (Brazil, Russia, India, China and South Africa) in the “irregular payments and bribes” category — a subcomponent of the World Economic Forum’s Global Competitiveness Index.
While there has been huge Government intervention in improving the business climate in Zimbabwe, recent statistics indicate that investors have not yet warmed up to the country as an investment destination as negative perceptions and misconceptions continue to be entrenched.
Fraud and corruption are some of the key factors that have alienated the continent from investors, market watchers say.
South Africa had the highest number of reported fraud cases in the period at 35 percent from 37 percent that was recorded in the period of January to June in 2011.
Nigeria was second, with the number of cases recorded at 22 percent from 25 percent in the first half.
On the overall, 520 fraud cases worth $7,2 billion were recorded in the second half of last year.
The report further notes that the highest value of fraud committed in the second half was by management at $1,2 billion, while employees weighed in with 29 percent of the cases.
There were very few fraud cases reported for the first half of 2011. Zimbabwe had a 9% occurrence of reported cases in the first half of 2011 with a value of $2, 4 million.
KPMG also noted that the Zimbabwe Government and the public sector industry had the highest occurrences of fraud reported at 39 percent.
However, the most extensive information of the psyche of investors, especially their perception towards Africa, Zimbabwe included, is provided by the latest report by Ernst & Young, which is based on a sample of 500 investors and business leaders from across the globe.
Most importantly, it was generally observed that there is a huge perception gap between businesses already operating in Africa and those which are yet to establish operations.
Those who have since opened businesses in Africa are believed to be upbeat about the prospects of business and future growth as compared to those who are reluctant to do business with the continent.
Much of the negative perception about Africa has mainly been fanned by fears of political risk, corruption, weak security and the difficulties in the ease of doing business.
Although the report notes that some African countries are now performing relatively better in terms of political governance, corruption, fraud and competitiveness than some of the BRIC countries, Zimbabwe stood out as one of the countries where the economic indicators, particularly consumer growth trends, remain worrying.
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