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Growing your business in Africa is a challenge. Risks and opportunities need to be well understood. And how these impact your potential clients is an area of risk management that needs good local information to help make better decisions.
Even before the current economic slowdown, corporate investigations and risk consulting firm Kroll, reported in late 2015 that 22% of companies operating in Africa were falling prey to vendor, supplier or procurement fraud. And in 2014, when the African economic growth story was still strong, professional services firm PWC found that procurement fraud was the single biggest type of crime among the 69% of companies affected by economic crimes in South Africa.
Now, with the decline in growth rates we are likely to see contraction across many sectors with the result that investments will be curtailed, budgets slashed and projects put on hold. The result being that companies and individuals will feel increased pressure to stay profitable. It is in exactly this kind of context that procurement fraud can thrive.
With the increasing complexities of the global business environment, procurement managers face enormous challenges in streamlining their supply chains. This is particularly true for companies with a footprint in developing world regions, where networks and relationships are less formalised and transparent. While traditional supply chain management is an effective model in a well regulated environment it has its shortcomings in emerging markets where the risk of fraud and abuse is far higher.