Independent; Copperstone University ; Charisma university

Kouam Henri

Independent

Date Written: March 19, 2020 Download this paper

Abstract

When China sneezes the world catches a cold is a statement that is true today more than ever before. The outbreak of the COVID-19 has had far reaching consequences around the world as almost every component of society is greatly affected in one way or the other. The impact transcends through culture, politics, history, economic, health and even the distortion of the historical landscape. If anyone doubted the super power position of China, COVID-19 has given us the opportunity to rethink. Economically, the ban of flights and limited movements in and out of the country has impaired the positive evolution of the financial markets naturally tilting the growth curve towards continues low. Food supplies, medication, importation and most especially commodity prices are on their all-time low. On the health side with extraverted African economies is meting towards short falls, at the central African sub region, rating institutions are projecting a 4.1% drop in consumer goods as import is greatly affected. The United Nations said it now estimates Africa’s GDP rate will fall from 3.2 percent to 1.8 percent this year. In order for Africa to meet its global targets under the UN’s Sustainable Development Goals, economists say Africa must grow at a minimum of 8 percent.

The novel COVID-19 has infected more than 94,800 people in at least 77 countries (see chart), bringing global manufacturing supply chains to a grinding halt and causing a slowdown in key service sectors such as tourism, transport, and recreation. While the virus will cause exports from Cameroon to China and Italy to fall, policymakers must see the negative implications of the virus as a trigger to incentivise higher value-added products such as components for computers and solar panels, consumer products such as cornflakes, packaged salmon, potatoes and cornflower, which are all appropriate for an increasingly climate-centric global consumer.

Keywords: COVID-19, Coronavirus, China, UNESCO, CEMAC, world bank, IMF, finance, market analysis, solutions, African countries, sub-Saharan countries, budget impact

Suggested Citation:Kingsly, Professor kelly and Henri, Kouam, China Sneezes the World Catches a Cold-CEMAC (March 19, 2020). Available at SSRN: https://ssrn.com/abstract=3557298 or http://dx.doi.org/10.2139/ssrn.3557298

The post China Sneezes the World Catches a Cold-CEMAC appeared first on Head of Finance Operations | Liquidity and debt management| Kelly Kingsly.

Red Flags
Opportunity Red Flags
Fraud Conducted By Employees against the Organization
• Familiarity with operations (including cover-up capabilities and in a position of trust)
• Close association with suppliers and other key people
• Rapid turnover of key employees either by quitting or firing
• No mandatory vacations, periodic rotations, or transfers of key employees
• Inadequate personnel-screening policies when hiring new employees to fill positions of trust
• Operating on a crisis basis
• Unrealistic productivity measurements
• Poor compensation practices

Fraud Conducted By Individuals On Behalf Of The Organization
• Related party transactions – less than arm’s length bargaining
• A complex business structure – often unnecessarily complex business structures are created to hide fraudulent activity and money laundering.
• No effective internal auditing function
• An organization that uses several different auditing firms or changes auditors often
• An organization that is reluctant to give auditors needed data
• An organization that uses several different legal firms or changes legal counsel often
• An organization that uses an unusually large number of different banks, none of which can see the entire picture
• Continuous problems with various regulatory agencies
• Large year-end and/or unusual transactions or adjusting entries to accounting records
• An inadequate internal control system or no enforcement of the existing internal controls
• Unduly liberal accounting practices
• Poor accounting records and inadequate staffing in the accounting department
• An organization that inadequately discloses questionable or unusual accounting practices

Some circumstances that might contribute to fraud include:
• Weak internal control environment
• Management does not emphasize the role of strong internal controls
• Management does not prosecute or punish identified embezzlers
• Management does not have a clear position about conflicts of interest
• Highly placed executives are less than prudent or restrained on expenditures for travel and entertainment, furnishings of offices, gifts to visitors and directors, etc.
• Internal auditing does not have authority to investigate certain executive activities involving heavy personal expenditures
• Accounting policies and procedures are on the lax or loose side
SITUATIONAL PRESSURE RED FLAGS
Fraud Committed By Employees Against The Organization
• Significant observed changes from past behavior patterns
• High personal debts or financial losses
• Inadequate income for lifestyle
• Extensive stock market or other speculation behavior
• Excessive gambling
• Undue family, organization, or community expectations
• Excessive use of alcohol or drugs
• Perceived inequities in the organization
• Resentment of superiors and frustration with job
• Peer group pressures
• Undue desire for self-enrichment and personal gain
• Emotional trauma in home life or work life

Fraud Committed By Management On Behalf Of The Organization
• Unfavorable economic conditions within the industry
• Pressure tactics by contractors or grantees to allow questionable costs
• Dependence on one or two products, customers, or transactions
• Obsolescence – the product, the service – the need for an organization no longer existing.
• High debt
• Substantial growth beyond the industry norm. Rapid expansion through new business or product lines often leads to control issues and chaotic management.
• Reduced ability to acquire credit or restrictive loan agreements
• Financial difficulties such as frequent cash flow shortages, declining sales and/or profits, loss of market share, costs and expenses rising higher and faster than sales and revenues
• Difficulty in collecting receivables – high bad debt expenses and aged receivables 90 days or greater, depending on industry.
• Significant tax adjustments
• Urgent need for favorable earnings to support high price of stock or to meet earnings forecast – trying to meet investor expectations
• Need to gloss over a temporarily bad situation in order to maintain management position and prestige
• Significant litigation, especially between stockholders and management o Unmarketable collateral o Significant reduction in sales backlogs (indicates future sales have declined) Possibility of license being revoked or imperiled, especially if it is necessary for the continuation of business
• Pressure to merge
• Sizable inventory increase without comparable sales increases
• Consistently late reports
• Managers who regularly assume subordinates duties
• Noncompliance with corporate directives and procedures
• Payments to trade creditors supported by copies instead of originals
• Commissions not in line with increased sales Unable to verify the existence of vendors, subcontractors

Personal Characteristic Red Flags

Warning Signals Should Go Off When Employees Evidence Characteristics Such As:
• Rationalization of contradictory behavior
• Lack of a strong code of personal ethics
• A strong desire to beat the system
• A criminal or questionable background
• A poor credit rating and financial status
• Highly materialistic and self-centered
• Are often eccentric in the way they display their wealth or spend their money
• Are reckless or careless with facts and often twist facts to fit their agenda
• Often they may appear to be hard working, almost compulsive, but most of their time at work is spent scheming and designing short cuts to get ahead or beat the competition.
• May demonstrate hostility toward people who oppose their views
• Feel exempt from accountability and controls because of their station or position
• Tendency to override internal controls with impunity and argue forcefully for less formality in controls

With internal offenders, research has shown that about 2/3 of crime is attributable to employees, while 1/3 is attributable to managers and executives. However, the median loss in employee cases was about 14 times less than when a manager/executive was involved. Frauds typically involve a trust element to make them work, and with internal offenders, the research bore out that the longer an employee has been with an organization, the higher the loss tended to be. This is attributed to the fact that most employees gain more responsibility and trust the longer they are with an organization.

Indicators Of Possible Fraudulent Activities
Transactions that are different or unusual (without explanation) or suspicious as to:
• Time (of day, week, month, year, or season)
• Frequency (too many, too few)
• Places (too far, too near, and too “Far out”)
• Amount (too high, too low, too consistent, too alike, too different)
• Parties or personalities (related parties, oddball personalities, strange and estranged relationships between parties, i.e., management performing clerical functions).

Discrepancies in Accounting Records
• Account balances that are significantly over or understated
• Transactions not recorded in a complete or timely manner or improperly recorded as to amount, accounting period, classification, or organization policy
• Unsupported or unauthorized records, balances, or transactions
• Last minute client adjustments that significantly affect financial results (particularly those increasing income presented after submission of the proposed audit adjustments)
• Excessive number of adjusting entries, and repetitive use of adjusting entries for no apparent purpose.

Conflicting or Missing Evidential Matter
• Suspicious or missing documents
• Unexplained items on reconciliations
• No original documents available – only photocopied documents
• Inconsistent, vague or implausible responses arising from inquiries or analytical procedures
• Unusual discrepancies between the client’s records and confirmation replies
• Missing inventory or physical assets
• Excessive voids or credits
• Shifting of costs from one category or cost account to another
• Common names or addresses of payees or customers – inability to verify the existence of vendors/subcontractors
• Alterations on documents (e.g. back dating, white-out)
• Duplications (e.g., duplicate payments)
• Questionable handwriting on documents

Unusual Relationships
• Appearance of a conflict of interest
• Less than arms length bargaining
• Related party transactions
• Denied access to records or facilities
• Denied access to certain employees, customers, vendors, or others from whom program managers may seek to obtain information from
• Undue time pressures imposed by management to resolve complex or contentious issues
• Unusual delays in providing requested information
• Tips or complaints about fraud, including whistleblowers inside the organization.

Other Concerns
• Significant internal control weaknesses or prior year internal control weaknesses not corrected
• Unexplained increases in costs or claims
• Suspicious, unexpected or unusual trends or shifts in activity.
• Unusual transactions (e.g., for activities outside the normal line of business)
• Changes in accounting principles or the methods of applying them that enhances reported income
• Departure of key financial or operating personnel
• Specific instances of management’s conduct that raise serious concerns as to their integrity

 Characteristics Of Top-Management Fraud 

Top Management Defrauders
a) Tend to have highly material personal values.
b) Success to them means financial success, not professional recognition.
c) Tend to treat people as objects, not individuals and often as objects for exploitation.
d) Are highly self-centered.
e) Are often eccentric in the way they display their wealth or spend their money.
f) They tend to be conspicuous consumers and often boast of the things they have acquired, the friends they have in high office, and all the fine places they have visited.
g) Speak about their cunning achievements and winnings more than their losses.
h) Appear to be reckless or careless with facts and often enlarge on them.
i) Appear to be hard working, almost compulsive, but most of their time at work is spent scheming and designing short cuts to get ahead or beat the competition.
j) May gamble or drink a great deal.
k) Buy expensive gifts for their families usually to compensate for spending so little time with them.
l) Are hostile to people who oppose their views.
m) They feel exempt from accountability and controls because of their station or position.
n) Create a great deal of turnover among their subordinates and often set off one subordinate against the other.
o) Play favorites among subordinates, but the relationship can cool very quickly because a subordinate often falls from grace after one mistake, even an insignificant one.
p) Manage by crisis more often than by objectives.
q) Tend to drift with the times and have no long-range plans, tend to override internal controls with impunity and argue forcefully for less formality in controls.
r) Demand absolute loyalty from subordinates, but they themselves are loyal only to their own self-interests.
s) Have few real friends within their own industry or company.
t) Their competitors and colleagues often dislike them.
Interpreting Potential Red Flags
It is not, of course, as easy as it sounds to identify and interpret potential red flags. First, flags is a bit of a misnomer and creates a false impression of plainly visible warning signs. While this is true of some frauds, it is important to remember that fraud is fundamentally a crime of deception and deceit. Calling to mind a mental picture of a scarcely visible red thread waving in the wind is more accurate than picturing a bold red flag. Some of the difficulties inherent in identifying and interpreting potential red flags are summarized in the following:
i. Fraud risk factors are not the same as evidence of fraud. Risk factors are not evidence of fraud. To the extent that risk factors are evidence of anything, they point to an environment or situation in which there is an increased risk that material misstatement due to fraud might occur either generally or in a specific functional or geographic sector of the entity’s operations.
Individuals may be motivated by the prospect of bonuses and other incentives to manipulate results to their advantage and in a manner that may amount to fraud. Several high-profile instances of financial statement fraud have been motivated in part by bonus and incentive arrangements. As an example, a chairman and CEO was accused of earning substantial bonuses and profiting on the sale of shares in the company on the basis of fraudulent financial reporting that misrepresented the company’s results. This does not mean, of course, that the presence of bonus and other incentive schemes is prima facie evidence of fraudulent financial reporting, but it may be considered in the overall risk assessment.
Another example of a fraud risk factor is the so-called dominant CEO. Even absent a dominant CEO, similar risks can emerge whenever corporate governance is weak—for example, when power is concentrated in the hands of senior management without an effective counterbalance from the board. No one would seriously suggest, however, that the existence of a CEO with a forceful personality and a strong sense of mission is indicative of fraud. It is simply a risk factor.
ii. Fraud risk factors may indicate the existence of risks other than fraud. Many risk factors are not exclusively indicative of fraud risk. They may also suggest a heightened risk of material misstatements due to human or process error. For example, deficiencies in internal controls may be regarded as fraud risk factors, but they also pose the risk that errors may occur and go undetected without any intent to commit fraud. Sometimes, weak internal controls simply fail to limit or identify accounting or reporting mistakes. The auditor should not discount either possibility without reasonable grounds for doing so.
iii. Fraud risk factors can be ambiguous. Many fraud risk factors are susceptible to both innocent and sinister interpretations. The fact that a company has a complex structure with a large number of overseas subsidiaries and significant intra company trading may indicate an increased fraud risk, or it may simply be a legitimate characteristic of that business. On one hand, that a ledger clerk drives a car he appears to be unable to afford may indicate a risk that he has misappropriated company assets. On the other hand, he and his wife may have a two-income household that allows them certain luxuries. The focus must be on fact-finding and critical assessment of cumulative evidence.
iv. There is no linear relationship between the number of fraud risk factors and the level of fraud risk. It may be that, in general, the more risk factors the auditor identifies in a client, the greater the overall risk of fraud. But even a few risk factors in key areas may be grounds for concern. A simplistic attempt to quantify fraud risk by a count of risk factors is misguided. The objective is not to estimate how likely it is that a material misstatement due to fraud will occur but, rather, to identify where and in what manner that might happen.
v. Fraud risk factors are of limited significance in isolation. In general, individual risk factors are of limited significance in isolation. Rather, they need to be considered as a whole. The point about the dominant CEO factor, for example, is that it may actually contain a number of separate risk factors that when looked at together, create a risk situation: a bullying CEO, lack of counterweight among other senior executives, and apparent absence of an effective audit committee, supervisory board, or similar corporate governance function. The auditor attempts to interpret evidence of potential risk factors within the wider context of other observations about the company, its management, and the business environment in which it operates. Nonetheless, the identification of an anomaly or loose thread can lead to the identification of multiple risk factors and control weaknesses or actual instances of financial statement fraud or misappropriation of assets. The auditor considers whether one particular risk factor may, in fact, be linked to one or more other factors.
vi. Some fraud risk factors are very difficult to observe. Certain fraud risk factors are essentially states of mind or related to an individual’s private life or personal financial affairs. They may be impossible to observe directly. The auditor might nonetheless become aware of indirect signs that relevant states of mind or privatelife factors may exist. All of these issues increase the challenge faced by the auditor in trying to identify indications of the existence of fraud risk within the substantial body of information available from the audit process. SAS 99 distinguishes between risk factors relevant to the risk of material misstatement due to fraudulent financial reporting and those relevant to the risk of material misstatement arising out of the misappropriation of assets. In practice, as the standard acknowledges, many risk factors are potentially common to both kinds of misstatement. Risk factors related to weaknesses in control or supervision may, for example, be equally applicable to either type of fraud.

Symptoms of Fraud
A person’s lifestyle may change, a document may be missing, a general ledger may be out of balance, someone may act suspiciously, a change in an analytical relationship may not make sense, or someone may provide a tip that fraud is occurring. Unlike videos in robbery or bodies in a murder, however, these factors are only symptoms rather than conclusive proof of fraud. There may be other explanations for the existence of these symptoms. Lifestyle changes may have occurred because of inherited money. Documents may have been legitimately lost. The general ledger may be out of balance because of an unintentional accounting error. Suspicious actions may be caused by family dissension or personal problems. Unexplained analytical relationships may be the result of unrecognized changes in underlying economic factors. A tip may be motivated by an envious or disgruntled employee’s grudge or by someone outside the company desiring to settle a score.

To detect fraud, managers, auditors, employees, and examiners must recognize these fraud indicators or symptoms (sometimes called red flags) and investigate whether the symptoms resulted from actual fraud or were caused by other factors. Unfortunately, many fraud symptoms go unnoticed, and even symptoms that are recognized are often not vigorously pursued. Many frauds could be detected earlier if fraud symptoms were investigated.

Symptoms of fraud can be separated into six groups: (1) accounting anomalies, (2) internal control weaknesses, (3) analytical anomalies, (4) extravagant lifestyle, (5) unusual behavior, and (6) tips and complaints. In this section, we briefly discuss these six types of symptoms.

1. ACCOUNTING ANOMALIES
Common accounting anomaly fraud symptoms involve problems with source documents, faulty journal entries, and inaccuracies in ledgers. We discuss each of them in the following section.

Irregularities in Source Documents
Common fraud symptoms involving source documents (either electronic or paper)—such as cheques, sales invoices, purchase orders, purchase requisitions, and receiving reports—include the following:
• Missing documents
• Stale items on bank reconciliations
• Excessive voids or credits
• Common names or addresses of payees or customers
• Increased past-due accounts
• Increased reconciling items
• Alterations on documents
• Duplicate payments
• Second endorsements on checks
• Document sequences that do not make sense
• Questionable handwriting on documents
• Photocopied documents

Faulty Journal Entries
Accounting is a language, just as English and Japanese are languages. For example, consider the following journal entry:
Legal Expense …………………………………….5,000
Cash …………………………………….5,000

In the English language, this entry says, “An attorney was paid $5,000 in cash.” In the language of accounting, this entry says, “Debit Legal Expense; credit Cash.” A person who speaks both accounting and English will realize that these statements say exactly the same thing.
The problem with the language of accounting is that it can be manipulated to tell a lie, just as can English or Japanese or any other language. For example, with the above entry, how do you know that an attorney was actually paid $5,000? Instead, maybe an employee embezzled $5,000 in cash and attempted to conceal the fraud by labeling the theft as a legal expense. Smart embezzlers sometimes conceal their actions in exactly this way, realizing that the fraudulent legal expense will be closed to Retained Earnings at the end of the accounting period, making the audit trail difficult to follow. And, if the fraudulent employer routinely pays large amounts of legal expenses, this small fraud could easily go unnoticed. To understand whether journal entries represent truth or are fictitious, one must learn to recognize journal entry fraud symptoms.

An embezzler usually steals assets, such as cash or inventory. (No one steals liabilities!) To conceal the theft, the embezzler must find a way to decrease either the liabilities or the equities of the victim organization. Otherwise, the accounting records will not balance, and the embezzler will be quickly detected. Smart embezzlers understand that decreasing liabilities is not a good concealment method. In reducing payables, amounts owed are eliminated from the books. This manipulation of the accounting records will be recognized when vendors do not receive payments for amounts owed to them. When the liability becomes delinquent, they will notify the company. Subsequent investigation will usually reveal the fraud.

Smart embezzlers also realize that most equity accounts should not be altered. The owners’ equity balance is decreased by the payment of dividends and expenses and is increased by sales of stock and by revenues. Embezzlers rarely conceal their frauds by manipulating either dividends or stock accounts because these accounts have relatively few transactions and alterations can be quickly noticed. In addition, transactions involving stocks or dividends usually require board of director approval, go through a transfer agent, and are monitored closely.

Thus, income statement accounts such as revenues and expenses remain as possible accounts for decreasing the right side of the accounting equation and making the accounting records balance when stealing an asset. Balancing the equation by manipulating revenues would require that individual revenue accounts be reduced. However, since revenues rarely decrease (except through adjusting entries at the end of an accounting period), a decrease in a revenue account would draw attention. Therefore, embezzlers who manipulate accounting records to conceal their frauds usually attempt to balance the accounting equation by increasing expenses. Increasing expenses decreases net income, which decreases retained earnings and owners’ equity, thus leaving the accounting equation in balance, as illustrated in Figure below.


Recording an expense to conceal fraud involves making a fictitious journal entry. Fraud examiners must be able to recognize signals that a journal entry may have been manufactured to conceal a fraud. Manipulating expense accounts also has the advantage that expenses are closed or brought to zero balances at year-end, thus obscuring the audit trail. The following are common journal entry fraud symptoms:
• Journal entries without documentary support
• Unexplained adjustments to receivables, payables, revenues, or expenses
• Journal entries that do not balance
• Journal entries made by individuals who would not normally make such entries
• Journal entries made near the end of an accounting period.

Inaccuracies in Ledgers
The definition of a ledger is “a book of accounts.” In other words, all transactions related to specific accounts, such as cash or inventory, are summarized in the ledger. The accuracy of account balances in the ledger is often proved by ensuring that the total of all asset accounts equals the total of all liability and equity accounts or, if revenues and expenses have not yet been closed out, that the total of all debit balances equals the total of all credit balances. Many frauds involve manipulating receivables from customers or payables to vendors. Most companies have master (control) receivable and payable accounts, the total of which should equal the sum of all the individual customer and vendor account balances. Two common fraud symptoms relating to ledgers are as follows:
1. A ledger that does not balance; that is, the total of all debit balances does not equal the total of all credit balances.
2. Master (control) account balances that do not equal the sum of the individual customer or vendor balances.

The first symptom is indicative of a fraud in which cover-up in the accounting records is incomplete. For example, a perpetrator may embezzle inventory (an asset) but not reflect the reduction of inventory in the accounting records. In this case, the actual inventory balance, as determined by a physical count, is lower than the recorded amount of inventory, and the ledger does not balance. Another example of a ledger out of balance is the theft of cash accompanied by the failure to record an expense. In this case, total assets would be less than total liabilities plus owners’ equity.

The second ledger symptom is indicative of manipulation of an individual customer’s or vendor’s balance without altering the master receivable or payable account in the ledger.
In this case, the sum of the individual customer or vendor balances does not agree with the master account balance.

2. Internal Control Weaknesses
Fraud occurs when perceived pressure, perceived opportunity, and rationalization combine. Many individuals and organizations have pressures. Everyone rationalizes. When internal controls are absent or overridden, the risk of fraud is great. Internal control is comprised of the control environment, the accounting system, and control procedures.
Common internal control fraud symptoms include the following:
• Lack of segregation of duties
• Lack of physical safeguards
• Lack of independent checks
• Lack of proper authorization
• Lack of proper documents and records
• Overriding of existing controls
• Inadequate accounting system

3. Analytical Fraud Symptoms
Analytical fraud symptoms are procedures or relationships that are unusual or too unrealistic to be believable. They include transactions or events that happen at odd times or places; that are performed by or involve people who would not normally participate; or that include odd procedures, policies, or practices. They also include transactions and amounts that are too large or too small, that are performed or occur too often or too rarely, that are too high or too low, or that result in too much or too little of something. Basically, analytical symptoms represent anything out of the ordinary.

They are the unexpected. Common examples of analytical symptoms include the following:
• Unexplained inventory shortages or adjustments
• Deviations from specifications
• Increased scrap
• Excess purchases
• Too many debit or credit memos
• Significant increases or decreases in account balances, ratios, or relationships
• Physical abnormalities
• Cash shortages or overages
• Excessive late charges
• Unreasonable expenses or reimbursements
• Excessive turnover of executives
• Strange financial statement relationships, such as:
_ Increased revenues with decreased inventory
_ Increased revenues with decreased receivables
_ Increased revenues with decreased cash flows
_ Increased inventory with decreased payables
_ Increased volume with increased cost per unit
_ Increased volume with decreased scrap
_ Increased inventory with decreased warehousing costs

4. Extravagant Lifestyles
Most people who commit fraud are under financial pressure. Sometimes the pressures are real; sometimes they merely represent greed. Once perpetrators meet their financial needs, they usually continue to steal, using the embezzled funds to improve their lifestyles.

Often, they buy new cars. They sometimes buy other expensive toys, take vacations, remodel their homes or move into more expensive houses, buy expensive jewelry or clothes, or just start spending more money on food and other day-to-day living expenses. Very few perpetrators save what they steal. Indeed, most immediately spend everything they steal. As they become more and more confident in their fraud schemes, they steal and spend larger amounts. Soon they are living lifestyles far beyond what they can afford. To illustrate how people’s lifestyles change when they embezzle, consider the following two examples.

John Kate embezzled nearly $3 million from her employer. She and her husband worked together to perfect the scheme over a period of seven years. Because they knew they might someday get caught, they explicitly decided not to have children. With their stolen funds, they purchased a new, expensive home (supposedly worth $500,000) and five luxury cars—a Maserati, a Rolls-Royce, a Jeep Cherokee, and two Audis. They filled their home with expensive artwork and glass collections. They bought a boat and several expensive computers, and they paid cash to have their yard extensively landscaped. They frequently invited Kate’s coworkers to parties at their home and served expensive foods, including lobster flown in from the east coast. Yet none of the employees noticed the change in lifestyle. They did not note, for example, that Kate drove a different car to work every day of the week and that all her cars were extremely expensive.

In the second case, Randy stole over $600,000 from his friend’s small company, for which he worked. The business constantly had cash flow problems, but Randy drove a Porsche, bought a cabin in the mountains, and took expensive vacations. At one point, he even loaned his friend $16,000 to keep the business going. Never once did the owner question where the money was coming from, even though Randy was being paid less than $25,000 per year.

Embezzlers are people who take shortcuts to appear successful. Very few crooks, at least those who are caught, save embezzled money. The same motivation for stealing seems to also compel them to seek immediate gratification. People who can delay gratification and spending are much less likely to possess the motivation to be dishonest.
Lifestyle changes are often the easiest of all symptoms to detect. They are often very helpful in detecting fraud against organizations by employees and others but not as helpful in detecting fraud on behalf of a corporation, such as management fraud. If managers, coworkers, and others pay attention, they notice embezzlers living lifestyles that their incomes do not support. While lifestyle symptoms provide only circumstantial evidence of fraud, such evidence is easy to corroborate.

5. Unusual Behaviors
Research in psychology reveals that when a person (especially a first-time fraud perpetrator) commits a crime, he or she becomes engulfed by emotions of fear and guilt.
These emotions express themselves as stress. The individual often exhibits unusual and recognizable behavior patterns to cope with the stress, as shown in Figure below. No particular behavior signals fraud; rather, changes in behavior are signals. People who are normally nice may become intimidating and belligerent. People who are normally belligerent may suddenly become nice.

Even perpetrators recognize their behavioral changes. A woman who stole over $400,000 said, “I had to be giving off signals. I could not look anyone in the eye.” A man who embezzled over $150,000 said, “Sometimes I would be so wound up I would work 12 or 14 hours a day, often standing up. Other times I would be so despondent I could not get off the couch for over a week at a time.”

6. Tips and Complaints
Auditors are often criticized for not detecting more frauds. Yet, because of the nature of fraud, auditors are often in the worst position to detect its occurrence. As we covered previously, the factors that lead to fraud are depicted in the fraud triangle. These factors consist of pressure, opportunity, and rationalization. As you may recall, the elements of fraud can be illustrated as shown in Figure below.



The theft act involves the actual taking of cash, inventory, information, or other assets. Theft can occur manually, by computer, or by telephone. Concealment involves the steps taken by the perpetrator to hide the fraud from others. Concealment can involve altering financial records, miscounting cash or inventory, or destroying evidence. Conversion involves selling stolen assets or transferring them into cash and then spending the cash. If the asset taken is cash, conversion means merely spending the stolen funds. As we have noted previously, virtually all perpetrators spend their stolen funds.

Fraud can be detected in all three elements. First, in the theft act, someone can witness the perpetrator taking cash or other assets. Second, in concealment, altered records or miscounts of cash or inventory can be recognized. Third, in conversion, the lifestyle changes that perpetrators almost inevitably make when they convert their embezzled funds are visible.

The post IDENTIFYING RED FLAGS AND SYMPTOMS OF RACKETING appeared first on Head of Finance Operations | Liquidity and debt management| Kelly Kingsly.

Initially, Brexit would fundamentally change contractual trade agreements between Europe and Africa. Nevertheless, the British government will proceed pragmatically and uphold existing contracts within the framework of the Cotonou Agreement, as the UK’s trade deals with Africa are essentially the EU’s trade deals with Africa. As the UK exits the European Union, all of those deals will have to be renegotiated. It’s likely, though, that the UK will simply keep the same trade deals with its African partners for the foreseeable future. However, developmental cooperation will have to be restructured.

The EU is Africa’s most important donor in the area, and Britain – due to its colonial past – contributes much of its aid. The UK has pledged 0.7% of its Gross National Income (GNI) to development aid. Now, while it probably won’t go back on that promise, if the UK goes into recession and the UK GNI falls, that reduces the amount of money for aid in real terms. More than this, the UK was one of the biggest supporters of EU aid programs in Africa, both politically and financially. While the UK will most likely continue to honor its own aid commitments, a changing attitude to aid could evolve within a UK-less European Union. The same principle applies to the EU’s Common Agricultural Policy (CAP). What about foreign direct investment (FDI)?

For 2014, the total FDI flows from the UK to African economies were only about 16% of total flows to the continent. In terms of the stock of FDI, a measure of the total value of investments in Africa, the UK’s portion was only 8% in 2014 (both estimates obtained from combining ONS and UNCTAD data). Because the UK mostly invests in mining, quarrying and financial services, and mostly in South Africa; sectors that are hardly the type to drive self-sustaining and job-creating growth on the continent.

The impact of BR-EXIT on Cameroon treasury bonds

With the BR-EXIT, will the mortgage repayments of Cameroon EURO-BONDS will be higher or lower?

The main question to be asked here is the BR-EXIT vote can result in a spike in risk aversion and a notable selloff of Cameroon EURO-BONDS? The BR-EXIT may result in rising yields and widening credit spreads, which are the yield differentials between corporate bonds and Treasuries’ of similar maturities. It is important to note that, yields on dollar bonds across the continent have risen steadily after the BR-EXIT vote. Today (9 August 2016), there is good news coming from Standard & Poor’s. The latest Standard & Poor’s credit rating for Cameroon stands at B with stable outlook. Moody’s credit rating for Cameroon was last set at B2 with stable outlook. Fitch’s credit rating for Cameroon was last reported at B with stable outlook.

 Therefore, despite a challenging economic backdrop dominated by recent falling international commodity prices, lower demand from China and the prospects of the Fed eventually hiking rates, Euro-bond issuance by Cameroon is well on track and continued. However, with the long term consequences of the BR-EXIT, existing Euro-bonds are widely shielded by their fixed coupon structure and long maturities, which mean that most principal repayments are still years away. Cameroon Euro-bonds issuance’s need to continue.

 Although the external environment is likely to remain challenging for frontier markets with European Union countries, it is important for the Cameroonian government to continue issuing Euro-bonds, albeit order books that might be smaller and yields higher. Unfortunately, because the ongoing drop in commodity prices reduces fiscal and external revenues in Cameroon, in order to mitigate sharp compression in fiscal spending and imports that would damage growth, borrowing must be increased. Therefore new emissions of EURO-BONDS are needed! As the national debt markets being small and illiquid, part of these borrowing needs will be financed through Euro-bonds.

 With the BR-EXIT, the Euro-bond issuance is likely to change the composition of Cameroon external debt. Despite the recent increase in international issuance, bonds still account for only a small fraction of Cameroon’s external debt. Most of Cameroon’s external debt still takes the form of multilateral or bilateral official debt. Given the current market turmoil after the BR-EXIT, and weakening currencies, foreign appetite for Cameroon assets is likely to remain muted and corporate Euro-bond issuance rare in the short term in the Republic of Ireland (pro European), as many investors are looking currently for Russians Euro-bonds.

 UK impact on Africa’s development

The biggest impact of the Br-exit on Africa would be the end of British outwardness; the country’s concern with and responsiveness to global development issues, which, from an African development perspective, reached its peak in 2005 during the UK presidency and the undertakings during the G-8 Summit in Gleneagles in 2005. During the G8 Summit, the gathered leaders agreed to double aid to Africa and eliminate outstanding debts of the poorest countries. Indeed, one of the major successes of the G-8 UK presidency was the agreement to provide debt relief to the poorest African countries. The G-8 countries agreed to increase aid to developing countries by $50 billion a year by 2010 with at least half of this commitment going to Africa. Other commitments included increased support for African peacekeeping forces and additional investment in education and the fight against HIV/AIDS, malaria, tuberculosis, and other diseases.

 Analysts agreed that, the Br-exit could lead to a retrenchment from outwardness with possible negative implications on the UK’s development initiatives. At a time when the process for IDA18 replenishment is underway, the Brexit is not good news for aid recipients, in which many African countries including Cameroon. Let’s have a closer look at the impact of the Brexit on bilateral development assistance.

 What analysts said

What can be done in Cameroon in order to be proactive vis-à-vis future directions that the UK intends to follow with the BR-EXIT? Let us just highlight what analysts said. Kevin Watkins, a Brooking nonresident senior fellow and executive director of the Overseas Development Institute (ODI), an international development think tank based in London, highlights the consequences of the BR-EXIT on the development assistance. He said that while a Br-exit would deprive the EDF of British resources for development assistance, Watkins argues that the direct disbursement of aid, set to replace the UK.’s contribution to the fund, from the UK to recipient countries will have a more narrow geographical reach than aid funneled through the EDF. According to him, Aid through EU institutions is just one part of the package. Collectively, the EU’s 28 member states spent some 56 billion euros in 2014, or 0.4 percent of their GNI. In terms of quality standards for transparency, efficiency and institutional development, the EU is roughly on a par with the U.K.

 Recent efforts to improve coordination have seen joint planning by EU donors in 40 countries, a move that could greatly enhance efficiency. In fact, despite the size of the aid budget and the strong mandate on poverty reduction enshrined in the Lisbon Treaty, the EU still punches well below its weight class on development assistance. Major economies such as Germany and France have failed to match the U.K.’s achievement of the 0.7 percent aid-to-GNI target. To make matters worse, the share of EU aid going to sub-Saharan Africa and the least developed countries has been shrinking from an inadequate base.

 Barclays thinks the UK is on the “cusp of recession,” Credit Suisse predicts that a recession will cost Britain 500,000 jobs, and Morgan Stanley says a recession is coming, though it was unsure of the specific details. Barclays identifies seven key reasons SSA growth is at risk from Br-exit. Take a look below:

1. Br-exit could harm global demand for goods, particularly hitting African economies that are focused on the export of raw materials. This would lead to “slower growth and wider current account deficits,” Barclays argues.
2. Weaker global demand could also, Barclays says, because key commodity prices to fall, further undermining the African economy, which relies heavily on exporting minerals, ores, and other commodities. The possible exception would most likely be gold, which has been boosted by market uncertainty since the referendum. Two of the world’s 10 biggest gold-producing nations are in sub-Saharan Africa.
3. Tourism will dwindle. A key area of economic prosperity for African nations is tourism, particularly through safaris and other nature tours. The basic argument here is simple — if Brits and other Europeans are suffering through economic hardship, an African holiday will be far less affordable.
4. Fewer African workers will be able to work in developed nations, which will reduce the amount of money sent back to SSA countries. As Barclays puts it, there will be fewer “economic opportunities for African migrants to the UK and Europe, and hence less workers’ remittances to home countries.”
5. If things get really bad, aid from UK and European governments could start to dry up, robbing SSA countries of vital funding for infrastructure projects and other economically beneficial plans.
6. Br-exit is causing heightened uncertainty and, in some respects, increased risk aversion. These factors are likely to increase financing costs and shrink capital inflows into sub-Saharan Africa.
7. Earnings on sub-Saharan investments into Europe and the UK will be lower. That is likely to have the biggest impact on sub-Saharan Africa’s most developed nation, South Africa, which has substantial investments in Europe.

 The way forward

African countries needs a proactive approach to deal with the BR-EXIT.

FIRST. Develop a national task-force to discuss BR-EXIT implications of UK financial contributions on national projects.

SECOND. Develop linkages with CEMAC countries to propose them the way forward regarding BR-EXIT

THIRD. Same approach with commonwealth countries that are part of the Cotonou Agreement. 

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Professor Alain Ndedi

International Council for Family Business; ISTG-AC; YENEPAD; Saint Monica University; University of Johannesburg; University of Pretoria; Charisma University

Professor Kelly Kingsly

Independent; Copperstone University ; Charisma university

Date Written: February 2, 2015

Abstract

It has been documented that fraud and corruption are gargantuan twin brothers that have limited the growth and infrastructure of many nations and led many firms to the road of bankruptcy. Fraud is rarely seen but the symptoms of fraud are usually observed. Corruption, the twin brother of fraud is the misuse of entrusted power for private benefit and includes; bribes, cronyism and nepotism, political donations, kickbacks and artificial pricing and fraud of all kinds. Corruption in Cameroon has been a significant problem for many years, inhibiting investment opportunities. The paper therefore adopts the agency theory to examine the level of fraud and corruption practices in doing business in Cameroon and evaluate the impact of government anti-corruption policies in fighting the menace of fraud and corruption practices. The study employed survey research method in obtaining data. Findings in this study revealed that virtually all the segment of the public sector are highly corrupt; with the Police, Custom and Tax administrations being the most corrupt institutions in Cameroon. Although, almost all the anti-corruption initiatives are ranked ineffective, only the CHOC-Cameroon programme (Change Habits, Oppose Corruption) are considered to be effective. This could be as a result of insincerity and lack of political will by the government to fight fraud and corruption in the system. The current paper gives a glimpse of challenges that all the established public structures are facing to deal with the fraud and corruption plights.

Keywords: Fraud, Corruption, Cameroon, public sector, anti-corruption

Suggested Citation:

Ndedi, Alain Aime and Kingsly, Professor kelly, Challenges Facing the Fight Against Fraud and Corruption Practices in the Cameroonian Public Sector (February 2, 2015). Available at SSRN: https://ssrn.com/abstract=2559000 or http://dx.doi.org/10.2139/ssrn.2559000

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Accounting, Organizations and Society, Forthcoming

22 Pages Posted: 17 Jun 2016 Last revised: 24 Feb 2021

Professor Kelly Kingsly

Independent; Copperstone University ; Charisma university

Date Written: May 22, 2016 Download this paper

Abstract

The urban dictionary (online) defines “magic bullet” as a term used to describe a universal solution a person uses for any problem they encounter” while the Merriam-Webster dictionary describes it as “something providing an effective solution to a difficult or previously unsolvable problem”. Furthermore, it can be described as the perfect drug to cure an ailment with no hazard of side effects. The term was first used in this manner by the German scientist, Paul Ehrlich to describe antibody and, later, the drug Salvarsan that he created to treat syphilis. In general, it refers to a magic answer to any vexing problem.

The use of forensic science techniques has traditionally been concentrated on more serious crimes such as rape and homicide. Increasingly, however, forensic techniques are being used routinely to aid the investigation of volume crimes such as money laundry, financial crimes, white collar crimes, burglary and vehicle crime.

This paper examines Forensic science techniques in developing Forensic accounts as it is. The paper explains the meaning, the purpose, the uses, the importance and the challenges of forensic accounting. The paper further enumerates skills needed for forensic accountants as well as factors impacting the growth of the demand of forensic accounting. Finally, the paper develops an overview of the contribution of forensic science to criminal investigations.

Keywords: Forensics, Accounts, Venality, Racketing, Magic bullet

Suggested Citation:Kingsly, Professor kelly, A Scientific Approach to Fighting Money Laundry: Forensic Accounts (May 22, 2016). Law and Social Inquiry, Forthcoming, Accounting, Organizations and Society, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2783155

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Independent; Copperstone University ; Charisma university

Kouam Henri

Independent

There are 2 versions of this paper

Date Written: March 17, 2020 Download this paper

Abstract

The corona virus, (Covid-19) has spread to several continents and Italy has in recent days become Europe’s worst-affected country. Whilst the humanitarian costs leaves little to desire, the economic impact has halted manufacturing supply chains across china and the world, caused imports of crude oil to fall by 25%, global economic activity to slow and oil prices to hit 31-$33/bl. In the meantime, central banks have cut interest rates in an attempt to reduce the adverse effects of a slowing global economy but commodity exporters such as Nigeria, South Africa and Cameroon will likely bear the brunt of weaker demand. Rather than stimulate domestic economies via interest rate cuts, central banks should emphasise the need for targeted fiscal reforms that prioritise higher value-added products such as green technologies, consumer and non-consumer products, intermediate products and components for industrial machinery. Such an approach will increase the number of people employed in formal sectors, reduce the impact of the virus on long-term economic growth whilst improving the pass-through from monetary policy to economic activity and inflation.

Keywords: Corona Virus, COVID-19, Europe, worst affected country, global economics, Cameroon domestic growth, interest rates, intermediate products, central bans, green technologies, non consumer products

Suggested Citation: Kingsly, Professor kelly and Henri, Kouam, Coronavirus and Carbon Transition for Developing Economies (March 17, 2020). Available at SSRN: https://ssrn.com/abstract=3555901 or http://dx.doi.org/10.2139/ssrn.3555901

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Independent; Copperstone University ; Charisma university

Kouam Henri

Independent

Date Written: March 27, 2020 Download this paper

Abstract

Central Banks have cut interest rates to historic lows in an attempt to reduce the adverse impact of COVID-19, while unprecedented liquidity infusions have been used to reduce funding constraints and frictions in the financial market. Monetary policy will lessen the economic and financial fallout from the virus, policymakers should emphasise the need for targeted fiscal measures to complement accommodative monetary policy and central bank liquidity. These should culminate fiscal transfers, wage subsidies and a significant reduction in social security contributions for households. Nevertheless, central banks should begin stemming structural vulnerabilities in financial markets and ensure that liquidity infusions are a short-term measure designed to improve the transmissions of monetary policy rather than create financial market dependence, as has been the case since the financial crisis.

The Coronavirus or COVID-19 has caused the global economy to grow at a slower pace, government yields have tumbled and liquidity constraints have increased in financial markets across advanced economies. Prior to this, the United States and China were locked in a geopolitical, economic and technological rivalry that caused a synchronized cyclical slowdown as businesses to postpone investment decisions. This trend of slowing capital investments into productive sectors such as green technology and renewable energy saw productivity wane, and global woes were compounded by Brexit amidst sluggish growth in the single market. Following the signing of a phase one of the trade agreement and the USMCA, COVID-19 began to spread in Wuhan, the capital of Hubei province. Since then, the virus has spread to Italy, North America and Africa. In the meantime, global manufacturing supply chains for cosmetics, the auto sector, consumer and industrial products stalled, business and consumer sentiment plummeted in some advanced economies and the service sector spanning tourism, transportation, restaurants have been adversely affected by the virus. Central Banks can assess the impact of the Coronavirus from two standpoints.

Keywords: central banks, interest rates, COVID-19, coronavirus, financial impact, monetary policy, economic and financial fall outs, Brexit, slaugish growth

Suggested Citation: Kingsly, Professor kelly and Henri, Kouam, Central Banks Respond to COVID-19 to Stave off a Financial Crisis, They Need for Targeted Fiscal Measures Should not Be Understated (March 27, 2020). Available at SSRN: https://ssrn.com/abstract=3562320 or http://dx.doi.org/10.2139/ssrn.3562320

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Independent; Copperstone University ; Charisma university

Date Written: March 27, 2020 Download this paper

Abstract

French Abstract: Les banques centrales ont abaissé leurs taux d’intérêt à leurs plus bas historiques pour tenter de réduire l’impact négatif de COVID-19, tandis que des injections de liquidités sans précédent ont été utilisées pour réduire les contraintes de financement et les frictions sur le marché financier. La politique monétaire atténuera les retombées économiques et financières du virus, les décideurs politiques devraient souligner la nécessité de mesures fiscales ciblées pour compléter la politique monétaire accommodante et la liquidité de la banque centrale. Celles-ci devraient aboutir à des transferts fiscaux, des subventions salariales et une réduction significative des cotisations de sécurité sociale pour les ménages. Néanmoins, les banques centrales devraient commencer à endiguer les vulnérabilités structurelles des marchés financiers et veiller à ce que les injections de liquidités soient une mesure à court terme conçue pour améliorer les transmissions de la politique monétaire plutôt que de créer une dépendance aux marchés financiers, comme cela a été le cas depuis la crise financière.
Le Coronavirus ou COVID-19 a fait ralentir l’économie mondiale, les rendements gouvernementaux ont chuté et les contraintes de liquidité se sont accrues sur les marchés financiers des économies avancées. Avant cela, les États-Unis et la Chine étaient enfermés dans une rivalité géopolitique, économique et technologique qui a provoqué un ralentissement cyclique synchronisé alors que les entreprises reportaient les décisions d’investissement. Cette tendance à ralentir les investissements en capital dans des secteurs productifs tels que les technologies vertes et les énergies renouvelables a vu la productivité décliner; et les malheurs mondiaux ont été aggravés par le Brexit dans un contexte de croissance atone du marché unique. Après la signature de la première phase de l’accord commercial et de l’USMCA, COVID-19 a commencé à se répandre à Wuhan, la capitale de la province du Hubei. Depuis lors, le virus s’est propagé en Italie, en Amérique du Nord et en Afrique. Dans l’intervalle, les chaînes d’approvisionnement mondiales de la fabrication de cosmétiques, du secteur automobile, des produits de consommation et industriels sont au point mort, le sentiment des entreprises et des consommateurs a chuté dans certaines économies avancées et le secteur des services, qui englobe le tourisme, les transports et les restaurants, a été affecté par le virus. Les banques centrales peuvent évaluer l’impact du virus Corona de deux points de vue;

English Abstract: Central Banks have cut interest rates to historic lows in an attempt to reduce the adverse impact of COVID-19, while unprecedented liquidity infusions have been used to reduce funding constraints and frictions in financial market. Monetary policy will lessen the economic and financial fallout from the virus, policy makers should emphasise the need for targeted fiscal measures to complement accommodative monetary policy and central bank liquidity. These should culminate fiscal transfers, wage subsidies and significant reduction in social security contributions for households. Nevertheless, central banks should begin stemming structural vulnerabilities in financial markets and ensure that liquidity infusions are a short-term measure designed to improve the transmissions of monetary policy rather than create financial market dependence, as has been the case since the financial crisis.

The Coronavirus or COVID-19 has caused the global economy to grow at a slower pace, government yields have tumbled and liquidity constraints have increased in financial markets across advanced economies. Prior to this, the United States and China were locked in a geopolitical, economic and technological rivalry that caused a synchronized cyclical slowdown as businesses to postpone investment decisions. This trend of slowing capital investments into productive sectors such as green technology and renewable energy saw productivity wane; and global woes were compounded by Brexit amidst sluggish growth in the single market. Following the signing of a phase one of the trade agreement and the USMCA, COVID-19 began to spread in Wuhan, the capital of Hubei province. Since then, the virus has spread to Italy, North America and Africa. In the meantime, global manufacturing supply chains for cosmetics, auto sector, consumer and industrial products stalled, business and consumer sentiment plummeted in some advanced economies and the service sector spanning tourism, transportation, restaurants have been adversely affected by the virus. Central Banks can assess the impact of the Corona virus from two stand points.

Note: Downloadable document is in French.

Keywords: Banque Central, COVID-19, BREXIT, injection des liquidite, financement, croissance, finance, emploi, CORONAVIRUS, l’economie mondial

Suggested Citation: Kingsly, Professor kelly, Reponse agressive des Banques Centrales – COVID-19 (Agressive Response of the Central Bank to the COVID-19 Pandemic) (March 27, 2020). Available at SSRN: https://ssrn.com/abstract=3562329 or http://dx.doi.org/10.2139/ssrn.3562329

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Independent; Copperstone University ; Charisma university

Date Written: January 23, 2016 Download this paper

Abstract

Early economists and other researchers have paid little attention to any link between religion and economic development; rather it is seen as something personal between man and his God. Religion, as a system of faith is based on belief in the existence of a particular God or gods, to some extent, influences or contributes in developing and coordinating the expression of the capacities latent in human nature for the progress of the society. Religion’s role in the determination of economic growth from central perspective is that religion affects economic outcomes mainly by fostering religious beliefs that influence individual traits such as honesty, work ethic, thrift, and openness to strangers. The paper examines the role of religion in transforming village-style and centralized government in Africa societies to democracy system of government. It also reviewed the economic system in Africa prior to colonial/missionaries arrival in Africa. From various accounts, religion has contributed immensely to the economic development of the country through investment in different sectors of the economy like real estate, capital market, shopping complex, schools and banks (including Islamic banks).

Keywords: Religion, economic development, political transformation

Suggested Citation: Kingsly, Professor kelly, Religion as a Tool for Economic/Political Transformation (January 23, 2016). Available at SSRN: https://ssrn.com/abstract=2720966 or http://dx.doi.org/10.2139/ssrn.2720966

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Independent; Copperstone University ; Charisma university

Date Written: June 15, 2016 Download this paper

Abstract

The integration vision for an African Economic Community through five geographic regions was recommended by the Abuja Treaty (1991). To streamline the existing multiple blocs in these regions, the African Union identified eight Regional Economic Communities (RECs) in its rationalization drive. The integration vision seeks to attain collective autonomy and contribute to raising the living standards of the population through the expansion of African markets and increased trade between Africa and the world.

According to the Bank Group’s Medium Term Strategy (2008-2012) and Regional Integration Strategy (2009-2012), a Regional Integration Strategy Paper (RISP) will be prepared for the Centre region. Accordingly, the current RISP concerns Central Africa which comprises the ten ECCAS countries: Angola, Burundi, Cameroon, Central African Republic (CAR), Congo, Democratic Republic of Congo (DRC), Gabon, Equatorial Guinea (REG), Sao Tome and Principe (STP) and Chad. The Central Africa is mainly characterized by the Congo Basin (CB) which is home to the world’s second forest and water reserve – one of the lungs of the planet; and a considerable but largely untapped mineral and agricultural potential. This is the least integrated region of the continent. Economically, the Central Africa performed relatively well over the last ten years, with an average growth rate of about 6.2% during the 1999-2009 period, with 7.3% on average in the six oil-producing countries (Angola, Cameroon, Congo, Gabon, Equatorial Guinea and Chad) and 4.7% in other countries. Economic growth in the region, which is above the African average (4.8%), was generally marked by higher exports of crude oil and mining products making it possible to finance non-oil activities. Accordingly, the region’s economy remains vulnerable to external shocks, mainly on account of its heavy dependence on oil production. From the political standpoint, the attainment of mutual understanding and concord between nations, in the spirit of the African Union, is the biggest challenge to regional integration in Central Africa.

In addition, this region is made up of fragile states, landlocked countries, forested countries and sparsely populated MICs. This set-up highlights the relevance of the regional integration process in Central Africa. Weak basic infrastructure compared with the continents other regions is also one of the challenges of this region. Specifically, the inadequate interconnection of national transport networks between Central African countries is an obstacle to economic and physical integration and the development of countries in the region. Similarly, electricity and water supply difficulties impede the emergence of a dynamic and competitive private sector. Conversely, the region has advantages that distinguish it from the rest of the continent. Central Africa’s pivotal and strategic position makes it a potentially preferred transit zone between regions of the continent. The region abounds with huge highly valued oil, mineral and mining resources.

Recently, proven oil reserves in the region are estimated at 31.3 billion barrels, representing 28% of the continents total reserves. Central Africa has a huge agriculture, forestry and hydroelectric power potential. Climatic conditions and the availability of quality arable land favour agricultural development. Finally, the region has the continent largest hydro-electric potential. Actually, the immense water network density accounts for 60% of Africa’ hydropower potential.

Keywords: Regional, Integration, Economic growth, economic transformation, prosperity, Energy, Development

Suggested Citation: Kingsly, Professor kelly, Regional Integration as a Tool for Economic Transformation (June 15, 2016). Available at SSRN: https://ssrn.com/abstract=2796344 or http://dx.doi.org/10.2139/ssrn.2796344

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