Cyber related frauds in our financial sector driving up the cost of doing business in Kenya.

The last 15 years has seen Kenya and the African continent as whole make gradual strides in having its populace achieve tremendous progress in computer literacy, this is attributable to the governments’ initiative of   removing import duty on ICT software’s plus the presence of over four undersea cables players thus making the same cheaper to Kenyans as well as attracting foreign investors. The dividends are already being felt  – the emergence of  ICT incubators such as the  IHUB in Bishop Magua Centre a centre for budding techprenuers, Tech giant IBM is already investing in the countries budding tech savvy innovators amongst other tech players in the market , the increased uptake in ICT related courses across the nation  and the hard efforts of the  information Permanent secretary  Bitange Ndemo of  driving the government effort of ensuring that all the 47 counties have fibre optic connections hence lowering the internet’s costs  and lastly the promise by the current President Uhuru Kenyatta   to provide free laptops to those joining primary schools in  January 2014 – all these is meant to spur economic growth in the country  as Kenya tries to move away from trading in perfect markets to the imperfect markets.

However it must be illustrious that the surge in the uptake of technology related courses due to the conducive atmosphere the government is offering is becoming a breeding ground for externalities that will require both human and technological mitigations premised on John Elkingtons’ Tripple Bottom Line Approach a term coined in his 1997 book Cannibals with Forks: the Triple Bottom Line of 21st Century Business where the model advocates for treating employees right, but furthermore also the community where your business operates. In this part of the Triple Bottom Line model, business not only ensures a fair day's work for a fair day's pay; but also reinvesting back some of its gains into the surrounding community through sponsorships, donation or projects that go towards the common good such as afforestation, supporting clean energy initiatives and recycling of waste products . This reinvestment can usually be written off come tax time as part of business operating expenses. The human spillover effects of cyber related frauds across the banking, insurance and all the other related stakeholders that eventually dents their respective reputational risk, insurance costs and generally the cost of doing business hence affects investor confidence.

With over than 9 years experience in the insurance industry i reckon that most Kenyan blue chip financial organizations in the country are investing a lot in new markets regionally, fending off foreign competition,  product innovations and at the same time falling prey to the ingenuity of the young tech savvy graduate employees  who have knack of understanding their organizational processes and IT systems and using their technical knowledge to engage in malpractices, a major part of these perpetrators  are young graduates with gross  income levels  lesser than  $500  per month  in country with an estimated GDP - per capita (PPP) $1,800 (2012 est.)according to the CIA fact book - where the housing sector players charge exorbitant rental  prices and the mortgage lending institutions charge higher interest rates on credit facilities, which is  detrimental to their income savings -   yet exposed to dealing with huge sums of money   hence the temptations that eventually crop in their minds , this  has forced major banking and micro finance   institutions pay higher premium rates for  bankers blanket, shares  and Fidelity Guarantee Policies to insurance firms who in turn because of the high claims costs opt to reinsurer these policies given their liability effects on their balance sheet.

Way forward for dealing with these cyber crimes will involve top management enroll for refresher courses in ICT related courses tied to cyber risks and their mitigation there off as well as the new emerging forms of white collar crimes ,  better crafted  Escrow agreement with the software vendors to safeguard firms against pronounced hacking malpractices, stricter rules on deregistration of the fraudsters from their respective professional bodies as well  the generational gap issues have to be addressed that is to say top level management  have to nurture these young talents by co-opting  them in their organizational strategies however , this can only be achieved through  better rewards such as better remuneration that can guarantee them better housing and other benefits such employee share option schemes -  financial firms and the economy at large ought to come up with policies that will ensure fair employment practices that are geared towards depolarizing income levels , it must be known income disparities and the cost of one living greatly affects their professional ethics in service delivery.