Employee fraud costs Nigeria N10trn yearly – CPPE

Employee corruption and occupational fraud constitute one of the largest hidden drains on Nigeria’s entrepreneurial economy, with annual losses ranging from N5–N10 trillion, the Centre for the Promotion of Private Enterprise (CPPE) hinted on Sunday.

The Chief Executive Officer of the CPPE, Dr Muda Yusuf, disclosed this in a policy brief titled: “Employee corruption and occupational fraud in Nigeria’s MSME Sector.”

Yusuf said the losses silently destroy profitability, suppress investment, eliminate jobs, weaken government revenue and slow inclusive growth.

He pointed out that Micro, Small and Medium Enterprises (MSMEs) are central to Nigeria’s economic resilience.

According to him, they account for the overwhelming majority of businesses, sustain

millions of livelihoods, and contribute significantly to non-oil GDP.

He pointed out that the MSMEs stability and growth are therefore indispensable to inclusive economic development, employment generation, and poverty reduction.

Yusuf, however, identified inflation, weak purchasing power, high operating

costs, infrastructure deficits, and constrained access to finance as some of the challenges confronting the MSMEs.

The CEO further identified “employee corruption and occupational fraud” as submitted that “a less visible but deeply corrosive threat” within the MSME ecosystem.

“Applying conservative assumptions to Nigeria’s MSME economy—whose contribution to national output is roughly 50 percent—suggests annual losses from employee corruption and occupational fraud plausibly ranging from ₦5 to N10 trillion.

“This represents a massive hidden tax on entrepreneurs in the MSME space, eroding profits, weakening investment capacity, and constraining job creation,” he said.

He blamed the losses on weaker internal control systems, heavy dependence on cash transactions, limited audit capacity, lower detection and recovery rates and high level of informality.

He said, “Most Nigerian MSMEs operate on thin margins, often below 15 percent of turnover. Fraud losses of 5–10 percent of revenue can therefore: eliminate profits entirely, deplete working capital and accelerate business closure

“This dynamic contributes to the high mortality rate of small businesses, where studies suggest up to 80 percent fail within five years and over half fail within the first year, with employee fraud being a significant contributory factor.”

Addressing this challenge, Yusuf said, is not only an ethical or managerial concern but a strategic economic priority.

“For Nigeria’s MSME sector to realise its full potential as an engine of growth, fraud prevention, governance strengthening, and digital transparency must become central pillars of enterprise policy and business practice,” he said.

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