Nigeria loses ₦10trn annually to employee fraud – CPPE, calls for national MSME internal-control framework 

Centre for the Promotion of Private Enterprises, CPPE, weekend, revealed that Nigeria loses N10 trillion annually to employee corruption and occupational fraud.

This was made known by the Executive Director, CPPE, Dr Muda Yusuf while speaking on the negative impact these have caused Nigeria’s entrepreneurial economy.

Dr Muda noted that beyond the visible pressures of inflation, weak purchasing power, high operating costs, infrastructure deficits, and constrained access to finance Micro Small and Medium Enterprises, MSMEs, grapple with “a less visible but deeply corrosive threat persists—employee corruption and occupational fraud within the MSME ecosystem.

“These practices manifest in multiple forms, including theft of cash and inventory, diversion of sales proceeds, payroll manipulation, procurement kickbacks, customer diversion, collusion with suppliers or clients, expense reimbursement abuse and falsification of financial records. Although often treated as internal management issues, their aggregate economic consequences are profound.

“Global occupational-fraud studies—particularly long-running international workplace-fraud surveys—consistently estimate that organisations lose between five and 10 per cent of annual revenue to employee-related fraud. 

“Evidence also shows that small businesses suffer disproportionately higher losses due to: weaker internal control systems; heavy dependence on cash transactions; limited audit capacity; lower detection and recovery rates; and high level of informality

“Applying conservative assumptions to Nigeria’s MSME economy—whose contribution to national output is roughly 50 per cent—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. Occupational fraud is therefore not merely a governance issue but a national welfare concern.”

According to him, sectors most vulnerable within Nigeria’s MSME landscape occupational fraud affects with high risk exposure characterised by cash intensity, weak documentation, inventory handling, and dispersed supervision include:Retail and Wholesale Trade; Agribusiness and Produce Trading; Transport and Logistics Services; Small Manufacturing; and processing Personal Services and Informal Enterprises.

However, he recommended that business owners can reduce losses by strengthening basic internal controls – prioritise separation of cash handling, record-keeping, and approvals; routine reconciliation of sales, cash, and inventory; periodic independent review of accounts; and reduce cash dependence through digital payments.

He also added that there is the need to improve hiring, supervision, and accountability – background and reference checks; written employment terms and disciplinary procedures; rotation of sensitive responsibilities; monitoring unexplained lifestyle changes.

Meanwhile, the CPPE boss called on the government to consider policies that are going to prevent such humongous losses owing to employee and occupational fraud, hence, the need for a national MSME internal-control framework. 

“Reducing occupational fraud in MSMEs requires coordinated public-sector support, including:a national MSME internal-control framework linked to credit and government programmes; accelerated digital financial inclusion for small businesses; stronger legal enforcement and asset-recovery mechanisms; expanded governance education.

“Such reforms would strengthen enterprise resilience, protect jobs, and enhance fiscal stability”, he added.