The Centre for the Promotion of Private Enterprises (CPPE) has disclosed that Nigeria loses an estimated ₦10 trillion every year to employee corruption and occupational fraud, urging the creation of a national internal-control framework for MSMEs.
Speaking in Abuja, the Executive Director of CPPE, Muda Yusuf, said beyond inflation, weak consumer purchasing power, rising operating costs, poor infrastructure and limited access to finance, Micro, Small and Medium Enterprises (MSMEs) are battling a more hidden but damaging threat—internal fraud perpetrated by employees.
According to him, such fraudulent practices include theft of cash and inventory, diversion of sales revenue, payroll manipulation, procurement kickbacks, collusion with suppliers and customers, abuse of expense claims, and falsification of financial records. Though often seen as internal management problems, he stressed that their broader economic impact is significant.
Citing global workplace fraud surveys, Yusuf noted that organisations typically lose between five and 10 per cent of their annual revenue to employee-related fraud. He added that small businesses are particularly vulnerable due to weak internal controls, heavy reliance on cash transactions, limited audit capacity, poor detection systems and high levels of informality.
Applying conservative estimates to Nigeria’s MSME sector—which contributes about 50 per cent to national output—he said losses linked to occupational fraud could range between ₦5 trillion and ₦10 trillion annually. He described the situation as a “hidden tax” on entrepreneurs that erodes profits, weakens investment capacity and limits job creation, making it a national economic concern rather than merely a governance issue.
Yusuf identified the most vulnerable sectors as retail and wholesale trade, agribusiness and produce trading, transport and logistics services, small-scale manufacturing and processing, personal services, and informal enterprises—particularly those characterised by high cash transactions, weak documentation and dispersed supervision.
To curb the losses, he advised business owners to strengthen internal controls by separating cash handling from record-keeping and approval processes, conducting regular reconciliation of sales and inventory, undertaking periodic independent account reviews, and reducing reliance on cash through digital payment systems.
He also recommended improving hiring and accountability measures, including background checks, clear employment terms, rotation of sensitive duties, and monitoring unexplained lifestyle changes among staff.
The CPPE chief further called on the government to introduce supportive policies, including a national MSME internal-control framework tied to credit schemes and public programmes, accelerated digital financial inclusion, stronger legal enforcement and asset-recovery mechanisms, and expanded governance education to help small businesses tackle occupational fraud
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