Nigeria’s Micro, Small and Medium Enterprises (MSMEs) may be losing between ₦5 trillion and ₦10 trillion every year to employee corruption and occupational fraud, according to the Centre for the Promotion of Private Enterprise (CPPE).
In a statement issued by its Chief Executive Director, Dr. Muda Yusuf, the economic policy think tank warned that the rising trend poses a serious threat to a sector widely regarded as the backbone of the nation’s economic resilience.
The CPPE noted that MSMEs account for the vast majority of businesses in the country, sustain millions of livelihoods, and contribute approximately 50 per cent of Nigeria’s non-oil Gross Domestic Product (GDP). However, beyond well-known pressures such as inflation, weak consumer purchasing power, high operating costs, infrastructure gaps, and limited access to finance, the sector is battling what it described as a “subtle but deeply damaging” internal threat.
According to the organisation, employee corruption and occupational fraud manifest in various forms, including theft of cash and inventory, diversion of sales proceeds, payroll manipulation, procurement kickbacks, customer diversion, collusion with suppliers or clients, abuse of expense reimbursements, and falsification of financial records.
“Employee corruption and occupational fraud constitute one of the largest hidden drains on Nigeria’s entrepreneurial economy, with annual losses ranging from ₦5 to ₦10 trillion,” Yusuf stated.
The CPPE cited global workplace fraud surveys indicating that organisations typically lose between five and 10 per cent of their annual revenues to employee-related fraud. It stressed that small businesses tend to suffer disproportionately higher losses due to weak internal control systems, heavy reliance on cash transactions, limited audit capacity, low detection and recovery rates, and a high degree of informality.
Applying conservative estimates to Nigeria’s MSME segment — which contributes roughly half of national output — the group said the financial impact represents a “massive hidden tax” on entrepreneurs. The losses, it warned, erode profits, weaken investment capacity, and constrain job creation.
To curb the growing menace, the CPPE urged MSME operators to prioritise digitalisation as a frontline anti-fraud strategy. It advised business owners to adopt digital payment systems and basic accounting software to enhance transaction traceability and reduce opportunities for diversion and concealment of funds.
“Digitalisation is one of the most powerful low-cost anti-fraud tools available to MSMEs,” the statement said.
The think tank further emphasised that tackling employee corruption should not be viewed merely as an internal management concern, but as a strategic economic priority critical to national development.
It added that for Nigeria’s MSME sector to fully unlock its potential as a driver of economic growth, fraud prevention, stronger corporate governance frameworks, and digital transparency must become central pillars of enterprise policy and business practice.
Comments