By Juliet Ezeh
Nigerian Micro, Small, and Medium Enterprises (MSMEs) are losing an estimated ₦5 trillion to ₦10 trillion annually to employee corruption and occupational fraud, according to a recent policy brief released by the Centre for the Promotion of Private Enterprise (CPPE).
The report, authored by CPPE CEO Dr. Muda Yusuf, describes these losses as a “massive hidden tax” that threatens the sustainability of a sector that contributes roughly 50 percent of Nigeria’s national output.
Applying global research on internal fraud, which shows organizations typically lose 5 to 10 percent of annual revenue to such practices, CPPE estimates that Nigerian MSMEs face similar losses, amounting to trillions of naira each year. The report identifies common forms of fraud, including cash theft, diversion of inventory, payroll manipulation, procurement kickbacks, and falsified financial records.
MSMEs are particularly vulnerable due to informal accounting systems, limited internal controls, and high-trust management structures. Sectors most affected include retail and wholesale trade, agribusiness, transport, and small-scale manufacturing.
To mitigate these “corrosive” threats, CPPE recommends adopting digital payment channels and basic accounting software to ensure transaction traceability. Businesses are also encouraged to move away from informal management practices toward structured oversight systems. Furthermore, the report calls for policy support, including a national MSME internal-control framework linked to credit facilities and government programs.
Experts warn that failure to address internal fraud could continue to erode profitability and hinder the growth potential of the MSME sector, which remains a key engine of Nigeria’s economy.
Juliet Ezeh is the founder and chief reporter at Westbridge Reporters with over 7 years of experience in journalism. She covers crime, industry, policy, and social developments, delivering timely and accurate reporting.