Employee Fraud Costs Nigerian MSMEs Trillions Annually — Expert Warns

Employee fraud has emerged as a major threat to the survival of Micro, Small and Medium Enterprises (MSMEs) in Nigeria, costing businesses trillions of naira annually according to recent findings.

The menace, which often goes undetected for long periods, has left many business owners counting heavy losses while struggling to keep their operations afloat. Experts say employee theft and fraudulent activities represent one of the most significant internal risks facing Nigerian businesses today.

Common tactics employed by fraudulent employees include embezzlement of company funds, inventory theft, payroll fraud, and falsification of expense claims. In many cases, trusted staff members exploit gaps in internal control systems to siphon resources over extended periods.

Business consultants advise MSME owners to implement robust internal controls, including regular audits, segregation of duties, and proper documentation of all financial transactions. They also recommend leveraging technology solutions for inventory management and accounting to reduce opportunities for manipulation.

The issue is particularly acute for small businesses that often lack the resources to implement sophisticated fraud detection systems. Many MSMEs operate on thin profit margins, making even modest losses from employee theft potentially catastrophic.

Stakeholders in the Nigerian business ecosystem are calling for increased awareness and training for entrepreneurs on fraud prevention strategies, as well as stronger legal frameworks to prosecute offenders and deter potential perpetrators.