On Sunday, February 15, 2026, Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), issued a startling warning regarding the survival of Nigeria’s Micro, Small, and Medium Enterprises (MSMEs). While macro-pressures like inflation and FX scarcity often dominate the headlines, Yusuf identified a “less visible but deeply corrosive” threat: occupational fraud and employee corruption.
According to the CPPE, these internal leakages cost the Nigerian entrepreneurial economy between ₦5 trillion and ₦10 trillion every year, effectively acting as a “hidden tax” that bankrupts thousands of businesses.
1. The Anatomy of Internal Fraud
Yusuf detailed how these practices manifest across the MSME ecosystem, often undetected by business owners until it is too late:
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Asset Misappropriation: Direct theft of cash, inventory, and office equipment.
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Revenue Diversion: Diverting sales proceeds and “skimming” before transactions are recorded.
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Payroll & Procurement Fraud: Creating “ghost workers,” inflating payroll, and receiving kickbacks from suppliers.
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Customer Diversion: Employees leveraging company resources to serve clients “on the side” or diverting customers to competitors in exchange for commissions.
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Financial Falsification: Altering expense reimbursements and tampering with financial records to hide deficits.
2. Why MSMEs are Vulnerable
Unlike large conglomerates with robust audit departments, MSMEs operate with unique structural weaknesses that fraudsters exploit:
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Slim Margins: Most Nigerian MSMEs operate on margins of under 15%. A fraud loss of even 5% of revenue can completely wipe out a year’s profit.
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Lack of Segregation of Duties: In many small firms, one employee might handle sales, bookkeeping, and banking, providing a “high-opportunity” environment for theft.
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Informal Systems: Reliance on manual record-keeping and a lack of digital inventory tracking make it easy to hide inventory shrinkage.
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The “Owner Factor”: Yusuf noted that business owners often prioritize growth over controls, leaving the “back door” open to opportunistic employees.
3. The Economic Consequences
The ₦10 trillion annual loss is not just a private problem; it has profound macroeconomic implications:
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Business Mortality: Fraud accelerates the closure of SMEs, which currently provide over 80% of Nigeria’s employment.
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Reduced Investment: Drained working capital prevents businesses from scaling or investing in new technology.
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Tax Leakage: As businesses struggle or collapse, government tax revenue from the informal and semi-formal sectors shrinks significantly.
4. CPPE’s “Anti-Fraud” Recommendations
“Employee corruption is a silent drain on Nigeria’s entrepreneurial economy. It destroys profitability, eliminates jobs, and slows inclusive growth more than many visible economic shocks.” — Dr. Muda Yusuf, February 2026.
