Technology adoption can suppress this menace.
She lived in Lagos and drew a salary in Imo state. She was one of the ghost workers in the civil service 12 years ago. She succeeded because her immediate boss was complicit. This was before the advent of biometric enrolment. Biometric capturing demystified the ‘’ghost workers.’’ It helped to ‘unveil’ individuals on the payroll of state and federal civil services. However, before the biometric evangelists arrived, employee fraudsters had fleeced the government of millions.
On the one hand
Employee fraud or internal fraud involves dishonest actions taken by employees to benefit themselves financially or personally at the expense of their employer. Activities such as theft, embezzlement, falsifying records, and manipulating financial statements are some of the games played by those who engage in the practice. It is still alive.
On the other hand
But by understanding the nature of employee fraud and taking proactive measures, businesses can protect themselves from potential losses. Maintain a trustworthy workplace environment. Since employee fraud is not limited to the civil service, private businesses are also bleeding.
In the long term
World Bank data on the subject stated that employee fraud is a global problem. It affects organisations in every region and in every industry worldwide. ‘’Measuring the true extent of the damage caused by occupational fraud can be challenging due to the inherent nature of concealment and deception involved in most schemes.’’
This practice is a global phenomenon. In Europe, Asia, Mexico, and America, employee fraud is a big business. Research shows that the employee fraud industry is worth over $4.7 trillion. Employee fraud is also crippling Nigeria’s micro, small, and medium enterprises (MSMEs). These businesses are losing N10 trillion every year.
The Centre for the Promotion of Private Enterprise (CPPE) CEO, Muda Yusuf, said employee corruption and occupational fraud constitute one of the largest hidden drains on Nigeria’s entrepreneurial economy, with annual losses ranging from N5 to N10 trillion. ‘’The aggregate economic consequences are profound with MSMEs losing 5 to 10% of annual revenue to employee-related fraud.”
Yusuf added that these losses silently destroy profitability. Suppress investment. Eliminate jobs. Weaken government revenue. Many of these MSMEs operate on thin margins. Often below 15% of turnover. Fraud losses of 5-10% of revenue can eliminate profits. Deplete working capital. Accelerate business closure faster than an act of God. The reason is that we have experienced a high mortality rate of small businesses, with up to 80% failing within five years. The sectors most affected include retail and wholesale trade, hospitality, food services, and entertainment. Digitalisation is one of the most powerful low-cost anti-fraud tools available to MSMEs
Why this matters
By adopting digital payment channels and basic accounting software, businesses can create transaction traceability, making diversion and concealment more difficult.
In the short term
Technology adoption and productivity-enhancing upgrades can suppress this menace.
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