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Fraud in Nig. soils the nation reputation

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By Mercy Kelani

Impacts of this activity on the economy is dire as it affects all sectors.

Continually, fraud poses great difficulty to Nigeria’s economy, taking a substantial toll on different sectors. The data released by Nigerian Deposit Insurance Corporation (NDIC) recently showed that the losses caused by this activity in Nigeria decreased in Q4 2022 from 3.18 billion to 472 million, indicating a huge decrease of 85.13 percent compared to the previous year. Nigeria’s reputation as a public trust for banking system and a protected business nation is endangered due to the rapid development of scams in the country.

Data was collated through detailed and concise report given by Financial Institutions Training Centre (FitC) — the body established in 1981 to ensure capacity-building programmes that will promote resources for financial services through Advisory bodies and create innovative knowledge solution — on forgeries and fraud in Nigerian banks. Through this report, enlightenment and exposition to various fraudulent platforms and their impact on the economy was evaluated. There are different forms of this activity that afflict Nigeria such as government, investment and bank frauds, which are the common ones.

Report shows reduction of 14.07 percent in fraudulent cases.

Investment fraud is the system of deceit from false investment representation on investments, while bank fraud is known as illegal usage of bank credit cards or accounts. Government fraud, is another act plaguing Nigeria, is the mismanagement or embezzlement of funds and resources. The consequences of these acts results to individuals’ and businesses’ financial losses, stigma on the country’s economic stance, and dismissal of public assurance in financial institutions. In the first quarter of 2023, the FitC listed important developments on these cases and their financial status.

The report showed the reduction of 14.07 percent of these cases reported, in comparison to the former quarter in 2022 of the sum of 12,533 reports. Point of sale (POS) transactions, mobile, web or computer are the primary medium by which fraud occurred with high cases of occurrences. In the first quarter of 2023, the amount of fraudulent cases dropped from 12.58 billion to 2.59 billion at the rate of 79.44 percent. On the same page, the losses decreased from 3.18 billion to 472 million making a 85.13 percent reduction due to fall of fraudulent activities.

FitC says fraudsters use channels such as POS, ATM, web, etc.

Usually, fraud involves the partnership of insiders and external players. Nevertheless, the report for the Q1 2023 shows the decrease of external collaboration at the ratio of 8.08 percent, statistically, from 13,436 to 12,351 cases. However, there is a growing increase of insiders’ involvement at 89.47 percent, increasing the new data cases from 32 to 72. Also, FitC report highlighted six occurrences of collusion to defraud and 124 unspecified cases. A vivid and concise evaluation of this criminal act divisions opens the financial scale of each category.

Mobile fraud has the highest cases with a value of 1.1 billion followed by the web which accounts for 646 million, while fraudulent bank withdrawal accounted for 139 million. From the report, there are also financial losses for each type: mobile fraud 161 million, fraudulent withdrawal 116 million (24.72 percent) and computer fraud at the loss of 130 million (27.69 percent). According to FitC report, different channels are used by fraudsters such as POS terminals, ATMs, bank branches, mobile banking platforms and web. The widespread and common instruments used for fraudulent activities are card transactions and cash while there is decrease in the use of cheques.

ATM channel losses rose from 949 million to 1.6 billion.

Based on the report, there is a decrease of cases in channels such as the ATM channel, from 404 reported cases in Q4 2022 to 248 in Q1 2023 (38.61 percent), web and mobile channels also saw a decrease of 17.81 percent and 9.7 percent respectively, but there was an increase in POS fraud cases rising to 1,985 at the rate of 19.51 percent. In the first quarter of this year, there were increased losses in bank branch channels and ATMs. The losses in ATM channel rose from 949 million to 1.6 billion while the losses in bank branch channels increased from 119.95 million to 172.56 million.


Related Link

Special fraud unit: Website


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