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Nigeria and internet fraud



That Nigeria loses a lot of money through internet fraud is not news but the figure of over N127 billion as annual loss given by the Minister of Communications is staggering. Most of the frauds are said to be perpetrated via foreign internet domain names being patronised by over 93 million internet users in Nigeria. With this rising trend of internet fraud, also known as cybercrime, the Nigerian Internet Registration Association (NiRA), managers of Nigeria’s domain name (.ng), has appropriately convened a meeting of representatives of law enforcement agencies and other relevant stakeholders to foster a collaboration and cooperation to arrest the situation. This is really commendable.

The truth is that cybercrime generally has been increasing in the country but most of it is not publicly reported. However, in the banking system, such crimes are reported by banks to the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) -their regulatory and supervisory bodies. The reports from the banking sector more than corroborate the fact that internet frauds are alarmingly on the rise. The NDIC reported that the number of web-based (internet) banking frauds rose from 316 in 2013 to 1,271 and 1,471 in 2014 and 2015, respectively (a phenomenal increase of about 365.5% between 2013 and 2015). By all means, this increase should bring about serious concerns to operators, regulators and other stakeholders including the government. But the actual amount lost to internet fraudsters, according to NDIC, declined significantly to N0.857 billion in 2015 from N1.683 billion in 2013, meaning that efforts were made by the banks to mitigate losses from internet fraud attacks.


Imperatively, the concerns being expressed over internet-based frauds should be extended to card-based frauds that have also been reported to be on the increase. The regulatory-induced quick steps into a cashless economy may be the driver. As reported by NDIC, the number of frauds being perpetrated with the use of Automated Teller Machines (ATMs) cards and other card-related financial settlement modes rose from 1,739 in 2013 to 7,181 and 8,039 in 2014 and 2015, respectively. This is a growth rate of about 362.27% between 2013 and 2015. Like their internet counterparts, the actual amount lost declined, presumably as a result of actions taken by banks to tackle the problem.

As can be easily appreciated, fraud is increasing as businesses and other organisations adopt modern technologies, processes and procedures. This is not out of expectation, especially given the almost complete debasement of acceptable societal and moral values, among other reasons. As economies adopt new ways of life and business, some people are not and may never be ready to earn their living through societal acceptable, just and fair means. Some will seek to undermine the new initiatives.

Beyond these individuals’ deliberate choice to follow the dishonourable path of fraud as a means of livelihood, there are other factors that may be contributing to internet fraud, not only in Nigeria but globally. Cases of poor home upbringing, unemployment, peer pressure, celebration of ill-gotten wealth, and so on are real. These and other factors that encourage, influence and motivate people to venture into the business of fraud perpetration should be addressed, if respite must be expected. It is important nevertheless, to recognise that no matter what, some people will still journey the way of frauds. What is important is making sure that all fraud attempts are foiled.


Going by the evidence in NDIC’s reports, perpetrators of frauds in banks include persons within and outside the banks. Those within encompass various grades of employees – managers, supervisors, clerks, typists, technicians, cashiers, cleaners and security guards. Although the report was silent on frauds committed at executive and board levels, it clearly shows how deep and broad based the fraud merchants in the banking sector have become. It is doubtful if the situation is different in other sectors of the economy. Thus, the concerns over cyber crime should cut across all sectors and systems and should be the concern of all citizens, especially because it is a well known fact that frauds have the capacity to send to death otherwise thriving businesses and even countries.

The solutions to the menace should, therefore, be multi-faceted. NiRA’s summoning of a meeting of law enforcement agencies and other relevant stakeholders to elicit collaboration and cooperation is one good step. It is akin to what the Associations of Chief Internal Auditors and Chief Compliance Officers in the banking industry had done to inter-face and share information with security and law enforcement agencies. In addition to these, organisations where cyber crimes are likely to occur should, in collaboration with their regulatory and supervisory bodies, improve on the security aspects of their technologies, review and strengthen internal control systems, emplace and adhere to codes of ethics and corporate governance, encourage and reward whistle-blowing. They should also improve, through training, the knowledge and skills of employees and enlighten customers and consumers on proper handling and use of modern transaction tools. Given that internet fraud is not necessarily localised, the need for cross-border/global collaborations and cooperation is very urgent. Finally, fraud, whether successful or otherwise, should be reported to appropriate authorities for thorough investigation, diligent prosecution and sanction of culprits.


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CBNInternet fraudNDICNiRA
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