Nigeria: Banking Fraud in Nigeria Soars to N9.5 Billion, Projected to Hit N20 Billion by Year-End

The Nigerian banking system has been grappling with staggering losses to fraud, with over N9 billion already lost this year. Experts predict that this figure could skyrocket to a staggering N20 billion by the close of 2023, underscoring the urgent need for financial industry players to enhance collaboration in combating the escalating rate of fraud in the nation.

Musa Jimoh, the Director of Payment Systems Management at the Central Bank of Nigeria (CBN) and the Chair of the Board of Nigeria Electronic Fraud Forum (NeFF), stressed the necessity for improved cooperation within the payment system ecosystem to counter the surge in Electronic Fraud (E-Fraud).

The most recent data from the Nigeria Inter Bank Settlement System (NIBSS) reveals that while fraud losses in the financial sector stood at N5.1 billion in the first quarter, they have surged to N9.5 billion as of July 2023. This brings the total amount lost to fraud since 2019 to a staggering N50.5 billion.

Jimoh, speaking on the sidelines of the meeting, emphasized the importance of securing the digital environment and cyberspace. He highlighted the critical role of collaboration in making life exceedingly difficult for cybercriminals and safeguarding bank credentials and sensitive information.

He said, “The objective is to have zero fraud, but it’s a gradual process because as you’re building techniques, they’re also exploiting other areas. Enlightenment education will continue to be our focus, as it’s a lengthy journey. With enlightenment and the concerted efforts of stakeholders, many Nigerians will be well-educated about the necessity of keeping their account details highly confidential.”

Nneka Onyeali-Ikpe, the Managing Director of Fidelity Bank, warned that if the current rate of fraud isn’t urgently addressed, more than N20 billion could be lost to fraud by year-end. She emphasized the erosion of customer trust in the financial system due to the gradual escalation of E-Fraud.

She stated, “As technology continues to advance, our reliance on digital transactions has grown exponentially. However, this has also brought about a significant rise in the threat of E-fraud, affecting individuals, businesses, and the industry as a whole.”

Highlighting E-fraud data for 2023, Premier Oiwoh, the Managing Director of Nigeria Inter-Bank Settlement System (NIBSS), pointed out that the industry witnessed its highest actual loss value of N2.7 billion in January, with June 2023 recording the lowest value of just over N800 million. Additionally, the highest count of fraud incidents over the last six months occurred in May 2023, with 11,716 cases, while the lowest count was in June 2023, with 6,240 cases.

Emphasizing the impact of the cashless policy from the CBN, Oiwoh noted that the efficiency-driven increase in transaction volume also led to a dramatic rise in fraud. For Q1 2023, the total reported fraud through the industry forum portal amounted to N5.1 billion.

Regarding fraud trends over the past five years, he stated, “In 2019, we had about N3 billion in fraud losses, and currently in 2023, we’re looking at about N9.5 billion to date. Fraud losses have surged significantly over the last five years.”

Concluding his remarks, Oiwoh highlighted the 39% increase in fraud incidents between June and July 2023, culminating in N1.2 billion in actual fraud losses for July, representing a 54% increase over the period.