Experts dissect menace of internet fraud on Nigeria’s socio-economic development


The alarming rate of cybercrime reported in the news in Nigeria poses great danger if not tackled head-on and urgently. FESTUS OKOROMADU writes on the need for the government and other stakeholders to stop the trend before everyone is consumed.

Perturbed by the increasing incidents of internet related crimes in the country, the Federal Ministry of Justice in collaboration with the United States Embassy and other stakeholders last week organised a forum to create awareness on data security safeguard.

In her welcome remarks, the Solicitor General of the Federation and Permanent Secretary Federal Ministry of Justice, Mrs. Beatrice Jeddy-Agba, said the global nature of cybercrimes, sometimes described as “phenomenon without borders” makes it imperative for governments to seek multi sectoral approach in building capacity to be able to effectively combat the menace, which also includes awareness creation.

Emphasizing the importance of digital security, Mrs. Jeddy-Agba stated that in today’s digital age, legal professionals, judges and law enforcement agencies depend on secure digital infrastructure to effectively carry out assigned tasks.

Therefore, breaches in cyber security, she said, could jeopardize the fair administration of justice, compromise the rule of law, and undermine the trust of citizens in the justice system.

“Hence, the importance of cyber security cannot be overstated, especially in the context of the criminal Justice system and access to Justice since a robust and secure cyber environment is crucial for the effective functioning of the system” the Permanent Secretary said.

Represented by the Director, Solicitors, Federal Ministry of Justice, Mrs. Gladys Obegbero, the SGF said the awareness campaign was part of the Ministry’s efforts to combat cybercrimes.

But inherent danger portend by cybercrime specialist who basically aim at defrauding victims of their hard-earned money was brought to the fore when chairman of the Economic and Financial Crime Commission, Ola Olukoyede, SAN, warned of the easy in committing cybercrime with the advancement of technology.

Represented by Sylvanus Tahir, SAN, the EFCC chairman said “Cybercrimes are faster, cheaper and easier to commit than traditional crimes.”
Affirming the rising trend of the criminal act in the country and how they are working within the available laws to curb it, the EFCC chairman said the Commission has successfully investigated and prosecuted several cases of cybercrimes.

“A report from the Financial Institutions Training Center stated that in the first and second quarters of 2022, Nigerian banks lost a total of N2.72bn to cybercrime related activities. The figure rose to N12.33bn in Q1 and Q2 of 2023”

“We have successfully investigated and prosecuted several cases of cybercrimes and so far, recorded 395 convictions in advance fee fraud cases and 1084 cybercrime convictions in 2023,” he stated.

The EFCC chairman called for collaboration with other agencies responsible for the administration of justice as well as other stakeholders in the cyberspace community to ensure the safety of the environment for the benefit of all.

In his remarks the Inspector General of police, Kayode Egbetokun stated that the rising level of cybercrime activities is posing a threat to socio economic life of Nigerians.

He therefore stressed the urgent need for agencies of government to collaborate and tackle the menace.

“The Nigeria Police Force recognizes the urgency and gravity of the exponential rise in cybercrime activities which portends significant threats to individuals, organizations and indeed the entire public sector and has therefore re-invented itself with a vast cyber security strategy to ensure the safety and security of the entire citizenry in the digital space.

“As the lead law enforcement agency in internal security, we remain highly committed and immensely proud to collaborate with various stakeholders including the organizers of this program and other international organizations to develop an enduring strategy and framework that will safeguard our digital landscape,” the IGP said.

Genesis of cybercrime

Although the existence of the internet dates back to over half a century, the past two decades have seen it gain acceptance and wider popularity across the globe, especially in developing countries.

A key advantage of this growth is that it has made the world a global village.

Interestingly, the financial sector has accepted the internet as a prominent infrastructure for the advancement of transactions. Thus, with the internet, financial institutions and their customers can easily interact and make transactions across the globe with ease.

But the internet, like other things in life, has proven itself to be a double-edged sword providing opportunities for business expansion and becoming a tool exploited for cybercrimes and other malicious activities.

Today, different types of cybercrimes, like phishing, piracy, hacking, identity theft, automated teller machine fraud, email spoofing, cyber stalking, and malware, are all enabled by the internet.

Globally, 5.5 million malware attacks happened in 2022 and Nigeria is actively involved. In fact, Nigeria was reported to be the 16th country in the world most affected by internet crime according to the US Federal Bureau of Investigation.

Internet penetration and cybercrimes in Nigeria

According to a cybercrime analyst, Bolaji Omodubi, internet penetration in Nigeria between 2018 and 2022 was sluggish with estimated user growth of between 28 percent and 38 percent rising from 56 million to 81 million users across board.

However, figures from the Nigerian Communications Commission for January 2023, show that internet users in Nigeria rose to 122.5 million, translating to a 57 percent internet penetration rate.

In addition, recent data from the NCC show that Nigeria is ranked 11 in internet penetration and seventh in mobile phone usage globally, indicating a rapid increase when compared to what it was in 2022.

But as internet penetration in Nigeria increases, the rate of cybercrimes has also surged with financial institutions being the worst hit. According to the Nigeria Inter-Bank Settlement System Plc, Nigerian banks lost a total of N3.5 billion to fraud-related activities between July and September 2020.

This represents a 534 percent increase from the same period the previous year (2019) with a reported figure of N522 million.

Similarly, a report from the Financial Institutions Training Center stated that in the first and second quarters of 2022, Nigerian banks lost a total of N2.72bn to cybercrime related activities. The figure rose to N12.33bn in Q1 and Q2 of 2023.

It has been projected by Nigeria’s Consumer Awareness and Financial Enlightenment Initiative that there will be a $6 trillion loss by 2030 to cybercrime globally.

Findings show that as more Nigerians are embracing e-transactions daily, so is the surge in cybercrimes, as cybercriminals are getting adept in the clean sweep of bank accounts of unsuspecting users.

While banks are facing a dearth of IT staff to promptly respond to cyber threats, bank account compromises are expected to get worse as the festive season approaches.

Already, the NCC has issued 10 cyber alerts to warn Nigerians about the possible danger associated with or targeted at some platforms, including Cisco and lately telegram, which these cyber criminals exploit to cause havoc.

Indeed, cybercrime has been projected to worsen as e-payment transactions gain more patronage.

Activities of cybercriminals have taken a new turn, as they become more daring and innovative and subsequently unleash more terror on their prey.

Almost on a weekly basis, bank customers complain of hacked accounts, where criminals wipe out all their life savings.

The Point checks showed that this is not peculiar, but cuts across the entire banking sector.

Between July and September 2020, Nigerian banks, according to NIBSS, lost N3.5 billion to fraud-related incidents, representing a 534-per cent increase from the same period in 2019, when it was N552 million. Though the latest data have yet to be confirmed, stakeholders are worried that the losses would be huge compared to previous years.

In 2018, commercial banks in Nigeria lost a cumulative N15 billion ($39 million) to electronic fraud and cybercrime. This was a 537 per cent increase on the N2.37 billion loss recorded in 2017. In the same period in 2018, over 25,043 bank customers and depositors lost N1.9 billion to cyber fraud, with fraud incidents rising by 55 per cent from the previous year’s 17,600.

Nigeria’s Consumer Awareness and Financial Enlightenment Initiative had projected a $6 trillion loss by 2030 to cybercrime within and outside Nigeria. These crimes are committed mostly through phishing and identity theft.

According to NIBSS, the trend from the beginning of 2020 has been that the web and mobile channels are viable mediums for exponential fraudulent gains.

For instance, in October, a customer of a leading bank claimed that she lost a lot of money to a hacker after she misplaced her wallet.

The customer with the name, Ola Sandra Ndukwe, recounted how the bank allegedly failed to recover N450, 000 stolen from her account by fraudsters.

According to her, this happened despite availing details of the transactions, including names and bank accounts that received the stolen money.

Ndukwe narrated that she lost her ATM cards and proceeded to block online transactions on her account, using self-service codes.

She said she only depended on her mobile application for confirmation of transactions on her bank account. And according to her, when she complained to Zenith Bank customer care agents, she was told that her transaction alert was active.

Unfortunately, she said some days back, her mobile bank app was hacked during which she lost a sum of N450, 000.

Lessons from Denmark on how to tackle cybercrime menace

According to Statista, Denmark reached 98.1 percent internet penetration in 2023 yet, in the same year, it was ranked as the most cyber-secure country in the world.

“Unlike in Denmark where cyber offenders can easily be fished out, in Nigeria, most cyber activities go unnoticed because the country does not have the modern tools and necessary intelligence to detect such criminal activities”

By implication, Denmark is doing differently from Nigeria; hence it has been able to reduce the rate of cybercrimes and other fraudulent internet practices.

The question is what are they doing?

The latest edition of Whispers, a publication by Financial Derivatives Company, offers some solutions in this regard, pointing out that Nigeria needs to focus on two major areas to secure its cyber landscape.

The report said that the first item to be addressed is legislation related to cyber security and digital infrastructure.

“With regard to legislation, in 2015, the Nigerian government enacted the Cybercrime Prohibition and Prevention Act in order to protect Nigeria’s cyber space from cybercrimes. However, this has not helped to stem the tide of cyber-attacks as the rate of cybercrimes in Nigeria has been increasing exponentially since 2015,” the report noted.

It further stated that a key reason why the rate of cybercrimes continues to rise despite legislation is because the cyber offenders know that they can always get away with their crimes.

“Nigeria needs to be more transparent and proactive with regard to enforcing cybercrime laws,” the report stated.

The report also emphasized the need for the government to invest in cyber infrastructure. “Compared to other cyber-secured countries, Nigeria’s digital infrastructure is less developed. Unlike in Denmark where cyber offenders can easily be fished out, in Nigeria, most cyber activities go unnoticed because the country does not have the modern tools and necessary intelligence to detect such criminal activities.

“Therefore, to curb the growing web of cybercrimes in Nigeria, the government needs to invest in strengthening its cyber infrastructure.

Related to cyber infrastructure is the issue of cyber security literacy.

“In Nigeria, cyber security literacy is not as strong as it is in most cyber-secure countries. Most organizations and individuals in Nigeria do not have robust and reliable cyber security policies and procedures thereby making their systems and data vulnerable to cyber-attacks.”

Improved legislature in sight

Fortunately, present at the stakeholders’ conference organised by the Federal Ministry of Justice last week was the Chairman, Senate committee on ICT and Cyber security, Senator Afolabi Salisu (Ogun Central).

In his remark, the Senator noted that the Nigerian cybercrime Act 2015 is now obsolete and needs to be reviewed to tackle the current challenges from cyberspace.

He expressed the willingness of the National Assembly to urgently commence the review of the act to accommodate the current challenges of cybercrimes.

He however charged the National Orientation Agency to embark on an aggressive enlightenment campaign on the ills associated with cybercrime to keep citizens abreast of the danger inherent in the practice.

Proactive measures required

Obviously, the digital era is here to stay, thus as businesses and government agencies become increasingly digitized, the need for every stakeholder to be conscious and contribute in whatever way necessary to secure our cyberspace.

The government and the business community as well as law enforcement and the judiciary must wake up to the new task of focusing on the digital security of the country.

There is no gainsaying that if the Nigerian government fails to take proactive measures in addressing the rising rate of cybercrime in the country, the economic growth of Nigeria would remain threatened, as investors are likely to stay away given the level of funds financial institutions are already recording.