Integrated Payroll and Personnel Information System (IPPIS) and the Incidence of Ghost Workers and Payroll Fraud in Nigeria’s Public Sector

This paper seeks to empirically analyze the association between Integrated Payroll and Personnel Information System (IPPIS) implementation and payroll-fraud-related outcomes in Nigeria’s federal public sector over 2013–2024. Payroll fraud in Nigeria, especially ghost worker syndrome-persisted despite successive reforms in public financial management. The practice leads to high levels of fiscal leakage and personnel expenditure inefficiency. The study conceptualized the use of System Enrollment Rate (SER) and Biometric Verification Cycles (BVC) to explain IPPIS implementation, and Personnel Cost Variance (PCV) and De-listed Ghost Names (DGN) to serve as proxies for payroll fraud. Drawing on Agency theory, Fraud Triangle theory and the COSO internal control framework, an ex post facto research design was employed and panel data techniques were used, including Pooled OLS, Fixed Effect and Random Effect Models. The Hausman specification tests was used in selection of the appropriate panel data model. The study uses a balanced panel of 16 federal Ministries, Departments and Agencies (MDAs), yielding 192 MDA-year observations. Empirical analysis indicated that the SER and BVC had negative association with PCV and indicated that wider coverage and frequent biometric verification of workers is associated with reduced personnel expenditure leakage in the system. Similarly, For DGN, SER is negatively associated with the number of names removed, whereas the positive BVC coefficient is interpreted as greater fraud detection/removal during verification rather than a higher underlying incidence of ghost workers. SER reduced the existence of ghost workers over time, but BVC initially exacerbated its existence before helping to clean up the system in the long run and deterring the existence of ghost workers. The Fixed Effects model, was used because unobserved variations among the various federal MDAs, were also found to have a statistically significant and negative association with DGN and PCV, thus proving to have the best model specification. This study concludes that broader IPPIS enrollment and biometric verification intensity are statistically associated with payroll-control outcomes, but the effect of IPPIS is reduced by differences among federal MDAs. The paper recommended comprehensive integration and stricter utilization of the biometric verification process, and stronger institutions and accountability mechanism.

IPPIS, payroll fraud, ghost workers, panel data, Nigeria, public sector accountability, biometric verification.

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