The Abuja School
By: Chukwuemeka Amadi
The Federal Government announced as of September 7th, 2024, they have established a levy of N50 on all electronic money transfer inflows reaching N10,000 and above. Which has been imposed on customers of various fintech companies operating in Nigeria starting September 9th, 2024. The Electronic Money Transfer Levy (EMT levy) was introduced through the Finance act, 2020, as it was brought in to replace the previous stamp duty on electronic transfers and receipts. Therefore, this new levy has been in the works since the former administration. The Central Bank of Nigeria (CBN) first iteration of this back in 2019 was a stamp duty of N50 on all electronic transfers and receipts reaching N1000 and above which they intended to mandate to all Deposit Money Banks and related financial institutions. While exempting transfer by the same person between accounts, i.e., current account to saving account. With the stamp duty to be remitted to the CBN. With the final framework of the Finance Act introduces, the amount set for the levy was increased to N10,000 and also removed savings accounts exemption. With the outline and history of this EMT levy covered, the question of why comes up in the minds of many Nigerians as to the reason for the introduction of the levy from the former administration followed up to the present. It has been a clear trend over recent years of fintech institutions boom and prevalence in Nigeria, with Nigeria making up one third of Africa’s total Fintech market. And most of these comprise of standalone digital financial platforms unassociated with any traditional banks and digital trading platforms. The mass adaptation of these financial platforms in Nigeria can be implied as the failings and limitations of the Traditional banking systems in Nigeria. Especially during the period of the Covid pandemic were most people had to explore and adopt fintech platforms to conduct financial transactions without leaving their homes. And more importantly the Controversial new redesigned currency change issued on December 15th, 2022, with the initial deadline of January 31st, 2023. Put many Nigerians into dire straits as Banks were quickly overrun and with scarcity of the new notes effectively forcing people into a cashless economy. Causing many to flock to these digital money platforms. Alongside fast and reliable transaction, the little to no fees on transfers, account management, plus instant and generous bonuses on savings all offered on these platforms. It is clear why they have their prevalence in Nigeria’s money market, with such a large market. As Fintech giant “OPAY” being on top on the banking sector with almost a 3 billion USD market cap with 40 million active users. There is incentive for the government to seek out avenues to generate tax revenue from this sector. With the remittance being shared 15% to the Federal government and 85% to state governments, the majority of all revenue goes to the state government. This also mean the state governments are to bare the most scrutiny on how they tend to use this new source of funds for the benefit of social welfare for its constituents especially during the current poor economic state the nation is in.