The Federal Government’s recent decision to impose a N50 electronic money transfer levy (EMTL) on transactions above N10,000 has faced significant criticism from economists. They warn that this move could discourage digital transactions, harm the economy, and stifle innovation in the fintech sector.
Former Chief Economist at Zenith Bank, Marcel Okeke, argued that the levy is ill-timed and could have unintended consequences. He expressed concern that it might discourage people from using digital services, leading to a partial demonetization of the economy. Okeke emphasized that even a small fee can significantly impact behavior, as people may seek alternative platforms with lower or no fees.
The fintech sector has been instrumental in promoting digital transactions in Nigeria, particularly among the unbanked population. The levy could hinder the growth of this sector and limit its ability to provide innovative solutions to underserved segments of the population.
Another economist, Alias Aliyu, described the government’s action as a “desperate move” to increase revenue, arguing that the current economic conditions do not justify such a measure. He pointed out that the government already generates significant revenue from various sources, including the floating of the naira, fuel subsidy removal, customs tariffs, and the recent VAT increase.
Aliyu emphasized the need for the government to focus on regulation rather than increasing fees, especially in light of cybersecurity threats and other challenges facing the fintech sector. He argued that effective regulation is crucial for addressing these issues and promoting a healthy fintech ecosystem.
The N50 EMTL is expected to generate substantial revenue for the government, but it has faced opposition from various stakeholders. The Senate Clerk of the National Association of Nigerian Students, Oladimeji Uthman, criticized the levy, arguing that it will disproportionately affect students and the general populace. He urged the government to explore alternative revenue sources and focus on long-term development rather than imposing additional financial burdens.
The introduction of the fintech transaction levy raises concerns about its potential impact on the economy, particularly in the context of the ongoing efforts to promote digital financial inclusion in Nigeria.
