Federal Government’s New Digital Transaction Levy Sparks Outcry from Economists
The Federal Government’s impending imposition of a N50 Electronic Money Transfer Levy (EMTL) on transactions exceeding N10,000 has drawn sharp criticism from economists, who warn the policy could dampen the growth of Nigeria’s burgeoning fintech sector and deter digital transactions.
The levy, set to take effect on September 9, 2024, will apply to payments made through fintech companies like OPay and Moniepoint, extending what was once a bank-only charge to digital platforms. Critics argue that this move may undermine the government’s own push towards a cashless economy and jeopardise the fintech sector’s role in financial inclusion.
Marcel Okeke, former Chief Economist at Zenith Bank, described the decision as poorly timed and fraught with unintended consequences. “The Federal Government’s move to impose a N50 levy on fintech transactions is driven by a desire to boost revenue. However, this approach may have unforeseen consequences,” he told The PUNCH. “By targeting digital transactions, the government may inadvertently discourage people from using these services, leading to a demonetisation of the economy.”
Okeke stressed that even a small fee could shift consumer behaviour, pushing users towards alternatives that impose fewer charges. He noted that fintech companies have been instrumental in expanding digital financial services to the unbanked and underbanked, a population that still accounts for nearly half of Nigeria’s adult citizens.
Another economist, Alias Aliyu, called the levy a “desperate move” for revenue generation at a time when the economic climate does not justify additional financial burdens. He pointed to the Federal Government’s multiple revenue streams—including gains from the floating of the naira, fuel subsidy removal, and a recent 10% VAT increase—and questioned the necessity of the new charge.
Aliyu further urged the government to focus on regulatory reforms to address deeper issues within the fintech space, including cybersecurity risks and the unchecked operations of loan sharks. “The government needs to address these challenges through effective regulation, rather than imposing additional fees on consumers. This is the wrong time for such a move, and it will only exacerbate the already difficult economic situation for many Nigerians,” he said.
Despite criticism, the Federal Government has seen significant growth in EMTL revenues, which reached N180.31bn in 2023, exceeding targets by 29.45%. The surge in digital transactions, which totalled over N600tn by the end of 2023, indicates a continued shift towards a cashless economy—a trend expected to bolster EMTL earnings in the coming years.
Meanwhile, students and young Nigerians, who have been particularly reliant on fintech services for their financial needs, have also voiced strong opposition to the levy. The National Association of Nigerian Students, through its Senate Clerk, Oladimeji Uthman, condemned the new charge, warning it would deepen the financial burdens on students.
“The proposed N50 Electronic Money Transfer Levy impacts over 40.1 million Nigerian students who use these fintechservices. Many students rely on financial transfers for their education and daily expenses, and the new levy could significantly reduce the funds available for essential needs such as school fees, textbooks, and living expenses,” Uthman said in a statement.
He called on the government to explore alternative revenue sources, such as investing in agriculture, infrastructure development, and job creation, rather than imposing new taxes on digital payments, which many see as essential for Nigeria’s economic future.
