A strategy has been devised by the Nigerian government to reinstate the telecommunications tax that was previously put on hold, along with other revenue-generating initiatives in order to obtain a $750 million loan from the World Bank. The recent Stakeholder Engagement Plan for Nigeria – Accelerating Resource Mobilisation Reforms program with the World Bank outlines this approach.
As indicated in a document posted on the World Bank’s website, the Nigerian government is contemplating the possibility of reintroducing taxes on telecommunications, electronic money transaction levies, and additional fiscal measures.
The $750 million contribution from the Washington-based World Bank accounts for a substantial portion of the program’s budget, with the government expected to provide $1.17 billion through annual budget allocations. Nigeria initially sought this loan in 2021 but faced setbacks.
Under the government’s ARMOR program, the Domestic Revenue Mobilisation drive aims to boost revenue from targeted industries and sectors. This involves collaboration with key entities in affected sectors, such as the Association of Licensed Telecom Operators of Nigeria for the implementation of excises on telecom services.
The Committee of Bankers is also integral to the process, particularly concerning the introduction of EMT levy on electronic money transfers through the Nigerian Banking System, necessitating the cooperation of all banking institutions.
This development follows President Bola Tinubu’s directive in July 2023 to suspend the five per cent excise duty on telecommunications and the Import Tax Adjustment levy on specific vehicles. The loan request made in 2021 is aimed at boosting the government’s financial position by enhancing its ability to effectively manage and harness domestic resources, which includes measures to enhance tax and customs compliance and safeguard oil revenues.
Sectors that will be impacted by these initiatives include manufacturers of goods such as alcoholic beverages, tobacco products, sugar-sweetened beverages, telecom and banking service providers, as well as the general tax-paying public, importers, and international traders.