N50 Transfer Levy May Ground Fintech, Economists Warn

The Federal Government’s recent move to deduct a N50 Electronic Money Transfer Levy from customers’ transactions has sparked criticism from economists, who warn that the move may discourage digital transactions and harm the economy.

The levy, which is set to take effect soon, will apply to every inflow of N10,000 and above received by customers of fintech companies, including OPay and Moniepoint.

Former Chief Economist at Zenith Bank, Marcel Okeke, told The reporter that the move was ill-timed and could have far-reaching negative consequences for the economy, particularly in the fintech sector, which has been growing rapidly in recent years.

Okeke argued that the government’s desire to boost revenue through this measure may have unintended consequences, potentially harming the economy and stifling innovation in the fintech sector.

“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.

”By targeting digital transactions, the government may inadvertently discourage people from using these services, leading to a demonetisation of the economy,” Okeke said.

He further emphasised that even a small fee can significantly impact behavior, as people may choose to move their accounts to alternative platforms with lower or no fees.

Fintech companies are significantly influencing the adoption of digital transactions in Nigeria by providing innovative solutions that enhance accessibility and convenience for users.

The sector is particularly focused on addressing the needs of the unbanked population, with around half of Nigeria’s adults still underserved by traditional banking systems.

Speaking with The reporters, 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 10 per cent VAT increase, which has been widely criticised.

Furthermore, Aliyu emphasised the need for the government to focus on regulation rather than increasing fees, particularly in the face of ongoing cybersecurity threats.

He highlighted the susceptibility of Fintech companies to cyberattacks and the presence of other issues, such as loan sharks, that require strong regulatory action.

“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