• Global fund lauds Nigeria’s anti-money laundering initiatives

The International Monetary Fund (IMF) has explained why the Central Bank of Nigeria (CBN) should issue operating licences or register cryptocurrency dealers.

In its 2024 Staff Report released at the weekend, the IMF recommends that global crypto trading platforms be registered or licensed in Nigeria, like similar operators, the Bureaux De Change (BDCs), which are licensed by the CBN to carry out forex transactions at the retail end of the market.

The IMF advised that such crypto trading platforms should be subjected to the same regulatory requirements applicable to financial intermediaries, following the principle of same activity, same risk, and same regulation.

The CBN had announced that cryptocurrency traders used peer-to-peer trading to manipulate the naira exchange rate against the dollar and other global currencies. 

The apex bank asserted in February that Binance, the largest cryptocurrency exchange by trading volume, had processed $26 billion in untraceable transactions in its Nigeria unit alone. 

Binance serves 185 million users in over 180 countries worldwide. 

To protect the naira from value erosion and reverse the negative impact in the financial system, the CBN subsequently stopped banks and other financial institutions from banking cryptocurrency traders.

Aside several other factors causing naira’s slide, like rising import bills, medical tourism, and tuition fees payment abroad, exchange rate manipulation by cryptocurrency traders remains a major contributory factor.

IMF said: “Rapid growth of transactions on FX trading platforms poses new challenges. At the end of February, the authorities closed the operations of Binance and other crypto-asset trading platforms that were being used by Nigerians to facilitate capital flight – neither the identity of traders nor the origin of their funds could be traced.”

“The authorities also revoked the licences of 4,173 Bureaux De Change (BDCs) that failed to comply with CBN accounting and reporting requirements. Staff recommends that global crypto trading platforms be registered or licensed in Nigeria and subjected to the same regulatory requirements applicable to financial intermediaries following the principle of same activity, same risk, and same regulation.”

The IMF lauded Nigeria’s progress in the fight against money laundering and terrorism financing.

It said: “Nigeria has made welcomed progress on improving its Anti-Money Laundering and Combating Financing of Terrorism (AML/CFT) framework, but further action is needed in line with Financial Action Task Force (FATF) recommendations. Nigeria has undertaken a series of measures, including legislative reform, conducted a money laundering and terrorism financing risk assessment, built awareness for competent authorities and the private sector, and increased investigation and prosecution of money laundering to correct identified deficiencies in the AML/CFT framework.”

[TheNation]

Directors and key management personnel of Deposit Money Banks borrowed about N549bn from their financial institutions in five years.

This is according to The PUNCH analysis of the banks’ annual reports filed with the Nigerian Exchange Limited between  2019 and 2023.

However, the banks’ loans and advances to some directors and key management personnel as well as related party transactions dropped significantly in 2023.

These transactions dropped to N52.40bn for eight financial institutions compared to N111.31bn in 2022, indicating a 52.92 per cent decline in one year.

Financial institutions reviewed in the 2023 review include Access Holdings, Guaranty Trust Holding Company Plc, Zenith Bank Plc, United Bank for Africa, Fidelity Bank, Wema Bank, Stanbic IBTC Holding Plc and the FCMB Group.

This decline came amid the release of new corporate governance guidelines by the Central Bank of Nigeria which went into effect August 1, 2023.

In the circular dated July 13, 2023, and signed by Director, Financial Policy and Regulation Department, Chibuzo Efobi, the guidelines which imposed responsibilities on the bank board and the executive compliance officers, supersede other previous codes, circulars and related directives, according to the apex bank.

The CBN guidelines on related party transactions said, “Banks shall establish a policy concerning insider trading and related party transactions by directors, senior executives, and employees, as well as publish the policy or a summary of that policy on their website. 22.2 The policy shall contain appropriate standards and procedures to ensure it is effectively implemented. 22.3 In addition to the requirements in Section 22.2, there shall be an internal review mechanism carried out by the internal audit function of the bank, to assess the compliance and effectiveness of the policy.

“22.4 Any director whose facility or that of his/her related interests remains nonperforming in any financial institution for more than one year shall cease to be on the board of the bank and shall be blacklisted from sitting on the board of such bank and that of any other financial institution under the purview of the CBN. 22.5 No director-related loans and/or interest thereon shall be written off without the CBN’s prior approval.”

Leading the pack in terms of major decline in loans to related parties and entities controlled by key management personnel was Fidelity Bank Plc, which went from N92.31bn at the end of December 2022 to N2.09bn at the end of last year.

In footnotes, the bank however said that some of the related parties like A-Z Petroleum Limited, Dangote Group and Genesis Group as of 31 December 2022, had “exited the related party relationship post 2022 financial year in line with CBN requirement.”

In 2022, the total value of insider loans for 10 banks including Access Holdings, Guaranty Trust Holding Company Plc, Zenith Bank Plc, United Bank for Africa, Fidelity Bank, Wema Bank, Stanbic IBTC Holding Plc, FCMB Group, Unity Bank and Sterling Bank amounted to N131.04bn.

Fidelity Bank led the highest for the year, followed by Unity Bank at N17.32bn and UBA at N13.74bn.

In 2021, the loans to related parties of these financial institutions rose to N139.16bn with Fidelity Bank and UBA leading at N97.73bn and N15.28bn, respectively. GTCO trailed in third position with N6.859bn.

Between 2019 and 2020, a total of N226.6bn was disbursed as loans. In 2019, eleven banks borrowed its key management personnel a total sum of N29.65bn. The figure also includes loans to companies related to the directors.

An analysis showed that GTCO lent N155m, Zenith Bank  (N1.76bn), UBA borrowed its directors N297m, Wema Bank (N5.2bn), Stanbic IBTC (N95m), FCMB (N4.8bn), Unity Bank(N7.14bn), Sterling Bank (N10.12bn) to related parties.

In 2020, the figure increased by 564 per cent or N167.32bn to N196.97bn.

Checks showed that Access Bank lent the highest with a total of N174bn to its directors and companies related to them. This was followed by Unity Bank with N7.55bn. Third on the list was Sterling Bank with N6.01bn.

Other banks including Fidelity borrowed its directors N986.2m, GTBank (N67.9m), Zenith Bank (N1.797bn), UBA (N206m), Wema Bank (N2.82bn), Stanbic IBTC (N332m), FCMB (N3.2bn), Unity Bank (N7.55bn), Sterling Bank (N6.01bn).

Commenting on the trend, the Chief Research Officer at InvestData Consulting, Ambrose  Omordion said “In my language, they say, it is the yam that you know that you use to make pounded yam. If an organisation feels that the insider or director can pay the loans given to them, then there is no issue. It is when they do not pay that is where there would be issues.

“Like what is happening now in the economy, banks are not giving loans to ordinary companies unless those with names because of economic headwinds. If they give loans to the public and they are unable to repay, Non-Performing Loans will rise. If the banks offer to insiders that would pay, it is better for them.”

Adding a word of caution, Omordion said, that when done in excess and without due process, then it is bad.

“It is when it is done in excess that it is wrong. Even banks know how to safeguard depositors’ money, which is the most important thing.

“Now, that it (insider loans) is reducing, that’s a good thing for the industry and it is a good thing for regulators too.”

The Head, Financial Institutions Ratings – Agusto&Co, Ayokunle Olubunmi, pointed out that there was no correlation between insider loans and an increase in banks’ NPLs.

“Although it is not a crime to give a loan to someone within the organisation, there is a rule and it may not be at what we call arms length. Having said that, there is no correlation that when you give an insider a loan, it goes bad.  There are some banks with insider loans which have been fully paid. However, the risk is there that they may not have done full diligence. Some banks are more stringent when it comes to insider-related loans.

“Majorly because of the CBN corporate governance, you must disclose the amount, the collateral, and the account’s performance. This is why you will see it in the accounts of banks, so that any analysts, investor will see it and if it is non-performing, then it is a red flag.”

A financial analyst and Chief Responsibility Officer, Peculiar Innovative Consulting, Segun Aremu, lamented the prevalence of the trend in the Nigerian banking sector saying, “Insider loans are prevalent in our Nigerian banking system. It has been happening for a long time. These insider loans display a lack of corporate governance which discourages investors.”

“This situation also leaves banks prone to high NPLs and what I call low profit to the banks. Meanwhile, the banks should improve their financial intermediation role and give loans to the people who need it, the manufacturers and employers of labour to drive the economy,” he said.

From the minority investor community, the overall stance was that if the loans were performing and disclosed, then there were no causes for concern.

Chairman, Ibadan Zone Shareholders Association, Eric Akinduro, speaking with The PUNCH, said, “The point is that, if it is performing, we are okay with it. As long as it is performing and there is disclosure, there is no problem but when these factors are not present, that is where we have issues.

“When a loan is not performing, it will lead to a higher rate of non-performing loans. At the end of the day, it is not just about the shareholders alone. When a loan is not performing, it is to the detriment of that business. And it is of concern to shareholders. Non-performing loans can run the business down.”

The National Coordinator of the Pragmatic Shareholders Association of Nigeria, Bisi Bakare, said, “If they are getting the loans and the loan is performing, that means there won’t be growth in Non-Performing Loans.

She, however, called on the regulators to ensure that insider loans are not written off.

“The regulators need to take the bull by the horns and ensure that these NPLs are not written off,” she charged.

 

Nigeria’s quest for diversified foreign exchange earnings away from oil not feasible for now as revenue from the manufacturing export sector plunged 166 per cent to N778.4 billion from the N2.1 trillion height reached in 2019.

Operators in the sector blamed poor state of infrastructure, logistics and other binding constraints which they said have worsened the operating environment in recent years.

The trend since 2019 has been downwards recording significant decline to N960.7billion attributed to COVID-19 in 2020, while a minor recovery was recorded in 2021 at N1.15trillion. But in 2022 a huge drop to N781.1billion was recorded and another significant drop to N778.4 billion was recorded in 2023.

Within the same period, the share of manufacturing exports to non-oil exports also dropped to 24.8 per cent in 2023 from 82.4 per cent in 2019.  

In its Africa Pulse publication, the World Bank specifically blamed the country’s dwindling foreign trade on poor infrastructure and inefficient logistics, among other factors.

According to the World Bank, the cost of trade in Nigeria and Ethiopia is four to five times higher than what obtains in the United States due to insecurity, higher transportation costs, topography and poor road infrastructure. 

“Studies from the Africa region consistently find spatial differences in prices of imported goods (food and non-food) as well as non-traded agricultural staples, indicating that markets are not well-integrated, and retail prices of products are affected by distance.  

“For instance, trade costs are four to five times higher in Ethiopia and Nigeria than in the United States, due to poor road infrastructure, low competition in the transportation sector, and topography,” it stated.

The report further noted that the consequences of these distortions include preference of African producers to sell locally rather than export.

In a similar vein, statistics provided by the World Trade Organisation (WTO) revealed that South African manufacturing export value was $46 billion in 2022, which is 15 times higher than that of Nigeria which was $3 billion in the same year.  

Manufacturers and operators in the export ecosystem have lamented that the harsh business environment in the country is making local products uncompetitive globally.

They noted that many businesses that are into exports have gone into extinction, even as several multinationals have also exited Nigeria over the past few years.

MAN, exporters seek govt intervention  

Giving insights into what is happening in the sector, Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said: “The rising cost of doing business has worsened competitiveness of Nigerian products in the global market, which is evident in the drastic reduction in global demand for these products.

“The reduction in global demand for Nigerian products was further buttressed by the NBS report that confirmed that the manufacturing export value of Nigeria plummeted by 166% from 2019 to 2023.  

“In addition, the exorbitant lending rate of over 30 percent has contributed largely to a drop in the share of manufacturing exports to non-oil exports from 82.4 percent to 24.8 percent in 2019 and 2023 respectively.”

Speaking to the development, Chairperson of the Export Group of MAN (MANEG), Odiri Erewa-Meggison, stated: “Indeed, it’s concerning to see exporters not doing as well as they could.

“As you must appreciate, the cost of doing business in Nigeria has increased by more than 300 percent. Just take a cue from the recently increased electricity tariffs.

“How can exporters compete on a global scale without a deliberate intervention from the government? All hands need to be on deck.  

“Exporters need deliberate interventions such as access to loans at right rates, support with eliminating administrative bottlenecks and multiple regulatory checks by different regulators. A consolidated or harmonized regulatory approach would be preferred.

“Higher costs in electricity make it more difficult to produce. Biggest elephant in the room is the incentives which need reviewing and streamlining to ensure qualifying exporters take benefit without having to compromise by settling anyone to get their incentive like Export Expansion Grant (EEG).

“There is an urgent need for a stakeholders’ engagement between government and exporters to discuss and agree on a way forward.  

“If exporters are to commit to repatriating their full export proceeds back to Nigeria, there are certain things exporters will like the government to equally commit to. For example, there is a need to review the items on the exports proceeds list in the CBN foreign exchange manual to ascertain and ensure the list is still relevant and updated to suit current needs.”

Also reacting, Chairperson of the Export Group of Lagos Chamber of Commerce and Industry (LCCI), Mrs. Bosun Solarin, said: “In 2020, the then Vice President through the office of the Presidential Enabling Business Environment Council (PEBEC) tried to help small businesses by slicing the cost of production, like NAFDAC registration. “So from 2020, many small businesses emerged into production, and some of them have entered the export market.    

“Many of such businesses have gone into extinction because of various policies that are anti-business.

“When people have even found a way to come into business through export, they are confronted with so many bottlenecks, bad policies and insecurity.

“If we don’t pay attention to security so that people can go back to the farm, if we don’t pay attention to interest rate so that the productive sector can get money to do business, if we don’t pay attention to logistics so that people can even move their products with ease, then we have not started.

“Nigeria is signing off for the guided trade of African Continental Free Trade Area (AfCFTA) very soon, and logistics is a problem to even move things.

“These, I think are places where the government should pay attention.”

Exporters must adhere to trade norms – NEPC

Meanwhile, the Nigerian Export Promotion Council (NEPC) has charged Nigerian exporters to adhere to the requirements for exporting products to different countries.

Speaking at a recent sensitisation workshop aimed at enhancing Nigeria’s export potential and strengthening trade relations with China, Mrs Nonye Ayeni, Executive Director of NEPC, emphasised the need for exporters to adhere to the General Administration of Chinese Customs (GACC).

Ayeni, who was represented by Mr Samson Idowu, North-Central Coordinator of the council, said that GACC has clear but stringent requirements for exporting products to China.

“Understanding the registration process, documentation and regulatory changes is paramount for successful export. Understanding the requirements set forth by GACC is crucial for Nigerian exporters to ensure smooth and successful trade with China,” she stated.

National Single Window will bring relief – CPPE

In his comment, CEO, Centre for the Promotion of Private enterprise (CPPE), Dr Muda Yusuf, said the implementation of the National Single Window (NSW) initiative will go a long way in enhancing Nigeria’s foreign trade.

Yusuf stated: “When you have a process that is highly bureaucratic, it gives people the opportunity for physical interaction that also gives room for discretion, which is a fertile ground for corruption, extortions, delays and inefficiencies which are also affecting the cost of goods and services.

“The impact on business will be significant. No matter what sector you talk about, what happens in the import/export sector impacts the sector, directly or indirectly. 

Whether you are in manufacturing, mining, or whatever, as long as you import or export goods. And if you talk to those who clear these goods, they will tell you the kind of experience they go through.

“So, first, there will be an impact in terms of the efficiency because when you bring technology into a space, the value proposition is the efficiency that it brings. And efficiency reduces cost of operation, it reduces the time it takes to conduct the business”.

Nigeria loses $4bn to import-export infractions annually – Tinubu

At the recent launching of the NSW project in Abuja, President Bola Tinubu stated that Nigeria currently loses about $4 billion annually to import-export infractions due to bureaucratic bottlenecks, especially at the ports.  

According to the president, the NSW project is expected to ensure 24-hour clearance of goods at the ports and simplify trade by providing a digital platform for all import and export-related activities.

Tinubu said: “This initiative will link our ports, government agencies, and key stakeholders, creating a seamless and efficient system that will facilitate trade like never before. It will reduce the need to deal with multiple agencies in multiple locations to obtain the necessary papers, permits and clearances to complete their import or export processes”.

[Vanguard]

“Nigerians pay one of the highest implicit tax rates in the world — way higher than developed countries,” African Development Bank’s president, Dr. Akinwumi Adesina, cried out in January 2021 at a Federal Inland Revenue Service Tax Dialogue. “Think of it”, he said “they provide electricity for themselves via generators; they repair roads to their neighborhoods, if they can afford to; there are no social security systems; they provide security for their own safety; and they provide boreholes for drinking water with their own monies.” Yet, more taxes and levies are rolled out daily against us like Israeli armoured tanks in Gaza.”

I do not believe that the president of any country will deliberately wreck everything. Their problem may be arrogance or ignorance – or arrogance in ignorance. Or, they may be worshipping wrong gods or feeding their gods with what they must not eat.

You remember Sir Shina Peters’ song for M.K.O. Abiola on the billionaire’s implacable friends who refused to eat his food?

“You gave smooth pounded yam to your friend,

Your friend refused to eat.

You made soft, mushy amala for your friend,

Your friend refused to eat.

You called your friend,

Your friend refused to answer you.

You do not know what they say you did wrong.”

There are at least two sides to a story such as this. Why would I give my friends food and they refuse to eat? Why would I shout their names and they ignore me? Am I calling the right names? If my offerings are right, shouldn’t I then check if they are really my friends?

The ace musician sang that song years before June 12 happened to Abiola. The musician may not know, but that chant is straight from the lore studio of the priests of life.

The foundation story of the song I tell here:

One ancient Yoruba king called Oniregba Osodi, at the beginning of his reign, asked his priests if his era would be peaceful and prosperous. The king was told to take care of all birds in his kingdom because they were hungry and angry and would hurt his happiness.

“What should I do and where are the birds?” the king should ask that question but he did not ask. He was the smartest and the wisest human being around, so he thought.

Instead of asking for directions, the king announced that he knew the road and blurted out orders. He commanded every man and woman in his kingdom to bring out all their grains and feed their ducks and fowls. The people brought out their corn and guinea corn and fed their ducks and pigeons, chicks and chickens.

The king was happy and satisfied.

But, the real hungry, angry birds were looking and watching.

“This oba is king also in idiocy,” they concluded and resolved to teach the powerful how to be wise.

Then, they struck. Nothing Oniregba did amounted to anything. He moved from market to farm, all was in vain. His efforts were like Abiku’s bangles in Soyinka’s lines. He sent his servants on an errand, they did as Alaafin Aole’s spell ordered them: The messengers did not come back. They even did worse. They created their own message, like Afonja did, and delivered the same to an audience different from their lord’s. Wracked by hunger and want, shouts of “ebi npa wá” rent the town while disease and death and general pestilence reigned.

In the midst of the commotion, the sad king, in tears, challenged his priests on the failure of their prescription. “False prophets,” he called them.

They replied the king that he did not feed the birds as they counseled him to.

He said he did. They told him he didn’t.

The king gave a detailed account of his specific orders and how they were carried out.

The priests exchanged looks and laughed. They told the king: “Kabiyesi, you offered the wrong sacrifice to the wrong birds in the wrong place.”

And, so, in Iregba till tomorrow is the song:

We made smooth and soft pounded yam,

We gave the birds of Iregba,

The birds said no, they won’t eat.

We rolled out pots of succulent amala for the birds of Iregba,

The birds said it was not their food,

They refused to eat…

When we gave the right meals to the big birds,

They ate and chirped with joy…

I did not make this story up. If you are a Yoruba and you are like me with a knowledgeable ancestor, consult him. Even if the forebears are like mine, long dead, their undying spirit should whisper to you the truth in the tale. But if you have no father and no mother, and you have no idea where their bones rest, put a call through to Professor Wande Abimbola. He has the knowledge. Or you can go to Chief Yemi Elebuibon in Osogbo. The tale is his to retell. He has a fuller version recorded in one of his books.

Except he retraces his steps and changes the deity he serves, by the time Alhaji Bola Ahmed Tinubu ends his tenure, he will be remembered for creating greater misery and more poor people than have ever lived in Nigeria. I don’t think that will be an enviable legacy. But he chose it. Every king writes the history of his era.

When a government neglects the road, opts for the bush and pumps efforts into wrong ideas, what it does is the same as starving the birds of life. Its efforts will, till eternity, roll up and down the hill like the boulder of condemned Sisyphus, the devious tyrant of Ephyra who violated “the sacred hospitality tradition” by killing visitors “to show off his power.”

Let us look at it. You moved the price of petrol from less than N200 to almost N1000 and upended every plan in every home. You pushed the naira tumbling down Mount Everest and clapped for yourself as a man of courage. Your Sango’s stone celts struck the market and shocked food prices beyond the reach of the hungry. People who need food, you continue to feed them hope in poisoned cans of tax, more tax and more levies.

Until now, I never knew that the introduction of taxes and levies could be celebrated as achievements by a government. Our government has that epaulette proudly emblazoned on its right and left shoulders. And we are so pinned down in helplessness.

The history of tax is one of intrigue. In ancient times, it was levy to fight wars. In medieval times, it was what Terence Dwyer (2014) calls “a fee derived entirely from surpluses” – the same thing Adam Smith prescribed as the “ability to pay”. In modern times, tax has become “a burden on production.” Why should people pay tax to an absent government? Tax theorists say tax is payment for government services. In ‘The Birth and Death of Taxes’ (1977) economic historians, Edward Ames and Richard Rapp, trace the history of tax as a feature of government’s economic life. They tell us that there is “a public good called protection, the suppliers of which are called governments.” They say a government “has a monopoly over the supply of protection to its subjects and taxes are the price paid to the monopolist.” They take it further, identifying two kinds of protection: one is defence, the other justice. They say when a threat is from foreigners, there is a demand for defence. When the threat is internal, one group of the same population unleashing threats against another, the good on demand is justice. Both goods should normally be exclusively government products. But, you and I know this may not always be so. A government that provides neither defence nor justice but still demands and collects tax is simply extortionate. In that case, what should the subjects do?

A newspaper on Sunday said the president had halted the proposed collection of cyber security levies from the poor and the rich. If it is true, I salute and thank the president. But, should that demand ever have been contemplated at all? What law backed the collection order in the first place? Who should collect and manage taxes under a just, normal law, the Federal Inland Revenue Service or an office created strictly to advise on security?

While we sheepishly surrender and pour libation to Abuja’s god of extortion, we are being offered as cheap ingredients for money ritual. CBN’s demand for cybersecurity tax from everyone, including sellers of pepper and locust beans, was said to be rooted in the Cybersecurity Act 2015 and its 2024 amendment. But that is not correct. The law mentions neither you nor me, nor the sweaty yam seller next street.

Let us check what the law contains. Section 44 (1) of the Cybersecurity Act 2015 says: “There is established a Fund, which shall be known as the National Cyber Security Fund (in this Act referred to as “The Fund”).” Subsection (2) adds that “There shall be paid and credited into the Fund established under subsection (1) of this section and domiciled in the Central Bank of Nigeria: (a) A levy of 0.005 of all electronic transactions by the businesses specified in the Second Schedule to this Act.” And what is in that Second Schedule? The Second Schedule is plain; it habours neither the jìbìtì nor the rìkísí which we read in the CBN circular. The Schedule says: “Businesses which section 44 (2)(a) refers to are: (a) GSM Service providers and all telecommunication companies; (b) Internet Service Providers; (c) Banks and other Financial Institutions; (d) Insurance Companies; (e) Nigerian Stock Exchange.” The 2024 Act amended the 2015 Act without touching the Second Schedule. Indeed, the Amendment Act reinforces that schedule by prescribing punishments for non-payment of the levy by the businesses so listed (see Subsection 8 of the Amendment Act). So, where did Tinubu’s Central Bank of Nigeria get its long turenchi demanding that you and I start paying cyber security levies to an office that already has its share of the budget?

Apparently some people needed more money for the next night party, they did the maths and felt what the listed companies would pay them wouldn’t be enough for their frolics. They then converted all of us to ‘businesses’ without bothering to tinker with the law as they did in February. They simply asked the CBN to help them rewrite the law with a wordy circular. They did so knowing that we are a conquered people who won’t bother to check what the law truly says.

Even the businesses listed in that cyber security law will argue that they are being unfairly taxed. You would know and agree with them if you apply the theory of tax as payment for public goods. What does the government sell to them that warrant incessant taxation? How many of those businesses get ‘defence’ or ‘justice’ from the government as we know it?

“Nigerians pay one of the highest implicit tax rates in the world — way higher than developed countries,” African Development Bank’s president, Dr. Akinwumi Adesina, cried out in January 2021 at a Federal Inland Revenue Service Tax Dialogue. “Think of it”, he said “they provide electricity for themselves via generators; they repair roads to their neighborhoods, if they can afford to; there are no social security systems; they provide security for their own safety; and they provide boreholes for drinking water with their own monies.” Yet, more taxes and levies are rolled out daily against us like Israeli armoured tanks in Gaza.

We should be afraid. There was a time in France when the people were compelled to purchase salt by the government which also forced them to pay extortionate tax on it. Kings and principalities historically taxed the most important ‘goods’ of life. Salt has always been that important – even the word ‘salary’ is related to salt; you may check the history of its Latin root ‘salarium’. And, so it was heavily taxed. The French called the salt tax la gabelle. Historians Theodore Sands and Chester Higby in 1949 published an article on ‘France and the Salt Tax’. In it, they recall that the history of the gabelle under the Ancien Regime is “largely a story of increasing taxation and flourishing abuses.” They say there was even a king of France who monopolized the sale of salt and made the people pay salt tax without selling salt to them. They add that it was a period when the government was “satisfied to receive the money supplied by the system and forgot the people who paid it.” The repercussion was an insurrection that pillaged the rich and, later, ignited the French Revolution.

Today’s Nigerians are like the birds of ancient Iregba. They are hungry and angry. In his ‘Salt, Politics and the French Revolution’, Toby Jaffe warns that “everyday commodities, including food, have the power to uproot, shatter and recreate societies…The revolutionary events around the salt tax of 18th-century France teach us that something as deceptively simple as salt can be a spark plug for civil unrest and revolution.” Now that Nigeria taxes everything including hunger, may God give us the fortitude to bear what may be coming.

A few weeks ago, Nigerians were startled by a legislation that had largely escaped public awareness. This legislation, which has since undergone substantial amendment carries profound implications for the financial health of every Nigerian, sparking widespread controversy.

The law raises several concerns regarding our legislators’ rigour, effort, and dedication to enacting laws. The legislation, which is known as the Cybercrime (Prohibition, Prevention, etc.) (Amendment] 2024 Act. Section 44 (2] (a] of the Act, mandated a levy of 0.5% of all electronic transactions value by businesses specified in the second schedule of the Act, which includes GSM service providers and telecommunication companies, Internet Service Providers, Banks and other financial institutions, Insurance companies and Nigeria Stock Exchange.

To implement this law, the CBN, on the 6th of May 2024, sent a circular to all banks and financial institutions in Nigeria to charge a cybersecurity levy starting from the 20th of May 2024 on electronic transactions by customers, barring a few exemptions. Industry watchers have claimed that the government aimed to earn about N2 trillion per annum, judging by the over N600 trillion values of all such transactions in 2023. This caused an uproar in the country, and most civil society organizations, private sector businesses, labour organizations, and concerned Nigerians used all the media available to them to voice their condemnation of this imprudent law.

The banks and other mandated institutions are to collect the levy and remit it monthly to a designated fund (National Cybersecurity Fund) at the CBN for transmission to the Office of the National Security Adviser (ONSA). The fund’s stated primary purpose is to provide financial resources for fighting cybersecurity crimes in Nigeria.

There are many things wrong with this levy beyond the fact that Nigerians are discontented with government and non-governmental levies and fees plaguing the living light out of them. Some have argued about the interpretation of the law by CBN that the transactions to be charged should be on the businesses mentioned in the Act, not their customers or Nigerians. Others have questioned why this law, created, and signed into law in 2015 by the Jonathan administration, was amended now to include the cybersecurity levy and why the haste to implement it now, especially given the harsh economic conditions occasioned by good-intentioned policies that have had a devastating impact on Nigeria.

The argument on timing is germane given the level of inflation and the devastating degradation of the value of the Naira and, by extension, the purchasing power of Nigerians. Some still argue about the increasing focus of government to use tax as a significant economic policy for revenue generation, especially in an increasingly volatile economic climate where productivity is low, and businesses are shutting down because of increasing cost of doing business, ranging from the cost of labour, energy, and raw materials. My take on this anchor on the morality behind the levy given Nigeria’s social contract with the state, procedural antecedents in institutional revenue collection for government, the burden on Nigerians on financial transaction-related charges, and the imperfections of our legislative processes. 

The pertinent question is why should Nigerians who pay personal and business taxes pay for security in whatever guise or nomenclature? Whether cybersecurity, physical security, or any form of security, it is the Nigerian government’s exclusive and primary responsibility, which is why we pay  tax to the government. Under the social contract between Nigerians and the state, we accept and give out our rights, especially the right to security of our lives, to the state and expect the state to protect us by whatever means necessary. The state provides the security infrastructure, architecture, and personnel to provide security for all. The government singling out an aspect of security and levying citizens to pay for it is tantamount to double taxation when we already pay income tax and allow the government income from our natural resources to provide this service. Unbundling security and taxing some is a prelude to other security tax forms. Should we expect a Banditry levy, terrorist levy, or armed robbery levy soon?

The second question is, when did the office of the National Security Adviser become a revenue-generating and collecting centre? The Nigerian state has explicit provisions for regulatory agencies or public enterprises that provide public goods and services. The office of the NSA is not such and does not have such a mandate. It is an anomaly procedurally to saddle this office with the mundane task of revenue issues, and as a government unit coordinating security, it should receive its funding from the federal government budget. Enacting and implementing laws that go against established procedures affects the structures and systems of the state and sometimes goes against the mandate on which institutions are created. 

The third issue is why the national assembly members were screaming at the top of their voices against this law when the same body amended it. Does it mean that they did not understand the law they passed? Or is it that the law was amended and passed without the knowledge of many members passing through the due processes? Is the interpretation of the law by CBN not in tandem with the intentions of the lawmakers? Is there a problem with framing the law caused by language failure? Did the framers mean online or electronic transfer levy? It would be easier for the public to understand the levy if it had come outright as a transaction levy because many people cannot link their electronic transactions and cyber security levy. Where is the ‘cybersecurity’ in transferring legitimate money? The law does not resonate with many Nigerians of average means and education, and they cannot link their everyday transactions to cybersecurity.

Granted, the legislation enacted by the National Assembly is not perfect. It sometimes has some flaws. They are subject to review, revision, or repeal. Because of this, the law is a living thing that changes with the seasons and the passage of time. Remember, errors are not uncommon when enacting laws. Had Magaji Tambuwal, the then-Clerk of the Nigerian Assembly, been successful in getting President Bola Tinubu to sign a version of the “Real Estate Regulatory Council of Nigeria 2023”—which is regarded as phoney—into law, he would have been inducted into the Hall of Fame. This demonstrates that sometimes, legislation approved and accented to by the president may not always accurately reflect the framers’ intentions. Numerous things occur in between.

The fourth issue is the incongruence of the cybersecurity levy while the Taiwo Oyedele committee is working on the harmonization of multiple taxes, reducing unprogressive taxes and  the multiplicity of legislation that imposes taxes on business. Besides, the cybersecurity levy affects citizens’ living wages. We cannot stagnate household income and continuously increase all cost elements of a living wage (housing, transport, utilities, food) through more charges like cybersecurity levy and not increase poverty in the extreme or diminish consumption income in the main.

The last issue is that the burden of bank-related levies and taxes that individuals pay in Nigeria is too much on them. It will be good for researchers to do a comparative study with other developing countries like Nigeria to determine whether we are in this alone. Bank-related levies include transfer fees, card maintenance fees, card issuance charges, stamp duties, VAT on SMS, and SMS charges for the receiver and sender. This cybersecurity levy will be one too many. Imagine the implication on the cost of doing business, especially post-subsidy removal, post-increase in electricity tariff, the collapse of the Naira, hyperinflation and many charges and levies on businesses.

Existing business levies and taxes include Company Income Tax, Stamp Duties, Petroleum Profit Tax, Capital Gains Tax, Value Added Tax, Personal Income Tax, Withholding Tax, Tertiary Education Tax, one per cent of payroll contribution to NSITF, 10 per cent of Payroll Contribution to PenCom; one per cent of Payroll ITF Levy and National Information Development Levy. Others are Radio and TV Licenses; Police Special Trust Fund Tax levy; Niger Delta Development Commission levy; National Agency for Science and Engineering Infrastructure levy; Land Use Charge; Parking Fee; Consumption Tax; Road Tax; Standard Organization of Nigeria fees; Nigeria Content Development levy; NAFDAC levy; Nigeria Health Insurance Authority contribution; Signage Fees. Touts and street urchins are leveraging the multiplicity of taxes and levies to attack businesses. Businesses are getting it rough and do not need another levy straw that will break their backs.

Cybersecurity levy is peculiar to Nigeria and is not applicable in many developing and developed countries of the world. President Bola Ahmed Tinubu acted well in suspending the cybersecurity levy; many Nigerians are happy about that. There are many reasons to repeal this law or quickly review it with broad-based consultations.

The multi billion dollars Lagos-Calabar Highway contract is the biggest and most ambitious of such contracts in Nigeria’s history and it was always going to attract great attention and commentaries. The current public fixation with it was guaranteed given the opaqueness and many questions which surround its award and rushed commencement of execution. The questions are legion, and the fact that satisfactory answers have not been proffered is profoundly disturbing.

Why, for example, did the Federal Government abandon the original route through the first ten or so kilometres of the road at its start in Victoria Island, Lagos, and embarked on a very controversial new route resulting in the destruction of otherwise secure properties at avoidable huge costs and destruction of livelihoods? Why was there no competitive bidding for such a strategic, generational project? When was the environment impact assessment (EIA) done, if at all? What is the exact total cost of the project? Why is it a priority of Tinubu’s government, all factors considered, including the fact that it is a grand duplication of the unfinished East-West Road and, as between Victoria Island and Epe, a duplication of the equally coastal Lekki-Epe highway?

There are just too many questions and for which Dave Umahi the Minister for Works did not provide any answer, and when he tried to do so sadly did not make much sense. The discerning public and the main opposition politicians expectedly took the Federal Government to task. And it was bad enough that Mr. Umahi was not making much sense, such as in his claim of the existence of an EIA, a necessarily very public process but which no one knew when it was purportedly done. What was well beyond the pale was his response to Peter Obi. Instead of sticking to politics, since he seems incapable of speaking or comporting himself professionally, he deviated into dog-whistling and ethnic-baiting Ndigbo, accusing Peter Obi of inciting them into hatred of Tinubu’s government.

Peter Obi in our view essentially only accused the Federal Government of gross misplacement of priorities with the coastal road project, and what that had to do with Ndigbo that Mr. Umahi had to drag them into his response to Mr. Obi beggars belief. It was most dishonest, cowardly and dangerous of Mr. Umahi to divert into ethnic baiting his own Igbo nationality in the course of rebutting Mr. Obi. The other major opposition figure, Atiku Abubakar, has since gone ahead to publish a much more trenchant criticism of the project, pointedly accusing President Tinubu of corruption on the matter. Not only has Mr. Umahi kept mute in the face of Atiku’s questioning of the integrity of the persons involved in the project, including himself the concerned Minister, even if indirectly, he did not see why Atiku’s Fulani ethnicity must be dragged into the verbal altercation. Again, weeks before the issues came to a head with the impending commencement of the project Afenifere (or at least a group identifying as such) had published a detailed criticism and also accused President Tinubu of corrupt motives in pushing ahead the project with indecent haste. And Mr. Umahi did not see in it an instigation of Yoruba people against the Tinubu Presidency, nor did he suggest such motives against notable Lagos indigenes and leaders of some affected coastal communities on the Lekki-Epe corridor who have complained against the project or its impact.

The League of Anambra Professionals is a community development oriented organization and we do not concern ourself with partisan political considerations. But this do not close our eyes from, and drawing attention to, egregious misdeeds of political actors and organisations which are inimical to community and national development. It is against this backdrop that we find it noteworthy that it seems to be a policy of the APC to not only deny Ndigbo their due but also cynically enable dog-whistling and setting their neighbours against them. They bore with equanimity the greatest brunt of President Buhari’s unspeakably retrogressive nepotism. As if this was not enough, the last general elections in Lagos State witnessed a systematic violent harassment of Ndigbo on a scale unseen since the Civil War, with vast numbers of them and those perceived as being of the ethnicity denied their right to vote.

In all this, not only did the APC and its leaders not disclaim the evils perpetrated in their name and for which they were supposedly the beneficiaries, they went on to reward with plum appointments some of the biggest culprits like Mr. Bayo Onanuga. It would thus appear that anti-Igbo rhetoric is a badge of honour and a step to promotion in APC, so much so that some of the Igbo lickspittles in the party like Mr. Umahi outdo themselves in their gratuitous denigration of their kith and kin. It is a sad commentary, in the foregoing vein, that Mr. Umahi has made a career out of nurturing of divisions amongst Ndigbo as well as between them and other ethnic nationalities.

As Governor of Ebonyi State Mr. Umahi made a habit of brainwashing the ordinary people of the state that their fellow Ndigbo from the other South-East states were responsible for their under development.  It would be recalled that it was the same Umahi who resisted the location of a new police zonal headquarters in Anambra State, advancing as his reason the drivel that Anambra State indigenes have too much money and that Ebonyi State indigenes were not comfortable that their state was grouped under the same police zonal command. Reasonable people would wonder what the wealth of Anambra State indigenes had to do with the location of a police zonal office. And when asked about Igbo agenda especially regarding quest for a restructuring of the Nigerian polity, Umahi disclaimed it and claimed knowledge of only the ‘Ebonyi agenda’. His latest dart only serves to expose Ndigbo to further calumny and hatred and must not go unchallenged.

Dave Umahi was in the main wrongly ignored by the Igbo leadership as he stoked divisions and intra-Igbo hatred from his perch as the Emperor of Ebonyi, in the course of which he propagated such inanities like the former President Buhari being the greatest Nigerian leader. Now that Tinubu has given him a national stage which is proving too big and sophisticated for him, and clearly disconcerted if not disorientated by legitimate questions over the controversial mammoth project under his watch, Mr. Umahi thinks that his best evasive tactic is indulgence in ethnic baiting of Ndigbo. If Ohaneze Ndigbo has any relevance then they not only must have a word with Mr. Umahi but insist that he tenders a public apology not only to Ndigbo but to all Nigerians for deceiving and trying to distract them from insistence on their rights as citizens to question how their money is being utilized especially on such an unprecedentedly grand scale.

Chijioke Okoli, SAN; Orji Nnewi

President, League of Anambra Professionals

 

 

   

Members of the organised labour, on Sunday night announced that they would shut down offices of the Nigerian Electricity Regulatory Commission (NERC) and Distribution Companies nationwide.

They said the offices would be under lock and key until the Federal Government accedes to their request on total reversal of electricity tariff hike.

The Federal Government later approved a marginal slash, which labour rejected and demanded full reversal.

Both Nigeria Labour Congress (NLC) and its counterpart from the Trade Union Congress (TUC) had last week warned the commission to immediately reverse the hike on or before Sunday, May 12.

The movement also warned the commission to announce the stoppage of what it described as “discriminatory practice” of segregating electricity consumers into arbitrary bands.

Giving an update on Sunday night, the head of information at NLC headquarters, Benson Upah, in an official notification sent to journalists, said members of the movement would converge on Labour House by 7:00am.

“NLC invites you to cover the picketing of the Nigerian Electricity Regulatory Commission headquarters in Abuja,” Benson said in the official notification sent to our correspondent last night.