Nigerian Government Plans to Reintroduce Telecommunications Taxes to Secure $750 Million World Bank Loan
The Nigerian government has devised a strategy to reintroduce previously suspended telecommunications taxes and other revenue-generating methods to secure a $750 million loan from the World Bank.
This plan is outlined in the recent Stakeholder Engagement Plan for Nigeria – Accelerating Resource Mobilisation Reforms program, conducted between Nigeria and the World Bank.
The document, available on the World Bank’s website, indicates the potential reintroduction of taxes on telecommunications, electronic money transaction levies, and other fiscal measures.
The $750 million contribution from the Washington-based World Bank is a significant portion of the program’s budget, with the government expected to contribute $1.17 billion annually through its budgetary allocations. Nigeria initially requested the loan in 2021 but faced delays.
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“Domestic Revenue Mobilisation drive in the government ARMOR program seeks to increase revenue on some targeted industries and sectors of the economy. Specific groups and agencies within affected sectors include the Association of Licensed Telecom Operators of Nigeria: The introduction of excises on telecom services requires that all telcos are mobilised to participate fully in collecting such revenue.
“Committee of Bankers: Introduction of EMT levy on electronic money transfers through the Nigerian Banking System would need the buy-in of all banking institutions”, the document partly reads.
The development comes after President Bola Tinubu, in July 2023, ordered the suspension of the five per cent excise duty on telecommunications and the Import Tax Adjustment levy on certain vehicles.
Recall that the Nigerian government applied for the $750 million loan in 2021 to improve the government’s financial position by enhancing its capacity to manage and mobilise domestic resources effectively, which includes improving tax and customs compliance and protecting oil revenues.
Sectors affected include manufacturers of goods such as alcoholic beverages, tobacco products, sugar-sweetened beverages, telecom and banking service providers, and the general tax-paying public, importers and international traders.
