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Banking Sector

Government Rakes in N78.95bn from Electronic Bank Transfer Levy in Five Months

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Retail banking

The Nigerian government generated N78.95 billion from the N50 levy imposed on electronic bank transfers in the first five months of 2024.

This revenue collection revealed the importance of the Electronic Money Transfer Levy (EMTL) introduced under the Finance Act 2020.

The EMTL, established to tap into the burgeoning sector of electronic funds transfers, applies a singular and one-off charge of N50 on electronic receipts or transfers of funds amounting to N10,000 and above.

This levy is imposed on any deposit money bank or financial institution account.

The National Bureau of Statistics, in its Federal Allocation Accounts Committee report, disclosed that the 36 state governments received a combined allocation of N31.84 billion from January to April 2024.

This distribution forms part of the government’s broader revenue-sharing framework, which allocates 50% of EMTL proceeds to state governments, 35% to local governments, and 15% to the Federal Government.

The monthly breakdown of revenue collected from the EMTL revealed consistent inflows: N15.9 billion in January, N15.15 billion in February, N14.75 billion in March, N18 billion in April, and N15.14 billion in May.

The states benefited significantly from this revenue stream. From January to April, the federal allocation indicated that N8.93 billion was shared in January, N7.96 billion in February, N7.58 billion in March, and N7.38 billion in April.

Among the states, Anambra received the highest allocation with N1.03 billion, followed by Bauchi with N818.98 million, and Akwa-Ibom with N796.81 million.

The 2023–2025 Medium Term Expenditure Framework and Fiscal Strategy Paper had projected government earnings from EMTL at N137.03 billion in 2023, N157.59 billion in 2024, and N189.11 billion in 2025.

This year’s collections suggest the government is on track to meet, if not exceed, its 2024 projection.

In addition to direct government revenue, digital banking channels have shown robust growth, generating approximately N438 billion for 10 financial institutions in 2023. This represents a 37.54% increase from N318.64 billion in the previous year.

E-business income, encompassing revenue from electronic channels, card products, and related services, has continued to rise, driven by stable platforms and increased consumer adoption.

Lilian Phido, Head of Corporate Communications at the Nigeria Inter-Bank Settlement System (NIBSS), highlighted the growing acceptance and reliability of electronic payment channels.

“With stability, these components have grown. More and more people are moving towards these platforms,” she commented in an earlier interview on Sunday.

The consistent revenue from the EMTL not only reflects the success of the Finance Act 2020 in capturing the economic potential of digital transactions but also underscores the crucial role of electronic banking in the country’s financial ecosystem.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Banking Sector

Jaiz Bank Boosts Chairman’s Income to N24m Amidst Strategic Expansion

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Jaiz Bank

Jaiz Bank has announced a 20% increase in its chairman’s annual income to N24 million.

This decision was unveiled in a recent statement filed with the Nigeria Exchange Limited, highlighting the bank’s commitment to rewarding leadership amidst its expansion plans.

The bank, renowned for its pioneering role in non-interest banking in Nigeria since 2012, also approved a remuneration package of N20 million for each non-executive director.

The announcement was made by the bank’s secretary, Mohammed Shehu, highlighting the importance of competitive compensation for board members who provide crucial oversight and strategic guidance.

Shareholders at the Annual General Meeting (AGM) expressed confidence in the board’s leadership by approving the resolution on directors’ fees.

This move aligns with Jaiz Bank’s ongoing efforts to enhance its capital base to N70 billion by the end of 2024.

The bank also announced a dividend of 4 kobo per share, which will be distributed to shareholders on July 16, 2024.

This dividend declaration was welcomed as a testament to the bank’s operational success in a challenging economic climate.

Also, the AGM saw the re-election of Muhammadu Indimi and Muhammad Abdulmutallab as non-executive directors, reaffirming shareholder trust in their leadership capabilities.

Jaiz Bank’s financial performance has been impressive, with a 67% increase in profit before tax, reaching N11.1 billion in 2023.

Gross earnings also rose by 42% to N47.2 billion from the previous year, showcasing the bank’s successful growth strategy.

As Jaiz Bank continues to expand its services, the enhanced remuneration package signals a commitment to maintaining strong governance and leadership, paving the way for future achievements in ethical banking.

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Banking Sector

Nigeria Plans 50% Windfall Tax on Banks’ Currency Profits

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Central Bank of Nigeria (CBN)

Nigerian President Bola Tinubu has announced a one-time 50% tax on windfall profits that banks reaped from currency gains following last year’s naira devaluation.

This decision was part of the government’s strategy to navigate the ongoing cost-of-living crisis.

The naira, which has depreciated by about 70% against the dollar since foreign exchange rules were relaxed in June 2023, allowed banks holding dollar assets to significantly boost their income.

However, the Central Bank of Nigeria had advised lenders to retain these profits as a buffer against potential future losses.

The proposed tax will apply to the 2023 financial year, with non-compliance resulting in hefty fines.

The move has already impacted the NGX Banking Index, which fell by 1.3% as of midday trading in Lagos. Notable declines were seen in FBN Holdings Plc and Zenith Bank Plc, dropping 3.2% and 2.5% respectively.

This initiative mirrors similar actions in Europe, where countries like Italy and Hungary have imposed taxes on banks to address what they view as excessive profits during periods of high inflation and interest rates.

European banks have criticized these measures, warning of potential impacts on economic growth due to constrained lending capabilities.

President Tinubu’s administration believes this tax will help manage Nigeria’s fiscal challenges while addressing social needs.

Lawmakers are expected to support the measure, alongside a proposal to increase government spending by 6.2 trillion naira ($3.8 billion).

While banks have benefited from currency revaluations, many customers, particularly manufacturers with dollar-denominated loans, faced significant losses as they struggled with the weaker naira.

The new tax policy highlights the government’s broader efforts to stabilize the economy and attract foreign investment, aiming to ensure a more equitable distribution of financial gains.

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Banking Sector

Unity Bank Customers Win Over N4 Million in Cashtoken Rewards Promo

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Unity Bank customers have claimed over N4 million in cash rewards in its ongoing loyalty programme recently rolled out with Cashtoken, a Cash Reward-as-a-Service company.

The winners included no fewer than 40 customers who adopted and transacted on the Bank’s digital banking platforms, including the UniFi mobile banking application, the *7799# USSD platform or activated their Unity Bank Verve Card to transact on e-payment terminals across Nigeria.

Beginning from onboarding in our customer lifecycle journey, the Unity Bank Cashtoken Partnership commenced as a loyalty and reward scheme to reinforce the benefits of e-banking platforms. To begin, Customer transactions earn cash tokens, which are then redeemed to qualify for the monthly Cashtoken Rewards draw. Consequently, winners emerge from the draws to claim the cash prizes.

Recall that the retail lender announced the ongoing Cashtoken Rewards loyalty programme in December 2023 in partnership with Cashtoken Rewards Africa to empower customers and improve customer satisfaction. The partnership with Cashtoken Rewards also provided an opportunity for the Bank to migrate customers—old and new—to a platform that will continually create exciting rewards and appreciation for loyalty.

Eghomware Iyamu, Unity Bank’s Head of E-Business, commenting on the success of the Cashtoken Rewards loyalty program, stated: “We are excited to see our customers win over N4 million in cash rewards through our partnership with Cashtoken. This initiative demonstrates our commitment to recognizing and rewarding the loyalty of our customers”.

“By leveraging our digital banking platforms, including the Unifi mobile banking application and the *7799# USSD platform, we are not only enhancing customer experience but also providing life-changing opportunities. The Cashtoken Rewards program is a testament to our dedication to improving customer satisfaction and creating meaningful rewards along our customer lifecycle journey. We look forward to seeing more of our customers benefit from this exciting program as we continue to innovate and deliver exceptional value to them.”

Unity Bank has robust electronic banking products which include mobile and digital banking channels, including ATM, PoS, or any digital payment channels which support retail product transactions across the country. New-to-Bank customers are invited to open a Unity Bank account, onboard onto the digital platforms and begin transacting on the various platforms to earn cash token rewards and cash prizes while existing customers are encouraged to onboard and transact to win even more rewards and cash prizes.

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