Feature/OPED

Africa’s Economic Development: Exploring Geopolitical Complexities and Contradictions

Published

2 years ago

13/05/2024

By Kestér Kenn Klomegâh

Within the context of rapid geopolitical changes and the Russia-Ukraine crisis, African leaders have to rethink and take strategies to save their straddling economy. Both situations have created increasing problems across the world. The underlying causes are well-known and therefore allowing its possible effects to largely influence the already-stressed economic development processes will spell disaster and tragedy for Africa and its 1.4 billion population.

Several years have elapsed after the United Nations declared Africa’s political independence. Archival records show that Russia not only supported African countries in liberating themselves from the yoke of colonialism and attaining political independence but also facilitated the UN General Assembly adopting in 1960 the Declaration on the Granting of Independence to Colonial Countries and Peoples. It was precisely May 25, now more than 60 years ago, but still, Africa is far away from attaining its economic freedom despite the huge natural and human resources there. The resources are untapped, development remains shabby and about 60% of the population is impoverished.

Some say leadership attitudes and approaches are holding back development in Africa, while others blame external factors including the opaque relations adopted by foreign players. Without an effort to negotiate and identify development priorities, without an effort to cut off self-centred attitudes, we will be prolonging our economic development and growth for another century. If we attribute our under-development to imperialism and colonialism, why not then primarily blame African leaders, their executive cabinets and the legislative organs? Does Africa need these weak public institutions civil society, and leaders with obsolete and parochial ways of managing our economy?

At this stage of Africa’s development, is it necessary to examine thoroughly how the geopolitical changes are influencing Africa’s unity and development? How it is impacting on African countries across the continent. In practical terms, the time has arrived to look at the development processes and review obstacles, control and monitor the participation of foreign players and now think of our role in the emerging new world order, as well as the implications for Africa.

On the other hand, many external players are swiftly dividing Africa and its desire for sustaining unity that has already been attained these several years by using anti-Western slogans and rhetoric, using political confrontation and consistently urging African countries to employ hatred for some foreign entities’ participation in Africa’s economy. There are glaring indications that Africa is sharply divided, and diverse conflicts are taking a heavy toll on developments there.

African Union simply lacks a unified approach to the continent’s development. Strengthening African unity has long been a sought-after goal that has never been fully achieved. As the need for regional integration and the reasons for past failures become better understood, new efforts are being made to hold economic and political ties between countries. To foster an integrated development, regional organizations have been created in different parts of Africa. But on the whole, they have done little to improve developments in their respective regions. In many cases, African leaders continue to have the most extensive bilateral relationships with their former colonial powers. In the opposite direction, Russia and China are critical of Western and European connections to Africa. At least, China has given appreciably huge support, especially in upgrading infrastructure. Russia has now embarked on fighting “neo-colonialism” which it considers a barrier on its way to regain part of Soviet-era influence in Africa.

In terms of working with Africa, Foreign Ministry Spokeswoman Maria Zakharova, during her weekly media briefing on March 23, indicated that African countries need to consolidate their political independence and sovereignty while overcoming acute socioeconomic issues and development. She expressed appreciation and respect for the sovereign equality of states and non-interference in their internal affairs. But on the other side, lashed at the aggressive policies of the United States, and its approach towards Africa. She also blamed African leaders for their inability to employ “common sense” in their interests and, most importantly, within the principles of the supremacy of international law, especially in the current geopolitical changes rapidly shifting from the unipolar system to a multipolar world order.

She said: “Russia’s active work on the African track is a significant part of the entire scope of measures to develop constructive cooperation with a great number of countries that pursue an open and balanced foreign policy guided by common sense and their interests and, most importantly, within the principles of the supremacy of international law and indivisible security with the central and coordinating role of the United Nations.”

According to her explanation, Russia advocates for a more equitable and democratic international order that will promote reliable security, the preservation of unique cultural-civilizational identity and equal opportunities for the development of all states. This can only be guaranteed within the framework of a multipolar system of international relations and cooperation based on a balance of interests of the developing world. In a nutshell, Africa’s future has to be in line with this overall global development.

Due to its Western and European dreams which it has pursued for the past three decades following the collapse of the Soviet era, Russia is shifting while charting a multipolar configuration and now moving to Africa. It is consistently expressing the desire to fight growing neo-colonial tendencies, obviously the most difficult task reminiscent of the Cold War times, in the continent to win support and sympathy from African leaders and among the 1.4 billion people, while Russia has invested little in the development of infrastructures, in the industrial sector and other employment-generating sectors across Africa.

In the context of development processes, African leaders are aware of the necessity to prevent the revival of neo-colonialism, the destructive attitude towards resources. The fight against neo-colonial tendencies should remain exclusively a challenging task for African leaders, the regional organizations and the African Union. Russia should focus on what it could concretely do in the various economic sectors rather than continue accusing the United States and Europe of the under-development, economic obstacles and political problems across Africa. Experts say African leaders, with the political mandates from their electorates, should take sole responsibility for African problems and find African solutions within their professional skills and competencies.

It implies that Russia is under-rating, and downgrading African leaders and their development policies for allowing the growth of neo-colonialism. By advising African leaders on what political direction is necessary to adopt, Russia is directly interfering in the internal politics of Africa. In practical terms, African leaders are answerable to their electorate, and the electorates have the duty of making objective assessments of their governments’ performance. It is widely acknowledged that state institutions are weak, and most high-level decisions relating to mega-projects first have to be discussed by parliament or get the necessary approval from the cabinet. The system of checks and balances is still questionable in many African countries.

Some experts say the world needs cooperation rather than fragmentation. Cooperation rather than confrontation is the basis for the emerging multipolar world. For instance, Ivan Timofeev, Russian International Affairs Council’s Director of Programs and also Head of the “Contemporary State” program at Valdai Discussion Club, writing under the headline “Can Russia Really Break Away from the West?” argued that long before relations between Russia and the West spiralled into a comprehensive political crisis, Russian leadership and officials were enthusiastically voicing ideas about developing ties with the rest of the world.

After the Soviet collapse, especially in the 1990s, former Foreign Minister Evgeny Primakov pursued most activities within the framework of a multi-vector foreign policy. The gradual growth of contradictions with the West accelerated the formation of ‘pivot to the East’ ideas, although their implementation was slow. However, the current crisis in relations between Russia and the West, for all its appearances, is irreversible and has driven an increase in the number and quality of ties with countries which are outside the control of the United States. Nevertheless, Russia itself is unlikely to be able to cement and consolidate them alone. However, it exemplifies the very possibility of challenging the political West on fundamental issues. Not everyone is ready to follow the same path, but the very fact of its presence is an event which has a global dimension.

The task is to create reliable opportunities for modernisation through interaction with the non-Western world. Here, success is far from guaranteed. The ‘world majority’ is closely embedded in Western-centric globalization, although the existing system has its problems. Russia’s links with its Western neighbours have been accumulating for centuries. Even such a powerful crisis like today’s cannot cut them overnight. Within the West itself, there is both an ideological and a purely material stratification. Behind the facade of general political slogans lies an extremely heterogeneous political and mental space.

According to Ivan Timofeev, it is necessary to take into account the fact that the countries of the world majority which are friendly to Russia, still have their national interests. They are unlikely to sacrifice them simply for the sake of friendship with Russia. Many non-Western countries maintain close relations with the West. A considerable number of them still benefit from Western-centric globalization. Moreover, many use a modernising process according to the Western model, preserving their cultural identity, and if possible, political sovereignty, but do not hesitate to use Western standards in the fields of economics, production, management, education, science, technology, et cetera. Rather, Russia will have to engage with a variety of cultures and ways of life.

Last year, I attempted to have an insightful understanding of the geopolitical changes, the emerging multipolar configuration and its implications for Africa. Whether it mean Africa has to break away from the United States and Europe? During the discussions with Dr Mohamed Chtatou, an experienced professor of Middle Eastern politics at the International University of Rabat (IUR) and Mohammed V University in Rabat, Morocco, told me how Africa can develop itself away from the greed of some developed nations and still maintain contacts with them. He clearly underscored the system of approach, noting further that there is no easy answer to this question, as it is a complex issue that involves many different factors. However, there are some steps that Africa can take to promote sustainable development and reduce the influence of developed nations.

Here are a few of the steps Dr. Mohamed Chtatou suggested:

Promote good governance: African nations should work to establish transparent and accountable systems of governance that promote the rule of law, protect human rights, and combat corruption.

Invest in education and human capital: Developing the skills and knowledge of the African people is crucial to building a sustainable and prosperous future for the continent. Investing in education, health care, and other social services can help to build a strong and healthy workforce.

Support local industries: African nations can promote economic development by investing in local industries, rather than relying solely on exports of raw materials. This can create jobs, generate income, and promote sustainable growth.

Foster regional integration: African nations can work together to promote regional integration and reduce dependency on external actors. This can involve developing common trade policies, investing in regional infrastructure, and promoting cooperation on issues of mutual interest.

Encourage foreign investment on African terms: African nations should strive to attract foreign investment on their terms, by negotiating fair and equitable deals that benefit both the investor and the host country. This can help to promote economic development and reduce dependency on aid.

Given its abundant resources, its ambitious youth, its vibrant society, and its geo-strategic potential, Africa needs to achieve unity and full integration, at once, to face the immense greed of the developed world and to defend its interests in the best possible ways.

Dr. Mohamed Chtatou further discussed the question of increasingly growing neo-colonialism and related tendencies in Africa. The term neo-colonialism first became widespread, particularly in Africa, shortly after the decolonization process following the end of World War II, which came after the struggle of several national independence movements in the colonies. Colonialism is a policy of occupation and economic, political or social exploitation of a territory by a foreign state. Neo-colonialism refers to a situation of dependence of one state on another. This dependence is not official, as is the case between a colony and a metropolis.

The brutal exploitation of the populations as well as the appropriation of the resources of the continent by the countries of the North are at issue. This is what justifies that today, France and other Western countries are implementing actions, notably by helping the development that colonization had slowed down. Neo-colonialism in Africa refers to the indirect and continued domination of African countries by former colonial powers, or by other external powers, through economic, political, and cultural means.

Some aspects of neo-colonialism in Africa include:

Economic exploitation: African countries are often forced to rely on exports of raw materials, while importing manufactured goods at higher prices, leading to a one-sided economic relationship.

Political interference: External powers often interfere in the political affairs of African countries, supporting leaders who are favourable to their interests, and opposing those who are not.

Cultural domination: The cultural influence of former colonial powers can still be felt in Africa, as Western cultural values and norms are often seen as superior to traditional African values.

Debt dependency: Many African countries are burdened by debt, which often originated from loans given by external powers. These debts can lead to dependency and compromise their sovereignty.

Land and resource grabbing: External powers or corporations often acquire large amounts of land or resources in African countries, displacing local populations and leading to environmental degradation.

There may be some contradictions and complexities when discussing and analysing Africa within the context of geopolitical changes. In terms of business, the United States and Europe stand as the traditional markets for Africa’s exports, earn significant revenues from these markets, and therefore difficult to abandon overnight. Most of the European capitals and the cities in the United States are popular holiday destinations for the African elites and the middle-class and business people. The diaspora is closely knitted by family culture. These are the essential features that unite them. The relationships were distinctively different during the political independence struggle, and now much relates to the economy.

In most cases, it is further argued that Africans speak most European languages, and more or less understand the Western and European culture, with all the diversity of the West. This is one greatest ultimate advantages of preserving their cultural identity, and if possible, political sovereignty. It simply facilitates establishing and maintaining ties with friendly ties with Western and European countries.

The design for an alternative has to significantly address development concerns and the population’s living standards, these are the primary tasks of African leaders. Africans are making fundamental decisions in the areas of economic development, thus external players with investment capital and entrepreneurial partnership are likely able to cement and consolidate their desires for a strong society in the global dimension. These have to be located within the frame of the African Union concept.

In other words, the African Union is far from its objectives and, contrary to its reference model, is not prospering. This sad fact raises several questions, both about African integration and about the legitimacy and usefulness of the African Union. The topic seems all the more relevant as African nations see regional integration as an important opportunity to introduce political stability and increase trade. In this regard, Kwame Nkrumah, the first president of Ghana and one of the founding fathers of African unity said: “There can be no real independence and economic independence and true economic, social, political and cultural development of Africa without the unification of the continent”. But how should this unification take place? Is the African Union, based on the European Union model the only solution for Africa? Is it capable of curing Africa of all its ills? What if regional integration under the European model is not adapted to Africa?

Most African experts believe that for Africa global stability is a necessary factor for growth, but it must first take control over its growth agenda. Of course, Africa has to forge an intra-African trade and investment, modern agriculture and focus on industrialising as the basis for the newly created single market. As Jakkie Cilliers, Head, African Futures and Innovation, ISS Pretoria, in April 2023 argued “the continent will suffer if current efforts to instrumentalize Africans in this divided world continue.”

In his view, especially at this new stage, “Africa needs debt relief, Chinese trade and investment, expanded relations with the EU, capital from the US and more trade with the rest of the global south. It needs an agricultural revolution to ensure food security and accelerate trade integration to provide a larger, more attractive domestic and foreign capital market. Fully implementing the African Continental Free Trade Area agreement can unlock more rapid growth than any other scenario.” Meanwhile, as the elephants fight, the grass suffers, according to Jakkie Cilliers, Head of African Futures and Innovation at the Institute of Security Studies, Pretoria in South Africa.

Related Topics:Africa's economic development economic development

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Feature/OPED

How AI Levels the Playing Field for SMEs

Published

3 days ago

17/12/2025

Business Post Contributor

By Linda Saunders

Intro: In many small businesses, the owner often starts out as the bookkeeper, the customer-service desk, the IT technician and the person who steps in when a delivery goes wrong. With so many balls up in the air – and such little room for error – one dropped ball can derail the entire day and trigger a chain of problems that’s hard to recover from. Unlike larger companies that have the luxury of spreading the load across dedicated teams and systems, SMEs carry it all on a few shoulders.

South Africa’s SME sector carries significant weight, contributing around 19% of GDP and a third of formal employment, according to the latest available Trade & Industrial Policy Strategies (TIPS) 2024 review. That is causing persistent constraints, including tight margins, erratic demand, high administrative load, and limited internal capacity.

This is not unique to South Africa. Many smaller businesses across the continent still rely on manual processes. It is common to find sales records kept separately from customer notes, or inventory data that is updated only occasionally. The result is slow turnaround times, duplicated effort and a lack of visibility across the business. Given that SMEs have such a huge influence on national economies, accounting for over 90% of all businesses, between 20-40% of GDP in some African countries, and a major source of employment, providing around 80% of jobs, these operational constraints have a broad impact on economies.

What has changed in recent years is that digital tools once seen as the preserve of larger companies have become more attainable for smaller operators. They do not remove the structural challenges SMEs face, but they can ease the load. Better systems do not replace judgement, experience or customer relationships; they simply give small companies more room to work with.

Cloud-based systems, automation and integrated customer-management tools have become more affordable and easier to deploy. They do not remove the structural pressures facing small businesses, but they can ease the operational load and create more space for productive work.

Doing more with the teams SMEs already have

Small teams often end up wearing several hats. One person might take customer calls, update stock records, handle service issues and manage follow-ups. When demand rises, these manual processes become harder to sustain. Local surveys regularly point to this strain, showing that smaller companies spend significant portions of the week on paperwork, compliance and routine administrative tasks – work that adds little value but cannot be ignored.

This is where automation is proving useful. Routine tasks such as onboarding new customers, checking documents, routing queries to the right person, logging interactions and sending follow-ups can now run quietly in the background. In larger companies, whole departments handle this work. In small businesses, the same burden has traditionally fallen on one or two people. When these processes run reliably without constant attention, a business with 10 employees can manage busier periods without rushed outsourcing or slipping service standards.

The point is not to replace staff, but to reduce the operational drag that limits what small teams can deliver. Structured workflows give SMEs a level of steadiness they have rarely had the time or money to build themselves.

Using better data to make better decisions

A second constraint facing SMEs is disorganised information. When customer details are lost in email, sales notes in chat groups, stock figures in spreadsheets and queries in separate systems, decisions depend on whatever information happens to be at hand. Forecasting becomes guesswork, and early warning signs are easy to miss.

Putting all this information in a single place changes the quality of decision-making. When sales, service and stock data can be viewed together, patterns become easier to spot: which products are moving, which customers are becoming less active, where delays tend to occur, and which periods consistently drive higher demand.

Importantly, SMEs do not need corporate analytics teams for this. Modern CRM platforms can organise information automatically and surface basic trends. For retailers preparing for 2026, this can help avoid over – or under – stocking. For service businesses, it can highlight customers who may be at risk of leaving, prompting earlier intervention. In competitive markets, having clearer information is a practical advantage.

Building a foundation before the pressure arrives

Rapid growth can be as destabilising for SMEs as an economic downturn. When orders increase, manual processes quickly reach their limit. Errors are more likely, staff become overwhelmed and the customer experience suffers. Many small businesses only upgrade their systems once these problems appear, by which time the cost, both financial and reputational, is already significant.

Putting basic workflow tools and a unified customer record in place early provides a useful buffer. Tasks follow the same steps every time, reducing inconsistency. Customers reach the right person more quickly. Staff spend less time checking or re-entering information and more time on work that matters. These small operational gains compound over time, especially during busy periods.

This is not about chasing every new technology. It is about avoiding a common pattern in the SME sector: when demand rises, systems buckle, and growth becomes more difficult.

Confidence matters as much as capability

Smaller companies understandably worry about risk when adopting new systems. Data protection, monitoring, and compliance can feel daunting without an IT department. The advantage of modern platforms is that many of these protections, like encryption, audit trails, and event monitoring, are built in. Transparent design also helps SMEs understand how automated decisions are made and how customer data is handled.

This reassurance is important because SMEs should not have to choose between improving their operations and protecting their customers’ information.

2026 will reward readiness

Technology will not replace the qualities that give SMEs their edge: personal service, flexibility, and the ability to respond quickly to customer needs. What it can do is relieve the administrative load that prevents those strengths from being fully used.

SMEs that invest in simple automation and better data practices now will enter 2026 with greater capacity and clearer insight. They won’t be competing with larger companies by matching their resources, but by removing the disadvantages that have traditionally held them back.

In the year ahead, the most competitive businesses will not be the biggest; they’ll be the ones that prepared early for the year ahead.

Linda Saunders is the Country Manager & Senior Director Solution Engineering for Africa at Salesforce

Feature/OPED

Why Africa Requires Homegrown Trade Finance to Boost Economic Integration

Published

4 days ago

16/12/2025

Business Post Contributor

By Cyprian Rono

Africa’s quest to trade with itself has never been more urgent. With the African Continental Free Trade Area (AfCFTA) gaining momentum, governments are working to deepen intra-African commerce. The idea of “One African Market” is no longer aspirational; it is emerging as a strategic pathway for economic growth, job creation, and industrial competitiveness. Yet even as infrastructure and regulatory reforms advance, one fundamental question remains; how will Africa finance its cross-border trade, across markets with diverse currencies, regulations, and standards?

Today, only 15 to 18 percent of Africa’s internal trade happens within the continent, compared to 68 percent in Europe and 59 percent in Asia. Closing this gap is essential if AfCFTA is to deliver prosperity to Africa’s 1.3 billion people.

A major constraint is the continent’s huge trade finance deficit, which exceeds USD 81 billion annually, according to the African Development Bank. Small and medium-sized enterprises (SMEs), which provide more than 80 percent of the continent’s jobs, are the most affected. Many struggle with insufficient collateral, stringent risk profiling and compliance requirements that mirror international banking standards rather than the realities of African business.

To build integrated value chains, exporters and importers must operate within trusted, predictable, and interconnected financial systems. This requires strong pan-African financial institutions with both local knowledge and continental reach.

Homegrown trade finance is therefore indispensable. Pan-African banks combine deep domestic roots with extensive regional reach, making them the most credible engines for financing trade integration. By retaining financial activity within the continent, homegrown lenders reduce exposure to external shocks and keep liquidity circulating locally. They also strengthen existing regional payment infrastructure such as the Pan-African Payment and Settlement System (PAPSS), developed by the Africa Export-Import Bank (Afreximbank) and backed by the African Continental Free Trade Area (AfCFTA) Secretariat, enabling faster, cheaper and seamless cross-border payments across the continent.

Digital transformation amplifies this advantage. Real-time payments, seamless Know-Your-Customer (KYC) verification, automated credit scoring and consistent service delivery across markets are essential for intra-African trade. Institutions such as Ecobank, operating in 34 African countries with integrated core banking systems, demonstrate how such digital ecosystems can enable continent-wide commerce.

Platforms such as Ecobank’s Omni, Rapidtransfer and RapidCollect, together with digital account-opening services, make it much easier for traders to operate across borders. Rapidtransfer enables instant, secure payments across Ecobank’s 34-country network, reducing delays in regional trade, while RapidCollect gives cross-border enterprises the ability to receive payments from multiple African countries into a single account with real-time confirmation and automated reconciliation. Together, these solutions create an integrated digital ecosystem that lowers friction, accelerates payments, and strengthens intra-African commerce.

Trust, however, remains a significant barrier. Cross-border commerce depends on the confidence that partners will honour contracts, deliver goods as promised, pay on time, and present authentic documentation. Traders often lack reliable information on potential partners, operate under different regulatory regimes, and exchange documents that are difficult to verify across borders. This heightens the risk of fraud, non-payment, and contractual disputes, discouraging businesss from expanding beyond familiar markets.

Technology is closing this trust gap. Artificial Intelligence enables lenders to assess risk using alternative data for SMEs without formal credit histories. Distributed ledger tools make shipping documents, certificates of origin, and inspection reports tamper-proof. In addition, supply-chain visibility platforms enable real-time tracking of goods and cross-border digital KYC ensures that both buyers and sellers are verified before any transaction occurs.

Ecobank’s Single Trade Hub embodies this trust infrastructure by offering a secure digital marketplace where buyers and sellers can trade with confidence, even in markets where no prior relationships exist. The platform’s Trade Intelligence suite provides customers instant access to market data from customs information and product classification tools across 133 countries.

Through its unique features such as the classification of best import/export markets, over 25,000 market and industry reports, customs duty calculators, and local and universal customs classification codes, businesses can accurately assess market opportunities, anticipate trends, reduce compliance risks, and optimise supply chains, ultimately helping them compete and grow in regional and global markets.

SMEs need more than financing. Many operate in cash-heavy cycles where suppliers and logistics providers require upfront payment. Lenders can support these businesses with advisory services, business intelligence, compliance guidance, and platforms for secure partner verification, contract negotiation, and secure settlement of payments. Trade fairs, industry forums, and partnerships with chambers of commerce further build the trust networks needed for cross-border trade.

Ultimately, Africa’s path toward meaningful trade integration begins with financial integration. AfCFTA’s promise will only be realised when enterprises can trade with confidence, knowing that payments will be honoured, partners verified, and disputes resolved. This requires collaboration between banks, regulators, and trade institutions, alongside harmonised financial regulations, interoperable payment systems, and continent-wide verification networks.

Africa can no longer rely on external actors to finance its trade. Its economic transformation depends on strong, trusted, and digitally enabled African financial institutions that understand Africa’s unique risks and opportunities. By building an African-led trade finance ecosystem, the continent can unlock liquidity, reduce dependence on external currencies, empower SMEs, and retain more value locally. Africa’s trade revolution will accelerate when its financing is driven by African institutions, African systems, and African ambition.

Cyprian Rono is the Director of Corporate and Investment Banking for Kenya and EAC at Ecobank Kenya

Feature/OPED

Tax Reform or Financial Exclusion? The Trouble with Mandatory TINs

Published

4 days ago

16/12/2025

Business Post Contributor

By Blaise Udunze

It is not only questionable but an aberration that a nation where over 38million Nigerians remain financially excluded, where trust in institutions is fragile, and where citizens are pressured under the weight of rising living costs, the use of Tax Identification Number (TIN) has been specified as the only option for their bank accounts operation from January 1, 2026 by the Federal Government of Nigeria.

In practice, the policy spearheaded by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, is rooted in the Nigerian Tax Administration Act (NTAA), and the intention can be understood in the areas of improving tax compliance, widening the tax net, and formalizing economic activities. But in practice, the directive risks becoming yet another well-meaning reform that punishes the wrong people, disrupts financial inclusiveness, and potentially destabilises an already stressed economy.

Yes, Nigeria needs tax reforms. Yes, the country must broaden its tax base. And yes, public revenues must increase to address fiscal pressures.

But compelling citizens to obtain TINs as a condition for operating bank accounts is the wrong tool for the right objective.

Below are five core arguments against the directive, and sustainable alternatives that actually strengthen tax compliance without endangering banking access or punishing informal earners.

The Directive Risks Deepening Financial Exclusion

Nigeria still struggles with financial inclusion. According to several official assessments, over 38 million adults remain outside the formal financial system. Many of them operate small, irregular businesses, survive through subsistence earnings, or depend on cash-based livelihoods.

The Federal Government’s compulsory TIN-for-bank-accounts policy is built on the assumption that every banked Nigerian is structured, organised, and tax-ready. This is false.

For instance, the rural market woman with N30,000 in rotating savings, the okada rider who deposits cash once a week, the petty trader using a mobile POS agent account, the retiring pensioner managing a small monthly income, and the migrant worker sends small remittances to their family. These are not tax evaders; they are survivalists.

Most operate bank accounts not because they run formal businesses, but because those accounts are essential to modern financial life: receiving transfers, accessing loans, participating in digital commerce, saving against emergencies, and avoiding the risks of moving cash in insecure environments.

By creating an additional bureaucratic barrier, the directive risks pushing millions back into a cash-dominant shadow economy, precisely the opposite outcome of what Nigeria’s financial-sector reforms are trying to achieve.

Bank Accounts Are Not Proof of Taxable Income

The NTAA clarifies that the TIN requirement applies only to taxable persons, individuals engaged in trade, employment, or income-generating activities.

But herein lies the problem: banks cannot determine who is “taxable” and who is not. Banks only see deposits and withdrawals. They do not audit the source or consistency of income. They are not tax authorities.

A student may run a small online clothing resale gig. A retiree may occasionally rent out farmland.

A dependent may receive cash support from a relative abroad. A job seeker may get intermittent gifts from family.

Who decides which of these scenarios qualifies as taxable? Banks? FIRS? Or will citizens be expected to self-declare under threat of account restrictions?

The result will be confusion, over-compliance, and mass panic with banks indiscriminately demanding TINs from everyone to avoid regulatory penalties.

This not only contradicts the spirit of the law but also exposes ordinary Nigerians to harassment and arbitrary compliance requirements.

The Policy Could Trigger Disruption, Panic Withdrawals, and Cash Hoarding

Whenever Nigerians perceive threats to their access to funds, the natural reaction is withdrawal and hoarding. We saw it during:

– the 2023 Naira redesign crisis,

– the 2016 TSA-bank consolidation tightening, and multiple periods of financial instability.

Telling citizens that bank accounts may face “operational restrictions” if they do not obtain a TIN creates a predictable behavioural response: people will rush to withdraw money.

This would be disastrous for a banking system already pressured by:

– high interest rates,

– inflation eroding deposits,

– rising loan defaults, and

– declining public trust.

Any government policy that unintentionally creates an incentive for citizens to flee the formal banking system is counterproductive.

The TIN Requirement Will Become a Bureaucratic Nightmare

Even if millions of Nigerians want to comply, the system is not ready. Nigeria’s administrative infrastructure does not have the capacity to process tens of millions of TIN registrations within months without:

– long queues,

– delays,

– data mismatches,

– duplicate records, and

– systemic errors.

The National Identity Number (NIN)-SIM registration experience is a painful reminder of what happens when ambitious policy meets weak execution capacity.

– Citizens spent months in overcrowded enrolment centres.

– Millions were blocked from services.

– Data inconsistencies persisted.

– The economy suffered productivity losses.

If Nigeria could not seamlessly synchronise NIN and SIM data, how will it synchronise NIN, BVN, and TIN at a national scale without dislocation?

Forcing TIN Adoption Ignores the Real Problem: Nigeria’s Broken Tax Culture

The Federal Government’s real challenge is not that citizens lack TINs, but that they lack trust in how taxes are used.

A government cannot widen the tax net when:

– tax leakages remain widespread,

– citizens feel services do not match taxation,

– corruption perceptions are high,

– government spending lacks transparency, and

– taxpayers do not feel seen, heard, or valued.

Coercion does not build a tax culture. Engagement does. Policy does not create legitimacy. Accountability does.

If the Federal Government wants Nigerians to freely participate in the tax system, it must earn legitimacy first, not mandate compliance through financial restrictions.

What the Government Should Do Instead: A Smarter Path to Tax Reform

Instead of enforcing a policy that may backfire economically and socially, the Federal Government can adopt four smarter, people-centred alternatives.

– Automatic TIN Issuance Linked to NIN and BVN

Rather than forcing Nigerians to apply manually, the government should:

auto-generate TINs for all existing BVN/NIN holders,
send the TINs via SMS, email, and bank alerts,
allow self-activation only when needed for tax obligations.

This eliminates queues, delays, and confusion.

– Build a Voluntary Tax Compliance Culture Through Transparency and Incentives

Tax morale improves when citizens see value. Government should:

publish annual audited reports of tax revenue use,
incentivise compliant taxpayers with benefits (priority access to government grants, credit scoring, etc.),
simplify tax filings for small businesses.

People comply more when they feel respected, not coerced.

– Target High-Value Tax Evaders, Not Low-Income Account Holders

Nigeria’s real tax leakages come from:

large corporations shifting profits,
politically exposed persons,
illicit financial flows,
multinational tax avoidance strategies,
the informal “big money” class operating outside the banking system.

Instead of threatening small depositors, the government should strengthen:

FIRS intelligence and investigation units,
inter-agency data integration (CAC, Customs, Immigration),
beneficial ownership transparency enforcement.

The fight against tax evasion should focus on those hiding billions, not those depositing thousands.

– Strengthen Digital Tax Platforms for Easy Self-Registration and Compliance

If tax registration becomes as easy as opening a social media account, compliance will rise naturally. The government should build:

a mobile-first tax app,
simplified online TIN retrieval,
one-click tax filing for gig workers and small traders.

Digital convenience can achieve what regulatory coercion cannot.

Reform Should Not Punish the Public

No doubt, tax reforms are needed urgently, but they must come with a human face, an intelligent, equitable, and aligned with the realities of ordinary Nigerians.

The TIN-for-bank-accounts policy, while well-intentioned, risks undermining financial inclusion, triggering economic instability, and imposing unnecessary burdens on millions who are not tax evaders but survival-based earners.

Good tax policy is built on trust, not fear. On transparency, not threats. On civic legitimacy, not administrative compulsion.

If the Federal Government truly wants to modernise Nigeria’s tax system, it must focus not on restricting citizens’ access to their own money, but on: