Feature/OPED
A Simple Way to Reduce Financial Effect of Loss of Employment on Everyday Nigerians
By Gbolahan Oluyemi
The loss of employment is a common event in people’s career. The circumstances leading to loss of employment could be voluntary, involuntary or triggered by an event.
An employee’s loss of employment could result from the termination of employment, voluntary resignation, or retirement due to age or health condition.
For resignation and retirement, the effect of the loss of employment is usually manageable because the employee had adequate notice of the impending loss of employment. Such employee would have activated steps to mitigate the effect of the impending loss of employment.
For retirement, a loss of employment due to retirement is protected by the Pension Reforms Act 2014. The legislation ensures that every employee that retires from employment receives an allowance from their pension fund account domiciled with a pension fund administrator.
However, in cases of involuntary loss of employment such as termination of employment by the employer, it translates into an outright loss of income for the employee.
The most common effect of impromptu loss of employment is that the employee becomes incapable of sustaining his/herself financially.
Although Section 7(2) and Section 16 (5) of the Pension Reforms Act allow an employee to withdraw 25 per cent of his/her pension fund after four months of loss of employment and inability to secure another job, the provision is insufficient for three reasons:
The provision does not consider how the employee will survive and settle his/her financial obligations in the first four months of unemployment.
Secondly, one of the challenges of the contributory pension fund scheme is inflation. There is a possibility that the value of the fund may be depleted at retirement by inflation. Hence, withdrawal of 25 per cent from the fund due to temporary loss of employment is an additional burden for the employee in his/her retirement era.
From interactions with few persons who have accessed the fund due to a temporary loss of employment, the process is cumbersome.
Due to the pandemic, numerous employees suffered an involuntary loss of employment. The situation is worse because it is difficult to get another job in the middle of an unpredictable pandemic.
Since the outbreak, both public and private institutions are struggling to meet their targets and corporate obligations. The situation remained unchanged despite the reported gradual recovery of the economy.
Employers who are unable to sustain the payment of staff salaries are constrained to either downsize their workforce or introduce pay-cut to the employees.
Unfortunately, the disengaged employees are at the receiving end with little or no protection other than their personal savings.
Indisputably, cushioning the financial effect of temporary involuntary loss of employment is an issue that should feature at the top of the agenda of every discourse on the improvement of our employment laws.
The most beneficial way to diminish the effect of unemployment due to job loss is for the legislature to enact a law mandating compulsory employment insurance for all employees. The objectives of the proposed legislation should be:
To create a social security system that provides adequate welfare for all Nigerian employees without placing a financial burden on government revenue;
To create and structure a privately administered insurance scheme that will cater for our teeming population in the unlikely event of their loss of employment;
To ensure that through the legislation, the employment of all Nigerians is insured and secured with unemployment benefits payable by the Insurer for at least six months immediately preceding the loss of employment.
Every employee should be compelled by the proposed law to subscribe with one per cent of his/her annual pay as a premium for an employment insurance product offered by an insurance company licensed by the National Insurance Commission (NAICOM).
The benefit of the subscription is that in the event the employee suffers a loss of employment, the insurance company pays the employee 50 per cent of his/her monthly salary every month for either a period not exceeding six months or till he/she secures another job i.e. if the employee secures another job before six months.
This proposal will relieve the operation of Section 7(2) and Section 16 (5) of the Pension Reforms Act and ensure that more funds are reserved for an employee after retirement.
Secondly, the proposal will guarantee that an employee earns an income in the first six months preceding the loss of employment.
Thirdly, it will drive the insurance business and attract more investment to the insurance sector.
Lastly, it will relieve the government of the burden of catering for the welfare of Nigerians who lost their jobs either due to the pandemic or due to other circumstances.
It is recommended that employers are mandated by the proposed law to deduct the premium and remit the premium to the employees’ preferred insurance company.
Consequently, failure to remit the deducted premium renders the employer liable to the extent the insurance company would have been liable in the event there is a loss of employment. It is expected that voluntary loss of employment such as resignation is excluded from benefits.
As an incentive for employees, subscribers for five consecutive years without making a loss of employment claim should also be entitled to some welfare benefits from the insurance company.
Should the National Assembly have thought in this direction while enacting the Pension Reforms Act in 2014, employees would have been less negatively impacted by the loss of employment that followed the outbreak of the COVID-19 pandemic in 2020.
The need for government palliatives and support programs would have been minimal. The insurance companies would have mopped up the effect of the pandemic on employments and probably recoup their losses from the re-insurance companies. However, it is not late to enact legislation that addresses the challenges.
By Luke Kyohere
The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:
1. The rise of real-time payments
Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.
2. Cashless payments will increase
In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.
3. Digital currency will hit mainstream
In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.
The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.
4. Increased government oversight
As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.
5. Business leaders buy into AI technology
In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.
6. Continued AI Adoption in Payments
In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.
When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.
7. Rise of Super Apps
To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.
8. Business strategy shift
Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.
As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.
Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq
In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.
In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.
“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”
The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.
Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.
The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”
The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.
As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.
In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.
“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.
By Kenechukwu Aguolu
The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.
One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.
A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.
In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.
The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.
The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.
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