Feature/OPED
Banks’ Funding Failure: The Shocking Rot In Nigeria’s Intervention Programmes
By Blaise Udunze
For over a decade, the Nigerian government and its financial institutions have launched a flurry of intervention funds, all with the promise to empower industries, revive the manufacturing sector, and lift millions of micro, small, and medium enterprises (MSMEs) out of financial drought. From agriculture to aviation, from creative industries to export promotion, these funds were designed as catalysts for inclusive growth and job creation.
But today, the story reads like a tragic irony. Trillions of naira later, there is little impact to show. Factories remain underutilized, MSMEs struggle to survive, and unemployment continues to soar. The rot runs deeply entrenched corruption, politicization, poor monitoring, and widespread loan defaults have turned what should have been Nigeria’s economic lifeline into a cautionary tale of mismanagement and missed opportunities.
The Central Bank of Nigeria (CBN) and the Bank of Industry (BOI) have, over the years, spearheaded multiple intervention programmes. In 2013, the N220 billion MSME Development Fund (MSMEDF) was launched to empower small businesses, with a special 60 percent allocation for women. Yet, more than a decade later, thousands of genuine entrepreneurs say they never accessed the fund, while others question the transparency of disbursement. The Anchor Borrowers’ Programme (ABP), launched in 2015, aimed to link smallholder farmers to processors and was hailed as a masterstroke for agricultural self-sufficiency. Over N1 trillion reportedly flowed into the scheme. But the dream soon dimmed with ghost beneficiaries, political interference, and poor loan recovery exposed a programme riddled with abuse.
Similarly, the Agri-Business/Small and Medium Enterprises Investment Scheme (AGSMEIS), a CBN-backed initiative pooling five percent of banks’ profit after tax, began as a noble effort to stimulate SMEs. However, its later years were marred by disbursement bottlenecks and allegations of insider favoritism. Commercial banks and some designated financial institutions, instead of acting as facilitators, became gatekeepers of corruption. Bribes, favoritism, and endless paperwork became the norm. Funds meant for productive ventures were sometimes redirected to political allies or misapplied by the very institutions entrusted with disbursement.
Rather than empowering Nigeria’s real economy, intervention loans too often empowered a network of insiders who saw the programmes as avenues for rent-seeking. The impenetrability of these schemes made them convenient channels for political reward and institutional looting. Once the funds leave government coffers, tracking them becomes an exercise in futility. There are no reliable public databases showing who got what, how much was repaid, or what impact was achieved.
The rot is not confined to agriculture. The Creative Industry Financing Initiative (CIFI), launched in 2019 to nurture Nigeria’s entertainment and digital sectors, became mired in controversy over opaque selection and limited reach. The Real Sector Support Facility (RSSF) and the Textile Sector Intervention Fund, meant to boost manufacturing and revive the textile industry, also suffered from weak monitoring and low repayment discipline. During the pandemic, the N400 billion COVID-19 Targeted Credit Facility (TCF) was touted as a lifeline for households and small firms. Administered by NIRSAL Microfinance Bank, it sparked hope among struggling entrepreneurs, but soon, the familiar patterns emerged as connected elites got the funds, while genuine applicants were locked out.
Official data reveals that the CBN has disbursed over N10.3 trillion across various interventions in less than a decade with an unprecedented scale of funding. When combined with BOI-managed programmes such as the Government Enterprise and Empowerment Programme (GEEP) and the Export Expansion Facility Programme (EEFP), total earmarked intervention funds likely exceed N12 trillion. Yet, Nigeria’s industrial contribution to GDP remains below 10 percent, and MSMEs with the supposed beneficiaries continue to struggle with high costs, poor infrastructure, and limited credit access.
Over the years, numerous intervention funds have been launched to support industries and MSMEs from the N220 billion MSME Development Fund and N300 billion Real Sector Support Facility to the N200 billion SME Restructuring and Refinancing Fund. However, poor administration, corruption, and diversion have undermined these initiatives. A 2023 report by the Auditor-General revealed that billions of naira from these schemes were either unaccounted for or misapplied, with funds channeled through commercial banks that prioritized profit over impact.
For instance, the CBN’s N220 billion MSME Development Fund has only seen about N83 billion disbursed over seven years. The Survival Fund, though lauded in principle, has delivered roughly N67.5 billion to over 1.25 million beneficiaries, including cases where mobilisation fees were collected but goods or services never followed. An N5 billion SME loan fund through SMEDAN and Sterling Bank saw only N250 million actually reach business owners. Even in interventions like BOI’s N75 billion Manufacturing Sector Fund, less than a third had been disbursed to manufacturers, with many applications still awaiting approval. These examples speak not to scarcity of funds, but to failures in administration, accountability, and access.
The cost of Nigeria’s failed intervention programmes goes beyond wasted billions; it has crippled the very sectors they were designed to rescue. Thousands of promising small businesses are left stranded without access to affordable credit, while manufacturers continue to struggle with obsolete equipment, erratic power supply, and prohibitive interest rates. Instead of catalyzing growth, these funds have deepened dependency, encouraged corruption, and distorted the credit market.
The result is a stunted industrial base, where innovation and expansion are sacrificed on the altar of bureaucracy and greed. Many entrepreneurs who could have scaled production or entered export markets have shut down under the weight of unmet promises. Jobs that could have been created remain mere statistics in policy documents, while Nigeria’s ambition to diversify its economy beyond oil continues to falter.
In the ongoing investigation into the Central Bank of Nigeria’s activities, news reports have uncovered that scrutiny may extend to Chief Executive Officers and senior management personnel of various banks. The investigation seeks to examine potential discrepancies related to the management of intervention funds by deposit money banks. This revelation follows reports that the CBN might be compelled to withdraw its released audited annual financial reports after investigators uncovered irregularities and inconsistencies.
This unfolding probe, led by Special Investigator Jim Obazee, who was appointed by President Bola Tinubu in July 2023 as this mark one of the most comprehensive financial examinations in Nigeria’s history. Obazee’s mandate extends beyond the CBN to include other Government Business Entities (GBEs), with the goal of plugging financial leaks and holding corrupt individuals accountable. According to the Secretary to the Government of the Federation, George Akume, the forthcoming audit report will shed light on governance failures that have long crippled Nigeria’s financial system.
One key revelation involves intervention funds totaling N1.27 trillion reportedly held in the accounts of five major banks: Access Bank, Fidelity Bank, Guaranty Trust Bank, United Bank for Africa, and Zenith Bank. These funds cover various CBN lending schemes, including the Commercial Agriculture Credit Scheme, Real Sector Support Facility, and state bailouts. Access Bank alone held about N530 billion in intervention funds, while Fidelity Bank retained roughly N310 billion.
Several banks have also been found to hold undisbursed funds from the CBN earmarked for programmes like the Anchor Borrowers’ Scheme and the Commercial Agriculture Credit Scheme. As of June 2023, Guaranty Trust Holding Company, Wema Bank, and Sterling Financial Holdings collectively held N114 billion in Anchor Borrowers’ funds, while seven banks, including UBA, Access, Zenith, and Fidelity, retained N94 billion from the agriculture credit scheme.
As the investigation progresses, bank executives were expected to be summoned for questioning. The revelations underscore the depth of systemic dysfunction, where funds meant for development sit idle or are diverted, while small businesses gasp for credit.
Amid the turbulence, the newly appointed CBN Governor Olayemi Cardoso called for a radical shift in the bank’s role. During his Senate screening, he emphasized the need to refocus the CBN on its core mandate of monetary stability rather than direct development finance. Cardoso warned that the CBN’s historical foray into fiscal interventions had blurred institutional boundaries and undermined credibility. His plan is to transition the bank toward a more limited advisory role, one that supports economic growth without entangling itself in politically driven lending.
This reorientation is timely. As of October 2022, nearly 10 trillion had already been disbursed as intervention funds, much of it tied to agriculture and small business support. Yet controversies over beneficiary selection, repayment defaults, and limited impact persist. Experts have urged a full-scale audit and restructuring of these programmes, recommending that future interventions be channeled through relevant ministries and agencies, not the CBN to ensure proper oversight and impact measurement.
Before the next bailout or recovery initiative is launched, both the CBN and BOI must clean house. This means full public disclosure of all beneficiaries, proper audits of past disbursements, and the recovery of misapplied or stolen funds. The impenetrability that has shielded corruption for years must give way to transparency, backed by digital tracking systems and citizen oversight.
Beyond cleansing their books, these institutions must also rethink their approach. Development finance should no longer be routed through rent-seeking commercial banks that profit without producing impact. Instead, direct digital lending platforms, strict eligibility verification, and measurable impact tracking should define the new model.
Nigeria’s intervention programmes must undergo radical reform anchored on transparency, technology, and traceability. Every fund should have a publicly accessible portal listing disbursements, beneficiaries, and repayment status. Periodic audits that are independently verified must be mandatory, not optional. Beyond financial engineering, Nigeria must fix the enabling environment for consistent power supply, logistics, security, and regulatory stability that makes business growth possible.
The shocking rot in Nigeria’s intervention programmes is not just a financial scandal; it is a betrayal of national trust. Trillions have been poured into schemes that promised jobs and prosperity, yet delivered little beyond paperwork and propaganda. Unless Nigeria cleans up the system, enforcing accountability and rewarding genuine productivity, its intervention funds will continue to fund failure, not progress.
Blaise, a journalist and PR professional writes from Lagos, can be reached via: [email protected]
Feature/OPED
Publication Standards and Predatory Publishing in Africa
By Timi Olubiyi, PhD
I pray that the new year, 2026, unfolds with fresh opportunities, meaningful growth, and endless possibilities. Amid the many emerging topical issues, this piece focuses on a troubling trend in academia: the growing reliance on predatory publications and the declining pursuit of reputable, recognised journals.
For many academics, particularly early-career scholars, mid-career academics facing promotion bottlenecks, adjunct and contract lecturers under publish-or-perish pressures, and even senior scholars navigating international mobility aspirations, evolving global performance metrics, and global competitiveness, this piece is intended as a lifeline, offering clarity, guidance, and reassurance at a critical moment in evolving scholarly environment.
Predatory publications are sometimes legitimate outlets that promise rapid academic publication but without the expected integrity of research or known ethical reputation, and oftentimes quality is compromised for cash for these publications. This alarming trend is not only undermining careers but also diminishing the visibility and impact of knowledge in shaping global scientific discourse.
From an African perspective, the damage caused by predatory publishing goes far beyond wasted money; it quietly erodes academic credibility, blocks international mobility, and traps scholars within local systems that increasingly struggle to meet global university standards.
Predatory journals thrive where demand for publication is high, and support structures are weak. In many African universities from observation, promotion and appointment criteria emphasise quantity over quality and indexed publications.
The disturbing finding is that often times there are no clear differentiation between indexed and non-indexed publication. As a result, many university-based journals have become the default publishing route but these journals are largely not indexed in reputable databases like Scopus, Web of Science, ABDC (Australian Business Deans Council) and ABS (Association of Business Schools) journal ranking systems which should increase quality and standards. These non-indexed journals journals are sometimes institutionally encouraged, yet they rarely offer the global visibility, citation impact, or academic recognition required for international competitiveness.
For a scholar whose work never leaves these local publishing ecosystems, the world remains largely unaware of their research, no matter how insightful or relevant it may be. Yet perhaps the most painful consequence of predatory publishing is loss of global opportunities, and systematic underestimation of impact.
African academics are frequently judged as underperforming, not because they lack ideas, rigour, or relevance, but because their work is largely invisible on global platforms. From the author’s observation, a striking number of African scholars have no Scopus profile at all, or profiles are with very low visibility, despite years of teaching and publishing as experienced lecturers, senior researchers, and even professors. This invisibility feeds a damaging cycle because when it comes to international evaluation limited indexed output is seen and it is assumed that African scholars have limited scholarly contribution, while local systems continue to reward these non-indexed publications that do not translate into global recognition.
The danger becomes most visible when academics attempt to cross borders physically or professionally. Because for international job applications, visiting fellowships, postdoctoral positions, and global research collaborations increasingly rely on transparent metrics: indexed publications, citation records, journal rankings, and evidence of international engagement.
An academic who has published extensively in non-indexed or predatory journals may appear productive on paper locally, but he is invisible internationally. Hiring committees in Europe, North America, Asia, and increasingly the Middle East are trained to recognise predatory outlets; rather than viewing such publications as achievements, they quickly interpret them as red flags, questioning the rigour, ethics, and peer-review exposure of the candidate.
In this way, predatory journals do not merely fail to help academics they actively ruin their global prospects. The contrast between quality publishing and predatory publishing is very clear and obvious. Because quality publishing follows strict academic standards like peer review, transparency, and ethical practices, predatory publishing on the other hand ignores these standards and mainly exists to collect fees from authors without providing real scholarly value.
A single well-placed article in a reputable indexed journal can open doors to international conferences, editorial invitations, collaborative grants, and academic networks.
For example, Nigerian and Kenyan scholars who publish in respected international journals often find themselves invited to review manuscripts, join global research teams, or contribute to policy-oriented projects at the African Union, World Bank, or UN agencies. These opportunities rarely come from non-indexed or predatory outlets because such journals are not read, cited, or trusted beyond narrow circles. Visibility, in the modern academic world, is currency, and predatory journals offer the illusion of productivity without the substance of impact.
So, what is the future of African academics in a globalised academic labour market? As universities worldwide shift toward international rankings, global partnerships, and research impact metrics, African scholars’ risk being locked out not because they lack intellectual capacity, but because their work is trapped in publishing systems that the global academy does not recognise. The danger is a growing academic isolation, where African knowledge circulates locally but fails to influence global debates or attract global opportunities. The solution lies not in rejecting local journals outright, but in redefining academic ambition and preparedness.
African academics must increasingly think beyond local promotion requirements and prepare for international exposure from the outset of their careers. This means understanding journal indexing systems, targeting reputable outlets even if acceptance takes longer, and valuing revision and rejection as part of scholarly growth. Universities, in turn, must reform promotion criteria to reward quality, indexing, and impact rather than sheer volume. Training in research methods, academic writing, and ethical publishing should be institutional priorities, not optional extras.
Governments and regulatory bodies can support this shift by funding open-access publication in reputable journals and discouraging the use of predatory outlets in academic evaluation. The suspenseful reality is this: African academics stand at a crossroads. One path leads to rapid local advancement built on fragile publishing foundations, offering short-term comfort but long-term invisibility. The other path is slower, more demanding, and often frustrating, but it leads to global relevance, intellectual exchange, and genuine academic mobility.
Predatory journals promise speed and certainty, but they quietly close doors. Quality publications demand patience and rigor, but they open the world. For African scholars seeking international jobs, collaborations, and influence, the choice is no longer optional it is existential. The future of African academia depends not just on producing knowledge, but on ensuring that knowledge travels, is trusted, and is seen. In this new year and beyond be different, be intentional, be visible, and be globally relevant. Good luck!
How may you obtain advice or further information on the article?
Dr Timi Olubiyi is an expert in Entrepreneurship and Business Management, holding a PhD in Business Administration from Babcock University in Nigeria. He is a prolific investment coach, author, columnist, and seasoned scholar. Additionally, he is a Chartered Member of the Chartered Institute for Securities and Investment (CISI) and a registered capital market operator with the Securities and Exchange Commission (SEC). He can be reached through his Twitter handle @drtimiolubiyi and via email at [email protected] for any questions, feedback, or comments. The opinions expressed in this article are solely those of the author, Dr. Timi Olubiyi, and do not necessarily reflect the views of others.
Feature/OPED
Game of Power: Throne Reclaim
By Abba Dukawa
Kano politics has been thrown into fresh uncertainty following reports that the Kano State Governor, Abba Yusuf, is planning to defect from the New Nigeria Peoples Party (NNPP) to the All Progressives Congress (APC).
For years, Rabiu Musa Kwankwaso aspired to be Kano’s undisputed political kingmaker. He only succeeded in realizing this ambition by installing his perceived political godson as the current governor of Kano State.
His earlier attempts had failed; notably, the current governor is the only candidate Kwankwaso attempted to install twice.
Even before the recent attempt at reclaiming the political and power throne by its rightful owner, there were widespread insinuations that the relationship between the political godfather and godson was far from cordial, despite both camps publicly maintaining that all was well.
The governor’s recent move to cross over to the ruling party has been strongly opposed by the state party leadership and the NNPP’s national leader, Senator Rabiu Musa Kwankwaso. This development has triggered internal disagreements within the NNPP, particularly between supporters of the governor and loyalists of the Kwankwasiyya movement.
Since news broke of Governor Abba’s intention to defect to the APC, claims have circulated that he was acting with Kwankwaso’s consent. Those who believed that Governor Abba planned to defect with Kwankwaso’s approval made a grave misjudgment.
This is not a coordinated plan; rather, it is a political conflict akin to that between a father and a son.
From a rational political standpoint, the situation reflects a deep and intense struggle—a clear attempt at reclaiming the throne between the Governor of Kano State and the leader of the Kwankwasiyya movement, Senator Rabi’u Musa Kwankwaso.
By all political indicators, the governor’s effort to reclaim the throne appears aimed at securing absolute control and liberating himself from total submission to the national leader of the Kwankwasiyya movement.
In response to the unfolding conflict, the NNPP national leader has intensified efforts to rally federal and state lawmakers, local government chairmen, and party structures to remain loyal to him. Kwankwaso’s reaction has been firm but defensive.
Kwankwaso, addressing them, reportedly stated that it was evident the governor was abandoning the NNPP for the APC and that any member wishing to follow him was free to do so. He reminded them that they won the election by divine grace alone, asking rhetorically: “Will the God who gave us power in 2023 not still be there in 2027?”
He has denied any involvement in defection plans and reaffirmed his loyalty to the NNPP and its ideology, warning supporters against what he described as “betrayal. However, events on the ground tell a different story, as several local government chairmen, along with state and federal lawmakers, appear to be gravitating toward the governor’s camp.
Ahead of his anticipated defection and in a bid to strengthen his political base, the governor has reportedly been working behind the scenes to secure the support of National Assembly members and NNPP members of the State House of Assembly and the local government council chairman.
Although no official statement has been issued by the governor’s office since reports of the planned defection emerged, the body language of prominent government officials suggests that the plan is already in motion and that it is only a matter of time. So far, only the Speaker of the State Assembly, Yusuf Falgore, has publicly endorsed the governor’s planned defection. Sources also indicate that a significant number of local government chairmen have joined the governor’s defection train.
Blind Kwankwasiyya members ideologues fail to distinguish between political betrayal and the pursuit of independence. Politics, after all, is about survival and adaptation.
Most Kwankwasiyya members are youths. Where were they when Kwankwaso parted ways with Hamisu Musa, Musa Gwadabe, and Dauda Dangalan? Kwankwaso rose under mentorship before charting his own course. Where were they when Abubakar Rimi broke away from Aminu Kano in ’79-’80, pursuing his own path? When Abdullahi Ganduje split from Kwankwaso, he faced ridicule and insults.
These same critics should appreciate Abba Gida-Gida’s restraint in not publicly recounting the unpleasant experiences surrounding his emergence as governor under the NNPP.
The Kwankwaso–Abba conflict is, at its core, politics in its truest form—a search for solutions and self-determination. There is a clear distinction between betrayal in politics, the pursuit of solutions, and the quest for independence from total submission.
If Governor Abba succeeds in taking the bulk of NNPP’s structure to APC, it’ll be a major symbolic blow to Kwankwaso’s influence . It seems Kwankwaso’s biggest fear is Abba taking the state with him, leaving him with a movement without a state .
The plan Abba defection from the New Nigeria Peoples Party (NNPP) to the All Progressives Congress (APC) could reshape Kano’s politics significantly- APC regains dominance in Kano, strengthening its position ahead of 2027- NNPP’s national relevance takes a hit, struggling to recover from losing its only governor Kwankwasiyya faces a tough test without state power, potentially losing influence. New alliances might emerge as Yusuf’s move triggers political recalibrations across the North.
Game of Power: Throne Reclaim
Dukawa writes from Kano and can been reached via [email protected]
Feature/OPED
How Nigeria’s New Tax Law Could Redefine Risk in the Banking Sector
By Blaise Udunze
Nigeria’s new tax identification portal goes live nationwide tomorrow, Friday, January 1, 2026, marking a pivotal moment in the country’s fiscal and financial governance. Designed to modernise tax administration and strengthen taxpayer identification, the reform reflects a decisive shift in economic strategy by a government grappling with shrinking oil revenues, rising public debt, and widening fiscal deficits.
At the centre of this shift is a deeper integration of identity systems, banking data, and tax administration, most notably the adoption of the National Identification Number (NIN) as a tax identification mechanism for operating bank accounts. In parallel, banks will also begin charging a N50 stamp duty on electronic transfers of N10,000 and above, following the implementation of the Tax Act.
Individually, these measures may appear modest, even reasonable. Collectively, however, they signal a fundamental reordering of the relationship between the state, banks, and citizens with far-reaching implications for banking business, customer trust, financial inclusion, and credit creation.
Banks at the Centre of Fiscal Enforcement
Under the new tax framework, Nigerian banks are no longer merely financial intermediaries or corporate taxpayers. They are increasingly positioned as collection agents, reporting hubs, and frontline enforcement points for government revenue policy.
The linkage of NIN to tax compliance, combined with transaction-based stamp duties, reinforces a stark reality that the banking system has become the most visible and accessible channel through which the state now extracts revenue from citizens.
This expanded role exposes banks to a new layer of risk not just financial or operational, but social, reputational, and political risks that extend far beyond balance sheets.
A Structural Shift in the Banking, Tax Relationship
Historically, banks played a facilitative role in tax compliance, primarily through payment processing and remittance support. The use of NIN as a tax identifier marks a structural departure from this model.
Bank accounts are no longer merely financial tools; they are becoming gateways to tax visibility.
This shift fundamentally alters the risk profile of the banking business. Banks are now exposed not only to credit, market, and operational risks, but also to heightened social backlash, reputational damage, and political sensitivity, arising from their expanded enforcement role.
Account Friction and Slower Customer Onboarding
One of the earliest and most visible consequences of NIN-based tax identification is increased friction in account opening and maintenance.
Consequently, in a real sense, millions of Nigerians will continue to face challenges with the NIN system, including delays in enrolment and correction, biometric mismatches as well as inconsistencies between NIN, BVN, and bank records.
For banks, this translates into slower onboarding processes, higher rates of account restriction or rejection, and increased congestion across branches and digital platforms.
What should be a growth engine for deposit mobilisation instead becomes a bottleneck, resulting in lost customers, fewer transactions, and weakened scale advantages in an increasingly competitive banking environment.
Banks as the Face of an Unpopular Tax Regime
Perhaps the most underappreciated consequence of the new tax regime is the escalation of customer hostility toward banks.
When accounts are flagged, restricted, or subjected to enhanced scrutiny, customers rarely direct their frustration at tax authorities or policymakers. Instead, they confront the most visible institution in the chain, their bank.
Banks are increasingly blamed for account freezes, accused of colluding with government, and perceived as punitive rather than service-oriented institutions. This hostility is particularly pronounced among informal sector operators, small traders, artisans, and self-employed professionals with irregular income streams.
In a low-trust economy such as Nigeria’s, perception often outweighs regulation. Banks risk becoming the public face of coercive taxation, absorbing reputational damage for policies they neither designed nor control.
Erosion of Trust in the Banking Relationship
Banking fundamentally depends on trust that deposits are safe, transactions are private, and institutions act in customers’ best interests.
When NIN becomes a tax enforcement gateway, that trust begins to fray. Banks are no longer seen primarily as custodians of savings, enablers of enterprise, or neutral financial intermediaries. Instead, they are increasingly perceived as extensions of tax authorities, surveillance nodes, and compliance police.
Once trust erodes, customer behaviour adjust often in ways that undermine the formal financial system itself.
The Hidden Impact of the N50 Stamp Duty
The introduction of a N50 stamp duty on electronic transfers of N10,000 and above may appear trivial. In practice, it carries outsized implications.
For many Nigerians, especially low- and middle-income earners, electronic transfers are not discretionary transactions. They are salary payments, family support remittances, SME operating expenses, and routine commercial settlements.
Customers rarely distinguish between government levies and bank charges. The stamp duty will therefore be perceived as yet another bank fee, deepening resentment toward institutions already accused of excessive charges.
Behaviourally, customers may respond by breaking transactions into smaller amounts, increasing cash usage, or migrating to informal transfer channels, distorting transaction patterns and weakening the efficiency of the digital payments ecosystem.
Although banks merely collect the duty on behalf of the government, they will once again bear the reputational cost.
Threat to Deposit Mobilisation and Liquidity
Fear of tax exposure is a powerful behavioural driver. As NIN becomes closely associated with tax scrutiny and transaction charges mount, many customers are likely to reduce account balances, avoid lump-sum deposits, split transactions to stay below thresholds, or move funds outside the banking system entirely.
For banks, the consequences are clear, as these will result in slower deposit growth, volatile liquidity positions, and reduced capacity to fund loans.
Deposit mobilisation is the lifeblood of banking. Any policy that discourages formal savings weakens banks’ intermediation role and, by extension, the broader economy.
Reversal of Financial Inclusion Gains
Nigeria has invested more than a decade in expanding financial inclusion through agent banking, digital wallets, and tiered KYC frameworks. The use of NIN as a tax trigger threatens to reverse these gains.
Many newly banked individuals, particularly those at the base of the economic pyramid, may abandon formal accounts, revert to cash-based transactions, or rely on informal savings mechanisms.
The irony is stark as an identifier designed to formalise the economy may inadvertently push activity back into informality.
Rising Compliance, Legal, and Technology Costs
Operationally, integrating NIN as a tax identifier significantly increases banks’ compliance burden. However, institutions are expected to synchronise multiple databases, resolve inconsistencies at scale, implement continuous monitoring systems while also managing customer disputes arising from mismatches or wrongful flags.
The challenges inherent in these demands require heavy investment in IT infrastructure, expanded compliance teams and enhanced cybersecurity. The costs either erode profitability or are passed on to customers, further fuelling public resentment.
Credit Creation and Economic Growth at Risk
Reduced deposits, higher compliance costs, reputational strain, and customer attrition converge on a single outcome that mainly constrained lending capacity.
There is no two ways about this, banks under sustained pressure will tighten credit standards, reduce SME and consumer lending, and favour low-risk government securities. The ripple effects include slower job creation, constrained entrepreneurship, and, on a dangerous level, it leads to weaker economic growth, ultimately undermining the very revenue base the tax reform seeks to expand.
Revenue Without Ruin
No doubt, linking NIN to tax identification and expanding transaction-based levies may enhance government visibility over economic activity, but in reality they carry significant unintended consequences for banking business.
They risk weakening customer trust, undermining deposit mobilisation, reversing financial inclusion gains, increasing operational and reputational risks, and constraining credit growth.
Banks do not oppose taxation. What they caution against is turning financial inclusion infrastructure into a blunt instrument of tax enforcement without adequate safeguards.
For the policy to succeed without damaging the banking system, regulators must ensure clear thresholds and exemptions, strong data protection guarantees, phased implementation and ensure sustained public education to redirect hostility away from banks.
Ultimately, the critical question is not legislative readiness but execution, especially coordination across institutions, technological preparedness and the capacity to prevent unintended disruption to businesses and citizens alike. The authorities must understand that when revenue meets risk, wisdom lies in balance.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]
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