Nigeria’s tech development fund receives N33.7 billion in contributions from ten banks in 2023

In 2023, ten Nigerian commercial banks made contributions to the Nigeria Information Technology Development Fund (NITDEF) totaling N33.7 billion.

The contribution, which is a component of the banks’ statutory taxes, was subtracted from their pre-tax profits for the year, as per the institutions’ audited financial reports.

Although businesses have been under pressure from the government to contribute 1% of their profits to support the development of the Nigerian digital ecosystem, the remittance from the 10 banks for 2023 may be the largest payment to the Fund to date. 

The National Information Technology Development Agency (NITDA) is responsible for collecting the NITDEF levy, and last year the Federal Inland Revenue Service (FIRS), acting on its behalf, reported that it had earned N22.5 billion in 2022—the highest amount ever collected in a single year.

In 2022, the ten commercial banks collectively paid N12.1 billion in NITDEF levies. As a result, the 2023 payments increased by 178%.

For background, the Information Technology Development Levy was paid by MTN Nigeria in 2022 and was N5.6 billion, according to the company’s 2023 audited financial records. Nevertheless, the report contained no information for 2023.

What Each Bank Paid in 2023 vs 2022 (in Million Naira)

The chart compares the NITDEF levy paid by various banks in 2023 versus 2022, expressed in millions of Naira. Below is the detailed information presented in the chart:

Businesses have to pay the NITDEF levy

The NITDEF was formed by the National Information Technology Development Agency (NITDA) ACT 2007, which mandates that businesses in Nigeria with annual sales of at least N100 million pay 1% of their profit before taxes to the fund.

Internet service providers, cyber companies, and GSM service providers are among the businesses required to pay the levy as specified in the third schedule of the Act.

It also comprises non-IT businesses including insurance companies, banks and other financial institutions, and pension managers, and related businesses. 

The Act further describes the penalties for noncompliance, saying that

“Any company, agency, or organization that fails to pay the import duty or levy imposed under section 11 of this Act within two months of receiving a demand note is guilty of an offense and faces a fine of at least N 1,000,000.00 upon conviction. The Chief Executive Officer of the company, agency, or organization will also be prosecuted and punished for the offense in the same way as if he had committed it himself, unless he can demonstrate that the act or omission that constitutes the offense occurred without his knowledge, consent, or collusion.” 

Nonetheless, NITDA has bemoaned the fact that numerous businesses have failed to pay the required charge following the legislation. In response, NITDA and the FIRS hosted a stakeholders’ event in Lagos last year to persuade more businesses to make contributions to the fund.

What is done with the Fund

The NITDA Director-General asserts that NITDEF is essential to the Agency’s accomplishment of all of its missions related to Nigerian technology development.

According to him, the fund is essential to the National Digital Skills Strategy Implementation, which is now underway and aims to guarantee that 95% of Nigerians be digitally literate by 2030. 

The head of NITDA clarified that the fund is also being utilized in its primary focus areas, which encompass, among other things, the execution of the National Digital Skills Strategy, the adoption of blockchain technology, the National Data Strategy, the Nigeria Startup Act, and the completion of the National Digital Innovation and Entrepreneurship Center.

Speaking next was Kabiru Abba, the Service’s Lead for General Tax Operations at FIRS, who disclosed that FIRS collected and remitted N22.5 billion in 2022 on behalf of NITDA. Abba said NITDA must keep showcasing its accomplishments so that taxpayers can readily connect the dots between taxes paid and their socio-economic impact, which will also help to increase voluntary compliance.