The impressive profit growth recorded by several Nigerian banks in 2024 is making a significant impact on the country’s technology ecosystem, as their contributions to the Nigeria Information Technology Development Fund (NITDEF) surged by 57% year-on-year to N34.3 billion.
This is according to the analysis of the 2024 audited financial results of six commercial banks.
The banks include Zenith Bank Plc, Guaranty Trust Holding Company Plc, United Bank for Africa Plc, Fidelity Bank Plc, Stanbic IBTC Holdings Plc and Wema Bank Plc.,
Compared with the N21.8 billion contributed by the six banks in 2023, this marked a significant increase.
Highest contribution so far
While the government has been complaining over the years about companies not complying with the mandatory payment of 1% of their profit to develop the Nigerian tech ecosystem, the six banks’ remittance for 2024 came as the highest contribution to the Fund so far.
- Data gleaned from the banks’ 2023 results showed that all banks in the country contributed N33.7 billion to the Fund.
- For 2024, the N34.3 billion was just for the banks that have released their results so far, excluding giants like FBN Holdings and Access Holdings, who were two of the biggest contributors to the Fund in 2023.
- For 2022, the Federal Inland Revenue Service (FIRS), which collects the tax on behalf of the National Information Technology Development Agency (NITDA), said it collected a total of N22.5 billion as NITDEF levy, and it was the highest annual collection at that time.
What each bank paid
Payments by the banks reflect their profit for the year, as the banks with the biggest profits paid the biggest amount. Zenith Bank, which recorded a profit before tax of N1.3 trillion for 2024, paid N11.4 billion into the tech fund, a 70% increase when compared with the N6.7 billion it contributed in 2023.
- Similarly, GTCO, which recorded N1.26 trillion profit before tax, paid N10 billion IT levy, up from N4.7 billion it contributed in the previous year.
- United Bank for Africa (UBA), with a profit before tax of N803.7 billion, paid N4.67 billion as the information technology levy in 2024. This is, however, lower than the N6.7 billion it put into the Fund in 2023.
- Stanbic IBTC also paid N3.2 billion into the tech fund from its pre-tax profit of N303.7 billion. The bank paid N1.8 billion IT levy in 2023.
- Fidelity Bank, which posted N385.2 billion profit before tax for 2024, paid N3.9 billion into the tech fund.
- Wema Bank, with a pre-tax profit of N102.51 billion in 2024, paid N1 billion into the tech development fund.
Companies required to pay the NITDEF levy
According to the National Information Technology Development Agency (NITDA) ACT 2007, which established the NITDEF, companies operating in Nigeria with an annual turnover of N100 million are to pay 1% of their annual profit before tax to the fund.
Companies mandated to pay the levy as stated in the third schedule of the Act include GSM service providers and all telecommunications companies; Cyber Companies, and Internet service providers.
It also includes non-IT companies such as pension managers and pension-related companies; Banks and other Financial Institutions; and Insurance Companies.
The Act also stipulates punishment in case of default, stating that,
“Any company, agency or organisation that fails within two months after a demand note, to pay the levy or the import duty imposed under section 11 of this Act commits an offence and is liable on conviction to a fine of not less than N 1,000,000.00 and the Chief Executive Officer of the company, Agency or Organisation shall be liable to be prosecuted and punished for the offence in like manner as if he had himself committed the offence, unless he proves that the act or omission constituting the offence took place without his knowledge, consent or connivance”.
However, NITDA recently lamented that many companies have not complied with the law’s provision in paying the fee.
What the Fund is used for
According to the Director-General of NITDA, Kashifu Inuwa, NITDEF is crucial to the Agency’s success in all areas of its mandates geared towards technology development in Nigeria.
He said the fund is pivotal in the ongoing implementation of the National Digital Skills Strategy Implementation geared towards ensuring that 95% of Nigerians become digitally literate by 2030.
The NITDA boss explained that the fund is also being deployed in its key focus areas, which include:
- The implementation of the Nigerian Startup Act,
- Completion of the National Digital Innovation and Entrepreneurship Centre,
- National Data Strategy Implementation,
- Adoption of Blockchain Technology, and
- Implementation of the National Digital Skills Strategy, amongst others.
Meanwhile, the Lead for General Tax Operations at FIRS, Kabiru Abba, emphasized the need for NITDA to continue to showcase its achievements with the Fund.
According to him, this would help the taxpayers to easily establish a connection between the taxes paid and their socio-economic impact, which will also assist in improving voluntary compliance.
