Nigeria Implements 5% Mobile Services Tax

As it deals with a growing financial crisis, Nigeria is preparing to implement a 5% tax on voice calls, text messages and mobile data.

As Bloomberg News reported Friday (Aug. 12), Nigerian Finance Minister Zainab Ahmed announced the tax in a statement outlining the country’s fiscal predicament, as it spends more on debt servicing than it takes in in revenue.

“Although Nigeria is celebrated as the largest economy in Africa, translating this wealth into revenues remains a challenge,” Ahmed said.

Bloomberg said Ahmed didn’t say when Nigeria will start collecting the tax, which is in addition to a 7.5% value-added tax on calls and data.

The report notes that Nigeria has one of the world’s lowest tax-to-GDP ratios and is Africa’s largest producer of crude oil. In the first four months of the year, the country generated 1.63 trillion naira (or $3.8 billion) in revenue and made 1.94 trillion naira in debt service payments.

See also: The African Mobile Money Tax Experiment

PYMNTS reported last month that a number of African governments have begun trying to tax mobile money transactions.

For example, there’s Ghana’s eLevy, a sweeping tax that covers almost all electronic transactions including mobile money payments. Initially slated to be a 1.7% tax, it was reduced to 1.5% following some fierce — in one case, there was a fistfight in parliament — opposition.

Meanwhile, Cameroon, Kenya, Tanzania, Uganda and Zimbabwe have all introduced taxes that target mobile money payments.

However, there’s evidence that these taxes hinder mobile use in the countries that implement them. Data shows that 47% of Ghanaians reduced the number of mobile money payments they make following the debut of the eLevy.

And in Tanzania, which imposed a mobile money tax in July 2021, peer-to-peer transactions fell by 38% from 30 million to 18 million per month, a study by GSMA found.

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