CEM REPORT | The Federal Government has projected N136.3 billion as revenue generation from Electronic Money Transfers (ETM) in 2023.
The projection is based on a 2.7 billion volume of eligible online transfers in the year.
This is according to the Budget Office of the Federation, which is under the Ministry of Finance, Budget and National Planning, while delivering the ‘2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper,’ released on Friday.
The ministry headed by the Minister of Finance Budget and National Planning, Zainab Ahmed, said the recently approved regulations governing the administration of the Electronic Money Transfer Levy (EMTL) are expected to boost revenue collection.
The minister added that there will be strict monitoring of banks and other financial institutions to conduct reconciliation and to ensure deduction and remittance of the levy.
However, the revenue projection for the EMTL for next year is, lower than the current year’s target of N209.7 billion as set in the amended 2022 framework. In 2021, the government had projected N500 billion in revenue from the levy but realized N111.84 billion at the end of the year.
The minister went further to explain two possible scenarios that may affect the government’s revenue and expenditure for next year.
She explained the first scenario is ‘the Business-as-Usual scenario, which assumes that the subsidy on PMS will be sustained throughout 2023, amounting to N6.72 trillion.
“Based on this, the net amount accruable to the Federation Account is projected at N7.76 trillion. The Main Pool, VAT Pool, and Electronic Money Transfer Levy (EMTL) are projected at N4.89 trillion, N2.74 trillion, and N136.35 billion, respectively, in 2023. Oil revenue at N498.06 billion is a negligible 6.4% of total Federation Account receipts as it will be eroded by the fuel subsidy.
“Other components of the Main Federation Account revenues include Corporate Tax – N1.92 trillion, Customs Revenue – N1.96 trillion, Special Levies – N344.72 billion, NLNG Dividend – N153.73 billion, and Solid Minerals – N7.51 billion. The share of the Federal Government from the Main Federation Account Pool will be N2.57 trillion, while the States and Local governments are projected to get N1.31 trillion and N1.01 trillion, respectively, in 2023.
“From the VAT Pool, the Federal Government is projected to receive N410.46 billion, the States N1.37 trillion, and the Local governments N957.73 billion. The shares of EMTL are N20.45 billion, N68.17 billion and N47.72 billion, respectively, for the Federal States and Local governments.”
Under the second scenario which the Budget Office described as the ‘Reform scenario’, it is assumed that the PMS subsidy will end by June 2023, in line with the government’s 18-month extension announced at the beginning of 2022.
“Based on this assumption, the net amount accruable to the Federation Account is projected to be higher at N11.10 trillion.”
The EMT levy was introduced in the Finance Act 2020, which amended the Stamp Duty Act and taps into the growth in electronic funds transfer in Nigeria.
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The N50 levy is charged on electronic transfer of money deposited in any bank or financial institution, on any account, on the sum of N10,000.00 or more.
The revenue derived from the EMT levy is shared based on the derivation and distributed at 15% to the Federal Government and Federal Capital Territory, 50% to the state governments, and 35% to the 774 local governments.
Recall a CEM report where Nigeria spent more than it generated in servicing debt, in the first quarter of the year (Q1’22).
The fiscal performance for the first quarter of 2022, revealed that the federal government’s total revenue for the period was N1.63 trillion, while the debt service gulped N1.94 trillion.