In 2024, Nigerian banks have set a new benchmark for supporting the country’s technology sector. Thanks to robust profit growth, their contributions to the Nigeria Information Technology Development Fund (NITDEF) surged by an impressive 57% year-on-year, totaling N34.3 billion. This increase from N21.8 billion in 2023 marks a significant stride in Nigeria’s digital transformation efforts.
This remarkable rise in contributions comes from six prominent banks: Zenith Bank Plc, Guaranty Trust Holding Company Plc (GTCO), United Bank for Africa Plc (UBA), Fidelity Bank Plc, Stanbic IBTC Holdings Plc, and Wema Bank Plc. Their combined efforts emphasize the critical role of the banking sector in advancing Nigeria’s tech ecosystem.
Setting New Records for Tech Development
For years, the Nigerian government has expressed concerns about companies not meeting their legal obligations to pay 1% of their annual profit to the NITDEF. However, in 2024, the banks’ contributions alone set a new record. When compared to the total contribution of N33.7 billion from all banks in 2023, the N34.3 billion from the six banks already outpaces last year’s contributions. This figure could rise even further as major players like FBN Holdings and Access Holdings finalize their results.
To put this in perspective, the Federal Inland Revenue Service (FIRS) reported a total NITDEF levy of N22.5 billion in 2022, the highest collection at that time. With the 2024 contributions already breaking records, it’s clear that the banking sector is stepping up in a big way.
Banks’ Contributions Reflect Their Growing Profits
The amount each bank contributed aligns closely with their respective profits. Zenith Bank, with a pre-tax profit of N1.3 trillion, made the largest contribution, paying N11.4 billion—representing a 70% increase from N6.7 billion in 2023. Guaranty Trust Holding Company (GTCO), which reported N1.26 trillion in pre-tax profit, followed with a N10 billion payment, up from N4.7 billion last year.
United Bank for Africa (UBA), with a pre-tax profit of N803.7 billion, contributed N4.67 billion, although this is slightly lower than the N6.7 billion paid in 2023. Stanbic IBTC, with a pre-tax profit of N303.7 billion, paid N3.2 billion, compared to N1.8 billion in 2023. Fidelity Bank, which reported N385.2 billion in pre-tax profit, contributed N3.9 billion, while Wema Bank, with a pre-tax profit of N102.51 billion, contributed N1 billion.
Who Must Contribute to the NITDEF?
Under the NITDA Act of 2007, companies operating in Nigeria with an annual turnover exceeding N100 million are required to contribute 1% of their pre-tax profit to the NITDEF. This includes companies in the telecommunications, financial, insurance, and IT sectors, as well as other businesses such as pension managers and internet service providers.
The Act also specifies penalties for non-compliance. Companies that fail to meet their obligations within two months of receiving a demand note are subject to a fine of at least N1 million. In addition, the company’s CEO may be held personally liable for prosecution, unless they can prove the violation occurred without their knowledge or consent.
Despite these provisions, NITDA has voiced concerns over widespread non-compliance, with many companies still not fulfilling their payment obligations.
NITDEF’s Role in Advancing Nigeria’s Digital Future
The NITDEF is a vital resource for driving Nigeria’s technology and innovation agenda. According to Kashifu Inuwa, Director-General of NITDA, the fund plays a central role in achieving the agency’s goals. One of the most significant objectives is to ensure that 95% of Nigerians are digitally literate by 2030, through the National Digital Skills Strategy.
Inuwa also highlighted several key projects funded by NITDEF, including the Nigerian Startup Act, the National Digital Innovation and Entrepreneurship Centre, and efforts to promote blockchain technology and national data strategies. These initiatives are essential for building a digital economy that can compete globally and meet the needs of the local population.
Increasing Transparency to Boost Compliance
Kabiru Abba, Lead for General Tax Operations at FIRS, stressed the importance of transparency in showcasing the impact of NITDEF contributions. By demonstrating the tangible benefits of these funds, NITDA can strengthen the connection between taxpayers’ contributions and the broader socio-economic impact. This transparency will help improve voluntary compliance, ensuring that more companies contribute to the growth of Nigeria’s digital ecosystem.
