In 2024, several Nigerian banks achieved impressive profit growth, significantly boosting the country’s technology ecosystem. Their contributions to the Nigeria Information Technology Development Fund (NITDEF) surged by 57% year-on-year, reaching a total of N34.3 billion. This marks a notable increase compared to the N21.8 billion these six commercial banks contributed in 2023.
The banks involved in this substantial contribution include 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. These banks represent a key part of the country’s financial landscape, and their support for the fund highlights a growing commitment to fostering technological development in Nigeria.
Record Contribution to NITDEF
Despite years of government concerns over non-compliance by companies with the mandatory 1% profit tax for technology development, 2024’s remittance from these six banks represents the largest contribution to the NITDEF to date. Data from 2023 indicates that all banks in Nigeria combined contributed N33.7 billion to the fund, while in 2024, the six banks that have released their financial results so far alone contributed N34.3 billion. This growth is expected to continue as other major players, including FBN Holdings and Access Holdings, release their financial reports.
In 2022, the Federal Inland Revenue Service (FIRS) collected N22.5 billion in NITDEF levies, marking the highest collection for that year.
Breakdown of Bank Contributions
The contributions from each bank correspond to their respective profits for 2024. Zenith Bank, with a pre-tax profit of N1.3 trillion, made the largest contribution of N11.4 billion, reflecting a 70% increase from the N6.7 billion it paid in 2023. Similarly, GTCO, which posted a profit of N1.26 trillion, paid N10 billion into the tech fund, up from N4.7 billion the previous year.
United Bank for Africa (UBA), with a pre-tax profit of N803.7 billion, contributed N4.67 billion to the fund, although this was lower than its N6.7 billion contribution in 2023. Stanbic IBTC, with a profit of N303.7 billion, paid N3.2 billion, up from N1.8 billion in 2023. Fidelity Bank, with a profit of N385.2 billion, contributed N3.9 billion, while Wema Bank, with a pre-tax profit of N102.51 billion, contributed N1 billion.
Companies Required to Pay NITDEF Levy
Under the National Information Technology Development Agency (NITDA) Act of 2007, companies operating in Nigeria with an annual turnover of N100 million are required to contribute 1% of their pre-tax profits to the NITDEF. The companies obligated to pay this levy include telecommunications providers, internet service providers, financial institutions, insurance companies, and others in the technology sector.
The Act also includes provisions for penalties in the event of non-compliance, stating that companies failing to pay the levy within two months of receiving a demand note face a fine of at least N1 million. The CEO of any non-compliant organization may also face prosecution unless they can prove the offense occurred without their knowledge or consent.
However, NITDA has expressed concerns about widespread non-compliance, as many companies have yet to fulfill their legal obligations.
Purpose of the NITDEF
NITDEF plays a vital role in supporting the growth and development of Nigeria’s technology sector. According to Kashifu Inuwa, Director-General of NITDA, the fund is critical to advancing key projects aimed at improving digital literacy and technological innovation in the country. One of the primary goals is to ensure that 95% of Nigerians are digitally literate by 2030 as part of the National Digital Skills Strategy Implementation.
Inuwa also highlighted other crucial initiatives funded by NITDEF, including the Nigerian Startup Act, the National Digital Innovation and Entrepreneurship Centre, the National Data Strategy Implementation, and the adoption of blockchain technology.
Enhancing Public Trust and Compliance
Kabiru Abba, Lead for General Tax Operations at FIRS, emphasized the importance of NITDA demonstrating the positive impact of the fund. By showcasing the achievements funded by the NITDEF, taxpayers can better understand how their contributions translate into tangible socio-economic benefits. This transparency can help foster greater voluntary compliance among Nigerian businesses and encourage them to fulfill their legal obligations.
