Nigeria is Africa’s largest wireless market.
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Nigeria, Africa’s largest wireless market, is moving ahead with a proposed 5% tax on voice calls, mobile data and text messages to combat a growing financial crisis.
Finance Minister Zainab Ahmed announced the tax, deferred from last year, in an emailed statement that highlighted the government’s tight financial picture. As of April, Africa’s largest crude oil producer is spending more on debt service than it is generating in revenue.
“Despite the fact that Nigeria is considered the largest economy in Africa, converting this wealth into revenue remains a challenge,” Ahmed said. The statement did not say when the charge, which is in addition to the 7.5% value-added tax on calls and data, will begin to be levied. Earlier this month, Communications Minister Issa Pantami asked the government to review the tax on the grounds that it could slow the expansion of one of the country’s fastest-growing sectors.
Following its first half results, MTN Ghana blamed a similar tax imposed by West African neighbor Ghana for slowing mobile money revenues. Ghana, also facing a financial crisis, introduced a 1.5% e-toll in May to boost government revenue and reduce a growing budget deficit.
According to the Organization for Economic Co-operation and Development, Nigeria has one of the lowest tax-to-GDP ratios in the world at 6% in 2019. The government received 1.63 trillion naira (about 61.4 billion rand) in revenue in the four months to April, against 1.94 trillion naira in debt service payments for the period.
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