E-Financial
How Nigeria’s New Tax Law Could Redefine Risk in the Banking Sector
By Blaise Udunze
Nigeria’s new tax identification portal goes live nationwide tomorrow, Monday, January 1, 2026, marking a pivotal moment in the country’s fiscal and financial governance. Designed to modernise tax administration and strengthen taxpayer identification, the reform reflects a decisive shift in economic strategy by a government grappling with shrinking oil revenues, rising public debt, and widening fiscal deficits.
New Tax Law
At the centre of this shift is a deeper integration of identity systems, banking data, and tax administration, most notably the adoption of the National Identification Number (NIN) as a tax identification mechanism for operating bank accounts. In parallel, banks will also begin charging a N50 stamp duty on electronic transfers of N10,000 and above, following the implementation of the Tax Act.
Individually, these measures may appear modest, even reasonable. Collectively, however, they signal a fundamental reordering of the relationship between the state, banks, and citizens with far-reaching implications for banking business, customer trust, financial inclusion, and credit creation.
Banks at the Centre of Fiscal Enforcement
Under the new tax framework, Nigerian banks are no longer merely financial intermediaries or corporate taxpayers. They are increasingly positioned as collection agents, reporting hubs, and frontline enforcement points for government revenue policy.
The linkage of NIN to tax compliance, combined with transaction-based stamp duties, reinforces a stark reality that the banking system has become the most visible and accessible channel through which the state now extracts revenue from citizens.
This expanded role exposes banks to a new layer of risk not just financial or operational, but social, reputational, and political risks that extend far beyond balance sheets.
A Structural Shift in the Banking, Tax Relationship
Historically, banks played a facilitative role in tax compliance, primarily through payment processing and remittance support. The use of NIN as a tax identifier marks a structural departure from this model.
Bank accounts are no longer merely financial tools; they are becoming gateways to tax visibility.
This shift fundamentally alters the risk profile of the banking business. Banks are now exposed not only to credit, market, and operational risks, but also to heightened social backlash, reputational damage, and political sensitivity, arising from their expanded enforcement role.
Account Friction and Slower Customer Onboarding
One of the earliest and most visible consequences of NIN-based tax identification is increased friction in account opening and maintenance.
Consequently, in a real sense, millions of Nigerians will continue to face challenges with the NIN system, including delays in enrolment and correction, biometric mismatches as well as inconsistencies between NIN, BVN, and bank records.
For banks, this translates into slower onboarding processes, higher rates of account restriction or rejection, and increased congestion across branches and digital platforms.
What should be a growth engine for deposit mobilisation instead becomes a bottleneck, resulting in lost customers, fewer transactions, and weakened scale advantages in an increasingly competitive banking environment.
Banks as the Face of an Unpopular Tax Regime
Perhaps the most underappreciated consequence of the new tax regime is the escalation of customer hostility toward banks.
When accounts are flagged, restricted, or subjected to enhanced scrutiny, customers rarely direct their frustration at tax authorities or policymakers. Instead, they confront the most visible institution in the chain, their bank.
Banks are increasingly blamed for account freezes, accused of colluding with government, and perceived as punitive rather than service-oriented institutions. This hostility is particularly pronounced among informal sector operators, small traders, artisans, and self-employed professionals with irregular income streams.
In a low-trust economy such as Nigeria’s, perception often outweighs regulation. Banks risk becoming the public face of coercive taxation, absorbing reputational damage for policies they neither designed nor control.
Erosion of Trust in the Banking Relationship
Banking fundamentally depends on trust that deposits are safe, transactions are private, and institutions act in customers’ best interests.
When NIN becomes a tax enforcement gateway, that trust begins to fray. Banks are no longer seen primarily as custodians of savings, enablers of enterprise, or neutral financial intermediaries. Instead, they are increasingly perceived as extensions of tax authorities, surveillance nodes, and compliance police.
Once trust erodes, customer behaviour adjust often in ways that undermine the formal financial system itself.
The Hidden Impact of the N50 Stamp Duty
The introduction of a N50 stamp duty on electronic transfers of N10,000 and above may appear trivial. In practice, it carries outsized implications.
For many Nigerians, especially low- and middle-income earners, electronic transfers are not discretionary transactions. They are salary payments, family support remittances, SME operating expenses, and routine commercial settlements.
Customers rarely distinguish between government levies and bank charges. The stamp duty will therefore be perceived as yet another bank fee, deepening resentment toward institutions already accused of excessive charges.
Behaviourally, customers may respond by breaking transactions into smaller amounts, increasing cash usage, or migrating to informal transfer channels, distorting transaction patterns and weakening the efficiency of the digital payments ecosystem.
Although banks merely collect the duty on behalf of the government, they will once again bear the reputational cost.
Threat to Deposit Mobilisation and Liquidity
Fear of tax exposure is a powerful behavioural driver. As NIN becomes closely associated with tax scrutiny and transaction charges mount, many customers are likely to reduce account balances, avoid lump-sum deposits, split transactions to stay below thresholds, or move funds outside the banking system entirely.
For banks, the consequences are clear, as these will result in slower deposit growth, volatile liquidity positions, and reduced capacity to fund loans.
Deposit mobilisation is the lifeblood of banking. Any policy that discourages formal savings weakens banks’ intermediation role and, by extension, the broader economy.
Reversal of Financial Inclusion Gains
Nigeria has invested more than a decade in expanding financial inclusion through agent banking, digital wallets, and tiered KYC frameworks. The use of NIN as a tax trigger threatens to reverse these gains.
Many newly banked individuals, particularly those at the base of the economic pyramid, may abandon formal accounts, revert to cash-based transactions, or rely on informal savings mechanisms.
The irony is stark as an identifier designed to formalise the economy may inadvertently push activity back into informality.
Rising Compliance, Legal, and Technology Costs
Operationally, integrating NIN as a tax identifier significantly increases banks’ compliance burden. However, institutions are expected to synchronise multiple databases, resolve inconsistencies at scale, implement continuous monitoring systems while also managing customer disputes arising from mismatches or wrongful flags.
The challenges inherent in these demands require heavy investment in IT infrastructure, expanded compliance teams and enhanced cybersecurity. The costs either erode profitability or are passed on to customers, further fuelling public resentment.
Credit Creation and Economic Growth at Risk
Reduced deposits, higher compliance costs, reputational strain, and customer attrition converge on a single outcome that mainly constrained lending capacity.
There is no two ways about this, banks under sustained pressure will tighten credit standards, reduce SME and consumer lending, and favour low-risk government securities. The ripple effects include slower job creation, constrained entrepreneurship, and, on a dangerous level, it leads to weaker economic growth, ultimately undermining the very revenue base the tax reform seeks to expand.
Revenue Without Ruin
No doubt, linking NIN to tax identification and expanding transaction-based levies may enhance government visibility over economic activity, but in reality they carry significant unintended consequences for banking business.
They risk weakening customer trust, undermining deposit mobilisation, reversing financial inclusion gains, increasing operational and reputational risks, and constraining credit growth.
Banks do not oppose taxation. What they caution against is turning financial inclusion infrastructure into a blunt instrument of tax enforcement without adequate safeguards.
For the policy to succeed without damaging the banking system, regulators must ensure clear thresholds and exemptions, strong data protection guarantees, phased implementation and ensure sustained public education to redirect hostility away from banks.
Ultimately, the critical question is not legislative readiness but execution, especially coordination across institutions, technological preparedness and the capacity to prevent unintended disruption to businesses and citizens alike. The authorities must understand that when revenue meets risk, wisdom lies in balance.
Blaise, a journalist and PR professional, writes from Lagos and can be reached via: [email protected]
Kayode Egbetokun, inspector-general of Police (IGP), has declared Nigeria’s banking industry a strategic national asset, ordering an immediate intelligence-led crackdown on cybercriminal networks, insider facilitators, and transnational financial crime syndicates threatening the stability of the financial system.
Kayode Egbetokun, inspector-general of Police (IGP),
Speaking at a strategic meeting with the Chartered Institute of Bankers of Nigeria (CIBN) and the Body of Bank Chief Executive Officers in Lagos, where he said the Nigeria Police Force was shifting from reactive policing to proactive dismantling of organised criminal structures targeting banks.
According to him, the financial sector remains central to national stability.
He said: “The Nigerian banking industry is not merely a driver of economic activity; it is a core component of our national stability architecture. The integrity, continuity, and resilience of the financial system are directly linked to public confidence, investor perception, and the credibility of Nigeria’s economic governance.”
In a major policy shift, Egbetokun announced that regular police officers would no longer be deployed for routine cash-in-transit escorts or non-essential VIP protective duties within the private sector.
He explained that the decision aligned with national policy direction and manpower optimisation within the Force, adding that the traditional model of conventional police deployment for banking sector protection was being reviewed and progressively restructured.
“This policy adjustment is not designed to diminish the security framework supporting the banking industry. Rather, it reflects a deliberate transition towards a more sustainable, professional, and institutionally governed model of security support,” he said.
Egbetokun warned that conventional risks such as armed robbery and cash-in-transit vulnerabilities, though still present, have been overtaken by more complex and technologically sophisticated threats.
“These threats are adaptive, technologically sophisticated, and often coordinated across borders. They include cyber-enabled fraud, identity compromise, insider facilitation, organised financial crime, and illicit financial flows,” he told the bankers.
The IGP stressed that disruptions to banking operations now carry international reputational consequences, citing global compliance standards set by the Financial Action Task Force FATF and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations.
He said: “In an era shaped by FATF standards, AML/CFT obligations, and heightened scrutiny of financial flows, the strength of a nation’s enforcement and security architecture is now directly relevant to investor confidence and market stability.”
The police noted that: “The speed and sophistication of cyber-enabled fraud illustrate the urgency of integration. Delayed reporting windows can render enforcement ineffective, while rapid escalation, evidence preservation, and coordinated response can significantly improve disruption, recovery, and prosecution outcomes.
“Modern financial crime operates at a pace that requires equally modern security coordination.”
Egbetokun disclosed that the Force had already intensified covert operations targeting kidnapping syndicates, illegal arms networks, and organised criminal enterprises whose activities threaten commercial stability.
He added that the Police were strengthening coordination with the Economic and Financial Crimes Commission (EFCC), the Nigeria Financial Intelligence Unit (NFIU), and the Central Bank of Nigeria (CBN) to ensure that criminal enterprises do not exploit gaps between enforcement, compliance, and oversight.
The IGP told the bankers that sustainable security cannot be achieved through episodic contact or fragmented interventions, calling for structured cooperation between law enforcement and financial institutions.
“Security is not merely the absence of crime; it is the presence of stability that enables productivity, investment, and growth. A secure banking environment supports savings mobilisation, credit expansion, financial inclusion, and the confidence of both domestic and international investors.
“When citizens trust financial institutions, participation in the formal economy increases. When investors perceive a stable internal security environment supported by credible enforcement, Nigeria becomes more bankable, more investable, and more competitive.
“The outcome of this meeting should not be limited to dialogue. It should produce structured liaison mechanisms between law enforcement and the banking sector, clear operational protocols for high-risk areas, joint capacity building, and lawful information-sharing.
“The Nigeria Police Force stands ready to work with the banking sector not merely as an enforcement institution, but as a strategic partner in safeguarding the integrity, stability, and international credibility of Nigeria’s financial architecture,” he said.
Earlier in his remarks, Oliver Alawuba, chairman of the Body of Bank Chief Executive Officers, who acknowledged the Police boss for measures put in place to tackle insecurity in the country, highlighted the banking industry’s past support.
He said: “The Bankers’ Committee was responsible for the renovation of over 42 police stations that were destroyed during the EndSARS protests. We stepped in when police infrastructure was in ruins. Today, we expect that same urgency when our own infrastructure is under digital siege.”
Professor Pius Olarenwaju, president, CIBN, on his part, painted a grim picture of an industry under silent assault, warning that the velocity of cyberattacks now outstrips the response capacity of traditional law enforcement.
“The banking sector plays a pivotal role in Nigeria’s economic development, and our critical functions can only flourish in a secure and stable environment. But we are fighting a war where the enemy no longer carries guns , they carry laptops and exploit system vulnerabilities in milliseconds,” he told the IGP.
Olarenwaju further stressed that the rapid digital transformation of financial services has created a security paradox.
“As we deepen financial inclusion and expand digital channels, we also expand the attack surface for cybercriminals. The same technology that empowers the unbanked also empowers fraudsters operating from jurisdictions where Nigerian law enforcement has no reach. This is the new reality, and we need the police to evolve with it,” he said.
Present at the occasion were Managing Directors and Chief Executive Officers of banks such as Union Bank, Signature Bank, Parallex Bank, Standard Chartered Bank, Keystone Bank, Coronation Merchant Bank, Guaranty Trust Bank, United Bank for Africa, among others.
E-Financial
Rashidat Adebisi Unveils Strategic Roadmap for Nigeria’s Insurance Sector under NIIRA 2025
Following a landmark 21-year career in institutional finance, Rashidat Adebisi, the former Executive Director at AXA Mansard, has officially launched “The Re-Architecture Project.”
This strategic pivot aims to align Nigeria’s insurance and financial infrastructure with the federal government’s ambitious $1 trillion economy goal, positioning the sector as a critical driver of macro-economic stability.
As Nigeria navigates the complexities of the Nigeria Insurance Industry Reform Act (NIIRA 2025), Adebisi identifies this moment as a “watershed” for the industry.
She argues that the path to a trillion-dollar economy requires more than just capital, it demands a total re-architecture of how financial systems interact with the informal economy, which currently accounts for over 60% of employment in Africa.
Macro-Economic Resilience as a National Imperative
The Re-Architecture Project reframes insurance from a transactional product into the “secret sauce” of a resilient economy.
Adebisi asserts that for Nigeria to achieve its macro-economic targets, the insurance industry must bridge the massive “protection gap,” as penetration currently remains below 3% across many African markets.
Insurance as an Economic Safety Net: “Insurance is the net that allows a nation to jump higher,” Adebisi stated.
She emphasizes that every decimal point in a financial model represents a business stabilized and a future secured, providing the essential foundation for macro-economic growth.
Infrastructure Beyond Capital: The project posits that Nigeria is not lacking capital but “invisible infrastructure”, specifically Trust, Access, and Regulatory Clarity.
NIIRA 2025: From Compliance to Competitive Advantage
Adebisi describes NIIRA 2025 as a vital structural reinforcement rather than regulatory friction. The Act’s focus on Capital Recalibration, Stronger Governance, and Consumer Protection is essential for building the institutional rigour required to support a $1 trillion GDP.
Recalibrating Foundations: The reform represents a necessary recalibration of the industry’s foundations while accelerating digital transformation.
Strategic Policy Fluency: “Those who view compliance as a burden will struggle; those who see it as a competitive advantage will thrive,” Adebisi noted, identifying policy fluency as a core leadership competency for the next decade.
Economic Visibility: Integrating the Informal Sector
A central pillar of the project is “Engineering Inclusive Ecosystems,” exemplified by the FileAm App. This initiative reimagines tax compliance as a digital utility for SMEs and informal entrepreneurs, moving them from economic invisibility into formal digital tax rails, insurance coverage, and credit ecosystems.
The Wealth Pipeline: By building digital identity and verifiable credentials, the project aims to turn compliance into credit history, and credit history into the capital access required for intergenerational wealth creation.
As a Financial Systems Architect, Adebisi’s blueprint for the next decade is governed by a singular core rule: Data-aware. Policy-conscious. Africa-focused.. The project calls on industry leaders and policymakers to move beyond incremental adoption toward designing interoperable ecosystems that can sustain the Africa of tomorrow.
“The future of finance in Africa will not be inherited. It will be architected,” Adebisi concluded. “It is our turn to build.”.
The National Insurance Commission (NAICOM) has unveiled a far-reaching reform agenda aimed at strengthening industry stability, improving consumer confidence, and positioning the sector to play more strategic role in national economic growth.
Speaking at the 2026 management retreat in Uyo, Olusegun Ayo Omosehin, commissioner for Insurance/CEO, NAICOM, described the initiative as a defining moment for the industry, stressing that the transformation drive is designed to modernise regulatory oversight, deepen market penetration, and build a more resilient and globally competitive insurance industry.
The renewed policy direction was unveiled at the Commission’s 2026 Management Retreat held in Uyo, Akwa Ibom State, under the theme “Insurance Regulation: Reset, Reimagine, Refocus.”
Omosehin, described the retreat as a watershed moment in the Commission’s 29-year evolution, declaring that the regulator is embarking on a decisive transformation phase anchored on integrity, professionalism, accountability, and institutional unity.
He stressed that the reform agenda represents a deliberate shift away from outdated regulatory practices towards a modern, proactive, and impact-driven supervisory framework capable of strengthening market confidence and driving sustainable industry growth.
Omosehin explained that the retreat’s theme reflects a strategic call to action designed to reset legacy regulatory approaches, reimagine the untapped potential of Nigeria’s insurance market, and refocus regulatory strategies to deliver measurable economic value.
He further underscored the Commission’s strategic role in supporting the economic expansion blueprint of president Bola Ahmed Tinubu, noting that achieving Nigeria’s ambitious $1 trillion economic target requires a resilient, well-capitalized, and shock-resistant insurance sector capable of underwriting major risks, attracting investment inflows, and supporting long-term national development.
Central to the reform drive is NAICOM’s ongoing recapitalization programme, which the commissioner described as one of the most far-reaching regulatory interventions in the history of Nigeria’s insurance industry.
He clarified that the initiative goes far beyond capital injection, stressing that it is designed to strengthen insurers’ financial stability, enhance consumer protection, deepen insurance penetration across underserved segments, reinforce the industry’s capacity to withstand economic shocks, and rebuild public trust in insurance as a credible financial safety net.
He emphasized that the credibility of the exercise will be measured by its transparency, fairness, and professional execution, warning that the Commission will tolerate no ambiguity, compromise, or preferential treatment in the process.
Addressing management staff, Omosehin delivered a firm directive for internal discipline and cohesion, urging leaders within the Commission to uphold integrity as a guiding principle, professionalism as an operational compass, and transparency as a non-negotiable regulatory standard.
He stressed that NAICOM’s effectiveness depends on institutional collaboration, warning that departmental silos and bureaucratic rivalries undermine regulatory efficiency.
In a symbolic demonstration of commitment, management staff collectively pledged to uphold fairness, accountability, and global best practices in executing the recapitalization roadmap and safeguarding the future of the insurance sector.
The Commissioner also outlined key strategic priorities expected to reposition the industry, including strengthening regulatory oversight, ensuring disciplined execution of the recapitalization framework, deepening stakeholder engagement, expanding institutional capacity in risk-based supervision and data analytics, driving market development through digital innovation, strengthening organizational culture, and reinforcing policyholder protection mechanisms.
Omosehin also invoked an African proverb to emphasize the importance of unity and collective resolve, noting that sustainable transformation of the insurance sector can only be achieved through shared commitment among regulators, operators, and stakeholders.
He reaffirmed NAICOM’s determination to build an insurance industry that is resilient, globally competitive, trusted by policyholders, and fully aligned with Nigeria’s long-term economic transformation agenda.
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