In the face of outcry over rising transaction costs of financial services, deposit money banks (DMBs) have extended electronic money transfer levy (EMTL) to domiciliary accounts.
The new levy takes immediate effect according to communication messages sighted by The Guardian. The levy, which is completed by banks on behalf of the government, was previously restricted to naira accounts.
But banks have communicated to their customers that the fee would, with immediate effect, apply to domiciliary accounts on the directive of the Minister of Finance, Budget, and National Planning, Zainab Ahmed.
Accordingly, a dollar or pound account holder would henceforth pay an equivalent of N50 as EMTL at an exchange rate to be determined by the Central Bank of Nigeria (CBN).
“We write to notify you of recent changes impacting electronic money transfer transactions. The Electronic Money Transfer Levy (EMTL) Regulation was recently issued by the Minister of Finance, Budget, and National Planning.
“Based on the Regulation, the EMTL levy at the foreign currency equivalent of N50 is now applicable on the transfer of funds into domiciliary accounts… EMTL shall apply to qualifying inflows into domiciliary accounts with immediate effect,” an email sent by a bank yesterday reads.
Usman signed the EMTL Regulations into law in 2022 placing a ₦50 fee on all deposits above ₦10,000. The charge on electronic transfer is an extension of the Stamp Duty Act, which came into force via the Finance Act 2019.
The extension of the charges to foreign currency accounts comes on the heels of an increase in social protest over the rising cost of banking services, particularly electronic transactions that the CBN is aggressively enforcing.
The Guardian had reported a spike in the adoption rate of fintech and shadow banking, which offer cheaper services. Some of the fintech operators have seen a surge in the number of subscribers in recent weeks following the rise in the number of individuals transacting electronically.
Cheap transaction costs, convenience and speed are given as major reasons Nigerian depositors are dumping conventional banks for fintech, despite the concern about the safety of depositors’ funds on digital wallets in the custody of the digital-first banks.
Interestingly, the pressure is beginning to take a toll on the efficiency of fintech firms, which are becoming the vampires in the ecosystem. Hence, downtime incidents are becoming daily experiences across the leading operators – a situation that will make choosing between the two variants a more complicated one for depositors.
Meanwhile, banks across the country are not finding it easy to keep the crowds in their premises at a controllable level as demand for cash continues to increase.
Whereas more banks across Lagos and other cities joined in issuing the few old N500 and N1000 notes in their vaults, managing queues in and outside the banking halls has become a major challenge.
In some parts of Lagos, banks are relying on volunteers to maintain sanity on their premises.
The operators seem to have damned the consequences of not getting a clear directive from the regulator and are bound to the pressure of the desperate depositors. As at yesterday, more operators were paying over-the-counter, albeit transactions are still restricted to N10,000 in most cases while a few were giving N20,000.
But while the old notes are making their way into the economy, though in small quantities, some traders insist they would hear from President Muhammadu Buhari before they start accepting the notes, which the Supreme Court said remains valid till the end of the year.
Amid persistent scarcity, The Guardian leant yesterday that apart from waiting for the arrival of the President to decide on recirculation of the money retrieved from Nigerians, the CBN may have been constrained by the volume of cash said to have been destroyed.
“It was well advertised a few weeks ago that the CBN had burnt some old naira notes that were initially deposited. Though for the benefit of hindsight now, it appears that the move has backfired. The Supreme Court has ordered the CBN to restore the old notes, the CBN had burnt the old notes,” a source claimed.
With the banks in limbo and confused, the unavailability of both old and new notes is proving to be a major challenge.
A banker expressed frustration in an interview with our correspondent, saying: “We don’t even know what is going on anymore. Heads of banks are not talking. There are no directives from headquarters and no one knows the true state of things. The bank executives and managers are issuing conflicting directives as dictated by the realities in their branches.”
On the availability of old notes in banks’ vaults, he said: “There are no old notes anymore because the CBN had taken them from the bank into its custody. The CBN has not released new notes to the banks hence the rationing that is going on.”
In Abuja, transport fares, as well as prices of groceries, have shot up as taxi drivers and sellers now charge motorists and buyers now charge higher.