Role Of Nigeria Finance Acts

Introduction Financial inclusion is a vital aspect of any thriving economy, as it ensures that all segments of the population have access to financial services and products. In Nigeria, achieving financial inclusion has been a priority for the government, with various measures being implemented through the Nigeria Finance Acts. As a leading accounting firm in Nigeria, this article explores the crucial role of the Nigeria Finance Acts in promoting financial inclusion and their impact on the country’s economic growth and development. 1. Expanding Access to Financial Services – Finance Act 2019 The Nigeria Finance Act 2019 took significant strides in promoting financial inclusion by increasing the VAT registration threshold. By raising the threshold, the government aimed to exempt more small businesses with lower turnovers from paying VAT. This measure provided relief to smaller enterprises, encouraging them to formalize their operations and gain access to formal financial services. Impact: The increased VAT registration threshold contributed to expanding the formal tax net and brought more businesses into the financial system, enhancing their ability to access credit and other financial products. 2. Encouraging Financial Literacy – Finance Act 2020 The Nigeria Finance Act 2020 recognized the importance of financial literacy in promoting financial inclusion. The act introduced measures to enhance financial education programs to improve financial literacy among individuals and businesses. By increasing financial awareness, the government aimed to empower people to make informed financial decisions and effectively utilize financial services. Impact: The Finance Act 2020’s focus on financial literacy contributed to increased awareness and understanding of financial products and services among the population, fostering a more inclusive and financially savvy society. 3. Digital Financial Services – Finance Act 2021 The Nigeria Finance Act 2021 embraced the potential of digital financial services in promoting financial inclusion. The act introduced provisions to encourage the use of digital payment platforms and other innovative financial technologies. By supporting digital financial services, the government aimed to increase financial access for individuals, especially those in remote or underserved areas. Impact: The promotion of digital financial services facilitated financial transactions, particularly for unbanked and under banked populations, thus advancing financial inclusion and reducing the reliance on cash-based transactions. 4. Tax Incentives for Financial Institutions – Finance Act 2022 The Nigeria Finance Act 2022 introduced tax incentives for financial institutions that extend their services to underserved areas and support financial inclusion initiatives. These incentives aimed to encourage financial institutions to reach out to unbanked and underserved populations and expand their operations to these areas. Impact: The tax incentives provided an incentive for financial institutions to broaden their reach and enhance financial access for marginalized communities, fostering greater financial inclusion. 5. Promoting Microfinance Institutions – Finance Act 2023 The Nigeria Finance Act 2023 recognized the significant role played by microfinance institutions (MFIs) in promoting financial inclusion. The act introduced tax incentives for MFIs that provide financial services to micro and small-scale businesses. These incentives aimed to strengthen the role of MFIs in facilitating financial inclusion for the informal sector. Impact: The tax incentives for MFIs encouraged these institutions to expand their services, reaching more micro-entrepreneurs and small businesses and providing them with access to credit and other financial services. Conclusion The Nigeria Finance Acts have played a pivotal role in promoting financial inclusion in the country. By expanding access to financial services, encouraging financial literacy, supporting digital financial services, providing tax incentives for financial institutions, and promoting microfinance institutions, the government has taken significant steps to create a more inclusive financial ecosystem. As an accounting firm in Nigeria, we recognize the importance of financial inclusion for sustainable economic growth and development. Through our expertise in tax advisory services, we aim to support financial institutions, businesses, and individuals in navigating the evolving financial landscape and contributing to Nigeria’s progress towards greater financial inclusion and prosperity. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.