The fintech Tax Collection Gap

While Ecobank and five other deposit money banks reported N33.99 trillion in customer loans despite fintech competition, this headline masks a deeper Nigeria policy challenge: the erosion of formal sector tax collection capacity. The 70% growth in fintech startups to over 430 companies represents a massive shift of financial activity into less regulated, harder-to-tax channels. Traditional banks generate predictable withholding tax, stamp duty, and VAT collections through their loan portfolios. Fintech platforms operate in regulatory gray areas where transaction tracking remains inconsistent. This suggests Nigeria's tax authorities face a shrinking formal financial sector base just as the CBN pushes banks toward a $1 trillion economy target. The risk is clear: as lending migrates to digital platforms, government revenue collection mechanisms designed for traditional banking become obsolete. With oil and gas comprising 26% of banking loans, the sector's commodity exposure compounds this tax base vulnerability.

Recapitalization Costs vs. Revenue Reality

The banking industry's ₦1.7 trillion capital raise by December 2024 creates a compliance cost burden that ultimately reduces taxable profits. Banks facing the March 31, 2026 recapitalization deadline will prioritize capital preservation over aggressive lending growth. This suggests the 9.2% loan growth figure masks underlying credit constraints that will worsen as banks hoard capital. The Investment and Securities Act 2025 enabling digital assets as securities further fragments the financial landscape across multiple regulators. Domestic credit growth remains constrained despite regulatory efforts, indicating structural problems beyond fintech competition. The real story: banks are retreating into safe, government-backed lending while fintechs capture the profitable retail segments that generate the most tax-efficient revenue streams.

Expect traditional banks to become utilities while fintechs avoid the tax net entirely. Nigeria's revenue collection capacity is quietly collapsing.