How The Central Bank Of Nigeria Robs Citizens To Fund manipulated FX trades

avatar of @badbitch
4 min read


The government is the poorest entity in the world, how we've let them penetrate our finances is what's amusing

This is something not every Nigerian knows, the major reason being that a huge percentage of the county's population is underemployed and not well educated or informed about the finance of the nation, how it affects theirs and how the entire economy is built around lies and total dependency on one sector - oil.

Taxation In Nigeria Is Going Over The Roof

Many people legit feel like there are not many tax laws in Nigeria given how these things are so built into the system that it could go literally unnoticed unless of course you're a big deal in the country. Companies generally pay close to 30% on their income from Nigeria-based businesses. For workers, it gets a little tricky on how taxes are imposed but more importantly, the VAT system in Nigeria is one of the evil tax structures in the country.

By far, it is one of the most unnoticed taxes in the system given that the majority of the population make up the cash economy, so they really have less access to systematic details on transactional data. VAT are value added tax and they are levied on goods and services, meaning that every good or product a person buys is taxed, which in-turn translates to all circulating fiat currency in Nigeria all being taxed. The VAT in Nigeria is set at 7.5%, meaning that each transaction within the Nigerian economy is taxed a whooping 7.5%.

It sometimes feels like a small amount of money. We'd realize that this effectively means that 7.5% of our money is owned by the government as there is literally no way to avoid this. Companies generally impose this on every day transactions within the system so every biscuit or water bought has a VAT added to the sum paid.

These values are constantly being drained from the citizens with zero maximization of that value. Reports indicate that Nigerians spend over 9.5 trillion naira every month on mere living expenses, this is over $12.7 billion and over $153 billion yearly. Of course, this is all estimations so the actual numbers are bound to be more.

7.5% of this means almost $11.5 billion in VAT yearly, from only purchase and service taxes. Some reports hides the significance of VAT in Nigeria, with the reported 574(about $771 million at parallel markets rate of 744/$)billion naira federal allocation, VAT accounted for over 191 billion naira(over $256 million), about 75% lower than the actual numbers. These cash flows are the major reasons Nigeria has a rather great credit score to constantly take loans from the world bank but always constantly manage to fuck us up with it.

Cryptocurrency crack down, New tax levies, CBDC and new naira notes

In an attempt to keep this value flowing in, the authorities have done a number of things including prohibiting commercial banks from facilitating crypto transactions which specifically gave Nigeria a route to arbitrage the manipulated Naira official rates of 460/$ currently..

The next phase was deploying e-Naira, the supposed central bank digital currency which has failed to attract the growing business population. The redesigning on the Naira notes was an attempt to get the nation's money into the banking system which is to help push CBN's aim move into a cashless economy.

With these new laws around the Nation's finances, cash withdrawal limits were imposed to force Nigerians to start using e-naira and during the FX crisis that has led to all commercial banks seizing foreign transactions with Nigerian debit cards the central bank of Nigeria has deploy a new system of taxation to once again rob the citizens.

The timing of this levies points to the fact that CBN is running low on USD reserves to fund commercial banks transactions at a manipulated Naira rate of 460/$. The new tax law charges every transaction above $13.45. Note that this is not VAT, it shares no relationship other tax structures so it is independently a new added tax system that keeps taking value from citizens.

What are the tax rates?

The tax is not percentage fixed but fixed in Naira value. Meaning that regardless of large of a transaction over $13.45 the tax remains the same. The amount taxed currently per transaction above $13.45 is a rounded figure of $0.07.

As usual, it looks small but only that business perform thousands to millions of transactions if not billions a day. So if a business facilitates over 10 million transactions of over $13.45 each in a day, that's over $700k, now mutiply by the number of similar businesses across the country then factor in individual transactions that do not necessarily involve payments for goods or services like family members sending money to each other, then you'd realize the system is effectively milking millions of dollars from Nigerians.

All of this taxes as per my own observations is levied on Nigerians in other for the CBN to boost it's dollar reserves and resume selling to commercial banks to facilitate foreign transactions.

The effects of these banks' FX crisis has led foreign businesses such as airlines like the Emirates threaten to suspend flights to and from Nigeria from September, only resuming flights to Lagos when the central bank released $265mn of the estimated $464mn that airlines say it was sitting on - financial Times 2022 reports.

Notable comments from the story include that of Charlie Robertson of Renaissance Capital saying that the Central Bank of Nigeria may only be delaying the inevitable, adding that "In the face of economic realities, you don't have the resources to fight the market forever".

How long before Nigerians go extremely poor paying for the bad practices of these greedy governments?

Thank you and please leave a comment, your thoughts matter to me