Yemisi Izuora
Though Nigeria’s digital economy is experiencing unprecedented expansion, powered by an energetic and youthful population coupled with accelerating digital adoption, digital infrastructure deficits have been identified as a repressive trend that will continue to slow growth especially in the financial sector.
Speaking at the 35th anniversary conference of the Finance Correspondents Association of Nigeria (FICAN) on Saturday, September 20, 2025, in Lagos, Professor Olayinka David-West, Dean, Lagos Business School, said that the Nigerian financial sector is both a driver and beneficiary of the digital revolution.
Speaking on the topic, “Bracing for the Digital Economy in Nigeria: Taxation, Banking, and Finance-Navigating the Future of Nigeria’s Economic Landscape” he noted that the digital transformation in banking, finance, and taxation is an interconnected force that fuels Nigeria’s economic evolution.
He said that seamless digital payment systems underpin efficient tax collection; widening financial inclusion expands the taxable base; and transaction data powers evidence-based policy and enforcement, but however warned that fragmented policies risk throttling growth.
Prof. David-West, argues that a holistic, coordinated approach involving government agencies like FIRS, CBN, NIBSS, NDIC, PenCom, NCS, and stakeholders from private industry to academia and civil society has become imperative to create an enabling environment.
He notes that conference theme, “Bracing for the Digital Economy in Nigeria: Taxation, Banking and Finance,” is timely and vital for Nigeria’s sustainable development.
Besides, policy harmonization and collaboration, he stated that digital infrastructure deficits, especially unreliable electricity and limited rural broadband access, hinder expansion while digital skills shortages restrict economic participation.
He urged that regulators must dynamically balance innovation with consumer protection amid rapid technological shifts.
However, the Central Bank of Nigeria’s sandbox framework, already operational, provides a controlled environment for fintech innovation and regulatory experimentation, advancing the growth of Nigeria’s digital financial ecosystem, he noted.
Speaking on Nigeria’s expanding digital transformation, David-West cited
the Nigerian Communications Commission’s 2024 report, which said that internet penetration reached 43.5 per cent, with over 163 million Nigerians accessing the internet by March 2024. The telecom sector contributes approximately 18-20 per cent to Nigeria’s GDP, underscoring ICT’s pivotal role as a growth engine.
This digital revolution transcends statistics, as it reshapes commerce, services, and livelihoods.
“Our burgeoning e-commerce market, projected to exceed $16 billion by 2030, is fuelled by trailblazing platforms like Jumia and Konga. Innovative logistics startups such as Kwik and GIGL illustrate how digital technologies spawn entirely new value chains, enhancing efficiencies and expanding economic opportunities. Such developments promise exponential employment gains, diversification away from oil dependence, and transformative service delivery across sectors.” he added.
Dissecting the country’s banking and finance digital transformation, he said that in 2024, Nigeria’s fintech ecosystem attracted over $2 billion in investments, sustaining its position as the continent’s financial technology powerhouse.
This capital influx is propelling groundbreaking innovations that redefine financial transactions and inclusion.
Digital assets are understood in line with the Inclusive and Sustainable Assets (ISA) 2025 framework, which guides Nigeria’s policy and regulatory approach to digital financial innovations.
This initiative has led to a dramatic soaring of digital payments. In 2023, transaction volumes hit ₦657.8 trillion ($730.9 billion), averaging ₦54 trillion monthly: a 47-fold increase since 2013. The Nigeria Inter-Bank Settlement System (NIBSS) reveals that electronic transfers, especially the NIP platform, dominate with 88.2 per cent market share.
Digital Financial Services (DFS) are bridging inclusion gaps, though challenges remain, notably in Northern Nigeria, where nearly half of women remain financially excluded.
Leading Nigerian banks, including Access Bank and GTBank, harness cutting-edge technologies like Artificial Intelligence (AI) and Machine Learning (ML) to enhance fraud detection, personalise services, optimise credit scoring, and deploy AI-enhanced customer support. Blockchain is poised to fortify security, transparency, and cross-border payments, while Big Data Analytics drives refined market insights and product development.
However, the rapid digital ascent is accompanied by notable hurdles: escalating cyber threats underscore the urgency for robust cybersecurity frameworks, coordinated public awareness, and agile regulatory measures, particularly around cryptocurrency policies, which remain complex and evolving.
Discussing taxation in the digital age, he noted that taxation within the digital economy presents both challenges and unprecedented revenue opportunities. Since January 2022, Nigeria’s implementation of a 6 per cent Digital Services Tax (DST) on non-resident digital service providers complements VAT on foreign digital services, capturing revenues from the surging digital marketplace.
A typical example is the electronic money transfer levy which refers specifically to the N50 tax paid by the recipient on bank transfers of N10,000 and above, highlighting an important revenue source in Nigeria’s evolving digital payments ecosystem.
He listed FIRS embraced digital tools which aims to enhance compliance and efficiency to include TaxPro Max System which has seen reporting a 30 per cent increase in corporate tax filings within its inaugural year. The platform streamlines tax filing for millions.
Also, the 829# USSD Code, launched in 2024, democratizes access to tax services, enabling taxpayers to verify TIN, confirm tax clearance, and access enquiries effortlessly, while the e-Invoicing System, enables transparent, efficient electronic invoice filing, improving taxpayer accountability.
Also, the 2025 Tax Clinic which targets small businesses and informal sector operators aims to broaden the tax base through voluntary compliance and support.
He also noted that President Bola Ahmed Tinubu’s landmark Tax Reform legislation, signed in June 2025, aspires to elevate Nigeria’s tax-to-GDP ratio to 18 per cent by 2025.
It incorporates a global minimum tax framework for multinationals, signalling Nigeria’s alignment with global best practices. Digital payments and mobile money services uniquely position Nigeria to formalise vast informal sectors, amplify tax compliance, and integrate businesses into formal financial infrastructures.
To achieve broader growth and accelerate economic development, he recommended an accelerated investments in digital infrastructure via public-private partnerships, prioritising underserved areas,,reforming educational curricula to embed digital skills, exemplified by initiatives like the Lagos State e-Skills program as well as fortification of cybersecurity frameworks and sustaining public campaigns to combat digital fraud.
He also called for the development of agile regulatory sandboxes to nurture fintech innovation, such as the CBN’s proposed framework and promotion of regional and global cooperation to harmonize digital payment systems and regulatory standards, enhancing cross-border trade and investment.
He also said the Lagos Business School remains a cornerstone in Nigeria’s digital economy journey.
Through rigorous research, LBS delivers evidence-based insights guiding policy and practice in digital transformation and inclusive finance.
Its Executive Education, MBA, and DBA programs equip leaders with advanced competencies in data analytics, cybersecurity, and fintech.