More Africa NewsNigeria: the government approves a tax on telephone calls to finance the health of the most vulnerable

May 24, 2022by myles0

The government aims to set up health insurance in order to provide health care to the entire Nigerian population, even the most vulnerable. For this purpose, Abuja is turning to the telecommunications sector, among other sources of financing.

Nigeria’s President Muhammadu Buhari signed the National Health Insurance Authority Bill 2021 into law last week. The said bill provides for the levy of one kobo (0.000024 USD) per second of call to finance health care for the most vulnerable populations in the country.

According to Taiwo Oyedele, Tax Policy Partner and Head of Africa Taxation at PricewaterhouseCoopers, “  This tax is one of the sources of funding for the Vulnerable Groups Fund, which subsidizes the provision of health care to children under five years, pregnant women, the elderly, the physically and mentally handicapped, and the destitute, as they may be defined from time to time  ”.

Other sources of funding for the Vulnerable Groups Fund include the Fund for the Provision of Basic Health Care, health insurance contributions, grants, donations, gifts and any other voluntary contributions.

This bill was first mentioned in December 2021 by Mohammed Sambo, Executive Secretary of Nigeria’s National Health Insurance Scheme (NHIS). Its signature by Muhammadu Buhari comes about two weeks after the regulator refused to give in to the 40% increase in the prices of certain telecom services proposed by telecom operators who are facing an increase in their operating costs. Faced with this refusal, the telecom companies then proposed a revision of the various taxes they pay to the authorities, hoping that this will reduce some of the operational pressure currently weighing on them. 

With average call rates of 11 kobo per second, this new law implies that there will be a tax of at least 9% on every second of all telephone calls made in Nigeria. According to a report by the Nigerian Communications Commission (NCC), Nigerians spent 150.83 billion calling minutes in 2020. This translates to 9.050 billion calling seconds meaning the new tax will generate at least N90.5 billion per year. 

Source: Agence Ecofin

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