You want financial inclusion. You want financial services to go digital. You want the poor to have bank accounts. Then magically you want banks to ask customers for their Facebook, Instagram, TikTok, etc, accounts as part of the requirements to open a bank account. How do you reconcile those objectives when most of these citizens may not have social media accounts?

“In a landmark ruling, the Federal High Court in Lagos upheld a new regulation by the Central Bank of Nigeria (CBN) requiring financial institutions to collect the social media handles of their customers as part of the standard Know-Your-Customer (KYC) procedures.”

Sure, as part of due diligence and KYC, in financial transactions and contracting, checking social media may be important. But I am not sure how having social media accounts could help banks model the best possible customers, from the angle of risk, since 99.9% of these customers will never qualify for credits.

Possibly, a two-layer system may be better here: you can  open an account without a social media  account requirement. But if you want a loan, a bank may be required for you to disclose your social media accounts, positing that those accounts could provide clues on your credit worthiness and risks you pose to the bank.

Good People, I do not see why a bank should ask one to provide a social media handle in an age where we already provide NIN (national ID number) and BVN (bank verification number). Ease of doing business should not be a buzzword in Nigeria; we need action to simplify commerce!

A Court Upholds Central Bank of Nigeria’s Regulation Requiring Social Media Handles of Bank Customers

In a landmark ruling, the Federal High Court in Lagos upheld a new regulation by the Central Bank of Nigeria (CBN) requiring financial institutions to collect the social media handles of their customers as part of the standard Know-Your-Customer (KYC) procedures. 

The decision, delivered on Thursday, May 16, by Justice Nnamdi Dimgba, has stirred significant discourse on privacy rights and regulatory compliance in Nigeria’s banking sector.

Justice Dimgba ruled that the CBN regulation does not breach the right to privacy of bank customers. He dismissed a suit filed by Lagos-based lawyer Chris Eke, who sought a declaration that Section 6(a)(iv) of the Central Bank of Nigeria (Customer Due Diligence) Regulations, 2023, was unconstitutional and invalid.

Eke argued that the regulation was undemocratic and inconsistent with Section 37 of the 1999 Constitution of the Federal Republic of Nigeria (as amended), which guarantees the privacy of citizens. He also requested a perpetual injunction to prevent the CBN from enforcing the regulation.

The CBN, in its defense, filed a notice of preliminary objection, challenging the competence of Eke’s suit. The apex bank contended that the regulation did not interfere with the private lives of customers as claimed.

In his judgment, Justice Dimgba held that the preliminary objection had merit and struck out the suit. He reasoned that the provision of a social media handle is akin to providing an email address or phone number—standard contact information used for due diligence.

“The essence of having a social media account is for one to be publicly visible communication-wise. It would be highly unreasonable to hold the CBN in breach of privacy for it,” Justice Dimgba held.

The judgment’s details.

Justice Dimgba elaborated on several key points. He held: “First, the Applicant claims that the requirements on the CBN Regulations for financial institutions to request and collect the social media handle of its customers as part of KYC infringes on his right to privacy. This claim is very ambitious and amounts to a very far throw. The said Regulations are directed to and apply to financial institutions. It does not apply to private individuals such as the Applicant.

“Even if, as appears to be argued, that the Regulations itself would inevitably affect the Applicant, this claim is speculative for the simple reason that in nowhere in the affidavit in support was it stated that the Applicant operates an account with a financial institution and that the said institution had demanded his social media handle.

“There is also no deposition to the effect that any financial institution had begun to implement this Regulation and that its implementation had begun to create disruptions and inconvenience against the general population, in which case one could infer that the suit should be legitimated as a public interest litigation.

“Assuming even that the banks had begun to implement these regulations, the applicant assuming he maintained any bank accounts or sought to open one, but is being hindered or irritated by the requirement of the Regulation to avail his social media handle as part of KYC, the Applicant still had a choice, which is to refuse to do business with any bank insisting on the information as part of its social media handle but to seek other alternatives.

“My view is that the provision of a social media handle is of the same genre as the provision of email addresses, phone numbers, and other means by which a potential customer of a bank can be contacted.

“I should even say that the essence of having a social media account was for one to be publicly visible communication-wise. It, therefore, appears quite ironic, though wryly, that one can suggest that asking for information about a social media handle with which the individual exposes and immerses himself or herself in the public, can amount to a violation of privacy rights.

“A social media handle is left at large for the world to see, being in the public space, everyone enjoys the liberty to have access to it whether or not consent was obtained. It would be highly unreasonable to hold the Respondent in breach of privacy for what other persons have access to.”

Dimgba concluded that the regulation aimed at providing alternative means for banks to contact customers and conduct due diligence did not infringe on the right to privacy. He noted that having a social media handle was inherently public and that concerns about privacy violations were speculative and unfounded.

“The apprehension of the Applicant of his social interactions being monitored is manifestly speculative in itself and rather incredulous to believe that the financial institutions have the luxury of time to concern itself with such frivolities. On the whole, if I did not sustain the NPO, I would have dismissed the suit for the reasons stated. But the NPO having been sustained, the suit is therefore hereby struck out,” he said.

This ruling reinforces the CBN’s regulatory authority and clarifies the scope of privacy rights in relation to banking procedures, setting a precedent for future cases involving data collection and privacy in Nigeria’s financial sector.

The Federal Government of Nigeria has announced that tax revenue has become the highest source of income for the country, marking a significant shift in the nation’s revenue generation trajectory. 

Oluwatoyin Madein, the Accountant-General of the Federation, made this revelation on May 14 at the 26th Annual Tax Conference organized by the Chartered Institute of Taxation of Nigeria (CITN) in Abuja. The conference, themed ‘Sustainable Tax Culture and Economic Roadmap for Nation Building,’ highlighted the pivotal role of tax revenue in sustaining the country’s economy.

Acknowledging the shift in revenue sources, Madein emphasized the significance of tax revenue, which has become crucial for the Federation Account Allocation Committee (FAAC). 

“Tax revenue as at today is the highest source of revenue accruing to the federation,” she stated. “Therefore, at the federation account allocation committee meetings, we eagerly await the numbers coming from the Federal Inland Revenue Service (FIRS) because the performance keeps on increasing and brings succor to all tiers of government.”

This dependence on tax revenue marks a departure from the country’s historical reliance on oil. Nigeria has faced a dramatic decline in oil output, with production dropping to 1.281 million barrels per day (mbd) as of April, according to the Organization of the Petroleum Exporting Countries (OPEC). This decline has significantly impacted national revenue, forcing the government to seek alternative sources.

Against this backdrop, Madein called on tax practitioners to intensify their collection efforts to further boost government revenue. 

“Let us remain steadfast in our commitment to building a better future for all. Together we can harness the transformative power of taxation to create a more prosperous, equitable, and sustainable world,” she urged. She also highlighted the importance of non-oil revenue, which has become a critical lifeline for the nation’s finances.

“To tax practitioners, you are doing so well but we need more of this to be able to deliver on all the areas that the citizens are looking forward to because, for even infrastructure development, it is only through funds that we can get it done,” Madein added.

CITN’s Stance on Tax Culture

Samuel Agbeluyi, the president of CITN, echoed the need for a sustainable tax culture, stressing that it requires involvement from all levels of government. He noted that promoting a tax-paying culture involves the careful and transparent use of tax revenue to build trust between the government and taxpayers, which is essential for nation-building efforts.

Agbeluyi also welcomed the suspension of the cybersecurity levy implementation, a new tax move that had sparked significant backlash. 

“The institute will keep advising the government on its policies, taking into account their impact on citizens,” he said.

Declining Oil Output and Economic Challenges

The shift to tax revenue comes amid ongoing issues in Nigeria’s oil sector and a broader economic context characterized by the rising cost of living, which consequently, is crippling economic activities. The weight of the resulting economic hardship is underlined by skyrocketing inflation. As of April, Nigeria’s inflation rate stood at 33.69%, according to the latest data from the Nigerian Bureau of Statistics. 

The federal government’s push to widen the tax net has seen attempts to introduce new taxes, despite President Bola Tinubu’s earlier promise to streamline taxation to create a business-friendly environment. The latest was the Cybersecurity Levy, which generated a lot of backlash, forcing the government to suspend it.

Forced to depend on non-oil revenue, the Nigerian government has also sought revenue generation from its agencies, such as the Nigerian Customs Service (NCS). The exchange rate for customs duty collections has risen to N1502.1/$, the highest in seven weeks going back to March 22nd when the figure stood at N1572/$.

Economists have called for tax breaks, warning that increasing taxes now will exacerbate Nigeria’s economic woes. They also note that the federal government’s pivot towards tax revenue underscores the urgent need for a diversified and sustainable economic strategy. 

“This is absolute surrender,” Economist, Kalu Aja, said at the news of the NCS’ import rate increase. “There is no law mandating the Nigerian Customs to charge this rate. A way to reduce imported inflation is to fix this rate at $1:N100. IGR is not development.”