Appraisal of Digital Economy and Fintech in Nigeria: The Challenges

Ngozi Asomadu

University Ile-Ife Osun State Nigeria

There has been tremendous and speedy advancement in technology and this has brought fundamental changes in the face of the digital economy and financial market. This has given rise to speedy execution of financial transactions and created opportunities for attraction of new customers. The presence of digital economy growth has exposed the flaws in the traditional market. The convenience nature of the digital market has made most people have preference over it to the traditional market system. Notwithstanding this, there became a need for its regulation, following the rules of the open free market on the one hand, and protecting both entire financial systems and individual users from possible risks arising from the development of new financial technologies . The Nigerian government has been unable to enact a precise law that will govern the digital economy and this has become a big problem because it has led to loss of revenue and tax evasion or avoidance. This paper focused on the challenges of digital economy, FinTech and lack of concise legal framework on digital economy. The study employed a doctrinal research methodology through document analysis of primary and secondary legal sources to examine the effect of digital economy and FinTech in Nigeria. Findings have revealed that there is now an improved law on taxation in Nigeria which accommodates digital services but still not sufficient to cover the existing and already identified challenges. The paper concluded that lack of concise legal framework would rob Nigeria of huge revenue. It therefore recommended the need for collaboration amongst the key sectors like Nigerian Revenue Service, Corporate Affairs Commission and banks as this would help to keep the data system updated and birth effective implementation of the existing tax law. It further recommended the adoption of the blockchain model and Application Programming Interface (API)-based data exchange mechanism which would assist the tax authorities to obtain actual information about transaction values, service types, and user identities. This will enable the tax authorities to have the data of all the transactions made whether the information was supplied to them by the online-vendors or not.

Article link: https://www.asianinstituteofresearch.org/lhqrarchives/appraisal-of-digital-economy-and-fintech-in-nigeria%3A-the-challenges