By Babajide Komolafe
Banks have stepped up efforts to win more revenue collection mandates from the public sector to mitigate the declining profitability from traditional banking services.
In recent times the the biting effect of the global economic recession which occasioenedÂ decline in the prices of oil in the international market prompted sharp declineÂ governmentÂ which is the major source of liquidty for banks’ operations. In addition to this is the credit freeze in the industry which implies reduction in interest earnings for banks.
Faced with the grim reality of reduced earnings and profitability due to these factorsÂ Â more banks haveÂ resortedÂ tax and revenue collection mandates from the federal andÂ state governments; their agencies, ministries and parastatals to mobilize cheap deposits until such deposits are required by these agencies. Among the notable agencies of the government that have formed a mutually beneficial relationship with the banks are the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service, Power Holding Company of Nigeria (PHCN), among others.
The efforts of the bank in this regard is complimented by the increasing number ofÂ state governments to employ the banks to collect revenue on their behalfÂ in order toÂ maximise collections and pluck all loopholes that past efforts .Â for example t enhance their revenue collection drive and accountability, Lagos, Bayelsa, Kaduna, and Rivers state governments have appointed some banksÂ to collect their revenues. Such revenues are in respect of water rates, vehicle licenses and hackney permit issuance.
Investigation however revealed thatÂ there isÂ increasing competion for revenue collection mandatesÂ in the industry. Some of the prominent banks in revenue collection are Fisrt Bank, UBA, Intercontinental Bank,Â Â Zenith Bank Plc, Skye Bank Plc, Afribank Plc and Access Bank.
Recently, Skye Bank Plc was appointed by the Rivers State government to collect taxes, levies and fees due to the stateâ€™s Board of Internal Revenue, ministries, departments and agencies under its new policy of â€œPay Direct Systemâ€.
The new system of direct payment of taxes and fees to banks in Rivers States came into effect on October 5, and would enable tax payers to make payments directly to the banks.Â A statement from the bank, said that the bank would collect on behalf of the Rivers State Board of Internal Revenue, taxes which include personal income tax, stamp duties, road taxes as well as property tax , licenses and capital gains tax.
The statement further said the bank would collect, on behalf of the Ministry of Transportation, fees relatingto fuel badge/moving station, marine engineering workshop, revenue fromMOT, vehicle examination,Â Â Â MOT Sticker Fees and others.
The bank also explained that its mandate covered collection of fees for other ministries, departments and agencies of the Rivers State government. It therefore asked the good people of the state to take advantage of its wide branch network in the state to pay their taxes withease. The statement said tax payers would be issued e-receipts immediately if they make cash payment, while the e-receipts would be issued after three days if the mode of payment was cheque.
The Rivers State government said the introduction of the new and simple method of tax payment was informed by the need to make payments much easier and less cumbersome for the people of the state, and urged them to co-operate with the government.
Skye Bank has Â Â Â demonstrated Â Â Â expertise and skills in revenue collections, having collected and still collects for the Nigeria Customs Service, several states of the federation, JAMB and other agencies, departments and parastatals of both the federal and state governments.
In addition to this, the bank has an automated revenue collection relationship with Kaduna, Bayelsa, Lagos, Edo and several other states. It has been able to boost the internally generated revenue profile of its client-states.
To enhance their revenue collection drive and accountability, Lagos and Rivers state governments have appointed Afribank Nigeria Plc. to collect their revenues for vehicle licenses and hackney permit issuance.
Both governments had recently partnered with Afribank on their newly-introduced automated vehicle licensing and renewal system, known as AutoReg.
AutoReg is a web-based business solution that makes registration and renewal of licenses easier. Both governments have advised individuals and public institutions in the states to process their vehicle licenses and pay their hackney permits at any of the 300 branches of Afribank nationwide.
According to a statement issued by the bank, the appointment of the bank as collection agent was based on its track record in the collection of taxes, levies, revenues and bills for private and public institutions over the years.
Similarly, Access Bank Plc is also an active player in the revenue collection business. Apart from the numerous agencies, ministries and parastatals it collects revenue for, The Gombe State Government recently appointed it as one of the banks to collect taxes and fees in respect of Gombe State Board of Internal Revenue, and all revenue generating Ministries, Departments and Agencies (MDAs) of the State