In Nigeria, the implementation of new tax laws has raised concerns among small business owners regarding potential deductions and charges on their payments. Okonkwo Azuka, a furniture maker in Abuja, faced anxiety over receiving payment via bank transfer for his contract to build mini sofas, questioning the clarity and implications of the proposed tax reforms. Despite there being no formal mechanism for banks to deduct personal income tax from individual transactions, the fear of unexpected deductions has inhibited financial confidence among business owners like Mr. Azuka.

Azuka's experience reflects a broader hesitation among entrepreneurs in Nigeria as they navigate a complex financial landscape compounded by evolving regulations. Many individuals worry that the lack of transparency in tax implementation may deter them from accepting electronic payments, insisting on cash transactions instead. This reluctance could ultimately reverse recent gains in financial inclusion, as many businesses may avoid utilizing banking systems due to fears of being overtaxed or misinformed about their tax obligations.

The implications of such concerns extend beyond individual businesses and could affect the overall economy. If micro and small enterprises shy away from the banking sector, access to credit will diminish, and innovation may stagnate. The situation presents a challenge to the Nigerian government, which aims to improve tax compliance while fostering an environment where businesses feel secure utilizing formal banking channels. Addressing these fears is crucial for sustaining the momentum toward greater financial inclusion in the country.