By Bill Okonedo and Teliat Sule
May 8, 2024
Nigerians have taken to social media platforms to express their disapproval of the recent cybersecurity levy imposed on some banking transactions by the Central Bank of Nigeria (CBN). The CBN mandate to banks in the country to begin the collection of cybersecurity levy on certain banking transactions for onward remittance to the Office of the National Security Adviser (ONSA), came through a circular with reference number PMS/DIR/PUB/LAB/017/004 dated 6 May 2024.
Following the enactment of the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024 and pursuant to the provision of Section 44(2)(a) of the Act, a levy of 0.5% (0.005) equivalent to a half percent of all electronic transactions value by the business specified in the Second Schedule of the Act, is to be remitted to the National Cybersecurity Fund (NCF), which shall be administer by the office of the National Security Adviser (ONSA), the CBN circular stated.
Accordingly, banks such as commercial, merchant, non-interest, payment service banks and mobile money operators are to, within four weeks of the issuance of this circular to ensure system reconfigurations towards ensuring complete and timely submission of remittance files to the Nigerian Interbank Settlement System (NIBSS) while other financial institutions such as microfinance banks, primary mortgage banks and development finance institutions are to upgrade their systems within eight weeks, according to the CBN circular.
For the affected banking transactions, a bank customer is now to pay N5 on every N1000 transferred once the levy takes off. It also means bank customers will pay N50 on every N10,000 and N500 on every N100,000 and so on.
According to StatiSense, the new levy brings to five, the taxes or levies that Nigerian bank customers pay on banking transactions in the country. One of the five levies is stamp duty. Currently, recipients of every amount ranging from N10,000 to N10 million pay N50 as stamp duty.
There is also the transfer fee. It is N50 on an amount less than N5000; N25 on an amount that ranges from between N5001 and N50,000 and N50 on any amount more than N50,000.
We also have the value added tax (VAT). The sender pays N0.75 on N10 transfer fee; N1.875 on every N25 transfer fee and N3.75 on every N50 transfer fee, among others.
According to NIBSS, its NIP value rose from N72.11 trillion in January 2024 to N79.33 trillion in February 2024 and further to N83.05 trillion in March 2024.
Point of Sale (POS) value rose from N850.05 billion in January 2024 to N883. 45 billion in February 2024 and to N1.15 trillion in March 2024.
Mobile money operations were worth N5.17 trillion in January this year and its value rose to N5.51 trillion in February 2024 and to N6.46 trillion in March 2024.
It should be noted that the upsurge in the value of electronic transactions in Nigeria is also associated with cyber fraud. According to the Nigerian Communications Commission (NCC), Nigeria loses about $500 million annually due to cybercrime hacking, identity theft, cyber terrorism, harassment, and internet fraud.
A university don, Misbau Alamu Lateef said the National Assembly ought to have resisted the new levy being imposed on Nigerians as it increases the burden on hapless Nigerians with the negative impact to be felt on the cashless policy of the federal government.
Clearly, the new levy will disproportionately impact Nigerians and businesses when compared to those in other jurisdictions where such levies on electronic transactions are not imposed. I have banking experience in other jurisdictions, and I can confirm I do not pay any of those extant burdensome charges we experience with the Nigerian banks. Therefore, this additional financial burden may lead to reduced financial inclusion, as more people might resort to cash transactions to avoid the extra costs, thereby hampering the country’s efforts to promote a cashless economy, Alamu Lateef said.
In the last 1 week, Tinubus government has banned Crypto p2p on every platform, increased tax by 14% on importers and put a 0.5% cybersecurity levy on every banking transaction made. Things just got harder, another Tweep who goes by the handle Irnna, said on X, formerly Twitter.
However, Reno Omokri commended the CBN for coming up with the policy, noting that the absence of such a system in place, permitted Binance to transfer $26 billion out of the Nigerian economy in 2023, an amount representing 6 percent of Nigerias GDP.
The reason why Binance was able to siphon $25 billion, which represents 6% of our GDP, out of Nigeria in just one year is because our cybersecurity architecture is porous. And as long as it is vulnerable, the Naira cannot be stable. And if the Naira is not stable, your purchasing power as a Nigerian will reduce drastically, Reno said.
Meanwhile, the Socio-Economic Rights and Accountability Projects (SERAP), a non-profit and nonpartisan organisation, has urged President Tinubu to ask the CBN to reverse the cybersecurity levy within 48 hours, adding that they will institute a legal action in the event the president ignores their warnings.
The Tinubu administration must immediately withdraw the grossly unlawful CBN directive to implement section 44 of the Cybercrime Act 2024, which imposes a 0.5% ‘cybersecurity levy’ on Nigerians. We’ll see in court if the directive is not withdrawn within 48 hours, SERAP said.
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The Nigerian Observer is a daily newspaper published in Benin City, Edo State, Nigeria, since 1968 by the Bendel Newspapers Company Limited (BNCL) and is owned by the Edo State Government
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