CYBERSECURITY LEVY: ONE BURDEN TOO MANY. THE INSINCERITY AND INSENSITIVITY
The circular stated partly, “The levy shall be applied at
the point of electronic transfer origination, then deducted and remitted by the
financial institution. The deducted amount shall be reflected in the customer’s
account with the narration, ‘Cybersecurity Levy.”
It’s worth noting that the levy will be paid by the
originator of the electronic transaction and deducted by the financial
institution. The deducted amount shall be reflected in the customer’s account
with the narration, “Cybersecurity Levy.”
The 0.5% levy on electronic transactions will be deducted by
financial institutions and then remitted to the National Cybersecurity Fund
administered by the Office of the National Security Adviser.
I’ve searched (possibly not deep enough) but so far, it
appears Nigeria is the only country in the world with such a levy.
The introduction of yet another tax, in the form of
Cybersecurity Levy, on Nigerians who are already suffering severe economic
distress is further proof that the government is more interested in milking a
dying economy instead of nurturing it to recovery and growth.
I do not call it charge; I call it tax. It is another form
of government tax. As usual the government did not give Nigerians any reason, no
justification.
The banking public is already finding it difficult by the day to walk into any of the financial banks for cash transactions. While most banks do not allow daily withdrawal from personal accounts beyond N20, 000, Nigerians find it difficult to withdraw cash from Automated Teller Machines (ATMs) across the country.
The government now lays an ambush for the unsuspecting
Nigerians whose only solace is a recourse to electronic transfers. The
President Bola Tinubu administration seems to lack necessary efficient economic
strategies other than ‘milking’ the poor.
A sincere government is expected to provide a reason or
justification for such an action. What about those who do not have accounts in
the bank for instance? So, how do you get their portions? For me as an
individual, I think it is unfair and that the government did not come with
clean hands. I cannot remember anybody being consulted before this kind of
policy.
This levy, to be implemented by deduction at the transaction
origination, is yet another burden on the shoulders of hardworking Nigerians.
This move, ostensibly aimed at bolstering cybersecurity measures, threatens to
exacerbate the financial strain already faced by the populace.”
We are talking about less cash in this economy and now you
want to be charging customers for making transfers.
The enforcement of the law included the operationalisation
of the National Cybersecurity Fund, targeting 0.5 per cent of all electronic
transactions by businesses listed in the second schedule of the amended law.
The affected businesses include GSM service providers and
all telecommunication companies, internet service providers, banks and other
financial institutions, insurance companies and the Nigerian Exchange
The CBN circular, directed at all commercial, merchant, non-interest and payment service banks, other financial institutions, mobile money operators and payment service providers, reads, “The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration. ‘Cybersecurity Levy’.
“Deductions shall commence within two weeks from the date of
this circular for all financial institutions and the monthly remittance of the
levies collected in bulk to the NCF account domiciled at the CBN by the fifth
business day of every subsequent month.”
Hereunder are the five important things you need to know
about the ‘Cybersecurity Levy’:
Levy Amount: The levy is set at 0.5% of the value of
electronic transactions, intended to strengthen cybersecurity infrastructure
Collection Method:
Financial institutions will deduct the levy directly from transactions, visible
in customers’ account statements as ‘Cybersecurity Levy’.
Administration and Remittance: Institutions are tasked with
collecting and remitting the cybersecurity levy to the National Cybersecurity
Fund administered by Office of NSA (ONSA) monthly by the fifth business day of
the following month.
Implementation Timeline: The directive takes effect within
two weeks from the circular’s issuance date, May 20, 2024, prompting banks to
promptly adjust their systems.
Penalties for Non-compliance: Failure to remit the
cybersecurity levy may result in penalties, including fines of up to 2% of the
institution’s annual turnover.
Transactions that the CBN exempted from the levy included:
loan disbursements and repayments, salary payments, intra-account transfers
within the same bank or between different banks for the same customer,
intra-bank transfers between customers of the same bank, other financial
institutions’ instructions to their correspondent banks, interbank placements,
banks’ transfers to CBN and vice-versa.
Others are “Inter-branch transfers within a bank, cheques clearing and settlements, letters of credits, banks’ recapitalization-related funding only bulk funds movement from collection accounts, savings and deposits, including transactions involving long-term investments, such as treasury bills, bonds, and commercial papers.”
Also, “Government social welfare programmes transactions
e.g. pension payments, non-profit and charitable transactions, including
donations to registered non-profit organisations or charities, educational
institutions transactions, including tuition payments and other transactions
involving schools, universities, or other educational institutions.”
The CBN said the exemption was to avoid multiple
applications of the levy on the same transaction/transfer.
The move by the CBN came barely a week after the Federal
Government directed Deposit Money Banks to immediately begin the deduction of
0.375 per cent stamp duty charge on all mortgaged-backed loans and bonds.
Does the Government really need to charge Nigerians for
providing Security for their banking activities? The security and defence
sectors are already substantial recipients of the national budget. They are
responsible for tackling a hybrid of security challenges like terrorism,
banditry and other internal conflicts in Nigeria. However, cybersecurity is
firstly a transnational issue, which requires cooperation between international
security agencies and requires highly skilled and experienced human resources. The
burden should be shared across the current security and defence budget and not
passed on to Nigerians. The government seems not ready to do anything for the
citizens.
With an estimated N600tn in transactions annually, the
projected revenue from this levy is about N30tn.
What proportion of all online transactions are fraudulent
transactions? In what way will this levy counteract such transactions? With
incidence rates significantly lower than the levy rate, there is a mismatch
that needs to be addressed.
The introduction of this levy may be in contravention of the
constitutional provision mandating all revenues to be deposited into the
consolidated fund, which can only be utilised following appropriations by the
National Assembly.
It is increasingly
becoming a practice of the Tinubu administration for the National
Security Adviser to take up the duties of the Central Bank Governor and the
control of banks and financial imstitutions.
I think the cybersecurity levy is ill-timed, coming at a
time when the CBN is concerned about the increasing rate of currency
circulating outside the banks. It carries the downside risk of discouraging
financial intermediation as well as complicating the transmission of monetary
policy, with more people shunning the banks due to high charges.
This makes it a difficult effort by the CBN to tame inflation.”
It sounds fantastic on paper, but the consequences will be
far more terrible. It is one of those things that the government may come to
regret. It will end up hurting more people. Prices will rise as businesses
transfer the burden to consumers.
The goal should not be to create more taxes, especially
after eliminating fuel and power subsidies and floating the naira. The goal
should be to increase the number of people who use existing tax options.
Customers and the public on the other hand are struggling
with high cost of living, declining real wages and lower consumption
exacerbated by recent reforms such as removal of full subsidy, floating of the
FX, increase of electricity tariff, increase of lending rate, etc.
The new cybersecurity levy serves as another wave of
financial burden on businesses and the public with attendant implications such
as undermining financial inclusion drive and discouraging e-transactions.
To absolve the poorest of the poor from the adverse impact
of this policy, there is a need to set an ideal minimum threshold for the
amount of electronic transfer that will be eligible for this charge.
A twitter (X) user, A. sanwo, with the username
@O_sanwoabiola, stated, “A leopard never changes its spots. This administration
will tax with everything in their capacity.”
Another tweet, identified as Amber, tweeting as
@TheRealCEOAmber, opined, “One day, these people will start deducting us for
waking up and sleeping.”
A Facebook user, Olaide Ayodele asked, “Must the masses
suffer because of your incompetence? I need someone to point out just one thing
this administration has done for the masses if not hardship?”
Adesope Olugbade stated, “Why is the government enjoying the
groaning of Nigerians? No single policy has ever favoured the common man in
Nigeria.”
A user, @mummy_b3, stated, “Electronic charge, stamp duty,
SMS charges. Now cyber security levy. On top of how much?”
Another user, @dr_chiamakaobim, wrote, “At this pace, we
will soon be charged for breathing #free oxygen# given by God to mankind.”
Tongues continue to wag while the Tinubu government seems
unperturbed, indifferent and insensitive to the feelings of Nigerians.
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