The Cloud Network Foundation (CNF) has objected to the Federal Government’s decision to impose a 0.5% Cybersecurity Levy urging an immediate reversal of the policy because of its adverse effect on Nigerians.
Mr. Abimbola Tooki, CNF Chairman, voiced worries that the levy would worsen the financial difficulties faced by Nigerians, especially those on low incomes who heavily use electronic transactions for their day-to-day needs, in a statement issued by the technology-focused foundation dedicated to safeguarding the well-being of the technology ecosystem and internet users.
CNF is worried about the additional burden that the cybersecurity levy would impose. The Foundation highlighted the recent announcement by the Federal Government regarding the implementation of an amended 2015 Cybersecurity Act, which will levy the 0.5% fee on all electronic transactions starting from May 20.
The foundation criticised the timing of the government’s decision, stressing that it comes at a time when efforts should be made to alleviate the financial strain on Nigerians amidst high prices of goods and services.
Mr. Abimbola Tooki, Chairman of Cloud Network Foundation (CNF).
In June 2018, a memo from the CBN instructed banks to collect the levy on “electronic transactions taking place in a bank, on a mobile money scheme, or any other payment platform that includes a service charge.”
This levy, CNF said, represents a staggering 900% increase from the previous rate of 0.005%, prompting the Foundation to express concerns over its potential impact, especially when combined with existing fees such as stamp duty (₦50) and electronic transfer charges.
CNF emphasized that the levy would disproportionately affect low-income earners who rely heavily on electronic transactions for their daily activities.
According to Tooki, the CNF Chairman, the cybersecurity levy “drew parallels between the levy and historical instances of taxation perceived as oppressive, likening it to the biblical narrative of King Rehoboam’s reign in Israel.”
The foundation criticised the timing of the government’s decision, stressing that it comes at a time when efforts should be made to alleviate the financial strain on Nigerians amidst high prices of goods and services.
The Cybersecurity Act, initially passed in 2015, mandated a 0.005% levy on electronic transfers. However, an amendment in February 2024 increased the levy to 0.5% and extended its coverage to include fintechs, payment service providers, and other financial institutions.
Despite opposition from CNF and other quarters, the National Security Adviser, Nuhu Ribadu, advocated for the implementation of the amended act, citing heightened national security concerns. The levy will be remitted monthly to the National Cybersecurity Fund, administered by the Office of the National Security Adviser.
In response to the government’s directive, the Central Bank of Nigeria issued a circular to all financial institutions, instructing them to commence levy implementation from May 6, 2024. The circular outlined procedures for levy application, deduction, and remittance to the National Cybersecurity Fund.
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