The cybersecurity levy imposing 0.5% payments on electronic transactions introduced this week by the Federal Government was ‘mistimed’ and should be charged on high-networth individuals rather than the entire populace, the Nigerian Economic Summit Group (NESG) has said.
The NESG said on Thursday in a statement seen by Technology Times that that the cybersecurity levy should “be targeted at high-networth individuals and a specific amount transferred electronically to allay the fears of the populace.”
The statement by NESG comes in response to a directive issued this week by the Central Bank of Nigeria (CBN) outlining the planned enforcement on the cybersecurity levy across the nation’s financial and allied services industry.
Describing the levy as “mistimed,” NESG warns that “if this policy remains, several Nigerians will boycott electronic funds transfers, which does not even bode well for the government due to revenue loss from electronic transfer.”
The directive, according to the CBN, is in accordance with the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024, which mandates “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.”
The levy will be remitted to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA), the banking industry regulator said.
The government agencies said that the levy is intended to generate funds for bolstering cybersecurity efforts in Nigeria as the nation has witnessed a rise in cybercrimes in recent years, with financial institutions and individuals falling victim to online scams, phishing attacks, and data breaches. The government believes this levy will provide resources to strengthen cybersecurity infrastructure and improve incident response capabilities.
NESG: Our stance on cybersecurity levy
“An integrated approach in the fight against cybercrimes involving the collaborative efforts of financial institutions, security agents, the EFCC, and other key stakeholders. Hence, introducing a cybersecurity levy penalises the populace for the failure of the system to uproot the sources of cybercrimes,” NESG said.
The NESG, a Nigerian public-private association with a mandate to promote and champion the reform of the Nigerian economy, argues that the imposition of the cybersecurity levy was poorly timed. With Nigerians already grappling with rising inflation and a high cost of living, the additional levy adds another financial burden.
Describing the levy as “mistimed,” NESG warns that “if this policy remains, several Nigerians will boycott electronic funds transfers, which does not even bode well for the government due to revenue loss from electronic transfer.”
“The government must be cautious of the numerous strenuous policies that stiffen the purchasing power and welfare of corporations and individuals. Therefore, the government needs to properly sequence reforms for efficient socioeconomic outcomes, especially those that strain the people,” according to NESG.
Proposing alternative solutions for funding cybersecurity, NESG suggests focusing the levy on high-net-worth individuals. This approach, it believes, would “allay the fears of the populace who are still battling skyrocketing food and non-food prices.”
The NESG also raised concerns about policy coordination. The Presidential Committee on Fiscal Policy and Tax Reforms is currently working to streamline the number of taxes Nigerians pay. Introducing a new levy could undermine this important effort. NESG urged the government to postpone the cybersecurity levy and conduct proper consultation until the committee completes its mandate..
The non-partisan group also advocated for collaboration between financial institutions, security agencies, the Economic and Financial Crimes Commission (EFCC), and other stakeholders. This collaborative effort would tackle cybercrime at its source, not just rely on a levy paid by the public.
“An integrated approach in the fight against cybercrimes involving the collaborative efforts of financial institutions, security agents, the EFCC, and other key stakeholders. Hence, introducing a cybersecurity levy penalises the populace for the failure of the system to uproot the sources of cybercrimes,” NESG said.
The NESG warns that the levy could significantly slow down progress towards achieving the government’s goal of 95% financial inclusion by 2025. The added cost of electronic transactions could discourage many Nigerians from entering the formal financial system.
“Implementing this policy at this critical time,” NESG said, “will decelerate the pace of achieving the 95 percent financial inclusion target of 2025. The mere news of charges on bank transactions will demotivate many Nigerians from accessing financial services, potentially propelling a surge in the demand for cash.”
NESG also recommends:
Reduced Transaction Costs: Lowering bank transaction costs would make electronic banking more attractive for Nigerians.
Increased Transparency: Greater transparency about how revenue collected from the levy will be used is crucial to rebuild trust and encourage financial inclusion.
Home