Mixed Reactions Trail CBN’s ‘0.5% Cybersecurity Levy’

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Mixed reactions have continued to trail the 0.5 per cent cybersecurity levy on all electronic transactions valued by the Central Bank of Nigeria (CBN)

The CBN on Monday ordered banks, and others to implement a 0.5 per cent levy on all electronic transactions value as part of efforts to contain the rising threats of cybercrime in the financial system.

The implementation followed the enactment of the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024 and under the provision of Section 44 (2)(a) of the Act, which provided for the rate deduction.

The development was conveyed in a circular dated May 6, 2024, and addressed to all commercial, merchant, non-interest and payment service banks; other financial institutions, Mobile Money Operators and Payment Service Providers – and jointly signed by CBN Director, Payments System Management Department, Chibuzo Efobi, and Director, Financial Policy and Regulation Department, Haruna Mustafa.

The central bank warned that Section 44 (8) of the Act prescribes that failure to remit the levy constitutes an offence liable on conviction to a fine of not less than two per cent of the annual turnover of the defaulting business, among others.

“All institutions under the regulatory purview of the CBN are directed to note and comply with the provisions of the Act and the circular,” it added.

Reacting, a professor of Finance and Capital Market, Professor Uche Uwaleke in a statement said, “Cybersecurity levy is ill-timed, carries the downside risk of discouraging financial inclusion, thus advising the circular to be withdrawn forthwith.

“I think the cybersecurity levy is ill-timed, coming at a time when the CBN is concerned about the high rate of financial exclusion and 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 banks due to high charges. The result is that it makes a difficult effort by the CBN to tame inflation.”

“So, I think the circular should be withdrawn especially against the backdrop of assurances by the government that its plan to increase revenue would not include introducing new taxes or increasing tax rates.

“To this end, the government should suspend the policy while getting set to implement the recommendations of the Presidential Committee on Fiscal Policy and Tax Reforms whose mandate includes streamlining multiple taxes and levies currently inhibiting the growth of businesses in

The lead faculty at the Tekedia Institute, Professor Ndubuisi Ekekwe tweeted, “Nigeria does not need this playbook. What we need is to GROW the economy so that corporate taxes can take care of these auxiliary fees. America, waived online sales taxes for more than a decade to grow the economies like; Amazon ascend, all the lost taxes would be made up.

“Taking 0.5 per cent is a lot of money, and it makes the Office of the National Security Adviser (NSA) the most investable fintech in Nigeria if it is for investment.

However, Emmanuel Odunyemi, who works with a Cybersecurity Consulting firm said, “I think it’s a welcome development.

“Mind you, there are many transactions that are exempted.  I see no issues if we want to have a National Cybersecurity Fund. Although, I have not taken my time to read the 2024 Cybersecurity Act.

“Every year, commercial banks and some Payment service platforms have their Cybersecurity budgets running in hundreds of millions, some in billions under strict compliance to the CBN IT security guideline.

“Despite the huge budget, many still experience data breaches and several cases of fraud. If the government is now willing to harmonize the efforts and tackle Cyber-attacks from a consolidated fund, why should we have issues with that? On a transfer of 10k, u will be charged just 50 Naira. Should that be an issue?

“I think this is for our good. The threat landscape is getting wider day by day and it shouldn’t be left to the private sector alone to fight.