Victor EzejaFollowing the new cybersecurity levy introduced by the Nigerian government through the Central Bank of Nigeria (CBN), bank customers will have to pay N25,000 for every N1 million transfer Prime Business Africa can authoritatively report.
The apex bank had on Monday, May 6, 2024 issued a circular directing all commercial banks, mobile money operators and other financial institutions to begin the deduction of 0.5 per cent value of every electronic transaction made by customers and remit to the National Cybersecurity Fund (NCF) which shall be administered by the Office of the National Security Adviser (ONSA).
The CBN said the levy is in compliance with provisions of section 44 (2) of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024 and directed banks and other financial institutions to begin implementation of the Act two weeks from the date the circular was released.
The Federal Government said the fund will be used in combating cybersecurity in the country.
As specified in the Act, it means that an individual transferring N5 million would pay N25,000 which is the equivalent of 0.5 per cent. This also means that customers transfering N10 million will pay N50,000. A N1 million transfer will attract a levy of N5,000, N500,000 will be N2,500, and N200,000 is N1,000.
Exemptions to the Cybersecurity Charges
According to the CBN, there are exemptions to the cybersecurity charges which include transfers for loan repayment, 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 and other Financial Institutions (OFIs) instructions to their correspondent.
Others are banks Interbank placements, banks’ transfers to CBN and vice-versa, Inter-branch transfers within a bank, cheques clearing and settlements, Letters of Credits (LCs), 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.
READ ALSO: Cybersecurity Levy: Nigerian Govt Milking A Dying Economy – Obi
Equally included in the exceptions are Government Social Welfare Programs transactions e.g. Pension payments; Non-profit and charitable transactions including donations to registered nonprofit organisations or charities; Educational Institutions transactions, including tuition payments and other transaction involving schools, universities, or other educational institutions; Transactions involving bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
READ ALSO: CBN’s Cybersecurity Levy Sparks Reactions From Nigerians
Despite the exemptions, the announcement has since generated reactions from a cross section of Nigerians who opposed the imposition of the cybersecurity levy. Labour unions and other groups like the National Association of Chamber of Commerce Industry Mines and Agriculture (NACCIMA), have also kicked against it, saying it would create another burden on Nigerians who are already grappling with economic hardship posed by high cost of things in the country.
Economic experts have also criticised the action saying it is another form of tax that is not needed at the moment.
Speaking in an interview on Channels Television’s Sunrise Daily on Thursday, a Political Economist, Adakole Ijogi, said it amounts to extortion and called for withdrawal of the law by the National Assembly for comprehensive review.
Ijogi said that going ahead with implementation of the cybersecurity levy collection gives the feeling that the government is insensitive to the plight of the people.
“Nigeria is in dire strait, you cannot tax a dying economy,” he asserted.
“The government made a mistake the National Assembly shouldn’t have even increased it from 0.005 per cent it was before to half a percentage which is 0.5 per cent. I think it is a mistake. The government should just suspend its implementation quietly, the National Assembly should withdraw it and go back to the drawing board,” Ijogi advised.
He maintained that policies must be thought out clearly before implementation not a knee-jerk approach to issues that affect the masses.
The political economist and chieftain of the Peoples Democratic Party, urged the government to explore other sustainable ways of generating revenue such as increasing oil production among others.
Also commenting on the cybersecurity levy, Dr Paul Alaje, Chief Economist and Partner at SPM Professionals, said whatever tax levies the government is proposing should be properly thought through.
“New levies, tax reviews, and many more. No matter the name, please let’s think through it again. Whether we are proposing an increase in VAT or introducing cybersecurity levy, please let’s think through them again,” Alaje wrote on his X handle.
Countering the idea of taxing the citizens to generate revenue for improving the economy, Alaje quoted the words of former United Kingdom Prime Minister, Winston Churchill, that: “For a nation to try to tax itself to prosperity, it is like a man standing in the bucket and trying to lift the himself up by the handle.”
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
