The Central Bank of Nigeria’s (CBN) recent directive to implement a 0.005 cybersecurity levy on electronic transactions has sparked a nationwide debate.
While some see it as a necessary step to combat cybercrime, others raise concerns about timing and accountability.
There have also been misconceptions about the origin and the transactions it is proposed to affect.
Questions have equally been raised about its accountability. Many Nigerians fear that the money charged from the transactions, which will likely run into billions of naira annually, might end up in the pockets of a small group of people.
Interestingly, neither President Bola Tinubu nor the apex bank governor, Olayemi Cardoso, introduced the cybersecurity levy as some have erroneously alleged.
It was rather designed by the National Assembly of the Federal Republic of Nigeria through its Cybercrimes Act of 2015, enacted to stall the increasing cybercrimes in the country
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The collected funds, estimated to reach billions annually, are intended to be invested in cybersecurity research and preventative programs. The CBN and the Office of the National Security Adviser (NSA) are tasked with administering these funds.
Despite its introduction in 2015, the levy has never been successfully implemented. Past attempts, like the one in 2018 under former CBN Governor Godwin Emefiele, faced criticism due to concerns about its impact on the already struggling economy.
Meanwhile, experts wonder why Nigeria has not implemented the structures it designed to combat cybercrime even as it is reported to be growing globally. According to Proshare, in 2017, Nigeria lost N250 billion to cybercrime and N288 billion in 2018.
Earlier this year, the Cyber Security Experts Association of Nigeria, CSEAN, predicted increased cybercrimes in 2024.
Nigerians React to the CBN Cybersecurity Levy
The announcement of the CBN cybersecurity levy has caused a buzz in the country. Professor Uche Uwaleke, a finance and capital market expert, has criticized the policy, saying, “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.”
Similarly, Professor Ndubuisi Ekekwe, lead faculty at the Tekedia Institute, said, “Nigeria does not need this playbook. We need 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.”
However, Emmanuel Odunyemi, a staff of one of the leading Cybersecurity Consulting firms in the country, believes neither the timing nor the policy is wrong. He 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.”
On its part, the Socio-Economic Rights and Accountability Project (SERAP) wrote the President Tinubu-led government, saying, “If the unlawful CBN directive is not withdrawn and appropriate steps are not taken to amend the repressive provisions of the Cybercrimes Act within 48 hours, SERAP shall consider appropriate legal actions to compel the Tinubu administration to comply with our request in the public interest.”
Exempted Transactions
Amid the controversy trailing the cybersecurity levy, the apex bank said it had exempted 16 electronic transactions. They include loan disbursements and repayments, salary payments, intra-account transfers, intra-bank transfers, banks Interbank placements, banks’ transfers to CBN and vice-versa, inter-branch transfers within a bank, cheques clearing and settlements, Letters of Credits (LCs), educational Institutions transactions, non-profit and charitable transactions, transactions involving the bank’s internal accounts, government social welfare programs transactions, savings and deposits, Banks’ recapitalization-related funding, and Other Financial Institutions (OFIs).
Beyond Nigeria
While experts agree that cybercrime is a disastrous monster that should be addressed without delay, they say the National Assembly should consider reviewing the cyber security levy in with current reality or, better still, implement it after Nigeria’s economy recuperates.
It is, however, worth noting that Nigeria is not alone in this approach. Many countries, such as the Philippines, Singapore, and Malaysia among others, have adopted different approaches outside of budgetary allocations to fund their Cybersecurity initiatives.
