• NESG faults timing says Nigerians battling high food prices
'Seun Ibukun-Oni, Abuja
Tayo Busay, Abuja
DAILY COURIER - More discordant voices have condemned the cyber security levy by the federal government. Joining the calls are the House of Representatives and the Nigerian Economic Summit Group.
The Green Chamber has directed the Central Bank of Nigeria (CBN) to immediately withdraw its circular directing financial institutions to commence implementation of the 0.5 per cent cybersecurity levy, describing it as “ambiguous”.
DAILY COURIER earlier reported that the apex bank had in a circular, dated May 6, 2024, directed all banks, as well as other Financial Institutions and Payments Service Providers in the country to collect and remit 0.5% of all electronic transactions as National Cybersecurity Levy.
While the directive has since generated public outrage, the House of Representatives, while adopting a motion of urgent public importance moved at plenary on Thursday, by the House Minority Leader, Kingsley Chinda (PDP Rivers) and 359 others, directed the CBN to withdraw the ambiguous circular in existence, and issue an unequivocal circular in line with the letters and spirit of the Cybercrimes (Amendment) Act, 2024.
The Green Chamber also mandated its Committees on Banking Regulations, and Banking and other Ancillary Institutions to guide the CBN properly.
Moving the motion, Chinda recalled that the CBN, through a circular to all commercial, merchant, non-interest and payment service banks; other financial institutions, mobile money operators and payment service providers (“CBN Circular”) dated May 6, 2024, informed Nigerians of a proposed 0.5% levy on electronic transactions in line with Section 44(2)(a) of the Cybercrimes (Amendment) Act, 2024.
He noted that Section 44(2)(a) of the Cybercrimes (Prohibition, Prevention, etc.) (Amendment) Act, 2024 provides that “a levy of 0.5 per cent (0.005) equivalent to half percent of all electronic transactions value by business specified in the Second Schedule to the Act” be paid into the Cybersecurity Fund.
“Further notes that businesses which the said Section 44(2)(a) refers to are listed in the Second Schedule to the Cybercrimes Act to be: (a) GSM Service Providers and all telecommunication companies; (b) Internet Service Providers; (c) Banks and Other Financial Institutions; (d) Insurance Companies and (e) Nigerian Stock Exchange.
“Concerned that the CBN circular mandates all Banks, Other Financial Institutions and Payments Service Providers to implement the Cybercrimes Act by applying the levy at the point of electronic transfer origination as “Cybersecurity Levy” and remitting the same.
“Further concerned that the wordings of the CBN circular leaves the CBN directive to multiple interpretations, including that the levy be paid by Bank customers, that is, Nigerians against the letters and spirit of Section 44(2)(a) and the Second Schedule to the Cybercrimes Act, which specifies the businesses that should be levied accordingly,” Chinda explained.
The lawmaker expressed worry that this act has led to apprehension as civil society organisations and citizens have taken to conventional and social media to call out the Federal Government, issuing ultimatums for a reversal of the “imposed levy on Nigerians” among other things.
He argued that unless immediate pragmatic steps are taken to halt the proposed action of the CBN, the Cybercrime Act shall be implemented in error at a time when Nigerians are experiencing the aftermath of multiple removal of subsidies from petroleum, electricity and others, amid the rising inflation.
Following the motion, the House urgently called for the withdrawal of the bank’s initial circular on the levy and requested the issuance of a new circular by the Act’s provisions.
NESG faults timing
The Nigerian Economic Summit Group (NESG) faulted the timing of the introduction of the 0.5% cybersecurity levy on electronic transactions recently introduced by the Central Bank of Nigeria (CBN).
In a statement on Thursday, NESG asked the Federal Government to reconsider the levy as Nigerians are currently groaning under multiple taxation and inflationary pressures.
In a circular dated May 6, 2024 to all deposit money banks and mobile money operators and payment service providers, the apex bank directed the deduction of the levy to be remitted to the National Cybersecurity Fund (NCF), administered by the Office of the National Security Adviser (ONSA).
The development has sparked wild outrage with labour unions threatening actions.
The Nigerian Economic Summit Group said “amidst the cost of living crisis exacerbated by rising inflation, the cybersecurity levy is mistimed”, considering the high rate of financial exclusion and increased currency in circulation.
“The NESG posits that the levy should be targeted at high-net-worth individuals and a specific amount transferred electronically to allay the fears of the populace, who are still battling skyrocketing food and non-food prices. However, 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 levy.
“The NESG, however, feels this is a critical time to implement such a policy. The impacts of the fuel subsidy removal, exchange rate reform, and, most recently, the removal of electricity subsidies still permeate the operating costs of businesses and citizens’ welfare.
“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.”
NESG also raised concerns that the policy was introduced at a time when the Presidential Committee on Fiscal Policy and Tax Reforms has not finalised its mandate.
“To avoid conflict of interests and ensure no policy misalignment, the NESG strongly believes that the levy should be deferred and proper consultation until the Fiscal Policy Committee deems it necessary to implement it.
“The cybersecurity levy needs to be reconsidered, considering the CBN’s concern about the high rate of financial exclusion and increased currency in circulation.
“The cybersecurity levy adds to the list of levies and taxes collected by financial institutions on behalf of the government, including stamp duty, electronic transfer levy, and VAT. This embodiment of taxes increases the transaction costs of using a bank and could disrupt the financial intermediation role of banks.”
