Outrage over CBN’s 0.5% Cybersecurity levy on electronic transactions

COMFORT EKELEME, Business Editor

 

Experts in the nation’s financial services sector have faulted the decision of the Central Bank of Nigeria (CBN) to impose a 0.5 per cent Cybersecurity Levy on all electronic transactions in the country.

The experts, who spoke to Daily Champion in separate telephone interviews Tuesday, maintained that the present administration is not sensitive to the plight of Nigerians, adding that there is urgent need for customers to take legal action against the banks and it’s regulators.

Managing Director/Chief Executive Officer, Maxifund Investment & Securities Plc, Mazi Okechukwu Unegbu told Daily Champion that the 0.5 per cent cybersecurity levy is an unnecessary charge at this time.

He said that Nigerians are going through a lot already, stressing that the directive was not well thought out.

According to him, the reason CBN gave for the charge, does not even make sense because there are so many other charges bank  customers pay, including hidden charges.

He said, “I think this time around, customers should take action by suing the CBN, commercial banks for all these charges and let the court take decision. They think that customers are not reactive, they don’t care about what happens to their account, because the charge is not too much.

“I believe now, that customers of banks should if possible, join action against the banks,” he said.

Speaking further, Mazi Unegbu asked “on what law is the CBN and banks imposing charges on customers. To whose benefits.

“I understand the money is going to National Security Adviser to boost cyber security measures. It has no meaning because already all the efforts made so far, have not yielded results.

“Also, can it prevent citizens account from being invaded by scammers,” Unegbu queried.

He however, lamented that the government is over tasking people, adding that Nigerians are today overburdened.

Also speaking, a former President, Association of National Accountants of Nigeria (ANAN), Dr. Samuel Nzekwe stated there are lots of existing charges in the banking sector that CBN should have harmonized before introducing another one.

Nzekwe, who faulted the CBN’s decision noted that the regulator should have found out if the banks are charging the customers correctly or not, adding that 0.5 per cent may look small but when aggregated,it will run into millions of naira.

“CBN should have looked at the existing charges, and do a review before coming up with any other, if necessary. Now the CBN is giving the banks lifeline to charge whatever they like.

“Bringing a new one without reviewing the existing charges is a big problem. The CBN is not getting it right here. They should review the existing charges and call banks to order, because the charges are too much and Nigerians are suffering,” he lamented.

The CBN has ordered all banks to start charging a 0.5 per cent cybersecurity levy on all electronic transactions within the country excluding 16 listed banking deals.

According to a circular signed by the Director, Payments System Management Department, Chibuzo Efobi; and the Director, Financial Policy and Regulation Department, Haruna Mustafa; the cybersecurity levy would commence two weeks from May 6, 2024.

The apex bank, in the circular, directed to all commercial, merchant, non-interest, and payment service banks, among others; to start the implementation of the cybersecurity charges after two weeks of the information.

CBN said, “The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration, ‘Cybersecurity Levy,”

However, the CBN listed 16 banking transactions exempted from the new cybersecurity levy.

The exempted transactions are, loan disbursements and repayments, 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, other financial institutions instructions to their correspondent bank

Others are, banks’ transfers to CBN and vice-versa, inter-branch transfers within a bank, Cheque clearing and settlements, letter of credit,Banks’ recapitalisation-related funding – only bulk funds movement from collection accounts.

Also, savings and deposits, including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers, government social welfare programmes transactions, pension payments, Non-profit and charitable transactions, including donations to registered non-profit organisations or charities.

Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions, and 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.

.‘It’s more burden, pressure on workers, businesses … NLC

The Nigeria Labour Congress has rejected the newly introduced cybersecurity levy by the Central Bank of Nigeria, demanding its immediate withdrawal.

Meanwhile, the Nigeria Labour Congress (NLC) has rejected the newly introduced 0.5 per cent cybersecurity levy to be charged on all bank transactions.

The Central Bank of Nigeria (CBN), on Monday, issued a circular to all commercial, merchant, non-interest, and payment service banks, among others; noting that the implementation of the levy would start two weeks from Monday, May 6, 2024.

 

“The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration, ‘Cybersecurity Levy,” the circular stated partly.

But reacting to the development, the NLC, in a statement by its President, Joe Ajaero, demanded the immediate withdrawal of the levy, saying it is another anti-people policy of the government amid excruciating economic hardship.

The statement read: “The Nigeria Labour Congress, vehemently condemns the recent directive by the Central Bank of Nigeria, CBN, to levy a 0.5 per cent ‘Cybersecurity Levy’ on electronic transfers.

“This levy, to be implemented by deduction at the transaction origination, is yet another burden on the shoulders of hardworking Nigerians.

“In the circular issued by the CBN, the directive mandates banks and payment service operators to affect these deductions, effective next two weeks. This move, ostensibly aimed at bolstering cybersecurity measures, threatens to exacerbate the financial strain already faced by the populace.”

 

.Suspend implementation now, engage stakeholders, Dr Muda Yusuf tasks FG

 

Similarly, Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf has appealed to the relevant authorities to put on hold implementation of the 0.5 per cent cybersecurity levy on all electronic transactions, while a thorough review is done.

Dr. Yusuf in a statement made available to newsmen, however,  proposed a robust stakeholder engagement to review the legislation.

According to him, the legislation in its present form, will impose more hardships on the citizens and more burdens on investors.

He said recent announcement by the Central Bank imposing a 0.5per cent levy on all electronic transactions value in economy is a major cause for concern.

He said, “Businesses and the generality of citizens are yet to recover from the shocks of current reforms.

“Inflationary pressures have not abated, high cost of living is still a major worry, operating and production costs for businesses remain elevated, amidst weak consumer purchasing power.

“This is not a good time to impose an additional levy both on businesses and citizens. The magnitude of the levy is even of a bigger concern.

“The expectations of citizens and corporate organisations are that taxes and levies are being rationalised and streamlined for better business environment,” he said.

Dr  Yusuf maintained that the  Presidential Committee on Fiscal and Tax Reforms had said this repeatedly.

Speaking further, he noted that the  announcement on the cybercrime levy contradicts earlier assurances by the Presidential Committee.

Meanwhile, he stated that businesses are already saddled with the following federal taxes: Company Tax, Tertiary Education Tax, Stamp Duties, NITDA levy, Value Added Tax,NASENI Levy, Police Trust Fund Levy, among others.

Still in works are NYSC Levy and  Tertiary Health Levy.

“There are also a plethora of taxes and levies imposed by states and local governments.

Most MDAs, especially those performing regulatory roles, have practically become revenue generating agencies.  Many have revenue targets.

“All of these impose enormous pressures on investors in the economy.  This diminishes their capacity to drive economic growth and create jobs and also fueling inflation.

“The cybercrime levy is even more troubling because it is a tax on electronic transactions, not on profit.

“It has no regards to whether the business is healthy or not.  Even loss making companies are liable.  The poorer segments of society are not exempted either.  This raises serious issues of equity.

“There is also the issue of proportionality.  That is relating the project objective to the amount of revenue being mobilised,” Dr. Yusuf maintained.

He said, by the account of the Nigeria Interbank Settlement System [NIBSS], electronic payments on its platform in 2023 was N600 trillion. 0.5per cent of this is N3 trillion.

Also, the industry data of electronic payments in 2022, according to the CBN website was N1550 trillion. 0.5 per cent of this gives  N7.75 trillion.

He said, “Even if we discount these numbers for the exemptions provided in the law, what will be left would still be staggering.

“It is difficult to rationalise spending this much on fighting cybercrime.

“Meanwhile, total budget appropriation for defence and security in the 2024 budget was N3.2 trillion; and infrastructure appropriation was N1.32 trillion. These are just appropriations. Actual releases are often much less,” he stated.

He however, noted that there is also the risk the legislation poses to the cashless policy of the central bank over which significant progress has been made.

He disclosed that Nigerians are likely to see an increased migration to the use of cash as against electronic platforms.

SERAP gives Tinubu 48 hours to withdraw unlawful CBN directive imposing cybersecurity levy on Nigerians.

 

.SERAP gives Tinubu 48 hours ultimatum to reverse decision

 

Also, SERAP has urged President Bola Tinubu to use his “good offices to immediately direct the Central Bank of Nigeria (CBN) to withdraw the cybersecurity levy on Nigerians as it patently violates the provisions of the Nigerian Constitution 1999 [as amended] and the country’s international human rights obligations and commitments.”

SERAP also urged him “to stop Mr Nuhu Ribadu and the office of the National Security Adviser (NSA) from implementing section 44 and other repressive provisions of the Cybercrimes Act 2024 as it flagrantly violates the provisions of the Nigerian Constitution and the African Charter on Human and Peoples’ Rights and International Covenant on Civil and Political Rights to which Nigeria is a state party.”

SERAP urged him “to direct the Attorney General of the Federation and Minister of Justice, Mr. Lateef Fagbemi, SAN to immediately prepare and present a bill to amend section 44 and other repressive provisions of the Cybercrimes Act 2024 to the National Assembly so that those provisions can be brought in line with the Nigerian Constitution and the country’s international human rights obligations.”

In a statement today signed by SERAP deputy director Kolawole Oluwadare, the organisation said: “The Tinubu administration must within 48 hours withdraw the patently arbitrary and unlawful CBN directive purportedly imposing cybersecurity levy on Nigerians.

SERAP said, “Section 44(8) criminalizing the non-payment of the cybersecurity levy by Nigerians is grossly unlawful and constitutional.”

The statement, read in part: “Our lawyer Ebun-Olu Adegboruwa, SAN, is already preparing the necessary court papers should the administration fail or neglect to act as recommended.”

“The administration must urgently take concrete and effective measures to ensure the repeal of section 44 and other repressive provisions of the Cybercrimes Act 2024.

“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.”

“Withdrawing the unlawful CBN directive and repealing the repressive provisions of the Cybercrimes Act 2024 will be entirely consistent with president Tinubu’s constitutional oath of office requires public officials to uphold the provisions of the constitution, and the rule of law and abstain from all improper acts.”

“The repressive provisions of the Cybercrimes Act 2024 are clearly inconsistent and incompatible with the public trust and the overall objectives of the Constitution. A false oath lacks truth and justice. The oath statements require the oath takers to commit to uphold and defend the Constitution.”

“Section 14(2)(b) of the Nigerian Constitution of 1999 [as amended] provides that, ‘the security and welfare of the people shall be the primary purpose of government.”

“The CBN yesterday has directed banks and other financial institutions to implement a 0.5 percent cybersecurity levy on electronic transfers on the basis of the section 44 44(2)(a) of the Cybercrimes Act 2024 purportedly imposing a “a levy of 0.005 equivalent to a half percent of all electronic transactions value by the business specified in the second schedule of the Act.”

“The money is to be remitted to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA).”

 

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