The Central Bank of Nigeria (CBN) has retracted its earlier directive mandating a 0.5% cybersecurity levy on electronic transactions. The move comes in response to widespread public backlash and a subsequent suspension of the levy by the Federal Government.

The initial directive, issued in a circular on May 6, 2024, instructed deposit money banks, mobile money operators, and payment service providers to deduct the levy and remit it to the National Cybersecurity Fund (NCF). The NCF is managed by the Office of the National Security Adviser (ONSA).

The announcement of this policy quickly led to public outrage, with labor unions threatening actions and various pressure groups criticizing the timing, given the current cost of living crisis and rising inflation.

In light of the controversy, Information Minister Mohammed Idris announced on May 14, 2024, that the Federal Government had decided to suspend the levy.

Following this, the CBN issued a new circular on May 17, 2024, officially withdrawing the previous directive. The latest circular, signed by Chibuzo Efobi, Director of Payments System Management Department, and Haruna Mustafa, Director of Financial Policy and Regulation Department, instructed all financial institutions to disregard the earlier instructions on the cybersecurity levy.

This retraction marks a significant response by the CBN to the concerns raised by the public and stakeholders within the financial sector.

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President Bola Tinubu has intervened in the ongoing debate over the implementation of the controversial cybersecurity levy in Nigeria. Following mounting pressure and concerns raised by various stakeholders, including the House of Representatives, President Tinubu has directed the Central Bank of Nigeria (CBN) to suspend the implementation of the levy and initiate a thorough review of the policy.

The directive to suspend the levy came after the House of Representatives called on the CBN to withdraw its circular mandating all financial institutions to commence charging a 0.5 per cent cybersecurity levy on electronic transactions.

The CBN had issued a circular on May 6, 2024, instructing banks, mobile money operators, and payment service providers to implement the levy in accordance with the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.

However, the move sparked mixed reactions among stakeholders due to concerns about its potential impact on the cost of doing business and digital transaction adoption in the country.

In response to the growing concerns, President Tinubu ordered a review of the levy, citing the need to alleviate the economic burden on Nigerians, especially amid ongoing economic reforms.

Sources within the presidency indicated that President Tinubu was sensitive to the plight of Nigerians and did not want to exacerbate their hardships with additional levies.

While acknowledging the importance of cybersecurity measures, President Tinubu’s decision to suspend the levy reflects his commitment to responsive governance and willingness to listen to the concerns of the populace.Reacting to the President’s decision, various stakeholders expressed their views.

The Peoples Democratic Party’s National Publicity Secretary welcomed the suspension of the levy, describing it as an anti-people decision from the beginning.

Similarly, the Chief Executive Officer of the Centre for Promotion of Private Enterprises commended the President for his responsiveness, emphasizing the need for a comprehensive review process involving stakeholders and the organized private sector.

However, some voices, including the Socio-Economic Rights and Accountability Project (SERAP), threatened legal action if the levy was not withdrawn within 48 hours, citing constitutional violations and human rights concerns.

In the midst of these developments, the Nigeria Labour Congress (NLC) reiterated its call for the reversal of the directive, highlighting the financial strain already faced by Nigerians due to multiple taxes and levies.

As the debate continues, President Tinubu’s decision to halt the implementation of the cybersecurity levy underscores the importance of striking a balance between enhancing cybersecurity measures and mitigating the financial burden on the populace.

The forthcoming review process is expected to address stakeholders’ concerns and pave the way for a more transparent and inclusive approach to cybersecurity policy in Nigeria.

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A renowned cybersecurity expert, Mr Segun Olugbile, has endorsed the cybersecurity levy introduced by the Central Bank of Nigeria (CBN) but with cautions.

Speaking to PRNigeria, Olugbile, who is the president and co-founder of Global Network for Cybersolution (GNC), said the CBN policy is a rehash of a law that has been there for many years, adding that the recent development is in the best interest of the country.

“The cybersecurity levy has been in place since 2015 and it is meant to fund cybersecurity initiatives, but there were issues with interpretation and application. The recent 0.5% levy aims to provide clarity and funding for cybersecurity, targeting specific industries. Funding for cybersecurity initiatives must be internal to ensure sustainability and avoid dependence on external sources.

“As a nation, we need sustainable National funding for cybersecurity and counterterrorism. Cybersecurity is a strategic component of National Security. The nation has a robust national cybersecurity strategy that remains unimplemented due to poor funding and a lack of understanding of the critical nature of digital infrastructures. Nigeria must fund its cybersecurity and counter-terrorism program not by foreign aid.

“We must own it and not dance to the tune of the donors. I commend the NSA, the CBN and other stakeholders that made this happen. The Cybersecurity levy has always been there in the Act since 2015, but the conflicting challenges in interpretations and applications of the provision made it difficult to implement.

“However, institutional accountability and inclusive engagement should now be the necessary common doctrine for the success of the cybersecurity program. The approach to national cybersecurity should no longer be the same as before.

“My key concern now is the operational viability of the implementing agency, since ONSA is now transiting from national security coordination and policy advisory to implementer of policy, the ONSA now needs to embark on a comprehensive review of the need for the setting up a National Cybersecurity Agency, accommodate contributions and engagement of stakeholders with strategic communication on key national values of the cybersecurity levy. It is about safeguarding the digital future of Nigeria.

“The government has already provided exceptions to shield other vulnerable investments and transactions. The impact of the cybersecurity levy should be matched with a strong commitment to monitor the activities of the implementers and ensure good governance and accountability,” he said.

Mr Olugbile tackled organised labour and opposition figures who he said are seeking to make political capital out of the policy, adding that there is a lot of ignorance among the populace on the necessity of the levy.

He noted further that all countries of the world invest a lot fortunes on protecting their cyberspace.

According to a circular recently issued by the CBN to various financial institutions including commercial, merchant, non-interest, and payment service banks, a 0.5 per cent cybersecurity levy would come into effect from May 20.

While a lot of Nigerians have kicked against the policy and organised labour said it is exploitative, Olugbile, however, said the levy will not affect most Nigerians since it doesn’t include salary payments among other exceptions.

Other exceptions include same bank transactions, loan repayments and disbursements, charitable organisations payments, payments for educational pursuits including tuition among others.

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The Central Bank of Nigeria (CBN) has mandated all banks to initiate a 0.5% cybersecurity levy on electronic transactions within the country.

The directive, disclosed in a circular signed by Chibuzo Efobi and Haruna Mustafa, Directors of Payments System Management and Financial Policy and Regulation Departments respectively, has sparked mixed reactions among netizens.

Many citizens have expressed dismay over what they perceive as an additional financial burden. Social media platforms have been inundated with criticisms, with some labeling the levy as “extortion.”

The implementation of the levy, set to commence two weeks from Monday, May 6, 2024, has raised concerns among consumers already grappling with economic challenges.

However, the circular outlined exemptions from the cybersecurity levy, providing relief for certain transactions.

Notably, loan disbursements, salary payments, and intra-bank transfers are among the 16 exempted transactions.

Transactions involving government social welfare programs, non-profit organizations, educational institutions, and internal bank accounts are also spared from the levy.

Despite the exemptions, the introduction of the levy underscores the CBN’s commitment to enhancing cybersecurity infrastructure in the banking sector.

By imposing the levy at the point of electronic transfer origination, financial institutions are tasked with deducting and remitting the levy accordingly, with the amount reflected in customers’ accounts under the narration “Cybersecurity Levy.”

The measure aims to fortify the financial ecosystem against cyber threats, aligning with global efforts to safeguard digital transactions.

However, its immediate impact on consumers and businesses remains a subject of intense scrutiny as stakeholders assess its implications on the economy and digital finance landscape.

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