By Adamu Kabir Matazu
On May 6, 2024, the Central Bank of Nigeria issued a directive to all commercial, merchant, non-interest and payment service banks, other financial institutions, mobile money operators and payment service providers to implement a cybersecurity levy on electronic transactions. This directive is in line with the Cybercrime (Prohibition, Prevention, etc.) Act 2015 and the 2024 Cybercrime Amendment Act.
Consequently, a cybersecurity levy of 0.5% of all electronic transactions’ value is to be deducted and remitted to the National Cybersecurity Fund (NCF). Financial institutions are required to deduct the levy at the point of electronic transfer origination and reflect it in the customer’s account with the narration “Cybersecurity Levy”.
Deductions were expected to commence within two weeks of the circular, with monthly remittances to the NCF account domiciled at the CBN by the 5th business day of every subsequent month before President Bola Tinubu reportedly halted the levy.
The implementation sparked controversy and concerns among Nigerians. Some have questioned the timing, given the prevailing economic challenges. Others have raised worries about the lack of clarity in the legislation and the potential impact on financial inclusion.
The Nigeria Labour Congress described it is “an additional burden on hardworking Nigerians”. Civil society groups criticised the law, stating that the numerous taxes imposed by federal, state, and local governments are impeding the capacity of businesses to drive economic growth.
The misconception is that it will stifle innovation and increase the cost of living. It is also seen in some quarters as unfair to ordinary people, especially small business owners, who will be heavily affected by the additional deduction of 0.5% on their transactions. There is another school of thought that the levy would undermine the government’s efforts to promote a cashless economy, as people may opt for cash transactions to avoid the additional charge, potentially leading to a cash shortage.
However, the merits outweigh these concerns. As Nigeria continues to embrace digital transformation, the need for robust cybersecurity measures has become more pressing than ever. In recent years, the country has witnessed a significant surge in cyberattacks, resulting in substantial financial losses and compromised sensitive information. To combat this growing threat, the introduction of a cybersecurity levy is a crucial step towards safeguarding Nigeria’s digital landscape.
The cybersecurity levy is a small price to pay for the protection of our digital lives. By adopting this levy, Nigeria will be joining a league of nations that prioritise cybersecurity and recognise the importance of investing in digital security. The funds generated from the levy will be channelled towards enhancing cybersecurity infrastructure, supporting research and development, and promoting awareness campaigns to educate citizens on the importance of online safety.
The benefits of adopting the cybersecurity levy are multifaceted. Firstly, it will enhance the security of electronic transactions, protecting citizens and businesses from the financial and reputational damage caused by cyberattacks. Secondly, it will support the growth of Nigeria’s digital economy by creating a secure environment for online businesses to thrive. Thirdly, it will generate employment opportunities in the cybersecurity sector, contributing to the country’s economic growth.
Moreover, the cybersecurity levy will demonstrate Nigeria’s commitment to global cybersecurity standards, enhancing the country’s reputation and attracting foreign investment. It will also facilitate collaboration between public and private sectors, fostering a culture of cybersecurity awareness and best practices.
By implementing the cybersecurity levy, Nigeria would demonstrate its commitment to protecting its citizens, businesses, and critical infrastructure from the risks of cyber threats, promoting a safer and more secure digital environment with a dedicated source of funding for cybersecurity initiatives, ensuring a consistent and reliable source of funds to combat cyber threats.
The levy supports the development of a robust national cybersecurity framework, enabling Nigeria to better protect its critical infrastructure and sensitive information while raising awareness about the importance of cybersecurity, and encouraging individuals and organizations to prioritize cybersecurity measures.
On top of that, the levy encourages innovation and investment in cybersecurity, driving the development of new solutions and technologies to combat evolving cyber threats and helps protect critical infrastructure, such as power grids, financial systems, and government databases, from cyber threats.
While acknowledging the wisdom of Mr. President in halting the levy amidst protests, it is imperative to advise that it should be just a temporary measure. Investment in the fortification of the nation’s Cyberspace should be a priority. It must not be jettisoned if we are to avoid a regrettable path.
Perhaps, a number of adjustments could be made to accommodate some of the concerns raised. For instance, there is an ongoing tax reform under the Presidential Committee on Tax Policy and Fiscal Reforms headed by Mr. Taiwo Oyedele. The reform is expected to streamline taxation and remove instances of multiple taxation. This Cybersecurity Levy should be accommodated in whatever reform that is being proposed because of its very strategic importance.
There is also nothing wrong in reconsidering the percentage of the Levy and reducing it if need be, in order to lessen whatever burden is being complained about. It is much better than playing into the hands of cyber criminals and buying into the arguments of their enablers and sympathizers. Resources are needed to continuously develop capacity to protect our cyber domain. And for this reason, this resources must be mobilized through this levy, even if it means reducing it for now. The overall National Security interest must not be lost on us as we continue the debate on this matter and work towards the envisioned future of a safe Cyberspace.
In conclusion, the adoption of the cybersecurity levy is a necessary step towards securing Nigeria’s digital future. By embracing this initiative, we can protect our digital lives, support economic growth, and demonstrate our commitment to global cybersecurity standards. Let us join forces to create a safer digital Nigeria for all.
Matazu, a Public Affairs analyst, wrote from Abuja
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