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NLC, NACCIMA, Other Stakeholders Slam CBN Over Timing of Cybersecurity Levy, Demand Urgent Reversal
The Nigerian Labour Congress, NLC, Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), others on Tuesday faulted the timing of the newly imposed 0.5 percent tax on most electronic transactions by the Central Bank of Nigeria (CBN).
The CBN announced the new tax on Monday, explaining that the new charge was part of efforts to contain the rising threat of cybercrime in the financial system.
But many stakeholders, institutions, and financial market analysts condemned the new levy as an unnecessary extra weight on a stressed and fraught citizenry.
They included Nigeria Labour Congress (NLC); National President of Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Mr. Dele Kelvin Oye; Socio-Economic Rights and Accountability Project (SERAP); and Managing Director, Financial Derivatives Company Limited, Bismarck Rewane.
The new fee was also denounced by Chief Executive Officer of Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf; former Commissioner for Finance, Imo State, Professor Uche Uwaleke; and other financial market analysts.
SERAP threatened possible lawsuit if the federal government did not withdraw the levy within 48 hours.
CBN stated that implementation of the levy followed the enactment of the Cybercrime (Prohibition, Prevention, etc.) (amendment) Act 2024, and was pursuant to the provisions of Section 44 (2)(a) of the Act, which provided for the rate deduction.
Under the new CBN directive, if a customer, for instance, wants to transfer N10,000, the customer will be charged N50 as cybersecurity levy, aside other charges incurred on the transaction, like Value Added Tax (VAT).
Nigeria Interbank Settlement System (NIBSS) said electronic payments on its platform in 2023 were N600 trillion and 0.5 percent of this sum is N3 trillion, which analysts stressed would be a heavy burden on the citizens. They further lamented the effect of the new levy on new businesses struggling to set up.
The levy was conveyed in a circular dated May 6, 2024, and addressed to all commercial, merchant, non-interest and payment service banks; other financial institutions, Mobile Money Operators and Payment Service Providers. It was jointly signed by CBN Director, Payments System Management Department, Chibuzo Efobi, and Director, Financial Policy and Regulation Department, Haruna Mustafa.
The central bank explained that the deducted funds were to be remitted to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA).
With few exemptions, all banks, Other Financial Institutions and Payments Service Providers are required to implement the new provision of the Act as directed.
However, NLC stated that the cybersecurity levy as well as several other levies and taxes already imposed on the citizens had deepened the financial burden on the populace currently grappling with economic challenges.
“We urge a collaborative approach between the government, regulatory bodies, and stakeholders to develop sustainable cybersecurity measures that do not unduly burden the populace.”
NLC added, “We continue treading on the edge and it is not certain which uncaring policy will tilt the balance and throw us into a socioeconomic spiral
“The NLC recognises the importance of cybersecurity in today’s digital age. However, imposing such a levy on electronic transactions, without due consideration for its implications on workers and the vulnerable segments of society, is unjustifiable.
“This levy stands as another tax too much for Nigerians, burdening them with additional financial responsibilities.
“We see in this levy another gang up by the ruling elite to continue its extortion and exploitation of hapless and helpless workers and the masses so that their cronies in various financial centres can continue wallowing in unbridled consumption.
“During our last May day speech we called on the government to prioritise the welfare of Nigerian workers and masses in their policy directions and actions instead of profit seeking that unleashes more pressures on the people.
“We wonder when it has become a crime for the people to save their meagre incomes in the banks and whether it is the intention of government to encourage people to resort once again to keeping cash and using cash transactions instead of electronic transfers, which has seemed to have become an undoing for the people?
“NLC further lamented that such deductions directly affect the disposable income of workers and further diminish the purchasing power of the common citizen.”
According to NLC, domestic manufacturers and other businesses are already shuttering as a result of the stifling socioeconomic environment.
Yet, NLC said, instead of creating a business-friendly environment to encourage greater investments in the economy, “The opposite seems to be what is being practised. How can you attract foreign investment when you make the business environment difficult?
“Moreover, the threat of fines amounting to not less than two percent of an institution’s annual turnover for non-compliance adds further pressure on financial institutions, potentially leading to a trickle-down effect on consumers.
“Definitely, the businesses will pass down these costs to consumers, which will lead to further inflation in an economy that is already in the grips of hyper-inflation.”
NLC wondered, “How would domestic manufactured goods and services remain competitive in the midst of all these costs and how would the businesses expand capacity, thus, employ more Nigerians when they cannot sell their products because of high prices?
“Monies raised in the past have not helped in making lives better for the citizenry, neither have they been seen in better infrastructural provisions. Extracting this levy from the people who are already kwashiorkored by government policies in order to throw money at cybersecurity will not make our cyberspace better, just like it has been our experience in the past.
“We see this as a cybersecurity levy that will inflict severe social security on workers and masses.”
In his own reaction, Rewane stated, “Does it mean that if there was no levy there won’t be fight against cybercrime? Whether there was a levy or not, we would have loved to fight cybersecurity.”
The economist pointed out that the responsibility for fighting cybercrime ought not to be imposed on the citizens, even though the citizens must be protected, which is the more reason they pay taxes.