Banker, Cybersecurity Expert Faults CBN’s Cybersecurity Levy
Bankers from Nigeria’s leading banks have expressed concern over the new directive by the Central Bank of Nigeria mandating banks and other financial institutions to charge their customers a ‘Cybersecurity Levy.’
Commenting on the 0.5 percent cybersecurity levy, which will be charged on electronic transactions starting from May 20, 2024, bankers from top financial institutions reliably told Neusroom that the policy is counterproductive to the country’s cashless policy vision and could endorse another naira scarcity as witnessed in February last year.
According to a statement signed by Chibuzor Efobi, the apex bank’s Director of Payment Management Department, and Haruna Mustafa, the bank’s Director of Financial Policy and Regulation Department, a cybersecurity levy, will be collected by banks and remitted to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA).
However, coming at a time when Nigeria is grappling with its worst economic challenges in nearly three decades, including an inflation rate of 33.2 percent and food inflation exceeding 40 percent, many Nigerians have expressed displeasure with the levy.
Why Was the Cybersecurity Levy Introduced?
According to Section 44 (1) of Nigeria’s Cybersecurity Act, as amended, “a Fund, known as the National Cybersecurity Fund,” will be established to enhance and develop Nigeria’s cybersecurity industry.
In addition to other sources of funding, such as grants-in-aid and donations from bilateral and multilateral agencies, “a levy of 0.005 of all electronic transactions by the businesses specified in the second schedule to the Act” was made mandatory.
Although cyber threats to Nigerian banks remain a concern, with banks losing N9.5 billion between January and August 2023, according to the Nigeria Inter-Bank Settlement System (NIBSS), experts who spoke to Neusroom argue that the levy may jeopardise the country’s aim of promoting a cashless policy.
Bankers Criticise Cybersecurity levy
A top banker with one of Nigeria’s tier-one banks, who wished to remain anonymous, told a Neusroom correspondent that the cybersecurity levy is counterproductive.
“The name itself and the fact that they are driving towards a cashless society, then taxing the masses for using alternative channels to transfer funds, is counterproductive,” he said.
He added, “This, coming at the same time they reintroduced cash processing fees on cash deposits, makes no sense to me.”
In a circular to First Bank customers seen by Neusroom, First Bank (FBN) said that while the directive took effect on May 1, 2 percent will be charged on deposits above ₦500,000 for individuals, and 3 percent will be charged on all deposits above ₦3 million for corporate account holders.
A cybersecurity expert with another leading bank in the country, based in Lagos, Nigeria’s economic hub, also criticised the move.
“The aim of the levy is to help generate funds to fight cybercrime. However, so far, most cybercrime cases that banks encounter, they bear the cost, and I don’t see how this agency (Cybercrime Advisory Council) will help strengthen cybersecurity in the banking sector.”
In February 2023, Nigerians witnessed harsh times due to naira scarcity as the country’s apex bank tried to mop up notes by introducing redesigned notes of higher denominations: ₦200, ₦500, and ₦1000. The move, although it was later overturned by a Supreme Court verdict, caused cash shortages that wreaked havoc on many businesses.
“What might be witnessed is a return of long queues at ATM machines, as people will prefer withdrawing from the ATM rather than paying for the levy,” the cybersecurity expert said.
