What You Need To Know About ‘Cybersecurity Levy’ And How It’ll Impact You
The Central Bank of Nigeria, on Monday, May 6, 2024, ordered banks and other financial institutions to commence the deduction of what it called a ‘cybersecurity levy’ from all electronic transfers in the country.
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 of 0.5 percent is to be charged on electronic transactions starting from May 20.
The deduction of the levy, which banks should apply at the point of electronic transfer origination, shall be remitted to the National Cybersecurity Fund (NCF).
“Following the enactment of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024 and pursuant to the provision of Section 44 (2)(a) of the Act, a levy of 0.5% (0.005), equivalent to half a percent of all electronic transactions’ value, by the businesses specified in the Second Schedule of the Act, is to be remitted to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA),” the statement reads in part.
How the Levy Will Affect Nigerians
The introduction of the cybersecurity levy has sparked widespread concern among Nigerians, who are already grappling with economic challenges such as rising food prices and fuel scarcity. This new levy is expected to further strain businesses that rely heavily on electronic transfers. In 2023, electronic payment transactions in Nigeria rose significantly from ₦387 trillion to ₦600 trillion.
With this new order, transactions not included in the schedule of exemptions will be subject to a 0.5 percent levy on every electronic transaction. For instance, for a transfer of ₦1 million, customers will be charged an additional ₦5,000 for the cybersecurity levy, in addition to other transaction fees.
Electronic Transactions Exempted from the Levy
While failure to comply with the directive attracts a penalty of not less than 2 percent of the annual turnover of the defaulting business, the apex bank outlined transactions that are exempted from the said levy.
Loan disbursements and repayments, intra-account transfers within the same bank or between different banks for the same customer, salary payments, and intra-bank transfers between customers of the same bank will not be charged the cybersecurity levy.
Also, savings and deposits, including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers, government social welfare programs transactions such as pension payments, are also excluded. Non-profit and charitable transactions, including donations to registered non-profit organisations or charities, as well as educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions, are equally exempted.
