Why Proposed Cybersecurity Levy on Electronic Transactions Upset Businesses, Nigerians

…Raises Concerns

The Central Bank of Nigeria (CBN) recent proposal to implement a 0.5% cybersecurity levy on all electronic transactions has sparked concerns among businesses and citizens alike.

CBN aims to utilize these funds to bolster cybersecurity initiatives within the country. However, stakeholders are questioning the levy’s impact on the economy and its potential to hinder financial inclusion.

The proposed cybersecurity levy on electronic transactions in Nigeria has drawn criticism from businesses and civil society groups.

Critics argue that the levy’s timing is particularly inopportune. With inflationary pressures persisting and consumer purchasing power remaining weak, the additional cost could further strain businesses and individuals. Additionally, the levy’s structure, impacting both profitable and struggling businesses, raises concerns about its fairness.

Furthermore, experts warn that the cybersecurity levy might inadvertently impede the CBN’s cashless policy. By making electronic transactions more expensive compared to cash, the policy could disincentivize Nigerians from adopting digital payment methods.

Stakeholders are urging the government to reassess the levy’s implementation. Calls for a thorough review process and broader stakeholder engagement are gaining traction. Proponents suggest exploring alternative funding mechanisms for cybersecurity initiatives without placing a direct burden on electronic transactions.

The debate surrounding the cybersecurity levy highlights the delicate balance between promoting financial security and fostering a robust digital economy. Striking the right balance will require careful consideration of both economic and security concerns.

Concerns about the levy:

Bad Timing: Businesses and citizens argue the levy comes at a difficult economic time with inflation already high. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), stated the levy adds pressure to already struggling businesses and citizens.

Unfair Tax: Critics argue the levy unfairly impacts everyone, regardless of income or business profitability. Auwal Musa Rafsanjani, executive director of the Civil Society Legislative Advocacy Centre (CISLAC), called the levy “anti-poor” and questioned why the government isn’t focusing on large corporations.

Cashless Policy: Experts warn the levy could discourage people from using electronic payments, hindering the CBN’s cashless policy goals. Ayokunle Olubunmi, head of Financial Institutions at Agusto & Co., noted the levy could make electronic transactions less attractive compared to cash.

Calls for Review:

Stakeholders are urging the government to reconsider the levy. CPPE’s Dr. Yusuf proposed a “thorough review” and “robust stakeholder engagement” to find alternative funding solutions. Social media users have also questioned the levy, with one user (olayemiX) asking why citizens have to directly fund a government agency.

The debate highlights the challenge of balancing cybersecurity needs with economic growth in Nigeria.