8th May, 2024
By Grace Alegba
The Centre for the Promotion of Private Enterprise (CPPE) has explained why the implementation of the 0.5 percent cybersecurity levy ordered by the Central Bank of Nigeria, CBN, to be deducted from electronic transactions of customers by the banks in the country should be halted.
The CBN had in a circular on Monday directed commercial banks and other financial institutions to start charging a 0.5 percent cybersecurity levy on Nigerians’ banking transactions after two weeks.
The apex bank, however, listed 16 categories of accounts that were exempted from the taxation.
However, Dr Muda Yusuf, CEO of CPPE, in a statement on Tuesday in Lagos said the implementation of the cybersecurity levy should be halted pending stakeholder inputs and a review of the law.
Yusuf also enumerated challenges and hardship the policy could bring on Nigerians and measures that could be adopted.
The CPPE boss noted Nigerians were still grappling with shocks emanating from recent economic reforms and should not be further burdened with additional levies.
He added that the levy could discourage online banking and make people resort to keeping monies outside the banks or at home.
He said a Presidential Committee on Fiscal and Tax Reforms had repeatedly promised reduction in number of taxes, adding that announcement of the cyber security levy contradicted earlier assurances by the committee.
“We plead with the relevant authorities to put the implementation of the legislation on hold while a thorough review is done.
“We propose a robust stakeholder engagement to review the legislation.
“In its present form the legislation will impose more hardships on the citizens and more burdens on investors,” he said.
He explained that 0.5 per cent levy on all electronic transactions was a major cause for concern that would affect digital payments.
Yusuf said enormous pressures could reduce investors capacity to drive economic growth and create jobs, thereby also fueling inflation.
“There is also the issue of proportionality. That is relating the project objective to the amount of revenue being mobilised.
“By the account of the Nigeria Interbank Settlement System [NIBSS], electronic payments on its platform in 2023 was N600 trillion. 0.5 per cent of this is N3 trillion.
“The industry data of electronic payments in 2022, according to the CBN website, was N1550 trillion. Five per cent of this gives N7.75 trillion. Even if we discount these numbers for the exemptions provided in the law, what will be left would still be staggering.
“It is difficult to rationalise spending this much on fighting cybercrime. Meanwhile, total budget appropriation for defence and security in the 2024 budget was N3.2 trillion; and infrastructure appropriation was N1.32 trillion.
“These are just appropriations. Actual releases are often much less.
“There is also the risk the legislation poses to the cashless policy of the central bank over which significant progress has been made. We are likely to see an increased migration to the use of cash as against electronic platforms,” he said.