On May 6, 2024, the Central Bank of Nigeria (CBN) released a circular requiring Banks and Other Financial Institutions to initiate deductions for a cybersecurity levy. This is coming after the National Security Adviser, Malam Nuhu Ribadu advised full implementation of the Cybercrimes (Prohibition, Prevention, Etc.) Amendment Act 2024.
According to the CBN, the directive is a follow-up on an earlier letter dated June 25, 2018 (Ref: BPS/DIR/GEN/CIR/05/008) and October 5, 2018 (Ref: BSD/DIR/GEN/LAB/11/023), respectively, on compliance with the Cybercrimes (Prohibition, Prevention, Etc.) Act 2015.
The new circular states:
‘Following the enactment of the Cybercrime (Prohibition, Prevention, etc.) (amendment) Act 2024 and under the provision of Section 44 (2) (a) of the Act, “a levy of 0.5% (0.005) equivalent to a half percent of all electronic transactions value by the business 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).’
Additionally, the circular specified that the deduction would be labeled as the ‘Cybersecurity Levy,’ and paid into the NCF. All Banks, Other Financial Institutions and Payment Service Providers are expected to commence the deduction in two weeks from the circular date, effective May 20th, 2024. It also prescribed a fine of 2% of the annual turnover of a business, in the event of a failure to remit the levy as instructed.
For the purpose of interpretation, electronic transactions refer to ‘any transfer of funds which is initiated by a person by way of instruction, authorization or order to a bank to debit or credit an account maintained with that bank through electronic means and includes point of sales transfers, automated teller machine transactions, direct deposits or withdrawal of funds, transfer initiated by telephone, internet and card payment’.
TAXABLE BUSINESSES
1. Service Providers and all Telecommunication companies
2. Internet Service Providers.
3. Banks and other GSM or Financial Institutions.
4. Insurance Companies.
5. Nigerian Stock Exchange
EXEMPTIONS
1.Loan disbursements and repayments.
2. Salary payments.
3. Intra-account transfers within the same bank or between different banks for the same customer.
4. Intra-bank transfers between customers of the same bank.
5. Other Financial Institutions (OFIs) instructions to their correspondent banks.
6. Interbank Placements.
7. Banks’ transfers to CBN and vice-versa.
8. Inter-branch transfer within a bank.
9. Cheques clearing and settlements.
10. Letter of Credits (LCs).
11. Banks’ recapitalization related funding – only bulk funds movement from collection accounts.
12. Savings and deposits including transactions involving long-term investments such as Treasury Bills, Bonds and Commercial Papers.
13. Government Social Welfare Programs Transactions E.g. Pension payments.
14. Non-profit and charitable transactions including donations to registered non-profit organizations or charities.
15. Educational Institutions Transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions.
16. Transactions involving Bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
However, despite section 44 of the Act specifying that the levy should be on transactions of taxable businesses listed above, the CBN’s circular seems to include some ambiguity and can be interpreted in a way that suggests deductions from accounts of members of the public. This has provoked mixed reactions from different Institutions and Citizens of the nation. Many Nigerians have expressed their dissatisfaction with the new levy arguing that the timing is inappropriate, given the current financial hardships being faced. Also, the Nigeria Labour Congress (NLC), has openly rejected the levy, emphasizing its potential impact on ordinary citizens.
It becomes important that citizens, businesses, and policymakers engage in constructive dialogue to strike a balance between Cybersecurity enhancement and economic well-being. As the levy takes effect, its implications will unfold, prompting further debates and adjustments.