Amidst widespread discontent over the recent introduction of the 0.5% cybersecurity levy on electronic transactions by the Central Bank of Nigeria (CBN), the Nigerian Economic Summit Group (NESG) has raised objections to the timing of the policy implementation.
Expressing concerns over the burden imposed on Nigerians already grappling with high food prices and inflationary pressures, the NESG has called on the Federal Government to reconsider the levy in light of the prevailing economic challenges.
In a circular issued on May 6, 2024, the CBN instructed all deposit money banks, mobile money operators, and payment service providers to deduct the levy from electronic transactions, with proceeds remitted to the National Cybersecurity Fund (NCF) overseen by the Office of the National Security Adviser (ONSA). However, the move has ignited widespread outrage, with labour unions threatening to take action against what they perceive as an additional financial burden on citizens.
Highlighting the adverse impact of the levy on an already strained populace, the NESG emphasized the need for a targeted approach to levy implementation.
Proposing that the levy be directed towards high-net-worth individuals and specifying a fixed amount for electronic transfers, the NESG aims to alleviate the concerns of Nigerians grappling with skyrocketing food and non-food prices. Moreover, the group warned of the potential consequences of widespread boycotts of electronic funds transfers, which could result in significant revenue losses for the government.
While acknowledging the challenges posed by the fuel subsidy removal, exchange rate reforms, and the recent elimination of electricity subsidies, the NESG underscored the importance of prudent policy implementation during this critical period.
It said, “The NESG posits that the levy should be targeted at high-net-worth individuals and a specific amount transferred electronically to allay the fears of the populace, who are still battling skyrocketing food and non-food prices. However, if this policy remains, several Nigerians will boycott electronic funds transfers, which does not even bode well for the government due to revenue loss from electronic transfer levy.
“The NESG, however, feels this is a critical time to implement such a policy. The impacts of the fuel subsidy removal, exchange rate reform, and, most recently, the removal of electricity subsidies still permeate the operating costs of businesses and citizens’ welfare.
“The government must be cautious of the numerous strenuous policies that stiffen the purchasing power and welfare of corporations and individuals. Therefore, the government needs to properly sequence reforms for efficient socioeconomic outcomes, especially those that strain the people.”
NESG equally said that the policy was introduced at a time when the Presidential Committee on Fiscal Policy and Tax Reforms has not finalised its mandate.
“To avoid conflict of interests and ensure no policy misalignment, the NESG strongly believes that the levy should be deferred and proper consultation until the Fiscal Policy Committee deems it necessary to implement it.
“The cybersecurity levy needs to be reconsidered, considering the CBN’s concern about the high rate of financial exclusion and increased currency in circulation.
“The cybersecurity levy adds to the list of levies and taxes collected by financial institutions on behalf of the government, including stamp duty, electronic transfer levy, and VAT. This embodiment of taxes increases the transaction costs of using a bank and could disrupt the financial intermediation role of banks.”
As citizens continue to navigate the economic fallout from these reforms, the NESG urges policymakers to adopt measures that prioritize the welfare of Nigerians and mitigate the impact of new policies on their livelihoods.