President Bola Tinubu has asked the Central Bank of Nigeria to suspend the implementation of the controversial cybersecurity levy policy and ordered a review.
This followed the decision of the House of Representatives, which, last Thursday, asked the CBN to withdraw its circular directing all banks to commence charging a 0.5 per cent cybersecurity levy on all electronic transactions in the country.
The CBN on May 6, 2024, issued a circular mandating all banks, mobile money operators, and payment service providers to implement a new cybersecurity levy, following the provisions laid out in the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.
According to the Act, a levy amounting to 0.5 per cent of the value of all electronic transactions will be collected and remitted to the National Cybersecurity Fund, overseen by the Office of the National Security Adviser.
Financial institutions are required to apply the levy at the point of electronic transfer origination.
The deducted amount is to be explicitly noted in customer accounts under the descriptor “Cybersecurity Levy” and remitted by the financial institution. All financial institutions are required to start implementing the levy within two weeks from the issuance of the circular.
By implication, the deduction of the levy by financial institutions should commence on May 20, 2024.
However, financial institutions are to make their remittances in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month.
The circular also stipulates a timeframe for financial institutions to reconfigure their systems to ensure complete and timely submission of remittance files to the Nigeria Interbank Settlement Systems Plc as follows: “Commercial, Merchant, Non-Interest, and Payment Service Banks – Within four weeks of the issuance of the Circular.
“All other Financial Institutions (Microfinance Banks, Primary Mortgage Banks, Development Financial Institutions) – Within eight weeks of the issuance of the Circular,” the circular noted.
The CBN has emphasised strict adherence to this mandate, warning that any financial institution that fails to comply with the provisions will face severe penalties. As outlined in the Act, non-compliant entities are subject to a minimum fine of two per cent of their annual turnover upon conviction.
The circular provides a list of transactions currently deemed eligible for exemption, to avoid multiple applications of the levy.
These are loan disbursements and repayments, salary payments, intra-account transfers within the same bank or between different banks for the same customer, and intra-bank transfers between customers of the same bank.
Exemptions include other financial institutions’ transfers to their correspondent banks, interbank placements, banks’ transfers to CBN and vice versa, inter-branch transfers within a bank, cheque clearing and settlements, letters of credit, and banks’ recapitalisation-related funding.
Others are bulk funds movement from collection accounts, savings, and deposits including transactions involving long-term investments such as treasury bills, bonds, and commercial papers, and government social welfare programmes transactions.
These may include pension payments, non-profit and charitable transactions including donations to registered non-profit organisations or charities, educational institutions transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions, and transactions involving the bank’s internal accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
The introduction of the new levy sparked varied reactions among stakeholders as it is expected to raise the cost of conducting business in Nigeria and could potentially hinder the growth of digital transaction adoption.
‘Stop levy now’
Members of the House of Representatives on Thursday asked the Central Bank of Nigeria to withdraw the circular directing financial institutions to commence implementation of the 0.5 per cent cybersecurity levy, describing it as “ambiguous”.
The development was in response to a motion on the urgent need to halt and modify the implementation of the cybersecurity levy, moved by Kingsley Chinda.
According to the House, the CBN is to withdraw the initial circular, and “issue a more understandable one”.
Chinda had drawn the attention of the House to multiple interpretations of the CBN directive against the specifications in the Cybersecurity Act.
The House then expressed worry, that the Act would be implemented in error if immediate steps were not taken, to address the concerns around the interpretation of the CBN directive and the Cybersecurity Act.
However, sources with knowledge of Tinubu’s position on the issue told Sunday PUNCH that the President was aware of the economic burden on Nigerians since his hardline economic reforms began last May, adding that he did not want to risk adding to the burden with more levies.
A senior presidency official who preferred not to be named told our correspondent, “The President is sensitive to what Nigerians feel. And he will not want to proceed with implementing a policy that adds to the burden of the people.
“So, he has asked the CBN to hold off on that policy and ordered a review. I would have said he ordered the CBN, but that is not appropriate because the CBN is autonomous. But he has asked the CBN to hold off on it and review things again.”
Another presidency official who preferred to remain anonymous as he was not authorised to speak on the issue said these discrepancies prompted the President to order a review.
“If you look at it, the law predates the Tinubu administration. It was enacted in 2015 and signed by Goodluck Jonathan. It is only being implemented now.
“You know he (Tinubu) was not around when that directive was being circulated. And he does not want to present his government as being insensitive. As it is now, the CBN has held off the instruction to banks to start charging people. So, the President is sensitive. His goal is not to just tax Nigerians like that. That is not his intention. So, he has ordered a review of that law.” (PUNCH)
