The Nigerian Economic Summit Group (NESG) has faulted the timing of the introduction of the 0.5% cybersecurity levy on electronic transactions recently introduced by the Central Bank of Nigeria (CBN).
In a statement on Thursday, NESG asked the Federal Government to reconsider the levy as Nigerians are currently groaning under multiple taxation and inflationary pressures.
In a circular dated May 6, 2024 to all deposit money banks and mobile money operators and payment service providers, the apex bank directed the deduction of the levy to be remitted to the National Cybersecurity Fund (NCF), administered by the Office of the National Security Adviser (ONSA).
The development has sparked wild outrage with labour unions threatening actions.
The Nigerian Economic Summit Group said “amidst the cost of living crisis exacerbated by rising inflation, the cybersecurity levy is mistimed”, considering the high rate of financial exclusion and increased currency in circulation.
“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 also raised concerns 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.”