“Following the announcement of the new CBN 0.5% cybersecurity levy, many of my friends contacted me to understand its implications, effects, and potential criticisms. In response, I have conducted a thorough analysis of this policy, providing an overview of its scope, features, benefits, and criticisms, to help clarify the intricacies of this initiative
The introduction of the Cybersecurity Levy in Nigeria has significant implications and positive effects on the country.
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 per cent (0.005) equivalent to a half per cent 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 which shall be administered by the Office of the National Security Adviser,” the circular stated.
This is crucial initiative aimed at safeguarding Nigeria’s digital landscape. In an increasingly interconnected world, the threat of cyber attacks and data breaches has become a pressing concern. To address this challenge, the Nigerian government has introduced a 0.5% tax on electronic transactions, which will fund the country’s national cybersecurity infrastructure
Many dont know that This policy, has been in place since 2015 although just like the cultural Nigeria setting implementation and enforcement s always a challenge for us.
This proactive measure seeks to protect the nation’s financial sector, critical infrastructure, and online presence from the ever-evolving threat of cybercrime. By implementing the Cybersecurity Levy, Nigeria is taking a vital step towards ensuring the stability of its currency, preventing massive financial losses, and securing a safer digital future for its citizens.
calculation formula of the rate is the amount to be transferred multiplied by 0.5 and then divided by 100. The result is what will be charged as the cybersecurity levy on that transaction.
The levy of 0.5% on electronic transactions may seem insignificant, but its impact will be substantial.
Firstly, the Cybersecurity Levy will help prevent massive financial losses like the present case of $25 billion siphoned by Binance in just one year. This amount could be said to represent 6% of Nigeria’s GDP, and this loss definitely has severe consequences on our dear country’s economy and our citizens’ purchasing power.
Secondly, it’s expected that the levy will ensure the stability of the Naira. A stable currency is essential for economic growth and development. By securing the Naira from foreign and domestic threats, the Cybersecurity Levy will contribute to economic stability and reduce the risk of financial crises. Perhaps we might be saved from the everyday price skyrocketing or perhaps reducing such.
Thirdly, the levy will support the protection of Nigeria’s critical infrastructure, including military, industrial, financial, communications, and governmental online presence. This will safeguard the country’s security and integrity, preventing potential threats from cybercriminals and hostile nations.
Fourthly, the Cybersecurity Levy will fund the Office of the National Security Adviser’s efforts to develop a solid and dedicated team focused on cybersecurity. This team will work tirelessly to identify and mitigate potential threats, ensuring Nigeria’s online presence remains secure.
it’s important to note that not all transactions are affected by the levy. CBN highlighted 16 banking transactions that are exempted from the CBN’s new cybersecurity levy including Loan disbursements repayments and Salary payments, among others. Transactions such as Social welfare schemes, charitable donations, tuition payments, salaries, loans, and intra-bank transfers are exempt, ensuring that essential transactions are not burdened by the levy.
There are three general criticisms which represent the most significant concerns about the Cybersecurity Levy, highlighting potential issues with its impact on citizens, transparency, and efficiency this criticism covers
1. Additional Financial Burden: The 0.5% levy on electronic transactions may be seen as an additional financial burden on individuals and businesses, especially in a country with a high poverty rate like Nigeria.
2. Lack of Transparency: Critics may question how the funds collected from the levy will be utilized, managed, and allocated, potentially leading to concerns about corruption and mismanagement.
3. Inefficient Taxation: Some may argue that the levy is an inefficient way to tax citizens, as it targets a specific aspect of economic activity (electronic transactions) rather than broader income or consumption.
In conclusion, the Cybersecurity Levy is a necessary measure to protect Nigeria’s economy, currency, and online presence. While it may seem like an additional burden, the long-term benefits far outweigh the costs. By paying a small percentage of our transactions, we can ensure a stable and secure financial environment, preventing significant losses and promoting economic growth
