Calling for action from the Nigerian government, the Centre for the Promotion of Private Enterprise (CPPE) has urged the suspension of the 0.5% cybersecurity levy imposed on all electronic transactions within the country’s banking sector.
In a statement condemning the levy, CPPE’s Director, Dr. Muda Yusuf, highlighted the need for reconsideration.
Mandated by the Central Bank of Nigeria on Monday, all banks and financial sector operators are required to collect and remit a 0.5% cybersecurity levy to the National Security Adviser.
Expressing concern over the timing and economic implications, CPPE emphasized the challenges faced by Nigerians, deeming the levy as untimely.
The think tank pointed out the difficulty in justifying the government’s revenue expectations from the cybersecurity levy aimed at combating cybercrime.
Addressing the recent developments, the statement read: “The imposition of a 0.5% levy on electronic transactions by the Central Bank raises significant concerns.”
“The timing is unfortunate, with businesses and citizens still grappling with the lingering effects of recent reforms, inflationary pressures, high living costs, and elevated operating expenses for businesses amidst weakened consumer buying power. Introducing an additional levy at this juncture is inopportune, especially considering its magnitude.”
“There is an expectation from citizens and corporate entities for a rationalized and streamlined tax system to foster a conducive business environment, as repeatedly advocated by the Presidential Committee on Fiscal and Tax Reforms. This move contradicts previous assurances made by the Committee.”
“The multitude of taxes and levies imposed by various levels of government, coupled with regulatory agencies adopting revenue-generation roles, creates immense pressure on economic investors, hindering their ability to stimulate growth, employment, and inflation.”
“What makes the cybercrime levy particularly troubling is its imposition on electronic transactions rather than profits, disregarding the financial health of businesses. This blanket approach also impacts loss-making entities and economically vulnerable groups, raising equity concerns.”
“The issue of proportionality is paramount, considering the projected revenue mobilization against the levy’s intended purpose. For instance, based on NIBSS data showing N600 trillion in electronic payments in 2023, a 0.5% levy would yield N3 trillion. Similar calculations demonstrate staggering amounts that challenge the rationale for such extensive spending on combating cybercrime.”
“Given the proportions, with defense and security budget appropriations for 2024 at N3.2 trillion and infrastructure at N1.32 trillion, there is a need for a review to align expenditures and priorities with actual releases.”
“The plea is for a pause in the legislation’s implementation to conduct a comprehensive review. CPPE advocates for inclusive stakeholder discussions to refine the legislation, as the current framework risks exacerbating hardships for citizens and investors.”