NESG raises concerns over CBN’s cybersecurity levy amid high cost of living

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The Nigerian Economic Summit Group (NESG) on Thursday expressed concerns regarding the recently implemented 0.5 percent cybersecurity levy on electronic transactions by the Central Bank of Nigeria (CBN) because of its timing.

In a circular issued on Monday, the Central Bank of Nigeria (CBN) informed various financial institutions, including commercial, merchant, non-interest, and payment service banks, about the introduction of the cybersecurity levy.

In a released statement, the NESG called upon the federal government to reconsider the levy, highlighting worries about the burden of multiple taxes and inflationary pressures on Nigerians.

The group emphasized that amidst escalating inflation and rising financial exclusion rates, the timing of the cybersecurity levy appears inappropriate, especially considering the ongoing cost of living crisis and increased currency 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.

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“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,” the statement read.

The NESG expressed worries that the policy was rolled out before the Presidential Committee on Fiscal Policy and Tax Reforms completed its mandate.

To prevent conflicts of interest and ensure policy coherence, NESG advised the government to delay the levy and conduct thorough consultations until the Fiscal Policy Committee deems it appropriate to implement it.

According to the group, the cybersecurity levy adds to the list of levies and taxes managed by financial institutions for the government, including stamp duty, electronic transfer levy, and VAT.

This accumulation of taxes, it said, raises the transaction expenses associated with banking and may disrupt banks’ financial intermediary functions.

Since the levy was announced, many Nigerians have expressed widespread dissatisfaction, citing a growing perception that banking transactions are becoming more expensive due to numerous charges.