Cybersecurity Levy Targeted at Financial Institutions, Telecoms, Not Individuals, Senator Buba clarifies
Senator Shehu Umar Buba, the Chairman of the Senate Committee on National Security and Intelligence, has clarified that the recently imposed cybersecurity levy announced by the Central Bank of Nigeria (CBN) is not targeted at individuals or ordinary bank customers. The Senator who sponsored the amendment bill told Economic Confidential that the levy is aimed explicitly at financial institutions and telecom companies, the most vulnerable sectors to financial crimes and cyber fraud, to enhance cybersecurity measures and national security in the country. He noted that the relevant section of the Cybercrime Act is very clear about the businesses that are required to pay the levy, not the citizens. “The Act is very explicit about who is responsible for the payment, not Nigerian citizens or individuals. The relevant Section of the Cybercrime Act 2015 listed the businesses required to pay the levy: telecommunications companies, Internet Service Providers, Banks, Insurance Companies, the Nigerian Stock Exchange, and other Financial Institutions. “The organisations in the sectors have been listed in previous circulars by the Central Bank of Nigeria, especially in 2018. The new circular by the CBN further provided many exemptions.” Senator Buba also clearly explained the amount payable as a cybersecurity levy. “It is either 0.005 or 0.5% arithmetically. The figure in the principal act was 0.005 as a fraction, which was converted to the percentage that became 0.5% in the amendment. Therefore, the statistics in fractions and percentages are the same. The legislator highlighted that the passage of the amendment bill was a collaborative effort of various stakeholders. “The passage of the amendment bill was a collaborative effort involving the government, industry players, civil society, and academia in the contributions and active participation in the public hearing before and endorsement by the two chambers of the National Assembly. After rigorous processes, President Bola Ahmed Tinubu signed the bill into law in February 2024.” The Senator acknowledged the concerns of Nigerians, civil groups, and other stakeholders about the current economic situation but was reassured that implementing the cybersecurity law was not meant to punish citizens. He emphasised that the levy is a collective effort to protect national security and the economy, with the financial burden primarily falling on the specified businesses. The Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024, which President Tinubu signed into law in February, imposes a 0.5 percent (0.005) levy equivalent to half the value of all electronic transactions by the businesses specified in the Second Schedule of the Act. The levy will be remitted to the National Cybersecurity Fund, which the Office of the National Security Adviser (ONSA) shall administer. The circular announcing the levy also exempted some transactions from the cybercrime levy, including loan disbursements and repayments, salary payments, intra-account transfers, and other financial transactions.
Cybersecurity Levy Not Punitive – Sen Buba,
The Chairman of the Senate Committee on National Security and Intelligence, Senator Shehu Umar Buba, has addressed the controversy surrounding the proposed implementation of the Cybersecurity levy by the Central Bank of Nigeria (CBN). The levy is provided for in the Cybercrimes (Prohibition, Prevention, etc) (Amendment) Act, 2024. He clarified that the levy is not punitive as it has numerous exemptions to protect and relieve ordinary citizens, particularly the poor. According to him, the exemptions include salary payments, intra-account transfers, loan disbursements and repayments, and other financial transactions. Senator Buba said the amendments to the Cybercrimes Act were a collaborative effort with the National Assembly’s ICT and Cyber Security Committee. The committee also underwent a transparent public hearing process, receiving contributions from various stakeholders. Both Houses of the National Assembly unanimously passed it before President Bola Ahmed Tinubu signed it into law. Senator Umar emphasised that the provisions for the cybersecurity levy have been in place since 2015 but were delayed due to unclear interpretations and applications. “The Cybercrimes Act of 2015 has provisions for imposing a cybersecurity levy since its enactment, but the vagueness of Section 44 led to different interpretations until the 2024 amendments. The levy is 0.5%, equivalent to half a per cent of the value of all electronic transactions by businesses specified in the Second Schedule to the Act. “The amendments addressed crucial gaps in the Act and empowered the nation to implement the National Cybersecurity Programme effectively. They also seek to realign and empower the country to combat the inadequate funding and disruptive effects of cyber threats on national security and critical economic infrastructures,” he said. Senator Umar underscored the criticality of the cybersecurity levy’s implementation, stating that its prudent utilisation will bolster the nation’s capacity to evaluate, execute, upgrade, and fortify the security of national critical economic infrastructure, thereby safeguarding the nation’s cyberspace. The Committee commended the Office of the National Security Adviser and the Central Bank of Nigeria (CBN) for initiating the operationalising the cybersecurity levy, highlighting its benefits far outweigh its drawbacks. He expressed appreciation to the leaders and representatives of MDAs at the federal and state levels, as well as to all stakeholders who contributed to this effort’s success. While maintaining that the Committee’s mandate is to create laws that align with the aspirations of Nigerians, he appealed for public support, assuring that the policy will yield maximum benefits for citizens in the shortest possible time. 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 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 the Office of the National Security Adviser shall administer. Though the announcement created controversy, the circular exempted some transactions from cybercrime levy. The exemptions included loan disbursements and repayments, salary payments, intra-account transfers within the same bank or between different banks for the same customer, intra-bank transfers between customers of the same bank, and Other Financial Institutions (OFIs) instructions to their correspondent banks. The exemption also applies to interbank placements, banks’ transfers to CBN and vice versa, inter-branch transfers within a bank, cheque clearing and settlements, and Letters of Credit (LCs). Others include banks’ recapitalisation-related funding only bulk funds movement from collection accounts; savings and deposits including transactions involving long-term investments such as treasury bills, bonds; and commercial papers; government social welfare programmes transactions, e.g. pension payments; non-profit and charitable transactions including donations to registered non-profit organisations or charities; educational institutions transactions, including tuition payments and other transaction involving schools, universities, or other academic institutions.
More Woes For Nigerians As Presidency Moves To Increase VAT Rate
The current financial woes of the Nigerian is set to get worse as the Presidential Committee on Fiscal Policy and Tax Reforms has put forth a proposal to increase the current Value Added Tax (VAT) rate. Mr. Taiwo Oyedele the chairman of the committee, has highlighted the need for this change during a policy exposure session. Currently set at 7.5 per cent, the proposed adjustment aims to restructure the revenue-sharing formula, with states and local governments set to receive a larger portion. Oyedele stressed the importance of ensuring transparency and neutrality in VAT collection, emphasizing that the burden should fall on the ultimate consumer. To mitigate the impact on small businesses and the underprivileged, certain essential goods and services would remain exempt from VAT. He said, “We are proposing that the federal government’s portion should be reduced from 15 per cent to 10 per cent. States’ portion will be increased, but they would share 90 per cent with local governments. “In 1986, we had sales tax collected by states. The military came up with VAT in 1993 and stopped sales tax, so they said it would collect VAT and return 15 per cent as cost of collection, and that is the 15 per cent charged today came about. But we think it is too much. So we must make it transparent and neutral, and this is what over 100 countries where they have VAT are doing. “Nigeria’s economy is more than 50 percent in services and if I just stop at this, many states will be broke because VAT collection will go down by more than 50 percent and it won’t even fly. “So we, therefore, need to adjust the VAT rate upward. We would ensure that it doesn’t affect businesses. The only thing is to look at basic consumption from food, education, medical services, and accommodation will carry zero per cent VAT. So, for the poor and small businesses, no VAT.”
TUC Threaten Nationwide Strike Over Cybersecurity Levy
The Trade Union Congress (TUC) has threatened a massive protest that will shut down the Nigerian economy should the Federal Government fail to cancel the controversial cybersecurity levy recently introduced by the Central Bank of Nigeria. The TUC in a statement signed by its President, Festus Osifo, on Wednesday, slammed the directive by the CBN to banks imposing a 0.5 per cent cybersecurity levy on almost all electronic transactions. This is after the Nigeria Labour Congress (NLC) had heavily criticised the levy which it described as another burden on Nigerians. Adding to the deluge of condemnations that have greeted the introduction of the levy which the CBN said will take effect in two weeks from May 6, the TUC said it is illogical that this is coming at a time that Nigerians are grappling with the high cost of living that is imposed by the devaluation of Naira, hyper hike in the cost of Petrol, supersonic increment in the cost of electricity tariff, etc. The union said it is disturbed that since the inception of the President Bola Tinubu-led administration, government policies have brought pain, anguish and sorrow to Nigerians. It lamented that account holders in Nigeria are already dealing with multiple taxation from both the Federal Government and the banks. The TUC berated the National Assembly for “colluding” with “elements in the executive” to “exploit” the citizens they ought to be protecting. Saying that all Nigerians are interested in right now is the urgent conclusion of discussions around the minimum wage and not a “vexatious policy”, the TUC urged the Federal Government to immediately direct the CBN to withdraw the circular to banks and cancel the levy forthwith. It said that it will be left with no option but to mobilize all its members, stakeholders and indeed the entire masses “to embark on the immediate protest that would culminate into the total shutdown of the Nigerian economy as this is one exploitation too many.”
Since when did the office of the NSA become a revenue collecting centre?” – Peter Obi knocks Tinubu over Cybersecurity Levy”
Former Anambra State governor Mr. Peter Obi has challenged the Tinubu-led government over the introduction of cyber security levy. He wrote: “The introduction of yet another tax, in the form of Cybersecurity Levy, on Nigerians who are already suffering severe economic distress is further proof that the government is more interested in milking a dying economy instead of nurturing it to recovery and growth. “This does not only amount to multiple taxation on banking transactions, which are already subject to various other taxes including stamp duties but negates the Government’s avowed commitment to reduce the number of taxes and streamline the tax system. “The imposition of a Cybersecurity Levy on bank transactions is particularly sad, given that the tax is on the trading capital of businesses and not on their profit, hence it will further erode whatever is left of their remaining capital, after the impact of the Naira devaluation and high inflation rate. “It is inconceivable to expect the suffering citizens of Nigeria to separately fund all activities of the government. Policies such as this not only impoverish the citizens but also make the country’s economic environment less competitive. “At a time when the government should be reducing taxes to curb inflation, the government is instead introducing new taxes. And when did the office of the NSA become a revenue collecting centre? “And why should that purely national security office receive returns on a specific tax as stated in the new cybersecurity law? -PO”
CBN Suspends Charges On Cash Deposits
The Central Bank of Nigeria has decided to stop charging fees on cash deposits until September 30, 2024. The central bank shared this information in a memo dated May 6, 2024, signed by Adetona Adedeji, who is the director of banking supervision at CBN. CBN said,“Please refer to our letter dated December 11, 2023, referenced BSD/DIR/PUB/LAB/016/023 on the above subject, suspending processing charges imposed on cash deposits above N500,000 for Individuals and N3,000,000 for Corporates as contained in the “Guide to Charges by Banks, Other Financial Institutions and Non-Bank Financial Institutions” issued on December 20, 2019,” “The Central Bank of Nigeria (CBN) hereby extends the suspension of the processing fees of 2% and 3% previously charged on all cash deposits above these thresholds until September 30, 2024.”
Comedian Seyi Law knocks Tinubu government over Cybersecurity Levy
Comedian Seyi Law has taken to social media to knock the Tinubu administration over the new cyber security levy. The Central Bank of Nigeria (CBN) had issued a directive to all banks and financial institutions to implement a cybersecurity levy on banking transactions. This new levy, set at 0.5% of the value of all electronic transactions, was in response to the escalating concerns over cyber threats and follows the guidelines of the recently enacted Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024. Reacting to the development, Seyi Law wrote: “I hate when government agencies don’t speak up to the understanding of the citizens and allow wrong narratives to fester before tackling it. Cybersecurity level, according to the act, is 0.005%, and different figures from 0.5% to 3% are being thrown around. “A 0.5% charge in the Nigeria of today is in itself too much punishment on Nigerians. Are we trying to discourage banking transactions again and encourage cash keeping? @cenbank should revisit this abeg. “Stamp duty is something, and now this. It is unacceptable. @NGRPresident @officialABAT, let the poor breathe. When will the new minimum wage be announced and implemented? Some of your ministers need to look for another job. One year is here and we are counting”.
Central Bank of Nigeria Mandates Registration of All PoS Operators with CAC
In a bid to tackle fraudulent activities and bolster transparency within the financial sector, the Central Bank of Nigeria (CBN) has issued a directive requiring all point-of-sale (PoS) operators to register with the Corporate Affairs Commission (CAC) within a two-month timeframe. According to reports, PoS terminals have been implicated in a significant portion of fraud incidents, accounting for a staggering 26.37% of such cases in 2023 alone. This move by the CBN seeks to address these concerns and ensure the integrity of transactions conducted through PoS systems. With Nigeria boasting 1.8 million PoS agents as of 2022, the directive mandates that all operators must undergo registration with the CAC to continue conducting business in the country. The announcement came following a meeting between representatives from the fintech industry and Hussaini Magaji (SAN), the Registrar-General/Chief Executive Officer of the CAC, held in Abuja on Monday, May 7th. Magaji emphasized that the registration deadline of July 7th is in accordance with legal obligations and aligns with the directives of the CBN. “The Corporate Affairs Commission and Fintech companies in Nigeria, better known as PoS operators, have agreed to a two-month timeline to register their agents, merchants, and individuals with the CAC in line with legal requirements and the directives of the Central Bank of Nigeria,” stated Magaji. The collaborative effort between the CAC and fintech companies underscores the commitment to regulatory compliance and the promotion of a secure financial ecosystem in Nigeria.
More Burden on Nigerians as the Central Bank Slams Another Tax on Bank Customers
It will seem like there may be no respite soon for the toiling mass of Nigerians as they continue to be bombarded by all manners of taxes, tariffs and levies by the government and service providers with the latest being the introduction of a 0.5 per cent “cybersecurity levy” by the Central Bank of Nigeria (CBN). Earlier in the day, First Bank Nigeria Plc led others in the reintroduction of two percent processing charge on deposits above N500,000 and three per cent charge on amounts above N3,000,000 for corporate customers. The reintroduction of these charges is coming about four months after the Central Bank of Nigeria suspended such charges for cash deposits above N500,000. In a circular signed by Chibuzor Efobi, Director of Payments System Management and Haruna Mustafa, Director of Financial Policy and Regulation, the CBN said collection of the new levy shall commence in two weeks from yesterday, May 6th, 2024 and it shall be remitted to the Office of the National Security Adviser (ONSA). Even though the apex bank was silent on the use into which the ONSA will put the proceeds of the new tax to be paid by bank customers, it explained that deduction and collection of the cybersecurity levy is consequent upon the enactment of the Cybercrime (Prohibition, Prevention etc) Amendment Act of 2024. It was explained in the circular that Section 44 (2)(a) of the Act, provides for the collection of “a levy of 0.5% (0.005) equivalent to a half percent 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 (NCF), which shall be administered by the Office of the National Security Adviser (ONSA).” It was further stated that the CBN shall rely on commercial, merchant, non-interest and payment service banks, as well as mobile money operators for the collection of the levy. It also stated that any defaulting institution that fails to remit funds collected shall be liable to a fine of not less than two percent of the annual turnover of the defaulting business. “Deductions shall commence within two (2) weeks from the date of this circular for all financial institutions and the monthly remittance of the levies collected in bulk to the NCF account domiciled at the CBN by the 5th business day of every subsequent month,” the bank stated.
FG Registers New Trade Union
The Federal Government has registered a new trade union. This means that illegal price fixing and exploitation of customers in Nigerian markets may soon be a thing of the past. These are some of the roles members of the newly registered National Union of Market Trade of Nigeria are to perform as workers. At its executive inauguration, officials of both the Ministry of Labour and Employment, and, the Nigeria Labour Congress, NLC however told the new union to avoid clashes with related workers groups and government established agencies in the market. The National Union of Market Trade of Nigeria is the latest affiliate of the NLC and with this latest addition, the labour centre now has 46 affiliates.