House of Reps Directs CBN to Halt Implementation of 0.5% Levy on e-Transactions

10th May 2024

The House of Representatives, yesterday, took sides with the growing number of Nigerians calling for the cancellation of the Central Bank of Nigeria’s controversial 0.5 per cent levy on electronic transactions.

Following the adoption of a motion of urgent public importance moved by Minority Leader, Kingsley Chinda and 359 other lawmakers, the House directed the CBN to suspend the implementation of the policy.

It directed the apex bank to withdraw its ambiguous circular on the policy and issue an unequivocal circular, in line with the letters and spirit of the Cybercrimes (Amendment) Act, 2024.

It further mandated its Committees on Banking Regulations, and Banking and other Ancillary Institutions to interface with the CBN on the issue.

While moving the motion, Chinda recalled how the CBN, via a May 6, 2024 circular to all commercial, merchant, non-interest and payment service banks, other financial institutions, mobile money operators and payment service providers informed Nigerians of a proposed 0.5 per cent levy on electronic transactions, in line with Section 44(2)(a) of the Cybercrimes (Amendment) Act, 2024.

He contended that the wording of the circular allowed for multiple interpretations.

This includes, that the levy should be paid by bank customers contrary to the spirit and letter of Section 44(2)(a) and the Second Schedule to the Cybercrimes Act, which indicates the businesses that should accordingly be levied.

Chinda argued that unless immediate steps were taken to halt the CBN policy, the Cybercrime Act would be implemented in error, at a time Nigerians were experiencing the aftermath of multiple removals of subsidies and rising inflation.

The lawmaker’s views were reinforced by prominent human rights lawyer, Femi Falana, who said: “The CBN should be directed to withdraw its circular of May 6, 2024, forthwith, as it has wrongly interpreted the provisions of the Cybercrime (Prohibition, Prevention, etc) Amendment Act 2024. The CBN should also apologise to Nigerians for the misleading interpretation of the clear and unambiguous provisions of the Cybercrime (Prohibition, Prevention, etc) Amendment Act 2024.”

Reacting to the policy in a write-up, yesterday, the Senior Advocate of Nigeria noted: “Pursuant to the Cybercrime (Prohibition, Prevention etc) Act 2015 amended in 2024, a levy amounting to 0.5 per cent of the value of all electronic transactions shall be collected and remitted to the National Cybersecurity Fund overseen by the Office of the National Security Adviser.

“Even though the said levy of 0.5 per cent is payable by the businesses listed in the second schedule to the principal Act, the CBN has wrongly directed all financial institutions to apply the levy at the point of electronic transfer origination, and that the amount is to be explicitly noted in customer accounts under the description ‘Cybersecurity Levy’ and remitted by the financial institution. The circular issued by the CBN has given the very erroneous impression that the levy is payable by individual customers.”

The rights lawyer added: “The erroneous interpretation might have arisen from the substitution of “businesses” for “business” in the amendment. For the avoidance of doubt, by virtue of Section 42(a) of the Cybercrime Act 2025 as amended, the businesses that are required to pay the levy are GSM Service providers and all telecommunications companies; Internet service providers; banks and other financial institutions; insurance companies; and the Nigerian Stock Exchange.”

But Chairman of the Senate Committee on National Security and Intelligence, Shehu Umar Buba, allayed the concerns of Nigerians over the policy, saying it was not punitive, adding that it had numerous exemptions to protect and relieve ordinary citizens, especially the poor.

According to him, the exemptions included salary payments, intra-account transfers, loan disbursements and repayments, and other financial transactions.

The lawmaker said amendments to the Cybercrimes Act were a collaborative effort with the National Assembly’s ICT and Cyber Security Committee.

He said the committee also held a transparent public hearing process, receiving contributions from various stakeholders.

“Both chambers of the National Assembly unanimously passed it before President Bola Ahmed Tinubu signed it into law,” he affirmed, adding that provisions for the cybersecurity levy had been in place since 2015 but were delayed due to unclear interpretations and applications.

“The Cybercrimes Act of 2015 had 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 inadequate funding and disruptive effects of cyber threats on national security and critical economic infrastructures,” the lawmaker said.

Senator Umar underscored the importance of the cybersecurity levy, saying its prudent utilisation will bolster the nation’s capacity to evaluate, execute, upgrade, and fortify the security of critical economic infrastructure, thereby safeguarding the nation’s cyberspace.

The chairman commended the Office of the National Security Adviser and the CBN for initiating operationalisation of the levy and stressed that its benefits far outweigh its drawbacks.

He also expressed appreciation to the leaders and representatives of ministries, departments and agencies at federal and state levels, as well as all stakeholders who contributed to the initiative.

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.

Unconvinced by the likes of Umar’s arguments, the Northern Elders Forum (NEF), yesterday, expressed its opposition to the levy, describing it as arbitrary, illegal, and out of touch with the realities faced by Nigerians.

In a statement released by Director of Publicity and Advocacy, Abdul-Azeez Suleiman, the forum expressed dissatisfaction with the policy, citing escalating costs associated with banking transactions as a result of multiple charges .

It called on the government to reconsider the policy and explore alternative means to ease the financial strain on individuals, while still promoting the use of electronic payments.

It noted that the introduction of the levy, in addition to existing fees such as stamp duty, transfer fees, value-added tax, and SMS charges, has placed an unbearable financial burden on individuals engaging in electronic transactions.

NEF noted that in a country already grappling with economic challenges and hyperinflation, the additional financial burden imposed by the levy is unjust and unfair. It therefore urged the government and relevant stakeholders to find a sustainable solution that strikes a fair balance between enhancing cybersecurity and alleviating the financial strain on the populace.

“It is imperative that the administration takes into account the concerns raised by a vast majority of Nigerians and prioritises policies that protect the interests of the people while also fostering economic growth and development,” NEF said.

“It is crucial that the government listens to the concerns of organisations like the NEF and works towards implementing policies that benefit all Nigerians, rather than burdening them with additional costs and hardships,” the group added.

Meanwhile, the International Monetary Fund (IMF) has called on the Nigerian government to scale up its cash transfers to help poor Nigerians manage the current cost of living crisis.

Axel Schimmelpfennig, IMF’s Assistant Director, African Department and Mission Chief to Nigeria, made this call at the briefing on Nigeria’s Article IV Consultation, yesterday.

He said: “On fiscal policy, we very much recognised the pain that many Nigerians are facing at the moment; hence, our emphasis on scaling up the cash transfer programme. It can potentially reach up to 50 million recipients and potentially benefit some 65 million Nigerians in need. ”

The IMF also acknowledged the pain Nigerians are going through due to rising inflation and ongoing reforms. Schimmelpfennig said: “There is a lot of pain for Nigerians right now, and our policy advice aims to provide support to those in need, while reinvigorating growth and job creation.”

He noted: “We encourage that the cash transfer system and other support systems are implemented. We emphasise that it is very important to scale those up to help Nigerians manage the ongoing cost of living crisis.”

Schimmelpfennig further said that the fund supports the Central Bank’s commitment to bringing down inflation, which hurts the poor disproportionally.

In its latest staff report for Nigeria, the IMF noted that fiscal policy in Nigeria is limited due to low government revenue, which is about 9.4 per cent of the country’s Gross Domestic Product (GDP).