The Central Bank of Nigeria (CBN) has reversed its decision to implement a contentious 0.5% cybersecurity levy on electronic transfers, just three days before it was scheduled to come into effect.
“Please be advised that the above referenced circular [the circular that implemented the levy] is hereby withdrawn,” read the circular signed by Chibuzo Efobi, the Director of the Central Bank Payment System management team, and Haruna Mustafa, the Director of Financial Policy and Regulation.
In 2024, amendments to the Cybersecurity Act expanded the levy’s coverage to include fintechs, payment service providers, and other financial institutions. Additionally, it introduced a significant increase of 900%, raising the levy from 0.005%.
In a circular dated May 6 2024, addressed to all deposit money banks, mobile money operators, and payment service providers, CBN directed the deduction of the levy to be remitted to the National Cybersecurity Fund (NCF), administered by the Office of the National Security Adviser (ONSA).
According to local reports, the cybersecurity levy was seen as ‘regressive’ due to its substantial increase in the cost of electronic transactions, particularly against the backdrop of Nigeria’s highest inflation rate in thirty years and a severe cost of living crisis.
According to a recent Bloomberg analysis, the Nigerian currency has emerged as the worst-performing currency.
In response to mounting pressure from labour unions, the federal government suspended the levy on May 14 2024 and announced that it would undergo review.
If the levy was imposed, it would be in addition to the other charges already being applied to electronic transactions for Nigerians. These include the stamp duty charge, SMS charge, and the fee from the national payment switch.
Consequently:
- A ₦10,000 ($6.57) electronic transaction would have come to ₦130.875 ($0.086) in fees
- An electronic transfer of ₦1,000 ($0.66) would attract a ₦5 ($0.033) fee, while
- A ₦100,000 ($65.70) transfer would attract a ₦500 ($0.33) fee
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