The Nigerian Economic Summit Group (NESG) has asked the Central Bank of Nigeria (CBN) to reconsider the cybersecurity levy recently imposed on all electronic transactions.
The group in a position on the recently introduced 0.5 per cent levy (equivalent of 0.005) stated that the levy could slow down the pace of achieving financial inclusion.
According to the economic think-tank group, the new levy would also add to the burden on Nigerians as “all households experience adverse factors in employment and, hence, income diversity.”
“Introducing a new levy may be slightly detrimental to household welfare and increase the disparity between the rural and the urban divide. Increased capital spending and household transfer from the government are effective policy strategies to cushion such adverse effects on economic actors.
“Economically, levies could strain the aggregate demand and limit growth. Since increases in government revenue do not compensate for decreases in household income, especially in the face of increased product prices and income falls, the Gross Domestic Product (GDP) could decline during the immediate policy implementation period,” the NESG said.
The group stated that while the policy might be intended to fight cybercrimes and raise revenue for the government, higher revenue should be achieved without imposing severe burden on poor and vulnerable Nigerians.
It added that the policy could also create loopholes for cybercriminals to devise alternative routes to perpetrate the heinous acts.
The NESG posited an integrated approach in the fight against cybercrimes involving the collaborative efforts of financial institutions, security agents, the EFCC and other key stakeholders.
The statement added, “Hence, introducing a cybersecurity levy penalises the populace for the failure of the system to uproot the sources of cybercrimes.
“The cybersecurity levy needs to be reconsidered, considering the CBN’s concern about the high rate of financial exclusion and increased currency in circulation. At the NESG, we are concerned that implementing this policy at this critical time will decelerate the pace of achieving the 95 percent financial inclusion target of 2025. The mere news of charges on bank transactions will demotivate many Nigerians from accessing financial services, potentially propelling a surge in the demand for cash.
“The cybersecurity levy adds to the list of levies and taxes collected by financial institutions on behalf of the government, including stamp duty, electronic transfer levy, and VAT. This embodiment of taxes increases the transaction costs of using a bank and could disrupt the financial intermediation role of banks. Furthermore, given the current strains that citizen face, perceived unfairness, lack of transparency and accountability would heighten distrust in the financial system. The NESG, therefore, suggests the need to reduce banks’ transaction costs, signal clarity to improve trust in the financial system and to entice people to become financially included. For instance, the high transfer costs charged by the official channel (banks) have prompted many Nigerian migrants to route remittances via informal channels.
“In conclusion, while acknowledging the imperative of enhancing cybersecurity resilience, the NESG urges prudent consideration of the cybersecurity levy’s timing and implementation modalities.
“By fostering dialogue, targeted application, and comprehensive cybersecurity strategies, Nigeria can navigate the evolving cyber threat landscape while safeguarding economic stability and promoting inclusive growth.”
