The Federal government recently introduced yet another policy, adding to the numerous ones implemented over the past year. It’s evident that Nigerians have been bombarded with a slew of announcements, particularly under the President Bola Tinubu administration.
The recent introduction of the cybersecurity levy by the Federal Government is based on the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act of 2024, specifically under Section 44 (2)(a) of the Act. Essentially, bank customers will now be required to pay 0.5 percent of the amount they transfer from their accounts.
Thereafter, The Central Bank of Nigeria instructed banks in the country to commence charging a cybersecurity levy on transactions. According to a circular from the apex bank, the implementation of this levy will commence in two weeks.
The circular cited the enactment of the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act of 2024, specifically under Section 44 (2)(a) of the Act. It mandates a levy of 0.5 percent (0.005), equivalent to half a percent of the value of all electronic transactions by businesses specified in the Second Schedule of the Act.
This levy is to be remitted to the National Cybersecurity Fund, which will be administered by the Office of the National Security Adviser.
In simpler terms, if a customer transfers 10,000 Naira from their account, they’ll have to pay 50 Naira as a cybersecurity charge. However, there are exceptions for certain transactions, including salary payments, totaling 16 exemptions.
Key Aspects Of The Levy
1. Mandated Levy: A new levy of 0.5%, equivalent to half a percent, is imposed on electronic transactions as per the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.
2. Payer and Deduction: The levy is paid by the initiator of the electronic transaction and deducted by the financial institution. The deducted amount will be shown in the customer’s account with the label: “Cybersecurity Levy.”
3. Remittance to NCF: Financial institutions will deduct the levy and transfer it to the National Cybersecurity Fund, which is managed by the Office of the National Security Adviser.
4. Implementation Timeline: Deductions will begin within two weeks from the date of the circular, May 6. Financial institutions must remit collected levies in bulk to the NCF account held at the CBN monthly by the fifth business day of the following month.
5. System Updates and Penalties: Financial institutions must update their systems to facilitate levy deduction and remittance. Failure to remit the levy may lead to penalties, including fines of up to 2% of the institution’s annual turnover.
Questions Arising
Does this levy represent the entirety of the charges or just a portion of what banks will deduct per transaction?
Why is this levy deemed crucial at this juncture?
Lastly, what is the ultimate objective of this levy, particularly regarding the National Cybersecurity Fund where the charges will be remitted?
16 Transaction Areas Exempted
Here are the 16 banking transactions exempted from the CBN’s new cybersecurity levy:
● 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
●Other Financial Institutions instructions to their correspondent banks
●Interbank placements
●Banks’ transfers to CBN and vice-versa
●Inter-branch transfers within a bank
●Cheque clearing and settlements
●Letters of Credits
●Banks’ recapitalization-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 organizations or charities
●Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions
Transactions involving bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
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