Cybersecurity Levy: Be Cautious Of 'Strenuous Policies' That Affect Purchasing Power, Welfare Of Nigerians - NESG Tells Tinubu

2024-05-09 20:02:47

The Whistler Nigeria

The Nigeria Economic Summit Group (NESG), an association of the private sector, has told the government of President Bola Tinubu to be cautious of "numerous strenuous policies" that stiffen the purchasing power and welfare of Nigerians.

NESG was reacting to the recent directive by the Central Bank of Nigeria (CBN) mandating banks and other financial institutions to implement a 0.5 per cent cybersecurity levy on electronic transfers.

By the directive, bank customers in the country will begin the payment of the levy on all electronic transfers in the next two weeks.

What this means is that for a transfer of N50,000, N250 will be deducted from the account of a bank customer as cybersecurity levy.

The association, which stated that Nigerians and businesses are still struggling with the impacts of the fuel subsidy removal, exchange rate reform, and the removal of electricity subsidies, noted that the cybersecurity levy is mistimed.

NESG posited that if the policy is not halted, it could force many Nigerians to boycott electronic funds transfers.

"Amidst the cost of living crisis exacerbated by rising inflation, the cybersecurity levy is mistimed, considering CBN's concern about the high rate of financial exclusion and increased currency in circulation. The NESG posits that the levy should be targeted at high-net-worth individuals and a specific amount transferred electronically to allay the fears of the populace, who are still battling skyrocketing food and non-food prices. However, if this policy remains, several Nigerians will boycott electronic funds transfers, which does not even bode well for the government due to revenue loss from electronic transfer levy.

"The NESG, however, feels this is a critical time to implement such a policy. The impacts of the fuel subsidy removal, exchange rate reform, and, most recently, the removal of electricity subsidies still permeate the operating costs of businesses and citizens' welfare. The government must be cautious of the numerous strenuous policies that stiffen the purchasing power and welfare of corporations and individuals. Therefore, the government needs to properly sequence reforms for efficient socioeconomic outcomes, especially those that strain the people," the association said on Thursday.

NESG suggested that the policy should be postponed until at least the Presidential Committee on Fiscal Policy and Tax Reforms finalises on its mandate to avoid conflict of interests and policy misalignment.

It said: "This policy is coming when the Presidential Committee on Fiscal Policy and Tax Reforms is yet to finalise its mandate. One of the terms of reference of the Committee is that the number of taxes should be streamlined. Introducing a cybersecurity levy could thwart this essential mandate. To avoid conflict of interests and ensure no policy misalignment, the NESG strongly believes that the levy should be deferred and proper consultation until the Fiscal Policy Committee deems it necessary to implement it."

NESG maintained that considering the CBN's concern about the high rate of financial exclusion and increased currency in circulation, the cybersecurity levy needs to be reconsidered as it could discourage people from accessing financial services.

According to NESG, the cybersecurity levy adds to the list of levies and taxes being collected by financial institutions on behalf of the government, which include stamp duty, electronic transfer levy, and value added tax (VAT).

"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 association said.

"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."

The association noted that although the policy intends to fight cybercrimes and raise revenue for the government, revenue can be raised without overburdening vulnerable Nigerians.

"It is noteworthy that the policy is intended to fight cybercrimes and raise revenue for the government. However, higher revenue should be achieved without imposing severe burden on poor and vulnerable Nigerians. Meanwhile, the policy could also create loopholes for cybercriminals to devise alternative routes to perpetrate the heinous acts. To narrow the alternative ways of committing cybercrimes, the NESG posits an integrated approach in the fight against cybercrimes involving the collaborative efforts of financial institutions, security agents, the EFCC and other key stakeholders. Hence, introducing a cybersecurity levy penalises the populace for the failure of the system to uproot the sources of cybercrimes," NESG added.

2024-05-09 News