In 2023, Nigeria’s electronic payment transactions reached an all-time high of N600 trillion, a 55% increase from 2022’s N387 trillion. This was reported by the Nigeria Inter-Bank Settlement System (NIBSS).

If the country imposes a 0.5% cybersecurity levy on these transactions, the home run will be N3 trillion. If you model that not all these transactions will qualify, you can have N1.5 trillion or $1.5 billion in the coffers of the government.

First, I am not in support of this levy. But if it has to go through, the government must not be tempted to spend additional $1.5 billion on cybersecurity yearly on top of whatever we’re spending now. I think $300m should be fine while the other $1.2 billion should go towards improving digital commerce. 

Fixing Nigeria Postal Service will boost the rural economy significantly.  Again, nothing justifies this policy because it is wrong. Another idea is elevating primary and secondary education in Nigeria. Till today, no one has explained why Colleges of Education should have the lowest JAMB scores, well below universities and polytechnics. Does it mean the worst performers should be teachers in Nigeria?

Meanwhile, I commend the reversal on the cash deposit tax

In a surprising move, the Central Bank of Nigeria (CBN) has announced a temporary suspension of charges on cash deposits for a three-month period, starting from May 6, 2024. This decision, revealed in a circular signed by the Director of Banking Supervision, Adetona Adedeji, aims to encourage more cash transactions and reduce the cost of banking services for customers. However, the move has sparked mixed reactions among users, with some questioning the irony of the CBN’s decision given the various charges associated with cash transactions. As the banking landscape adapts to this change, only time will tell if this measure will indeed lead to a more cost-effective banking experience for Nigerians.

Naira Is Improving – Twitter

From Twitter: “In a surprising turn of events, the Nigerian Naira has made a significant leap against the US Dollar, appreciating by a notable margin following the Federal Government’s recent measures aimed at stabilizing the currency. This development comes amidst ongoing discussions and reactions from the public, with the Naira’s value fluctuating in both official and parallel markets.

“As of Tuesday, May 7, 2024, the exchange rates stood at 1 USD to ?1384, 1 GBP to ?1734, 1 EUR to ?1491, 1 CAD to ?1009, 1 AUD to ?914, 1 GHS to ?100, 1 ZAR to ?74, and 1 XOF to ?2. This unexpected boost in the Naira’s value has sparked a wave of optimism among Nigerians, with many taking to social media to express their relief and hope for a more stable economy. As the nation continues to navigate the ever-changing landscape of global finance, only time will tell if these new measures will have a lasting impact on the Naira’s value and the overall economic stability of Nigeria.”

In 2023, Nigeria's electronic payment transactions reached an all-time high of N600 trillion, a 55% increase from 2022's N387 trillion. This was reported by the Nigeria Inter-Bank Settlement System (NIBSS). If the country imposes a 0.5% cybersecurity levy on these transactions,… pic.twitter.com/fFtIqHWXJS

— Ndubuisi Ekekwe (@ndekekwe) May 8, 2024

The Central Bank of Nigeria (CBN) has recently implemented a new directive that mandates a 0.5% cybersecurity levy on most electronic transactions. This move is part of the efforts to bolster the nation’s cybersecurity infrastructure in the wake of increasing digital threats. The levy, as stipulated by the Cybercrime (Prohibition, Prevention, etc.) (amendment) Act 2024, is to be remitted to the National Cybersecurity Fund (NCF), managed by the Office of the National Security Adviser (ONSA).

The cybersecurity levy is applied at the point of electronic transfer origination and is reflected in the customer’s account statement as “Cybersecurity Levy”. This directive exempts only 16 categories of transactions, including salaries, loans, cheques, and clearing and settlements, from the levy. The collected funds are intended to provide financial support for the nation’s cybersecurity initiatives, which are crucial in safeguarding Nigeria’s digital space.

The implementation of this levy has been met with mixed reactions. On one hand, it represents a proactive step towards addressing the growing concerns of cyber threats and the need for robust cybersecurity measures. On the other hand, it adds to the list of existing charges that customers have been paying over the years, raising concerns about the additional financial burden on consumers and businesses alike.

One of the key documents that provide a basis for the application of charges on various products and services offered by financial institutions is the “Guide to Charges by Banks, Other Financial and Non-Bank Financial Institutions” which took effect from January 1, 2020. This guide aims to enhance flexibility, transparency, and competition within the Nigerian banking industry.

The guide covers a wide range of charges, including but not limited to:
Interest on deposits.
Interest rates and lending fees.
Current account maintenance fees.
Commission on bonds, guarantees, and indemnities.
Foreign exchange commission/charges.
Electronic banking charges.

For instance, customers are charged an electronic money transfer levy for deposits of 10,000 naira or more. There are also fees for electronic funds transfers, SMS alerts, quick balance enquiry, card maintenance, and ATM withdrawals.

It’s important for customers to note that some charges are negotiable, and they have the right to discuss these with their financial institutions. The CBN requires that any new product, service, or charge not covered by the guide must be presented to it for prior written approval.

The CBN’s effort to review and reduce most charges and fees for banking services reflects its commitment to making banking more affordable for Nigerians. Customers are encouraged to stay informed about the charges they incur and to engage their banks if they have any concerns or need clarifications.

The introduction of the cybersecurity levy comes at a time when Nigeria is grappling with economic challenges, including the removal of fuel subsidies and the resultant inflation. The decision to implement this levy reflects the government’s prioritization of cybersecurity, recognizing the critical role it plays in the stability and integrity of the nation’s financial systems.

As the country navigates through these changes, it will be important to monitor the impact of the cybersecurity levy on electronic transaction habits, customer experience, and the overall effectiveness of the cybersecurity measures funded by this initiative. The balance between securing the digital economy and ensuring affordability for users will be a key factor in the success of this policy.