CEM REPORT, FINANCE| The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) has thrown a wrench into the plans of the Central Bank of Nigeria (CBN) regarding the recently introduced cybersecurity levy. NACCIMA is calling for a cap of N500 on the levy, citing concerns about its impact on the private sector.
NACCIMA raised several key points in its statement, highlighted the significant volume of electronic transactions processed in Nigeria, exceeding N600 trillion in 2023 according to the Nigeria Inter-Bank Settlement System (NIBSS). While acknowledging the need for cybersecurity measures, NACCIMA questioned the effectiveness of a blanket 0.5% levy on all electronic transactions.
“With such a massive volume of transactions,” the statement reads, “the projected revenue from this levy is substantial. However, a crucial question remains unanswered: what percentage of these online transactions are actually fraudulent? How will this levy directly address these fraudulent activities? The current levy rate significantly outweighs the reported incidence of cybercrime, creating a clear mismatch that demands rectification.”
NACCIMA Recommends Alternative Solutions
NACCIMA proposed a maximum levy of N500 per user, suggesting this would be a more sustainable approach. The association also emphasized the existence of alternative methods to bolster cybersecurity. These methods, according to NACCIMA, could involve leveraging expertise within the private sector.
“There are demonstrably effective solutions to mitigate online cybersecurity risks,” the statement continues. “These solutions can be implemented by drawing upon the experience and capabilities of qualified professionals within the private sector.”
NACCIMA further expressed concerns regarding transparency and the levy’s potential violation of constitutional principles. The association believes the private sector should be involved in managing the funds generated by the levy to ensure accountability. Additionally, NACCIMA raised questions about the levy’s compatibility with the Nigerian constitution, suggesting it might contravene provisions related to federal revenue collection.
Clash with Tax Reform Efforts
NACCIMA’s statement also highlights a potential conflict with the ongoing efforts of the Presidential Committee on Fiscal Policy and Tax Reforms. This committee, nearing the completion of its final report, aims to streamline the complex tax burden shouldered by Nigerian businesses. The cybersecurity levy, according to NACCIMA, runs counter to these reform efforts.
Impact on Business Competitiveness
Finally, the association expressed anxieties about the levy’s detrimental effect on Nigeria’s competitiveness in the global business landscape. NACCIMA fears the levy could hinder ease of doing business in the country, potentially leading to capital flight and a talent drain within the tech sector.
“This levy,” the statement warns, “directly contradicts the government’s commitment to improving the ease of doing business in Nigeria. It has the potential to discourage investment and trigger capital flight, particularly within the tech sector. Furthermore, skilled professionals may be driven to seek opportunities in countries with more favorable business environments.”
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If You Ask Me
The cybersecurity levy has sparked a lively debate in Nigeria. While the importance of robust cybersecurity measures is undeniable, concerns regarding the levy’s potential to stifle business growth and its alignment with existing tax reform efforts cannot be ignored. NACCIMA’s call for a capped levy and exploration of alternative solutions presents a compelling counterpoint to the CBN’s approach.
In the coming weeks, it will be interesting to see how the government and the CBN respond to NACCIMA’s concerns. Finding a solution that balances the need for cybersecurity with fostering a thriving business environment will be crucial for Nigeria’s continued economic development.
