CEM REPORT, FINANCE| The Central Bank of Nigeria (CBN) has withdrawn the National Cybersecurity Levy introduced just eleven days earlier on May 6, 2024.
The apex bank in a concise circular issued on May 17, 2024 (reference PSM/DIR/PUB/LAB/017/005), offered no explanation but simply stated:
“Further to this, please be advised that the above referenced circular is hereby withdrawn.”
The new circular, signed by Chibuzo A. Efobi, Director, Payments System Management Department, and Haruna B. Mustafa, Director, Financial Policy and Regulation Department, the CBN evades details of the rationale behind the the withdrawal.
However, the unexpected move follows controversy that erupted after the initial announcement of the levy. The proposed levy would have imposed a financial burden on a vast swathe of the financial sector, with potential ramifications for operational costs and ultimately, customer fees.
The directive would have kicked in today, May 20, 2024.
The Cybersecurity Levy
Through a circular PSM/DIR/PUB/LAB/017/004, the CBN introduced the cybersecurity levy mandating the collection and remittance of a fee (0.5%) from a broad range of institutions including banks, other financial institutions (OFIs), and even mobile money operators (MMOs) to finance cybersecurity initiatives.
The CBN positioned the National Cybersecurity Levy as a critical measure to combat the escalating threat of cyberattacks within the Nigerian financial landscape. The growing sophistication of cybercriminals necessitates robust defences, and the levy was envisioned as a means to bolster those efforts.
Despite the CBN’s stated objectives, the levy faced significant resistance from industry stakeholders. Critics argued that the levy would disproportionately burden financial institutions, potentially leading to increased costs passed on to consumers. Additionally, concerns were raised regarding the transparency of the collection process and how the levied funds would be allocated.
The House of Assembly after long debates, advised the CBN to stay the levy until the economy was strong enough however the Senate supported the levy stating its usefulness and need to strengthen the financial sector.
While some experts welcomed the policy and proffered various other options to ease it’s Implementation, others outlined other means to generate funding and improve cybersecurity infrastructure in the country. President Bola Ahmed Tinubu, on the other hand directed the CBN to hold off on the directive.
Read Also: New 0.5% Cybersecurity Levy on Electronic Transfers in Nigeria: What You Need to Know
Uncertainties Regarding Future Cybersecurity Measures
The withdrawal of the levy has introduced a new layer of uncertainty surrounding the future of cybersecurity initiatives within Nigeria’s financial sector. Stakeholders are left wondering how the CBN plans to fund critical cybersecurity efforts without the levy’s contributions.
If You Ask Me
The CBN’s withdrawal of the National Cybersecurity Levy, while positive for financial institutions and their customers, underscores the ongoing challenge of balancing cybersecurity needs with financial stability.
The CBN, along with relevant stakeholders, will need to explore alternative methods for funding and implementing effective cybersecurity measures to ensure continued protection of Nigeria’s financial sector.
Moving forward, open communication and collaboration between the CBN, financial institutions, and industry experts will be crucial in crafting a sustainable solution that safeguards the financial system without hindering its
