Nigeria’s President Bola Tinubu has asked the Central Bank of Nigeria (CBN) to suspend the implementation of the unpopular cybersecurity levy policy, according to a Punch report.
He ordered for a review of the policy that Nigerians have criticized.
Sunday Punch quoted an anonymous presidency source to have said that the President was aware of the economic burden on Nigerians since his hardline economic reforms began last May, adding that he did not want to risk adding to the burden with more levies.
“The President is sensitive to what Nigerians feel. And he will not want to proceed with implementing a policy that adds to the burden of the people.
“So, he has asked the CBN to hold off on that policy and ordered a review. I would have said he ordered the CBN, but that is not appropriate because the CBN is autonomous. But he has asked the CBN to hold off on it and review things again”, the source was credited to have said.
Another source also said the discrepancies inherent in the interpretation of the Cybersecurity Act prompted the President to order the stoppage and review of the implementation of the CBN directives.
“If you look at it, the law predates the Tinubu administration. It was enacted in 2015 and signed by Goodluck Jonathan. It is only being implemented now.
“You know he (Tinubu) was not around when that directive was being circulated. And he does not want to present his government as being insensitive. As it is now, the CBN has held off the instruction to banks to start charging people. So, the President is sensitive. His goal is not to just tax Nigerians like that. That is not his intention. So, he has ordered a review of that law”, the source said.
House of Reps vs Senate
Tinibu’s order came after the House of Representatives last Thursday asked the CBN to withdraw its circular directing all banks to commence charging a 0.5 per cent cybersecurity levy on all electronic transactions in the country.
The Nigerian Senate was less pro-people when it supported the policy without any hesitation.
CBN circular
The CBN on May 6, 2024, issued a circular mandating all banks, mobile money operators, and payment service providers to implement a new cybersecurity levy, following the provisions laid out in the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.
According to the Act, a levy amounting to 0.5 per cent of the value of all electronic transactions will be collected and remitted to the National Cybersecurity Fund, overseen by the Office of the National Security Adviser.
Financial institutions are required to apply the levy at the point of electronic transfer origination.
The deducted amount is to be explicitly noted in customer accounts under the descriptor “Cybersecurity Levy” and remitted by the financial institution. All financial institutions are required to start implementing the levy within two weeks from the issuance of the circular, which would have been May 20, 2024.
However, financial institutions are to make their remittances in bulk to the NCF account domiciled at the CBN by the fifth business day of every subsequent month.
The circular also stipulates a timeframe for financial institutions to reconfigure their systems to ensure complete and timely submission of remittance files to the Nigeria Interbank Settlement Systems Plc as follows: “Commercial, Merchant, Non-Interest, and Payment Service Banks – Within four weeks of the issuance of the Circular.
Exemptions include other financial institutions’ transfers 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 credit, and banks’ recapitalisation-related funding.
Others are bulk funds movement from collection accounts, savings, and deposits including transactions involving long-term investments such as treasury bills, bonds, and commercial papers, and government social welfare programmes transactions.
These may include pension payments, non-profit and charitable transactions including donations to registered non-profit organisations or charities, educational institutions transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions, and transactions involving the bank’s internal accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
Issue of interpretation
“The wording of the CBN Circular leaves the CBN directive open to multiple interpretations, including that the levy be paid by bank customers, that is, Nigerians, against the letters and spirit of Section 44(2)(a) and the Second Schedule to the Cybercrimes Act, which specifies the businesses that should be levied accordingly.
“Unless immediate pragmatic steps are taken to halt the proposed action of the CBN, the Cybercrime Act shall be implemented in error at a time when Nigerians are experiencing the aftermath of multiple removals of subsidies from petroleum, electricity, and so on, amidst rising inflation”, he said.
The House adopted the motion and directed the CBN to withdraw the ambiguous circular and issue an unequivocal circular in line with the letter and spirit of the law.
The House equally directed its committees on banking regulation and other ancillary institutions to guide the CBN properly.
Femi Falana
Supporting the position of the lawmakers, human rights lawyer, Femi Falana (SAN), said that the levy was not meant for individuals.
In a statement issued on Thursday, Falana said the CBN wrongly interpreted the provisions of the Cybercrime (Prohibition, Prevention, etc.) Amendment Act 2024.
“Even though the said levy of 0.5 per cent is payable by the businesses listed in the second schedule to the principal Act, the CBN has wrongly directed all financial institutions to apply the levy at the point of electronic transfer origination and that the amount is to be explicitly noted in customer accounts under the description ‘Cybersecurity Levy’ and remitted by the financial institution,” he said.
He said further: “The erroneous interpretation might have arisen from the substitution of ‘businesses’ for ‘business’ in the amendment.”
Kunle Adegoke
Earlier, another senior advocate, Kunle Adegoke, described Section 44 of the Act that the CBN relied on to order the deduction of the cybersecurity levy as unconstitutional.
The lawyer said Section 44 of the Act relied upon by the CBN was at variance with Section 162 of the Constitution, and that it is trite law that wherever a law contradicts the Constitution, the Constitution takes precedence.
He said the “Implication is that no arm of government, no agency of government, or the National Assembly itself cannot appropriate such revenue to do any other thing or to achieve any other goal until it goes first into the federation accounts.
“If Section 44 of the Cybercrime Act is now unconstitutional by virtue of saying that levies collected shall go into an account other than the federation account, then the directive of the CBN saying that levies to be collected shall be implemented by the National Security Adviser will equally be unconstitutional. You cannot build something on nothing. It will collapse.”
Senate wants levy to stand against people
On his part, the Chairman of the Senate Committee on National Security and Intelligence, Senator Shehu Umar Buba, said the levy was not punitive as it has numerous exemptions to protect and relieve ordinary citizens, particularly the poor.
Senator Buba said the exemptions include salary payments, intra-account transfers, loan disbursements and repayments, and other financial transactions.
The lawmaker said the amendments to the Cybercrimes Act were a collaborative effort with the National Assembly’s ICT and Cyber Security Committee.
According to him, the committee also went through a transparent public hearing process, receiving contributions from various stakeholders.
“Both Houses of the National Assembly unanimously passed it before President Bola Ahmed Tinubu signed it into law,” he said.
Senator Buba emphasised that the provisions for the cybersecurity levy have been in place since 2015 but were delayed due to unclear interpretations and applications.
