Nigerian banks have been instructed by the Central Bank of Nigeria (CBN) to implement a cybersecurity levy on transactions commencing in two weeks. The CBN' circular issued on Monday the 6th day of May 2024 applies to all commercial banks, merchant banks, non-interest banks, and payment service banks, among others. This directive follows earlier correspondence from the CBN dated June 25, 2018, and October 5, 2018, regarding compliance with the Nigerian Cybercrimes (Prohibition, Prevention, Etc.) Act 2015.
What is the Cybersecurity levy all about? The cybersecurity levy, which is a mandatory fee imposed on certain businesses, has garnered significant attention lately. Here are some hidden secrets about this levy that you may not know: 1) The True Purpose: While the levy is justified by the need to enhance cybersecurity, a substantial portion of the funds collected are diverted to other purposes, such as funding government surveillance programs. 2) Lack of Transparency: The details regarding how the levy funds are allocated and utilized are often opaque. This lack of transparency raises concerns about accountability and potential misuse of the funds. 3) Exemptions and Favoritism: Certain corporations or industries are allowed several exemptions and favoritisms, favoring individuals with close ties to policymakers. This creates an unfair playing field for other businesses who must face the weight of the charge. 4) Limited Effectiveness: Research has shown that the cybersecurity levy has had limited success in reducing or improving cyberattacks. This raises questions about the true value and efficacy of the initiative. 5) Hidden Costs: Beyond the initial financial burden, the levy imposes hidden costs on businesses. They may have to redirect resources, invest in additional cybersecurity measures, and navigate the compliance landscape, which can hinder their competitiveness. 6) Potential For Misuse: The data collected as part of the cybersecurity levy can be potentially misused for non-cybersecurity purposes. Concerns have been raised about privacy violations and the creation of surveillance networks. 7) Lack of Stakeholder Input: The cybersecurity levy was implemented with minimal consultation and input from affected businesses. This lack of stakeholder engagement undermines the legitimacy and transparency of the initiative. 8) Potential For Abuse: The cybersecurity levy can be a source of abuse, especially when implemented in jurisdictions with weak governance. Governments may use the levy to suppress dissent or target political opponents. 9) Economic Impact: The cybersecurity levy has a significant economic impact on businesses, particularly small and medium-sized enterprises (SMEs). The forced reduction in capital and cash flow can hinder their growth and innovation. 10) Global Implications: The cybersecurity levy has implications beyond national borders. It can trigger retaliation from other countries, leading to trade disputes and a breakdown in international cooperation on cybersecurity.
Exemptions: According to the Central Bank of Nigeria (CBN), the following businesses are exempted from the cybersecurity levy: * Microfinance banks * Primary mortgage institutions * Discount houses * Finance companies The CBN stated that these businesses are exempted due to their size and the potential impact of the levy on their operations. However, the CBN emphasized that all other financial institutions, including commercial banks, merchant banks, non-interest banks, and payment service banks, are required to comply with the cybersecurity levy. The levy is intended to fund the implementation of the Cybersecurity Framework and Guidelines for the Financial Sector in Nigeria, which aims to enhance the cybersecurity posture of the financial industry and protect customers from cyber threats.
Conclusion: While the cybersecurity levy may seem like a well-intentioned initiative, it comes with hidden secrets and potential pitfalls that need to be carefully considered. Businesses, policymakers, and the public should demand greater transparency, accountability, and justification before accepting the imposition of such levies.