NACCIMA urges suspension of cybersecurity levy amid concerns over economic impact

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has called on the Central Bank of Nigeria (CBN) to suspend its policy imposing a 0.5% cybersecurity levy on all eligible electronic transactions.

Dele Kelvin Oye, National President of NACCIMA, said the bank’s move was another hidden tax on the private sector, citing possible deleterious effects on the country’s economy.

The call for a suspension comes amid growing concerns about the levy’s impact on financial inclusion efforts, particularly in remote or underserved regions where electronic banking transactions play a central role.

In a statement signed by the Association’s President, NACCIMA expressed concern about the introduction of the levy, which coincides with the upcoming publication of recommendations by the President’s Committee on Fiscal Policy and Tax Reforms.

Also Read: With the Cybersecurity Levy, transferring N10,000 costs about N135

The association expressed disappointment at previous assurances that the tax system would be streamlined to include no more than ten major tax types. He, however, said the introduction of this new levy raises fears that it could harm Nigeria’s competitiveness in the Ease of Doing Business rankings, deter foreign direct investment, trigger capital flight and exacerbate the talent drain in the technology sector.

NACCIMA stressed the urgency of the matter and called on the Central Bank of Nigeria and other relevant authorities to reconsider the implementation of the cybersecurity levy. The association called for a temporary suspension of the levy to allow for a comprehensive review and consultation process with key stakeholders. NACCIMA argues that such measures are essential to ensure clarity of implementation and alignment with broader fiscal policy and tax reform objectives to promote economic growth and competitiveness.

The association also believes that the burden of addressing a mix of security challenges such as terrorism, banditry and other internal conflicts in Nigeria should be shared on the current security and defense budget, as the security and defense sector is already a significant recipient of the national budget.

“Cybersecurity is, firstly, a transnational issue that requires cooperation between international security agencies and requires highly qualified and experienced human resources.”

Despite the fears expressed, NACCIMA reiterated its commitment to promoting constructive dialogue and collaboration with government to find a balanced approach that addresses cybersecurity threats while protecting the Nigerian economy and promoting an enabling environment for business and investment.

“While NACCIMA recognizes the importance of strengthening our national cybersecurity infrastructure, the blanket imposition of this levy without limit raises significant issues that require thorough review and reconsideration by authorities.

“With over 600 trillion naira (NIBSS 2023) in transactions per year, the projected revenue from this levy is significant. We therefore expect transparency in the use of these funds through clear performance indicators, which are essential to justify the additional levies. For this reason, we must ask ourselves: What proportion of ALL online transactions are fraudulent transactions? How will this levy discourage such transactions? Since the incidence rates are well below the tax rate, there is a disproportion that must be remedied. We therefore recommend a maximum tax cap of five hundred (500) Naira. It is also a fact that there are other methods to reduce local online cyber security risks through professional experts from the private sector.

“The allocation and management of levy funds is critical. The organized private sector must be involved in the monitoring and management of these funds to ensure the efficiency and effective use of the public and private sector services levy, similar to a fee model for real estate services. Otherwise, there is a risk of misapplication and lack of accountability.

“The introduction of this levy may violate the constitutional provision that requires all revenues to be paid into the Consolidated Fund, which can only be used after appropriations have been made by the National Assembly. “We await further guidance on this position.”