On Monday, the Central Bank of Nigeria (CBN) ordered all financial institutions to begin withholding a cybersecurity fee of 0.5% from all domestic electronic transactions.
The apex bank’s directive was contained in a circular signed by the Director, Payments System Management Department, Chibuzo Efobi; and the Director, Financial Policy and Regulation Department, Haruna Mustafa.
According to the circular, the cybersecurity charge would take effect two weeks from May 6, 2024.
The apex bank, in the circular, directed to all commercial, merchant, non-interest, and payment service banks, among others; to start the implementation of the cybersecurity charges after two weeks of the information.
“The levy shall be applied at the point of electronic transfer origination, then deducted and remitted by the financial institution. The deducted amount shall be reflected in the customer’s account with the narration, ‘Cybersecurity Levy,’” the circular partly read.
However, the CBN listed 16 banking transactions were excluded from the new cybersecurity levy.
The exempted transactions are listed below:
1. Loan disbursements and repayments
2. Salary payments
3. Intra-account transfers within the same bank or between different banks for the same customer
4. Intra-bank transfers between customers of the same bank
5. Other Financial Institutions instructions to their correspondent banks
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6. Interbank placements,
7. Banks’ transfers to CBN and vice-versa
8. Inter-branch transfers within a bank
9. Cheque clearing and settlements
10. Letters of Credits
11. Banks’ recapitalisation-related funding – only bulk funds movement from collection accounts
12. Savings and deposits, including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers
13. Government Social Welfare Programmes transactions e.g. Pension payments
14. Non-profit and charitable transactions, including donations to registered non-profit organisations or charities
15. Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions
16. Transactions involving bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
Financial institutions may decide to pass on the cybersecurity charge in some way to their clients, which could result in slightly increased transaction costs for consumers. However, a number of variables, such as the pricing policies taken by financial institutions and the dynamics of market competition, will determine how much the charge will impact consumers.
The establishment of the cybersecurity levy signifies a wider understanding of the significance of cybersecurity in Nigeria’s financial sector, beyond the immediate ramifications. In order to protect the integrity of electronic transactions, authorities and financial institutions must continue to be proactive and attentive as cyber risks continue to grow and change. A concrete step in this approach is the cybersecurity levy, which offers funds for projects meant to strengthen cybersecurity resilience and safeguard the interests of companies and consumers alike.
Nigeria’s banking sector is entering a new phase of cybersecurity knowledge and readiness with the CBN’s adoption of the cybersecurity levy. The levy may require changes for customers and financial institutions alike, but its wider ramifications and exemptions highlight how crucial it is to give cybersecurity top priority in an increasingly digital society. Nigeria can enhance the security of its financial systems and guarantee the sustained trust and confidence of its stakeholders in the future by allocating resources towards cybersecurity measures now.
