Saturday , May 25 2024
Nigeria

Nigeria raises levy on e-transfers by 900%, analysts call for a transaction cap

Nigeria raises levy on e-transfers by 900%, analysts call for a transaction cap

Nigeria’s Central Bank will begin the implementation of an amended 2015 Cybersecurity Act that will levy a 0.5% fee on all electronic transactions on May 20, an increase of 900% from an earlier levy of 0.005%. It means an electronic transfer of ₦1,000 will attract a ₦5 fee while a ₦100,000 transfer will attract a ₦500 fee.

The cybersecurity levy will be charged in addition to existing fees like stamp duty, a ₦50 charge on electronic receipt or transfer of money in any deposit money bank or financial institution on sums of ₦10,000 or more.

When the levy goes into effect in two weeks, it will have only a few exceptions: money transfers within the same bank, salary payments, school fees payments, and loan repayments. 

Financial industry experts argue the new levy will constitute a burden for low-income earners who rely on electronic transactions for daily activities. The value of electronic transactions in Nigeria rose by 66% to over ₦600 trillion in 2023, according to the Nigeria Inter-Bank Settlement System (NIBSS).

The Cybersecurity Act was first passed in 2015 and introduced a 0.005% levy on electronic transfers. 

A June 2018 CBN memo directed banks to collect the levy on “electronic transactions occurring in a bank or on a mobile money scheme or any other payment platform that have an accompanying service charge.” 

In 2024, the Act was amended and the levy was increased by 900% to 0.05% and it was extended the levy to cover fintechs, payment service providers, and other financial institutions.

“It’s a little bit regressive. What we should be advocating for is an amendment to the law. There should be a cap on the transactions,” said a financial industry expert who asked not to be named so he could speak freely. 

On May 3, the National Security Adviser, Nuhu Ribadu called for an implementation of the amended act, highlighting the increased influence of the NSA. The cybersecurity levy will be remitted monthly to the National Cybersecurity Fund (NCF), managed by the NSA.

Last week, the NSA ordered five fintechs to stop onboarding new customers and deemed crypto a national security issue.


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