The Central Bank of Nigeria (CBN) has recently mandated a new measure that will significantly impact the landscape of electronic transactions across the country.
With the introduction of a 0.5 percent cybersecurity levy on a wide range of electronic transactions, the measure is set to commence two weeks from May 6, 2024. This innovative step, detailed in a joint circular by Chibuzo Efobi and Haruna Mustafa, directors of the Payments System Management Department and the Financial Policy and Regulation Department respectively, is aimed at all banking institutions including commercial, merchant, non-interest, and payment service banks.
The directive specifies that the levy will be applied at the moment an electronic transfer is originated. The amount deducted will be remitted by the financial institution handling the transaction and will be clearly itemized in the customer’s account statement as ‘Cybersecurity Levy’. This move is part of a broader strategy to enhance the resilience of Nigeria’s financial system against the rising tide of cyber threats.
To ensure that essential banking services remain accessible and to mitigate any undue burden on customers, the CBN has carefully exempted 16 types of banking transactions from this levy.
These exemptions are:
1. Disbursement and repayment of loans
2. Processing of payroll transactions
3. Transfers within and between banks for individual accounts
4. Transfers among clients within the same financial institution
5. Instructions from financial entities to their corresponding banks
6. Placement transactions between banks
7. Financial exchanges between banks and the Central Bank of Nigeria, and vice versa
8. Internal transfers across different branches of the same bank
9. Processing of cheque clearances and settlement operations
10. Issuance and management of Letters of Credit
11. Funding related to the recapitalization of banks, specifically large-scale fund transfers from collection accounts
12. Transactions related to savings and investments, including dealings in Treasury Bills, Bonds, and Commercial Papers
13. Financial transactions for Government Social Welfare Programs, such as pension payments
14. Financial operations for non-profit and charitable organizations, including contributions to certified entities
15. Financial transactions for educational bodies, covering tuition fees and other related payments
16. Management of a bank’s internal financial accounts, including but not limited to suspense, clearing, profit and loss, inter-branch, reserve, nostro and vostro, and escrow accounts.
The policy introduces a cybersecurity levy as a measure aimed at safeguarding electronic transactions against digital threats, reflecting the Central Bank of Nigeria’s (CBN) commitment to enhancing cybersecurity in the context of a more interconnected world. This initiative could be seen as part of broader efforts to address cybercrime, potentially serving as a model for similar actions by other countries.
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Last modified: May 8, 2024
