NIGERIA: CBN Withdraws Circular on 0.5% Cybercrime Levy on E-Transactions

In a recent development that has generated considerable discussion among financial stakeholders and the general public, the Central Bank of Nigeria (CBN) has withdrawn its earlier circular mandating a 0.5% cybercrime levy on electronic transactions. This decision comes amid growing concerns and backlash from various quarters, including consumers, businesses, and financial experts.

Background of the Circular

The initial circular, issued on April 1, 2024, aimed to impose a 0.5% levy on all electronic transactions as part of a broader effort to combat the rising tide of cybercrime in Nigeria. The CBN argued that the funds collected from this levy would be directed towards enhancing cybersecurity measures, developing more robust defense mechanisms, and supporting initiatives to curb cyber threats within the country's financial sector.

However, the proposal was met with widespread criticism. Consumers and businesses alike expressed concerns over the additional financial burden, particularly given the challenging economic climate. Many argued that the levy would disproportionately affect small and medium-sized enterprises (SMEs) and individuals who rely heavily on electronic transactions for their daily operations and personal needs.

Official Withdrawal and Stakeholder Engagement

Responding to the widespread disapproval, the CBN officially withdrew the circular on May 19, 2024. In a statement, the apex bank acknowledged the concerns raised by various stakeholders and emphasized its commitment to fostering a secure yet inclusive financial environment. The CBN stated that it would engage in further consultations with relevant parties to explore more balanced approaches to funding cybersecurity initiatives without placing undue strain on consumers and businesses.

The CBN's decision to withdraw the circular has been largely welcomed. Financial institutions, digital payment service providers, and other stakeholders have expressed relief, noting that this move will help maintain consumer confidence in electronic payment systems and ensure the continued growth of the digital economy.