Lagos Chamber of Commerce and Industry (LCCI) Expresses Concern Over Security Levy

The Lagos Chamber of Commerce and Industry (LCCI) and Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) worried over the impacts of the new 0.5 per cent cybersecurity levy on business, urging for immediate withdrawal or drastic reduction of the charge.

The Director-General of LCCI, Dr. Chinyere Almona, noted that the proposed cybersecurity levy is a serious cause for concern for the chamber and urged the government to withdraw the directive immediately.

While reacting to the directive by the CBN to banks to implement section 44 of the Cybercrime Act 2024, which imposes a 0.5 per cent cybersecurity levy on Nigerians, she expressed that individuals and businesses are being burdened with more levies amidst unsettled performance crisis with power supply after the recently reviewed electricity tariffs.

Similarly, she regretted that the upward review of the electricity tariff has not brought about a commensurate boost in power supply to justify the additional costs to individuals and businesses and are instead, paying more for darkness.

She urged the government to reconsider the implementation of this directive as its timing is wrong, saying the justification is unclear and the directive should be withdrawn immediately while consultations with critical stakeholders get underway.

Almona said, “In the face of biting inflation that has continued to weaken the purchasing power of consumers and with companies burdened with a rising cost of production, any further imposition of additional cost burden will slow down economic activities even more and drag our economic growth drive.”

Also, she added that since the levy collection cannot guarantee the protection of payers from cyber-attacks, it is difficult to justify its collection. “In the same vein, the collection approach with some exemptions can create confusion regarding what transactions qualify for the exemptions. Implementing this directive can gradually encourage some people to return to holding cash to avoid paying the levy. This can negatively impact the achievement already recorded with the cashless policy.”

The NACCIMA, in a statement, noted that with over N600 trillion recorded in e-payment last year, 0.5 per cent of the figure yearly is significant and with the incident rate significantly lower than the levy rate, the proposed levy should be reduced to N500.

NACCIMA National President, Dele Kelvin Oye, explained that while it is important to bolster the country’s national cybersecurity infrastructure, the blanket imposition of this levy without a limit raises significant issues that warrant a thorough review and reconsideration by the authorities.

According to him, “We are still in consultation with our stakeholders; however, we feel compelled to comment on the implementation of this cybersecurity levy as outlined in a circular dated May 7th 2024 and signed by the respective Directors of the CBN Payments System Management Department and the Financial Policy and Regulation Department of the CBN.

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

“Firstly, the security and defense sectors are already substantial recipients of the national budget. They are responsible for tackling a hybrid of security challenges like terrorism, banditry and other internal conflicts in Nigeria.

“However, cybersecurity is firstly a transnational issue which requires cooperation between international security agencies and requires highly skilled and experienced human resources. For this reason, we believe the burden should be shared across the current security and defense budget.”

Also, Oye said, “With over 600 trillion naira (NIBSS 2023) in transactions annually, the projected revenue from this levy is considerable. Therefore, we expect transparency in the application of these funds through clear performance metrics essential to justify the additional levies.

“For this reason, we must ask: what proportion of all online transactions are fraudulent transactions? In what way will this levy counteract such transactions? With incidence rates significantly lower than the levy rate, there is a mismatch that needs to be addressed. We will therefore advise a maximum levy cap of N500. It is also a fact that other methods exist to reduce local online cybersecurity risks through professional private sector experts.”

According to him, “Secondly, the allocation and administration of the levy funds are critical. The organized private sector must be involved in the oversight and management of these funds to ensure efficiency and effective use of the levy for public and private sector services, akin to an estate service charge model. Without this, there is a risk of misapplication and lack of accountability.

“Thirdly, the introduction of this levy may be in contravention of the constitutional provision mandating all revenues to be deposited into the consolidated fund, which can only be utilized following appropriations by the National Assembly. We await further guidance on this position.

“Finally, electronic banking transactions are pivotal in advancing financial inclusion for individuals in remote or underserved regions. This levy could potentially discourage the use of e-business platforms, undermining efforts to foster economic growth and financial participation," he concluded.