Nigeria’s Cybersecurity Levy Set to Raise N50bn by 2024

The Central Bank of Nigeria (CBN) is expected to generate approximately N50bn by the end of 2024 from the recently introduced 0.005% cybersecurity levy on electronic transactions, according to economic analysts. This levy, part of the Cybercrime (Prohibition, Prevention, etc.) (Amendment) Act 2024, aims to bolster the National Cybersecurity Fund, which is managed by the Office of the National Security Adviser.

Vincent Nwani, Head of Research at FMDQ Group Plc, highlighted the significant revenue potential of the levy. “The CBN is expected to raise N50bn from the cybersecurity levy by 2024,” Nwani said. He explained that electronic payments in Nigeria reached a total of N987tn between 2022 and 2023, with the new levy projected to generate a substantial sum for the government.

Applying the 0.005% levy to the N987tn in electronic payments yields an estimated revenue of N49.35bn. In 2022 alone, electronic payments amounted to N387tn, generating N19.35bn, while in 2023, with transactions surging to N600tn, the levy brought in N30bn. “For 2024, electronic payments are expected to climb to N999.9tn, with the cybersecurity levy projected to bring in N50bn,” Nwani added.

The increase in digital payments reflects the growing success of the CBN’s cashless policies, as well as its controversial naira redesign programme. Nwani also noted that point-of-sale (PoS) transactions had surged by 27.85%, from N8.39tn in 2022 to N10.73tn in 2023. PoS charges, which require a N100 fee for every N5,000 withdrawal, cost Nigerians N214.6bn in 2023, up from N167.8bn in the previous year.

David Adonri, Vice Chairman of Highcap Securities, pointed to these trends as a direct result of the CBN’s drive to reduce cash-based transactions. “Despite the CBN’s contractionary monetary policy, the money supply continues to expand, which might push electronic payments even higher in 2024,” Adonri said, forecasting that the projected rise in payments could indeed generate as much as N50bn for the government.

The levy was introduced under the amended Cybercrime Act as part of efforts to fortify Nigeria’s cybersecurity framework, particularly as digital transactions become an integral part of the economy. However, the policy faced initial resistance from President Bola Tinubu and members of the House of Representatives, who called for its suspension and review. Despite these objections, the CBN has reaffirmed its commitment to enforcing the levy, arguing that the growing volume of electronic transactions necessitates heightened cybersecurity measures.

As Nigeria continues to transition towards a more digital economy, the cybersecurity levy stands as a testament to both the opportunities and challenges of managing an increasingly cashless society. While the revenue generated is poised to strengthen the nation’s cybersecurity infrastructure, the additional costs to consumers, particularly from PoStransactions, underscore the broader economic implications of the CBN’s policy shift.