In response to a quiet move by the Nigerian government to implement a cybersecurity levy targeting financial transactions, the Socio-Economic Rights and Accountability Project (SERAP), supported by notable figures like Olisa Agbakoba and various civil society organizations (CSOs), has taken legal action. This decision follows widespread disapproval from both the public and various stakeholders who fear the economic repercussions and potential misuse of the raised funds.
The levy, initially directed by the Central Bank of Nigeria (CBN), required financial institutions to deduct 0.5% from all electronic transactions, funneling these funds into a national cybersecurity fund. This measure, set to commence by May 20, 2024, was rooted in the 2015 Cybercrime Act but has faced significant backlash due to concerns over legality and transparency.
SERAP, BudgIT, and over a hundred Nigerians have filed a lawsuit against the CBN, arguing that the directive to implement the cybersecurity levy without proper legislative backing and transparency violates constitutional principles, specifically those guarding against arbitrary taxation without representation. The lawsuit, which is yet to be scheduled for a hearing, challenges the CBN’s authority to enforce such a levy and questions the constitutionality of the Cybercrimes Act’s relevant sections.
Olisa Agbakoba, a respected Senior Advocate of Nigeria, has echoed these concerns, emphasizing the levy’s potential conflict with constitutional stipulations regarding revenue management. Agbakoba criticizes the broader issue of government agencies bypassing proper channels for fund allocation, which not only undermines the federal budget but also deprives essential services and infrastructure of necessary funding.
Critics argue that imposing a levy on electronic transactions could discourage digital financial services, a sector that has significantly contributed to economic inclusivity and modernization in Nigeria. This is particularly concerning given the ongoing efforts to increase digital economic activities as part of Nigeria’s broader economic development strategy.
Furthermore, the levy could disproportionately affect smaller businesses and everyday consumers who have become increasingly reliant on digital transactions, especially in the post-COVID-19 context where digital platforms have played a crucial role in sustaining economic activities.
The implementation of this levy has also been seen as a test of the government’s commitment to transparent and accountable governance. The controversy highlights the ongoing challenges in Nigeria’s policy environment, where new fiscal policies, particularly those impacting the rapidly evolving digital and financial sectors, are often introduced without comprehensive stakeholder engagement or consideration of long-term economic impacts.
The Senate’s role in amending the Cybercrimes Act to include this levy without a thorough public consultation process has been criticized. The legislative process appeared rushed and lacked the depth of debate and analysis expected for legislation with such far-reaching implications.
The federal government and the CBN may need to reconsider their approach to funding cybersecurity initiatives. Stakeholders suggest that rather than imposing a new levy, existing resources within the expansive budgets of relevant agencies could be better utilized. Additionally, enhancing the efficiency of existing tax systems could provide the necessary funds without introducing new charges that could stifle economic growth.
As the legal challenges progress, the outcome will likely have significant implications for policy-making in Nigeria, particularly in how new economic policies are introduced and implemented. This situation underscores the need for a more participative approach in policy formulation, one that involves all stakeholders and considers the socio-economic dynamics of Nigeria.
In conclusion, while the intent behind bolstering cybersecurity is valid, the method of imposing a levy on electronic transactions has been contentious. It reflects broader issues within Nigeria’s governance frameworks, particularly around fiscal policy and public administration. The ongoing legal challenge will not only determine the future of this specific levy but could also set important precedents for how similar policies are developed and implemented in the future.
Source: The Guardian
