Electronic banking levy faces backlash in Nigeria

Electronic banking levy faces backlash in Nigeria

The planned introduction of a new levy on electronic banking transactions in Nigeria is facing a backlash.

The Central Bank of Nigeria (CBN) has told financial institutions that a proposed 0.5% levy is intended to raise money to enhance cybersecurity. It will take effect on the 20th of May.

However, Nigeria is experiencing a major economic crisis that has already led to devaluation of the currency, the naira, and for many Nigerians, aleady struggling to afford basic items, this levy could make things worse. Some analysts suggest it could encourage them to fall back on cash transactions, undermining the move towards a cashless economy

The BBC says the Nigeria Labour Congress, which represents the country’s workers, has released a statement rejecting the levy, while the Socio-Economic Rights and Accountability Project (SERAP) lobby group has threatened to sue the government.

The ITWeb Africa news service quotes SERAP deputy director Kolawole Oluwadare as saying that the levy breached the provisions of the 1999 Nigerian Constitution as well as the country's international human rights obligations and commitments.

Meawhile, in further potentially bad news for consumers, various news services are saying that, in pursuit of securing a new US$750 million loan from the World Bank, the federal government may reintroduce a previously suspended telecom tax and other fiscal measures.

President Bola Tinubu in July 2023 ordered the suspension of the five per cent excise duty on telecommunications (a suspension announced in March) and the Import Tax Adjustment levy on certain vehicles. 

However, it appears that this suspension may be lifted to meet the programme targets for a new, yet-to-be-approved World Bank loan. Negotiations are ongoing between the government and the World Bank.

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