• Internet group warns of negative impact of policy on economy
• Levy aimed at financial institutions, telecoms, Buba clarifies

The resentment that greeted the Federal Government’s 0.5 per cent cybersecurity levy appears not to have abated, despite the reported quiet withdrawal of the policy.

The likes of Senate Chief Whip, Ali Ndume, had praised President Bola Tinubu for listening to the people, ordering a review of the levy, and suspending its implementation. This was even as the Human Rights Writers Association of Nigeria (HURIWA) lauded the President for displaying a fatherly disposition.

At ‘The Morning Show’, a programme on Arise News, yesterday, the senator said: “It’s good that the President has now acted. We’ll go back to the drawing table to look at the Act again. When this administration came on board, the first issue that needed to be addressed was that of cybercrime. And it is part of the purpose of government as outlined in Section 14.2 of our constitution; that the purpose of government is the security and welfare of citizens. And cybercrime is part of security, very important one.”

He explained: “That was why the government was in a hurry to look at the enabling law which was signed in 2015, to strengthen it, give more powers to the institutions charged with that responsibility, to ensure efficiency and address the issue of cybercrime, which you know is ravaging the country and spoiling our reputation.”

Notwithstanding, Socio-Economic Rights and Accountability Project (SERAP), BudgIT and 136 concerned Nigerians, have sued the Central Bank of Nigeria (CBN) at the Federal High Court, Lagos, over what they described as its failure to withdraw the circular directing all banks and other financial institutions to deduct a cybersecurity levy from customers’ account.

Similarly, Olisa Agbakoba, a Senior Advocate of Nigeria (SAN), said he would challenge the implementation of the controversial levy in court.

Recall that last week, CBN directed banks to implement a levy of 0.5 per cent (0.005) equivalent of all electronic transactions, and remit the levy to the national cybersecurity fund. The CBN relied on the Cybercrime Act 2015 (as amended). The directive is to be implemented by May 20, 2024.

In suit number FHC/L/CS/822/2024, filed at the weekend by SERAP and others, the plaintiffs are asking the court to determine whether the CBN’s circular, dated May 6, 2024, directing financial institutions to deduct a cybersecurity levy from customers’ accounts is unlawful and therefore ultra vires the CBN.

No date has been fixed for the hearing of the suit.

The plaintiffs are also asking the court to determine whether the CBN circular and Section 44(2)(a) of the Cybercrimes Act are not in breach of Sections 14(2), 44(1) and 162(1) of the Nigerian Constitution 1999 (as amended), and therefore unconstitutional, null, and void.

They are asking the court for a declaration that the CBN circular is contrary to the provisions of the Cybercrimes Act and ultra vires the CBN and therefore is illegal null and void.

They also want the court to declare that the circular is manifestly misleading, extorting, and a breach and misinterpretation of the provisions of Section 44, 58 and Second Schedule of the Cybercrimes (Prohibition, Prevention, etc) (Amendment) Act 2024 and ultra vires the CBN, and therefore is illegal, null and void.

The plaintiffs want an order from the court to set aside the circular and Section 44(2)(a) of the Cybercrimes Act for being inconsistent with, and a breach of the provisions of Section 14(2), 44 (1) and 162 of the Nigerian Constitution 1999 (as amended) and therefore unconstitutional, null and void.

They are also seeking an order of interim injunction restraining the CBN, its office, agents, privies, assigns, or any other persons acting on its instructions from enforcing the circular, pending the hearing and determination of the motion on notice filed contemporaneously in this suit.

In the suit filed on behalf of the plaintiffs by their lawyer, Ebun-Olu Adegboruwa, SAN, they argued that the circular is unlawful and an outright violation of the provisions of the Nigerian Constitution and the country’s international obligations.

They said: “Unless the reliefs sought are granted, the CBN will enforce its circular directing banks to deduct from customers’ accounts a cybersecurity levy. Millions of Nigerians with active bank accounts would suffer irreparable damage from the unlawful deduction of cybersecurity levies from their accounts.

“The provisions of the Cybercrimes Act on payment of cybersecurity levy strictly apply only to businesses listed in the Second Schedule to the Act. These provisions do not refer bank customers, contrary to the CBN circular to all banks and other financial institutions.

“The Nigerian government has a legal responsibility to ensure the security and welfare of the people, as provided for under Section 14(2)(b) of the Nigerian Constitution and human rights treaties to which Nigeria is a state party.

“The CBN circular is also a blatant violation of Nigerians’ human rights including the right to property guaranteed under Section 44 of the Nigerian Constitution and Article 14 of the African Charter on Human and Peoples’ Rights to which Nigeria is a state party.”
ON his part, Agbakoba, who described the imposition of the levy as unconstitutional, said: “It is not a good idea at all. I believe it is a good idea to have a Cybersecurity Act so that we can deal with cybercrime. However, it is not a good idea to create a fund for which the National Security Adviser will be entitled to deploy when that is contrary to what the Constitution prescribes.

“So, I am going to court to challenge the imposition by the CBN on levies on the banks which will amount to the banks paying about N3 trillion a year. That is unconstitutional because what the constitution says is that everything concerning revenue, whether it is tax or non-tax revenue such as the levy in the Cybersecurity Act, must pass through the federation account for it to be appropriated by the National Assembly.

“So, if the same National Assembly makes a law bypassing the appropriation process and putting money in the hands of an agency; that is unconstitutional.”

Agbakoba said the Federal Government is always broke because most of the ministries, departments and agencies (MDAs) are appropriating and disbursing to themselves money that should go into the federation account.

He said: “It goes back to when Nigeria was always having a deficit budget. Many of the MDAs bypass the federation account and collect money directly. The number one culprit is the Nigerian National Petroleum Company (NNPC). The NNPC collects so many trillions and then spends so much trillions and then gives pocket money to the Federal Government. That is very wrong. Section 162 of the constitution says that every resource of the Federal Government must be paid into the federation account before it is disbursed. So, the NNPC is spending money without the appropriation of the National Assembly.

“The cybersecurity fund will be spent without the National Assembly’s appropriation. It is a sorry thing that the very National Assembly that should understand that all revenue must pass through the federation account, are the ones passing laws bypassing the process.”

Agbakoba added: “We talk of Nigeria being poor, whereas, we have over 300 agencies in Nigeria appropriating money to themselves. Nigeria Customs does that, and the same with NIMASA, TETFUND, Police Fund, ETF and others. That is why the Federal Government is broke because these agencies are taking all the money. The government sits down waiting for money to come but the agencies have taken everything.

“It is something that I think ought to be challenged because the Federal Government is now dispossessed of revenue that can be used to build roads, bridges, schools, hospitals and create employment. Very few agencies take 80 per cent of our money.”

RELATEDLY, the Nigeria Internet Group (NIG), an advocacy body that promotes Internet access and connectivity in Nigeria, kicked against the planned introduction of cybersecurity levy by the CBN, highlighting its implications for both consumers and businesses in Nigeria.

President of NIG, Destiny Amana, who raised the concern, said if introduced, it would impact negatively on the economy, businesses and consumers. He therefore urged CBN to consider alternative approaches to strengthening cybersecurity without unduly burdening the Nigerian populace.

Amana, in a statement, said: “The recent announcement by the CBN regarding the introduction of a cybersecurity levy on electronic transactions is a matter of grave concern. The levy, pegged at 0.5 per cent of all electronic transaction values, is purportedly a provision of the recently passed 2024 Cybercrime (Prohibition, Prevention, among others) Amendment Act.

“While we recognise the importance of cybersecurity measures in safeguarding our digital infrastructure and protecting against cyber threats, we cannot ignore the potential negative impact of this levy on the Nigerian economy, businesses, and consumers.

“The imposition of a cybersecurity levy on electronic transactions is not only burdensome but also raises questions about its necessity and effectiveness in addressing cyber threats. We are deeply concerned about the potential for this levy to stifle innovation, hinder financial inclusion efforts, and place undue financial burdens on individuals and businesses, particularly small and medium-sized enterprises (SMEs).”

Amana further cited the lack of adequate consultation and transparency surrounding the implementation of the proposed levy, adding that policies of such magnitude should be subject to thorough consultation with relevant stakeholders, including industry experts, businesses, and consumer advocacy groups.

Amana, however, said NIG remained committed to advocating policies and initiatives that promote a vibrant and inclusive digital economy while safeguarding the interests of all stakeholders.

MEANWHILE, following backlash after he admitted that the cybersecurity levy was a creation of the Senate, Chairman of the Senate Committee on National Security and Intelligence, Shehu Umar Buba, has offered fresh insight, clarifying that the Central Bank of Nigeria (CBN) policy does not target individuals or ordinary bank customers.

Recall that last week, while the House of Representatives took sides with the growing number of Nigerians seeking cancellation of the controversial 0.5 per cent levy on electronic transactions, Buba had taken sides with the Federal Government and the CBN, highlighting its benefits to the citizens and the nation.

The House of Representatives had directed the apex bank to withdraw its ambiguous circular on the policy and issue an unequivocal version, in line with the letter and spirit of the Cybercrimes Amendment Act 2024.

In another statement, yesterday, the senator, who sponsored the amendment bill, explained that the levy explicitly targets financial institutions and telecom companies, which are the sectors most vulnerable to financial crimes and cyber fraud.

He said the relevant section of the Cybercrime Act is very clear about the businesses that are required to pay the levy, not citizens.

“The Act is very explicit about who is responsible for the payment, not Nigerian citizens or individuals. The relevant Section of the Cybercrime Act 2015 listed the businesses required to pay the levy: telecommunications companies, Internet service providers, banks, insurance companies, the Nigerian Stock Exchange, and other financial institutions.

“The organisations in the sectors have been listed in previous circulars by the Central Bank of Nigeria, especially in 2018. The new circular by the CBN further provided many exemptions,” he said.

Buba also explained the amount payable as a cybersecurity levy: “It is either 0.005 or 0.5 per cent arithmetically. The figure in the principal Act was 0.005 as a fraction, which was converted to the percentage that became 0.5 per cent in the amendment. Therefore, the statistics in fractions and percentages are the same.”