EXPLAINER: What CBN’s 0.5% (0.005) cybersecurity levy means

EXPLAINER: What CBN’s 0.5% (0.005) cybersecurity levy means

EXPLAINER: What CBN’s 0.5% (0.005) cybersecurity levy means
EXPLAINER: What CBN’s 0.5% (0.005) cybersecurity levy means

The Central Bank of Nigeria has issued a directive to banks operating within the country, instructing them to begin levying a cybersecurity fee on transactions. This measure, as outlined in a circular from the apex bank, is in response to the Cybercrime (Prohibition, Prevention, etc) (amendment) Act 2024. According to Section 44 (2)(a) of the Act, a levy of 0.5 per cent (0.005), which equates to half a percent of the value of all electronic transactions conducted by businesses specified in the Second Schedule of the Act, is to be imposed. This levy is to be remitted to the National Cybersecurity Fund, which will be overseen by the Office of the National Security Adviser.

The circular further indicates that the implementation of this levy will commence within two weeks. This move aims to bolster cybersecurity measures in the country, particularly in light of the increasing prevalence of cyber threats and attacks. In practical terms, this means that individuals and businesses engaging in electronic transactions will notice a slight increase in the costs associated with their transactions, reflecting the newly imposed cybersecurity levy.

For those seeking clarification on how this levy affects their transactions, PUNCH Online provides insights into understanding the implications of this measure and how to identify the cybersecurity levy applied to their transactions.

First and foremost, it's crucial to understand that 0.5% is essentially the same as 0.005 in decimal form, representing half of 1 percent. When expressed as a decimal, 0.5% becomes 0.005.

Therefore, this implies that the Central Bank of Nigeria (CBN) will subtract 0.5% from any transfer conducted in accordance with the specified regulations.

To illustrate, let's say a customer intends to transfer N10,000. As per the recent directive from the CBN, the customer will incur a N50 cybersecurity levy charge. It's important to note that this levy is separate from any additional bank fees or charges associated with transactions, such as Value Added Tax (VAT), among others.

To find out how to calculate what you will be charged when making a transaction, the formulas are below;

Formula one

The amount to be transferred is multiplied by 0.5 and then divided by 100. The result is what will be charged as the cybersecurity levy on that transaction.

Formula two

The amount to be transferred is multiplied by 0.005. The result is what will be charged as the cybersecurity levy on that transaction.

However, the CBN also highlighted 16 banking transactions that are exempted from the CBN'S new cybersecurity levy including  Loan disbursements repayments and Salary payments, among others.