In May 2024, the Central Bank of Nigeria (CBN) introduced a new policy that immediately drew national attention: a 0.5% levy on all domestic electronic money transfers. The government explained this levy was necessary to fund the nation’s cybersecurity infrastructure, a critical need given Nigeria’s rising vulnerability to cybercrime. But the policy quickly triggered intense backlash from the public, lawmakers, business groups, and economists alike. This widespread opposition forced a reconsideration at the highest levels of government.
By January 2025, President Bola Tinubu officially suspended the implementation of the levy, instructing the CBN to review the policy thoroughly. The backlash and suspension have created a rare moment of public policy pause in Nigeria, where government decisions often move swiftly without such pushback. The question now is: Why are lawmakers seriously considering scrapping this controversial cyber-security levy altogether?
This article delves deep into the background of the levy, explores the reasons behind the backlash, and examines the economic and political factors driving lawmakers toward potentially abandoning the levy. Through verified data and official statements, we’ll unpack the complexities of this issue, aiming to provide a clear, comprehensive understanding without hype or distortion.
The Rationale Behind the Levy
To understand why the cyber-security levy stirred such debate, it’s important first to grasp the government’s reasoning for introducing it. Nigeria, like many countries worldwide, has seen a rapid increase in digital financial transactions over the past decade. With this growth came a corresponding rise in cybercrimes — from identity theft and fraud to large-scale cyberattacks targeting banks and fintech platforms. The financial sector, responsible for trillions of naira in daily transactions, had become a prime target for cybercriminals.
Recognizing this threat, the Central Bank of Nigeria proposed the cyber-security levy as a dedicated funding mechanism to strengthen national cyber defense. Specifically, the levy was set at 0.5% on domestic electronic transfers, which includes bank-to-bank transfers, mobile money transactions, and payments made through fintech apps. The collected funds were intended to be funneled directly into the National Cybersecurity Fund, managed by the Office of the National Security Adviser (ONSA).
The official goal was straightforward: create a sustainable, long-term financial pool that could be used to upgrade digital infrastructure, enhance cybersecurity training for institutions, and improve incident response capabilities. Prior to this levy, cybersecurity initiatives in Nigeria were largely financed through budget allocations, grants, and international partnerships — sources considered insufficient to meet the growing demands of securing a rapidly digitizing economy.
In summary, the government framed the levy as a necessary, proactive investment in national security, designed to protect consumers, businesses, and the integrity of Nigeria’s financial ecosystem against escalating cyber threats.
Public and Institutional Opposition
Despite the government’s stated intentions, the cyber-security levy quickly met with widespread and vocal opposition from many corners of Nigerian society. The backlash was rooted primarily in economic concerns, legal questions, and fears about the levy’s impact on ordinary citizens and businesses.
Economic Strain on Nigerians
One of the strongest criticisms centered on the timing and economic context. Nigeria’s economy had been under pressure due to high inflation, currency devaluation, and rising living costs. Many Nigerians were already struggling to cope with daily expenses. Introducing a new 0.5% charge on every electronic transfer, no matter how small, was seen as an additional financial burden on individuals and businesses alike.
Critics pointed out that this levy would affect millions of low-income earners who rely heavily on mobile money and bank transfers for everyday transactions — from paying utility bills to sending money to family members. For many, the incremental costs could accumulate quickly, reducing disposable income and increasing financial stress.
Concerns About Multiple Taxation
Another key point of opposition was the perception that Nigerians were being taxed multiple times on the same transaction. Electronic transfers in Nigeria are already subject to stamp duties and other levies. The introduction of the cyber-security levy was viewed as piling on an extra tax layer without clear justification or transparency.
Many argued that instead of creating new taxes, the government should optimize existing revenue streams and improve accountability in public spending. The fear was that the levy would set a precedent for further micro-levies that could stifle economic activity.
Legal and Constitutional Issues
Beyond economic arguments, some legal experts and advocacy groups raised constitutional questions about the legitimacy of the levy. The Association of Legislative Drafting and Advocacy Practitioners (ALDRAP) and other legal bodies pointed out that taxation powers in Nigeria are constitutionally vested in the National Assembly.
Since the levy was introduced administratively by the Central Bank of Nigeria without prior legislative approval, critics argued it lacked the legal foundation required for a tax. They warned that continuing with the levy could expose the government to legal challenges and undermine trust in fiscal governance.
Institutional Pushback
Trade unions, professional associations, and civil society organizations joined the chorus of opposition, demanding immediate suspension of the levy. These groups emphasized that cybersecurity is undeniably important but insisted funding mechanisms should not disproportionately affect ordinary Nigerians or small businesses.
In conclusion, the opposition was fueled by a mix of economic hardship, concerns over fairness and legality, and skepticism about the government’s approach to policy implementation. This collective resistance played a significant role in prompting lawmakers and the executive branch to reconsider the levy.
Political and Legislative Reactions
The cyber-security levy did not only face criticism from the public and institutions; it rapidly became a hot topic in Nigeria’s political and legislative arenas. Lawmakers, recognizing the widespread discontent and potential economic fallout, weighed in strongly against the policy.
Lawmakers’ Condemnation
Prominent senators and members of the House of Representatives voiced sharp criticism. Senator Ali Ndume, a key voice in the Senate, publicly condemned the levy as an unfair tax that burdens Nigerians without corresponding benefits. Ndume and others highlighted that imposing additional financial charges on an already cash-strapped population was unjustifiable, especially when wages and incomes have stagnated or declined.
Several lawmakers argued that the levy was implemented without adequate stakeholder engagement or legislative oversight. They stressed the importance of due process, transparency, and consultation in tax policies, emphasizing that rushed decisions risk undermining democratic governance and citizen trust.
Legislative Motions to Scrap the Levy
In response to the backlash, multiple legislative motions were introduced to formally investigate and possibly repeal the cyber-security levy. These motions called for a comprehensive review of the policy’s rationale, implementation procedures, and impact assessments.
The motions also sought clarification on how funds collected through the levy would be managed and audited, emphasizing the need for accountability to prevent misappropriation or inefficiencies. Some lawmakers advocated for alternative funding models that would not impose direct costs on consumers.
Executive Response and Suspension
The combined legislative pressure, along with public outcry, led President Bola Tinubu to intervene by suspending the levy indefinitely in January 2025. The President tasked the Central Bank and relevant agencies to review the levy comprehensively, including consulting stakeholders across the public and private sectors.
This suspension effectively paused the levy and signaled a willingness by the government to reconsider the policy’s design and implementation. The President’s decision was seen as an acknowledgment that the levy, as initially structured, was politically and economically untenable.
Economic Implications of the Levy and Potential Scrapping
Understanding why lawmakers may scrap the cyber-security levy requires analyzing its broader economic implications. The levy’s potential impact spans consumer behavior, business operations, government revenue, and Nigeria’s digital economy trajectory.
Impact on Consumer Spending and Financial Inclusion
A direct charge on electronic transactions, even at 0.5%, has a psychological and practical impact on consumers. Nigerians, especially those in lower income brackets, may reduce the frequency or value of transactions to avoid paying the levy. This behavioral change could lead to reduced economic activity in the digital space, undermining financial inclusion efforts.
Financial inclusion, a key development goal, depends heavily on accessible, affordable digital payment options. By increasing transaction costs, the levy risked excluding marginalized populations who are just beginning to adopt mobile banking and fintech solutions.
Business Costs and Digital Economy Growth
For businesses, particularly small and medium-sized enterprises (SMEs), the levy represented an additional operational cost. Many SMEs rely on electronic payments for sales and supplier transactions. Increased costs could reduce profit margins, limit investment, and potentially lead to higher prices for consumers.
Nigeria’s digital economy is among the fastest-growing sectors, contributing significantly to GDP and employment. Policies perceived as punitive could slow growth, deter innovation, and reduce Nigeria’s competitiveness in fintech and other technology-driven industries.
Government Revenue and Alternative Funding Options
On the government’s side, the levy was intended as a steady revenue source to fund critical cybersecurity projects. Scrapping the levy means identifying alternative funding mechanisms. Options could include budget reallocations, international grants, public-private partnerships, or targeted levies on large corporate entities rather than consumers.
Effective cybersecurity funding is essential, but it must be balanced with economic realities and the need to protect the vulnerable segments of society. Lawmakers’ push to scrap the levy reflects this balancing act — prioritizing sustainable cybersecurity without undermining economic stability.
Alternatives to the Cyber-Security Levy
Given the backlash and economic concerns, several alternatives to funding cybersecurity without directly taxing electronic transactions have emerged in policy discussions. These alternatives aim to maintain robust cyber defense capabilities while minimizing adverse effects on consumers and businesses.
Targeted Corporate Contributions
One alternative is to impose cybersecurity funding levies or contributions on large corporations, especially those in finance, telecommunications, and tech sectors that benefit most from secure digital infrastructure. This approach places the financial responsibility on entities with greater resources, potentially raising substantial funds without burdening everyday consumers.
Budget Reallocations and Efficiency Improvements
Improving the efficiency of existing government spending and reallocating budgets to prioritize cybersecurity is another option. By auditing current expenditures and cutting waste or corruption, more resources could be freed up without creating new taxes.
International Support and Public-Private Partnerships
Nigeria can also seek increased support from international development agencies, cybersecurity alliances, and foreign governments that have an interest in stable, secure digital economies in Africa. Additionally, partnerships with private sector companies can leverage expertise and investment to strengthen defenses without relying solely on government funds.
Education and Capacity Building Initiatives
Investing in public cybersecurity education campaigns and training professionals can reduce the overall threat level cost-effectively. Enhancing the skills of Nigerians in cyber defense reduces the need for expensive reactive measures later.
Building Trust Through Transparency and Accountability
A central issue underpinning the cyber-security levy backlash is public trust — or the lack thereof — in government fiscal policies and cybersecurity governance. For any funding mechanism to succeed, transparency in how funds are collected, managed, and spent is essential.
Past experiences with government levies and funds in Nigeria have often been marred by allegations of mismanagement and corruption. This history fuels skepticism and resistance when new levies are introduced, especially those that impact millions of ordinary Nigerians.
Lawmakers have emphasized that future cybersecurity funding models must include clear accountability frameworks, independent audits, and stakeholder involvement. Only with robust governance can Nigerians feel confident that any contributions they make genuinely enhance national security rather than lining bureaucratic pockets.
Looking Ahead: The Future of Cybersecurity Funding in Nigeria
The debate around the cyber-security levy has highlighted important tensions in Nigeria’s evolving digital economy: the need to secure critical infrastructure against increasing threats versus the imperative to protect vulnerable populations from new financial burdens.
Lawmakers’ move toward scrapping the levy signals a recognition that cybersecurity funding must be pursued through more equitable, transparent, and economically sustainable means. The government’s challenge will be to develop policies that safeguard Nigeria’s digital future without sacrificing social and economic inclusion.
Moving forward, the emphasis is likely to be on greater consultation with stakeholders, enhanced legislative oversight, and exploring innovative funding mechanisms that balance the interests of security, growth, and fairness. Nigeria’s experience serves as a valuable case study for other countries facing similar dilemmas in the digital age.
Ultimately, the success of Nigeria’s cybersecurity initiatives will depend on a holistic approach—one that integrates technological investment, legal reforms, public education, and above all, trust between the government and its citizens. Only then can the nation build resilient cyber defenses that protect its economic future and digital sovereignty.
