Backlash Over Proposed Levy on Electronic Banking Transactions in Nigeria

Nigeria’s Central Bank has stirred controversy with its plan to impose a levy on domestic electronic money transfers, sparking backlash from various quarters amid the country’s economic challenges.

The proposed 0.5% levy, set to commence on May 20th, aims to bolster cybersecurity funding, according to the Central Bank. However, the timing of the levy, amid Nigeria’s economic crisis and currency devaluation, has drawn criticism, with concerns raised about its impact on citizens already struggling to afford basic necessities.

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Dr. Abdulrazaq Fagge, an economics lecturer, denounces the move as ill-timed and detrimental to Nigeria’s fragile economy. He argues that burdening citizens with additional charges while they grapple with financial hardships is unjust, particularly for small businesses.

The levy has prompted public outcry, with citizens expressing frustration over the potential financial strain. Bread seller Abubakar Sheka voices his discontent, vowing to revert to cash transactions to evade the levy’s deductions, citing the financial challenges faced by ordinary Nigerians.

The Nigeria Labour Congress and the Socio-Economic Rights and Accountability Project have rejected the levy, with the latter threatening legal action against the government. Critics argue that the levy undermines the country’s cashless economy initiative and may exacerbate cash shortages.

Public affairs analyst Habu Sani warns of a regression in cashless transactions, foreseeing a resurgence in cash usage to circumvent the levy. He highlights the potential adverse consequences, including strains on government finances and a resurgence of cash shortages, reminiscent of those experienced in 2023.

The scarcity of cash in 2023, precipitated by currency reforms aimed at curbing election-related fraud, prompted a shift towards mobile money usage. However, with the proposed levy threatening to reverse this trend, concerns are mounting over its impact on Nigeria’s digital payment landscape, especially in rural areas with limited mobile network coverage and smartphone accessibility.

As the controversy unfolds, Nigerians await the government’s response to the mounting opposition against the proposed levy, which has ignited debates over its implications for the country’s economic recovery efforts and digital transformation agenda.