Controversy Erupts in Nigeria Over New Levy on Electronic Banking Transactions

The recent announcement of a new levy on electronic banking transactions by the Central Bank of Nigeria (CBN) has sparked widespread backlash among Nigerians, with concerns raised over its potential impact on the country’s struggling economy.

Scheduled to come into effect in two weeks’ time, the 0.5% levy aims to bolster cybersecurity measures. However, many Nigerians fear that it will exacerbate their financial hardships, forcing them to revert to cash transactions.

Dr. Abdulrazaq Fagge, an economics lecturer at Yusuf Maitama University, deems the government’s decision ill-timed and detrimental to the economy. He argues that imposing additional financial burdens on citizens during times of economic turmoil is unjustifiable.

Expressing similar sentiments, Fagge highlights the disproportionate impact the levy will have on ordinary individuals and small businesses. He contends that the levy should be borne by banks, which profit substantially from electronic transactions.

Abubakar Sheka, a bread seller, voices his frustration, stating his intention to steer clear of electronic banking once the levy takes effect. He criticizes the levy as unfair, particularly for those with limited earnings, and bemoans the government’s insensitivity to the plight of its citizens amidst rising costs of living.

Opposition to the levy extends beyond individual grievances, with prominent organizations such as the Nigeria Labour Congress and the Socio-Economic Rights and Accountability Project (SERAP) condemning the move. While the former rejects the levy outright, the latter threatens legal action against the government.

Public affairs analyst Habu Sani warns of unintended consequences, suggesting that the levy could undermine the government’s efforts to promote cashless transactions. He predicts a resurgence in cash usage as individuals seek to avoid the levy, potentially leading to cash shortages.

Sani’s concerns are underscored by past experiences, such as the cash shortages observed in 2023 following currency reforms aimed at combating fraud during elections. The resultant shift towards mobile money services may be reversed if the levy discourages electronic transactions.

Despite these criticisms, Nigeria faces challenges in achieving widespread digital penetration, attributed to inadequate mobile network coverage and limited access to smartphones, particularly in rural areas.

As the implementation date approaches, Nigerians await the government’s response to the mounting opposition, amidst fears of further economic strain and setbacks to the country’s cashless economy initiatives.