NESG makes case for postponed cybersecurity levy

Nigeria's President Bola Tinubu recently called for the Central Bank of Nigeria to halt the implementation of the proposed cybersecurity levy for further review. The Nigerian Economic Summit Group (NESG) has echoed this sentiment, suggesting that the levy be postponed until the Fiscal Policy Committee deems it necessary to proceed. Faith Iyoha, an Economist at the NESG, provided insights on the potential impact of the levy on various economic stakeholders during an interview on CNBC Africa. One of the key concerns raised by Iyoha is the potential burden this levy could place on everyday Nigerians. With rising food prices and essential expenses like education and healthcare already straining household budgets, any increase in government revenue through the levy must be balanced with measures to ease the financial constraints on citizens. Iyoha emphasized that the Nigerian populace is already facing challenges in meeting their basic needs, and additional financial burdens could further limit their quality of life. From an investment perspective, Iyoha highlighted the potential strain on profits for businesses. The ability of companies to pass on the increased costs to consumers will determine their profitability. If businesses cannot transfer the additional expenses to customers due to demand elasticity, it may result in thinning profit margins and hinder reinvestment in operations. Furthermore, the NESG recommended that if the cybersecurity levy proceeds, it should target high net worth individuals to minimize impact on vulnerable segments of society. There were also suggestions to set a minimum threshold for the levy to ensure that average Nigerians are not disproportionately affected. Iyoha argued against a 500 Naira cap on transactions subject to the levy, expressing concerns that it could push more people into poverty and hinder consumption patterns. Regarding the exclusion of certain transactions such as salary payments and loan repayments from the levy, Iyoha cautioned that the implementation should be gradual and well-sequenced to prevent disruptions to financial inclusion goals. With the Central Bank recently raising policy rates and potential additional tax reforms on the horizon, Iyoha advised against abrupt taxation measures that could exacerbate inflation and economic challenges. In conclusion, the debate over the cybersecurity levy in Nigeria reflects the complex balancing act between increasing government revenue and safeguarding the welfare of citizens and businesses. The call for a cautious approach to the implementation of the levy underscores the need for thorough assessment and alignment with broader fiscal policies. As the country navigates these economic decisions, collaboration between stakeholders and thoughtful reform sequencing will be crucial for sustainable growth and inclusivity.