IMF Backs CBN’s Tough Monetary Policy, Solicits Robust Cybersecurity Framework
*Hails economic reforms, canvasses autonomy
*Senate: Cybersecurity bill duly passed
*Halt implementation, house orders apex bank
*NESG, NEF, Falana fault, reject idea, timing
Chuks Okocha, Ndubuisi Francis, Adedayo Akinwale, Alex Enumah, Sunday Aborisade in Abuja, Nume Ekeghe and Dike Onwuamaeze in Lagos
The International Monetary Fund (IMF) has endorsed some of the tight monetary policies of the Central Bank of Nigeria (CBN), which are part of its reforms, and recommended caution on amendment of the CBN Act in order not to weaken the apex bank’s autonomy.
The endorsement was part of the multilateral lender’s recommendations on Nigeria in its Article IV Consultation report.
Relatedly, Chairman of the Senate Committee on National Security and Intelligence, Senator Shehu Buba, justified the proposed implementation of the cybersecurity levy by the CBN.
But no fewer than 356 members of the House of Representatives demanded an immediate halt to the proposed implementation of the cybersecurity levy.
Nigerian Economic Summit Group (NESG) also faulted the timing of the introduction of the 0.5% cybersecurity levy on electronic transactions.
Similarly, Northern Elders Forum (NEF) rejected the introduction of cybersecurity charges on bank customers.
Human rights activist, Mr Femi Falana, SAN, equally faulted the CBN directive to commercial banks for the deduction of 0.5 per cent of the value of all electronic transactions and remitting same to the National Cybersecurity Fund overseen by the Office of the National Security Adviser (NSA).
IMF Assistant Director of the African Department and Mission Chief to Nigeria, Axel Schimmelpfennig, at a virtual press briefing, yesterday, unveiled the position of the IMF Executive Directors at the end of the Article IV Consultation on Nigeria.
According to Schimmelpfennig, the IMF Executive Directors stated, “Following monetary policy tightening in February and March 2024 and a resumption of FX interventions, the naira has started to stabilise.”
While welcoming what they described as the bold reforms implemented by the President Bola Tinubu administration, the IMF executive directors commended the authorities’ focus on revenue mobilisation, governance, social safety nets, and upgrading policy frameworks in the face of Nigeria’s significant economic and social challenges.
The report said, “In view of the downside risks, directors stressed the importance of steadfast, well‑sequenced, and well‑communicated reforms to restore macroeconomic stability, reduce poverty, support social cohesion, and pave the way for faster, inclusive, and resilient growth.
“Directors commended the authorities’ actions to rein in inflation and restore market confidence. They stressed the importance of keeping a tight monetary policy stance to put inflation on a downward path, maintaining exchange rate flexibility, and building reserves.
“Directors welcomed the removal of foreign exchange market distortions and encouraged the authorities to continue improving the functioning of the FX market, including by adopting a well‑designed FX intervention framework.
“Some directors also noted that carefully and sequentially phasing out capital flow management measures when warranted would be important.”
The IMF directors also supported the Nigerian authorities’ intentions to shift to an inflation-targeting regime and recommended strengthening central bank independence and communication to ensure a successful transition.
The report stated. “They recommended caution regarding amendments to the Central Bank of Nigeria (CBN) Act that might weaken the central bank’s autonomy. They encouraged further progress in implementing the outstanding recommendations from the 2021 safeguards assessment.
“Directors commended the authorities for restarting the cash transfer programme and emphasised the urgency of scaling it up to mitigate acute food insecurity. They welcomed the authorities’ work on a comprehensive revenue mobilisation strategy, including boosting tax enforcement and broadening the tax base.
“They underscored that mobilising revenue and reprioritising expenditure, including phasing out costly and regressive energy subsidies, are critical to creating fiscal space for development spending and strengthening social protection, while maintaining debt sustainability.
“Directors appreciated the authorities’ commitment to discontinue deficit monetisation and positively noted progress in macroeconomic policy coordination.”
Schimmelpfennig said the directors emphasised the importance of close monitoring of financial sector risks, and added that they supported the increase in the minimum capital for banks, and urged the CBN to unwind the regulatory forbearance introduced during the pandemic.
The directors further acknowledged Nigeria’s recent improvements in the AML/CFT framework and called for sustained action to exit the Financial Action Task Force (FATF) grey list.
Schimmelpfennig said the directors equally supported the authorities’ efforts to foster financial inclusion and deepen the capital market.
The IMF Mission Chief expressed optimism regarding the country’s economic reforms, highlighting their potential for inclusive growth.
Schimmelpfennig commended the authorities for their determination to address distortions and bottlenecks hindering economic progress.
While acknowledging the challenges faced by Nigerians amid ongoing reforms, he emphasised the importance of providing support to the vulnerable as well as revitalising growth and job creation.
He stressed the need for a well-sequenced approach to reforms, particularly in scaling up social support systems to alleviate the current cost of living crisis.
The IMF chief alluded to government’s determination to push ahead with reforms to address distortions and bottlenecks that have been built up over the years, and are holding back Nigeria and Nigerians from reaching their economic potential.
He stated, “We appreciate that, there’s a lot of pain for Nigerians right now. And our policy advice aims to provide support to those in need, while also reinvigorating growth and job creation.
“And in that regard, we put a lot of emphasis on the sequencing of reforms in our report, to ensure that the most vulnerable are protected and can navigate the economic situation as it is.
“And specifically, we are encouraged that the cash transfer system and other social support systems are now implemented and we emphasise that it’s very important to scale those up urgently to help Nigerians manage the ongoing cost of living crisis.
“But we think it is also worth highlighting the upside, which is the authorities are working on a comprehensive economic reform program to accelerate growth implementing that in a well sequence manner we do see has the potential of raising growth and making it more inclusive.”
On the recent monetary policy reforms, Schimmelpfennig said, “We welcome the central bank’s commitment to bringing down inflation. Inflation does hurt the poor disproportionately, they are the ones that are least able to impact that.
“With that in mind, we think that the decision by the Monetary Policy Committee in February and March to raise the policy rate combined with steps to tighten market liquidity is appropriate to address inflation. That really is a high priority to reduce the cost-of-living crisis that Nigerians are facing.
“We also welcome the steps by the central bank to introduce a willing buyer willing seller principle in the foreign exchange market. As I said, if you kind of think back, trying to keep the naira artificially at an artificial level meant that many people just didn’t have access to dollars or you had to turn to a parallel market, which had a huge premium of 60 per cent at times.”
Responding to a question on the controversial cybersecurity levy, IMF Resident Representative to Nigeria, Christian Ebeke, said, “Cybersecurity is a macro critical issue, so it is something that has to be taken very seriously because of the potential financial instability, and repercussions of cybersecurity attacks on the financial sector.
“So, this is an issue that we take very seriously at the IMF and, in fact, our latest global financial stability report published in April a few weeks ago highlighted the importance of designing adequate frameworks and adequate regulation really to tackle cybersecurity.
“In the case of Nigeria, my understanding from just a few minutes ago is that yet to be confirmed by you, but we understand that the House of Representatives voted the motion to pause the implementation of this cybersecurity levy that was part of the Cyber Crime Act that was just adopted also, lately.
“So, we have not discussed this particular issue with the authorities, but as I mentioned, it is very serious and we encourage the authorities to work towards having an adequate framework around cybersecurity, and more generally designing something robust and sufficiently efficient to tackle this very important issue for the financial sector.”
Senate: Bill on Cybersecurity Duly Passed
Chairman, Senate Committee on National Security and Intelligence, Senator Shehu Buba, justified the proposed implementation of the cybersecurity levy by the Central Bank of Nigeria (CBN).
Buba, in a statement, clarified that the levy was not punitive, as it has numerous exemptions to protect and relieve ordinary citizens, particularly the poor.
He said the exemptions included salary payments, intra-account transfers, loan disbursements and repayments, and other financial transactions.
Buba said the amendments to the Cybercrimes Act were a collaborative effort with the National Assembly’s ICT and Cyber Security Committee.
He stated, “The committee also underwent a transparent public hearing process, receiving contributions from various stakeholders. Both houses of the National Assembly unanimously passed it before President Bola Ahmed Tinubu signed it into law.”
Buba emphasised that the provisions for the cybersecurity levy had been in place since 2015, but were delayed due to unclear interpretations and applications.
He said, “The Cybercrimes Act of 2015 has provisions for imposing a cybersecurity levy since its enactment, but the vagueness of Section 44 led to different interpretations until the 2024 amendments.
“The levy is 0.5%, equivalent to half a per cent of the value of all electronic transactions by businesses specified in the Second Schedule to the Act.
“The amendments addressed crucial gaps in the Act and empowered the nation to implement the National Cybersecurity Programme effectively.
“They also seek to realign and empower the country to combat the inadequate funding and disruptive effects of cyber threats on national security and critical economic infrastructures.”
Buba underscored the criticality of the cybersecurity levy’s implementation, stating that its prudent utilisation would bolster the country’s capacity to evaluate, execute, upgrade, and fortify the security of national critical economic infrastructure, thereby safeguarding the country’s cyberspace.
Halt Implementation, House Orders CBN
The House of Representatives demanded an immediate halt to the proposed implementation of the cybersecurity levy imposed by the CBN.
The resolution of the House was sequel to the adoption of a motion by Hon. Kingsely Chinda on behalf of others.
He said the CBN through a circular to all Commercial, Merchant, Non-interest and Payment Service Banks; other Financial Institutions, Mobile Money Operators and Payment Service Providers, dated May 6, 2024, informed Nigerians of a proposed 0.5% levy on electronic transactions in line with Section 44(2)(a) of the Cybercrimes (Prohibition, Prevention, etc.) (Amendment) Act, 2024 (Cybercrimes Act).
Chinda explained that Section 44(2)(a) of the Cybercrimes Act 2024 provided , “A levy of 0.5% (0.005) equivalent to half percent of all electronic transactions value by business specified in the Second Schedule to this Act be paid into the Cybersecurity Fund.”
He added that businesses, which the said Section 44(2)(a) referred to, were listed in the Second Schedule to the Cybercrimes Act to be: GSM Service Providers and all telecommunication companies; Internet Service Providers; Banks and Other Financial Institutions; Insurance Companies and Nigerian Stock Exchange.
The minority leader was concerned that the CBN circular mandated all banks, other financial institutions and payments service providers to implement the Cybercrimes Act by applying the levy at the point of electronic transfer origination as “Cybersecurity Levy” and remitting same.
He expressed concern that the wordings of the circular left the CBN directive to multiple interpretations, including that the levy be paid by bank customers against the letters and spirit of Section 44(2)(a) and the Second Schedule to the Cybercrimes Act, which specified the businesses that should be levied accordingly.
Chinda lamented that the act had led to apprehension, as civil society organisations and citizens had taken to conventional and social media to call out the federal government, give ultimatums for a reversal of the imposed levy on Nigerians, among other things.
He worried that unless immediate pragmatic steps were taken to halt the proposed action of the CBN, the Cybercrime Act would be implemented in error at a time Nigerians were experiencing the aftermath of multiple removal of subsidies from petroleum, electricity and so on, and rising inflation.
The House, therefore, resolved, “Direct the Central Bank of Nigeria to withdraw the ambiguous circular and issue an unequivocal Circular in line with the letters and spirit of the Law
“Direct the House Committees on Banking Regulations, and Banking and other Ancillary Institutions to guide the Central Bank of Nigeria properly.”
NESG Faults Timing of Cybersecurity Levy
Nigerian Economic Summit Group (NESG) faulted the timing of the 0.5% cybersecurity levy on electronic transactions recently introduced by the CBN.
It, therefore, asked the federal government to reconsider the levy, as Nigerians were currently groaning under multiple taxation and inflationary pressures.
NESG, in a statement, said, “Amidst the cost of living crisis exacerbated by rising inflation, the cybersecurity levy is mistimed,” considering the high rate of financial exclusion and increased currency in circulation.
According to the statement, “The NESG posits that the levy should be targeted at high-net-worth individuals and a specific amount transferred electronically to allay the fears of the populace, who are still battling skyrocketing food and non-food prices.
“However, if this policy remains, several Nigerians will boycott electronic funds transfers, which does not even bode well for the government due to revenue loss from electronic transfer levy.
“The NESG, however, feels this is a critical time to implement such a policy. The impacts of the fuel subsidy removal, exchange rate reform, and, most recently, the removal of electricity subsidies still permeate the operating costs of businesses and citizens.
“The government must be cautious of the numerous strenuous policies that stiffen the purchasing power and welfare of corporations and individuals. Therefore, the government needs to properly sequence reforms for efficient socioeconomic outcomes, especially those that strain the people.”
NEF Rejects Cybersecurity Levy
Northern Elders Forum (NEF) rejected the recent introduction of cybersecurity charges on bank customers by the CBN.
In a statement in Kaduna, spokesperson of the forum, Abdul-Azeez Suleiman, described the policy as arbitrary, illegal, and out of touch with the realities facing Nigerians.
The forum called on the federal government to reconsider the policy and explore alternative measures to ease the financial strain on individuals while still promoting the use of electronic payments.
NEF said, “The introduction of cybersecurity levies, in addition to existing fees, such as stamp duty, transfer fees, value-added tax, and SMS charges, has placed an unbearable financial burden on individuals engaging in electronic transactions.”
Suleiman stated that the fees included various charges that bank customers now face,d including cybersecurity levies, ranging from N5 on N1,000 to N50,000 on N10,000,000 transactions, transfer fees, stamp duty, and value-added tax.
According to the statement, these additional costs have significantly increased the overall expense of electronic transactions for both senders and receivers.
While acknowledging the importance of cybersecurity in safeguarding electronic transactions, NEF stressed the need for a more balanced approach that ensured the costs of security measures were reasonable and did not excessively burden bank customers.
Suleiman said the country was already grappling with economic challenges, and additional financial burden imposed by the CBN cybersecurity levy was unjust and unfair.
The statement urged the government and relevant stakeholders to find a sustainable solution that struck a fair balance between enhancing cybersecurity and alleviating the financial burden on the Nigerian populace.
Falana Faults Application of Levy
Mr. Femi Falana, SAN, faulted the directive of the CBN to commercial banks for the deduction of 0.5 per cent of the value of all electronic transactions.
In a statement, Falana argued that the apex bank was wrong in holding that the Cybercrime (Prohibition, Prevention etc) Act 2015 amended in 2024, was applicable to individuals.
Falana stated that although the said “levy of 00.0 5 per cent is payable by the businesses listed in the second schedule to the principal Act, the Central Bank of Nigeria, has wrongly directed all financial institutions to apply the levy at the point of electronic transfer origination and that the amount is to be explicitly noted in customer accounts under the description ‘Cybersecurity Levy’ and remitted by the financial institution.”
According to the senior lawyer, the circular issued by CBN gave the very erroneous impression that the levy was payable by individual customers.
He stated, “The erroneous interpretation might have arisen from the substitution of ‘businesses’ for ‘business’ in the amendment. For the avoidance of doubt, by virtue of Section 42(a) of the Cybercrime Act 2025 as amended, the businesses which are required to pay the levy are: GSM Service providers and all telecommunications companies; Internet Service Providers; Banks and other Financial Institutions; Insurance Companies; and Nigerian Stock Exchange.
“In view of the foregoing, the Central Bank of Nigeria should be directed to withdraw its Circular of May 6, 2024 forthwith as it has wrongly interpreted the provisions of the Cybercrime (Prohibition, Prevention, etc.) Amendment Act 2024.”
Falana said the apex bank should also apologise to Nigerians for the misleading interpretation of the clear and unambiguous provisions of the Cybercrime (Prohibition, Prevention, etc.) Amendment Act 2024.
