Cybercrime On The Rise: Can Nigeria’s New 0.005% Cybersecurity Levy Protect Financial Systems?

By Michael Ojih

In a bold move to combat the growing menace of cybercrime, the Central Bank of Nigeria (CBN) has directed all banks to implement a 0.005% levy on electronic transactions. This directive is aimed at strengthening cybersecurity defenses across the nation’s financial sector, which has become increasingly vulnerable to sophisticated attacks. Yet, questions remain about whether the public will embrace this levy, especially given past concerns about government transparency and accountability

Cybercrime is often compared to digital robbery, where criminals use the internet or technology to commit illegal activities. Instead of breaking into buildings, cybercriminals infiltrate computer systems, stealing personal information, money, and even identities. This high-tech crime can cause as much damage as traditional crimes, affecting individuals, businesses, and even nations.

In recent years, cybercrime has escalated into a multi-billion Naira illegal market, threatening financial systems worldwide. Nigeria is no exception. As more Nigerians adopt digital services, cybercriminals find it easier to commit online fraud. In 2022 alone, the nation reportedly lost over five billion Naira to cyber fraud primarily from phishing, ransomware, and bank scams. These cybercriminals act like invisible thieves, constantly devising new strategies to break into financial systems. Their actions not only disrupt banking services but also undermine public trust, posing serious risks to the Nigerian economy.

The financial sector, particularly currency markets, is a prime target for cybercriminals. With rapid transaction speeds and the ability to move large sums across borders, criminals can act and disappear before detection, making it challenging to track and recover stolen funds. Wallet accounts, often with less stringent regulatory standards than traditional banks, offer cybercriminals an additional avenue to exploit. By using fake identities and unregulated platforms, they can launder money with minimal detection. Cryptocurrencies, with their emphasis on anonymity, also aid in concealing these illicit transactions. Another concern is large-scale ransomware attacks, which can shut down entire networks and incur massive financial losses. These attacks exploit vulnerabilities within financial systems, leading to an urgent need for stronger cybersecurity measures to safeguard the industry

The introduction of a 0.005% levy on electronic transactions is designed to support Nigeria’s financial institutions in defending against cyber threats. The CBN envisions that this levy will provide banks with additional funds to invest in security measures, allowing them to protect customer data better, prevent fraud, and respond quickly to potential threats. The success of this initiative, however, hinges on how effectively the funds are managed and whether the public can trust that they are being used for their intended purpose.

Public trust is a critical factor in the success of this levy. Many Nigerians are skeptical about how public funds are managed, given past incidents of corruption and inadequate transparency. If people perceive the levy as simply another financial burden without visible improvements in cybersecurity, it could backfire. Instead of bolstering confidence in the financial system, it might deepen public mistrust, with many viewing it as just another “tax” that delivers little in return.

In the worst case scenario, if the funds generated by this levy are misused or not properly allocated toward cybersecurity, it could become a form of “cybercrime” in itself. Funds intended to secure the financial system could end up wasted or even misappropriated, further eroding public confidence and making it harder to gain support for future cybersecurity initiatives.

For the 0.005% cybersecurity levy to achieve its goals, both the government and banks must prioritize transparency and accountability. Clear communication about how these funds are being used to improve cybersecurity, coupled with measurable outcomes, will be essential for building public trust. Without this transparency, the directive could create more issues than it solves, driving a deeper wedge between the public and authorities.

As Nigeria grapples with the challenges of digital threats, the CBN’s cybersecurity levy presents an opportunity to strengthen defenses, provided it is managed transparently. The journey to a more secure digital financial landscape is a challenging one, and for this initiative to succeed, the government must prove that the funds will indeed enhance Nigeria’s resilience against cybercrime.

Michael Ojih is a Cybersecurity Leader, Chief Information Security Officer at TransactWorld Digital Limited, and Chief Solution Officer at InfoAssure Limited.