Anger in Nigeria Over Taxes on Money Transfers

Nigerians say the levy will hurt their wallets even more [Getty Images]

Many Nigerians have condemned the introduction of a new levy on e-banking transactions. Some say it will put them back into cash.

The Central Bank of Nigeria (CBN) has told financial institutions that the 0.5% levy, aimed at raising funds to improve cybersecurity, will come into effect in two weeks.

Nigeria is experiencing its worst economic crisis in a generation and many people say the levy will lead to more hardship as they struggle to afford basic goods.

Dr. Abdulrazaq Fagge, who teaches economics at Yusuf Maitama University, tells the BBC that this is a wrong move by the government that will have a negative impact on Nigeria’s struggling economy.

“Not only is it bad timing, it is a completely wrong move, as no government should say.” [an] “An additional burden on citizens at a time when they are struggling to make ends meet,” he says.

He said it would also hurt small businesses.

“If you remit one million naira, five thousand naira will be deducted as cybersecurity levy, which is not fair to the common man.”

The lecturer says that the money should be paid by the banks as they make huge profits.

Bread seller Abubakar Sheka says he has already decided to forego electronic banking until the levy begins on May 20.

“I will definitely not agree to give 0.5 percent on my transfers when I earn very little, many people don’t buy bread now and the business is fragile.

“Why will this government continue to make us cry despite the high food and fuel costs we are already going through?”

The Nigeria Labor Congress, which represents the country’s workers, released a statement opposing the levy, while lobby group the Socio-Economic Rights and Accountability Project (Serap) has threatened to sue the government.

The government has not yet commented on the reaction.

Public affairs analyst Habu Sani believes the government has done a great disservice to its cashless economic policy as more people will now transact in cash.

“The government has been pushing people to use electronic transfers to limit cash printing, which is having a negative impact on government finances, and now this will result in people turning back to cash to pay the levy avoid.”

“I expect there will soon be a cash shortage if the government does not reverse its decision.”

There was a severe cash shortage for much of 2023 after the CBN introduced currency reforms intended to curb electoral fraud last year. This prompted many people to use mobile money.

The shortage only eased at the end of last year.

Only around eight percent of people between the ages of 16 and 64 used mobile payment services in 2024. That was a decrease compared to the previous year.

In Nigeria, digital penetration is low due to the lack of mobile signal in many rural areas and many people cannot afford smartphones.