Banking
EXPLAINER: Understanding CBN’s 0.5% Cybersecurity Levy
By Adedapo Adesanya
On Monday, May 6, 2024, the Central Bank of Nigeria (CBN) directed all financial institutions, including commercial banks and others to deduct a 0.5 per cent cybersecurity levy on electronic transfers as stipulated in the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.
The directive has since created an uproar among Nigerians as they interpreted it to be that the 0.5 per cent fee would be charged on the value of the funds transferred electronically. For instance, a sum of N1,000 will attract N5, N2,000 to attract N10, N5,000 to attract N50, and so on.
But from the explanation given by the CBN in 2018 when this policy was first implemented, the cybersecurity fee is levied on the service charge by the financial institutions from the originator of the transaction.
For example, if the service charge on the transfer of N10,000 is N50, the 0.5 per cent cybersecurity levy will be charged on the N50, not N10,000, which means apart from paying N50 for Electronic Money Transfer Levy (EMTL), 7.5 per cent Value-Added Tax (VAT), and other fees, the customer will likely pay 25 Kobo as an additional fee for the transaction.
This development is not new. The Cybersecurity Act was first passed in 2015 and introduced a 0.005 per cent levy on electronic transfers. In June 2018, the CBN implemented the policy and directed banks to collect the levy on “electronic transactions occurring in a bank or on a mobile money scheme or any other payment platform that have an accompanying service charge.”
It was explained in 2018 through Mr Dipo Fatokun, who was then the Director Banking and Payments System Department, that “Electronic transactions shall be all financial transactions occurring in the bank or on a Mobile Money Scheme or any other payment platform that have an accompanying service charge; the levy shall be 0.005 per cent of the service charge (exclusive of all tax effects) from all electronic financial transactions occurring in a bank, a Mobile Money Scheme and other Payment Platforms.
“All electronic transactions (both inter and intra) that have an accompanying service charge shall qualify as eligible transactions; the effective date of collection shall be with effect from July 1, 2018.”
Now, the levy has been increased by 900 per cent and covers fintechs, payment service providers, and other financial institutions. These institutions have been mandated to remit the monies to the National Cybersecurity Fund (NCF), which would be administered by the Office of the National Security Adviser (ONSA).
In the latest circular signed by the Director of the Payments System Management Department of the CBN, Mr Chibuzo Efobi; and the Director of the Financial Policy and Regulation Department, Mr Haruna Mustafa, the apex bank emphasised that failure to remit the fees is an offence as stated in Section 44 (8) of the Act and will attract a conviction of not less than 2 per cent of the annual turnover of the defaulting business, amongst others.
“Following the enactment of the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024 and pursuant to the provision of Section 44 (2)(a) of the Act, ‘a levy of 0.5% (0.005) equivalent to a half per cent of all electronic transactions value by the business specified in the Second Schedule of the Act,’ is to be remitted to the National Cybersecurity Fund, which shall be administered by the Office of the National Security Adviser,” a part of the notice said.
While the outbursts have continued, many have also justified the need for the charge, especially with fraud prevalent in the Nigerian financial ecosystem.
Available data released by the Financial Institutions Training Centre (FITC) showed that Nigerian banks lost N2.09 billion to frauds in the fourth quarter of 2023, with mobile emerging as the top channel through which the largest amount was lost.
According to the report, the N2.09 billion loss recorded in Q4 was a 77.58 per cent increase from the N1.18 billion recorded by the banks in Q3 2024.
There are also indicators that the number might be higher this year, with the CBN forcing the hands of neobanks like Opay, MoniePoint, PalmPay, and Kuda not to open new accounts.
Despite this new fund, it is not all gloomy as 16 banking transactions are exempted from the CBN’s new cybersecurity levy.
These are Loan disbursements and repayments; Salary payments; Intra-account transfers within the same bank or between different banks for the same customer; Intra-bank transfers between customers of the same bank, Other Financial Institutions’ instructions to their correspondent banks; Interbank placements; Banks’ transfers to CBN and vice-versa; Inter-branch transfers within a bank; and Cheque clearing and settlements.
Others are Letters of Credit; Banks’ recapitalisation-related funding – only bulk funds movement from collection accounts; Savings and deposits, including transactions involving long-term investments such as Treasury Bills, Bonds, and Commercial Papers; Government Social Welfare Programmes transactions e.g. Pension payments; Non-profit and charitable transactions, including donations to registered non-profit organisations or charities; Educational institutions’ transactions, including tuition payments and other transactions involving schools, universities, or other educational institutions; as well as transactions involving the bank’s internal accounts such as suspense accounts, clearing accounts, profit and loss accounts, inter-branch accounts, reserve accounts, nostro and vostro accounts, and escrow accounts.
By Aduragbemi Omiyale
The N6.2 billion series 2 fixed rate senior unsecured bonds issued by LAPO Microfinance Bank Limited in 2020 have been redeemed by the company.
The small lender repaid bondholders on the maturity of the corporate debt instrument, Business Post gathered.
The thick of the COVID-19 lockdown and economic meltdown, LAPO Microfinance Bank approached the capital market to source funds from investors at 13 per cent.
Due to the confidence investors have in the organisation as one of the top microfinance banks in Nigeria, the bond issuance was oversubscribed by N200 million.
The bank attributed this investor confidence to its “strong corporate governance and fundamentals.”
The financial institution did not disappoint as it fully paid the bond subscribers at maturity, further solidifying the trust investors have in the company.
When it sold the papers five years ago, the Managing Director said the N6.2 billion was to be used to “enhance our capacity to meet the needs of micro and small enterprises, especially actors in the rural economy.”
“The success of this journey is largely due to the support of African Local Currency Bond (ALCB) Fund (two-time anchor investor) and other parties to the Issue; FBN Quest Merchant Bank and Coronation Merchant Bank who served as Lead and Joint Issuing House/Book Runner.
“LAPO Microfinance Bank Limited is already standing by owners of micro and small enterprises who are determined to overcome the set-back of the COVID-19 pandemic. From January to July the microfinance bank delivered N59.4 billion to micro and small enterprises.”
After issuing the notes in 2020, LAPO Microfinance Bank took them for listing on the FMDQ Securities Exchange.
LAPO Microfinance is a leading microfinance bank in Nigeria, accounting for over 20 per cent of the market share.
The firm had wanted to raise N6 billion from the bond issuance under its N20 billion bond programme, but was oversubscribed by N200 million. A unit of the note was sold at N1,000 via book building, opening from Tuesday, February 10 and closing on Wednesday, February 19, 2020.
By Modupe Gbadeyanka
Seventy lucky winners have emerged in the Season 4 of the Reward4Saving Promo put together by Stanbic IBTC Bank to foster a sustainable savings culture in Nigeria.
The beneficiaries were chosen at the fourth monthly draw of the campaign conducted in Lagos with keen oversight from regulatory representatives to ensure transparency and fairness.
Notable attendees included representatives of the Federal Competition & Consumer Protection Commission (FCCPC); Advertising Regulatory Council of Nigeria (ARCON); and Lagos State Lotteries and Gaming Authority (LSLGA).
The 70 lucky winners were from the lender’s seven business zones; each winning N100,000 for maintaining a minimum savings balance of N10,000 in their Stanbic IBTC Savings Account or @ease Wallet. The balances were maintained for a minimum of 30 consecutive days.
Speaking during the draw, Oluwakemi Zollner, Head of Sales and Distribution, Lagos Mainland, stated, “Stanbic IBTC Bank is committed to rewarding loyal customers while enhancing the savings culture within society.
“The promo is open to both existing and new customers. By saving just N10,000 in your Stanbic IBTC Savings Account or @ease Wallet for 30 consecutive days, you qualify for the draw. More savings equal higher chances of winning.”
One of the recent winners, Ebinum Abosede, an entrepreneur, shared her emotional journey upon receiving her prize. “When I initially received the call, I was doubtful and thought it could be a scam. Even my daughter warned me against going. But now that I am here and have received my alert, I could not be happier. I just moved into a new house and was searching for funds to paint my apartment. Thank you to Stanbic IBTC Bank; I can finally give my new home a fresh coat of paint.”
The Reward4Saving Promo continues to create a buzz across Nigeria, inspiring individuals to practice financial discipline while being rewarded for their dedication. Through this initiative, Stanbic IBTC Bank celebrates the achievements of savers and strengthens its role in promoting financial inclusion and empowering local communities.
Since the commencement of the Reward4Saving Promo – Season 4, a total of 288 customers have shared in N37 million worth of cash rewards, with the total prize expected to reach N130 million by the conclusion of the initiative in April 2026.
With N93 million remaining in the prize pool, excitement continues to climb among customers of Stanbic IBTC Bank nationwide.
By Adedapo Adesanya
Guaranty Trust Holding Company Plc (GTCO) has strengthened the capital base of its banking subsidiary, Guaranty Trust Bank Limited (GTBank), with a fresh equity injection of N365.85 billion through a rights issue.
According to a statement on the Nigerian Exchange (NGX) Limited on Friday, the additional funding was raised under its two-phased equity capital programme approved by shareholders at its 2024 Annual General Meeting and implemented in line with approvals obtained from regulators.
As part of the transaction, it issued and allotted 6,994,050,290 ordinary shares of 50 Kobo each made by the bank to the company.
“The company continues to hold 100 per cent of the entire issued and paid-up share capital of the bank. None of the directors of the company have any interest, direct or indirect, in the bank,” the statement said.
With this capital injection, GTBank’s share capital has risen from N138.19 billion to N504.04 billion, positioning the lender in compliance with the Central Bank of Nigeria’s (CBN) new minimum capital requirement for banks with international authorisation.
Business Post reports that banks across various spreads have less around seven months to meet to the deadline set by the apex bank in late 2023.
According to the group, the fresh equity will be channelled into branch network expansion, growth of its loan and investment securities portfolio, and upgrades to its information technology infrastructure.
“The additional equity capital will be deployed by GTBank primarily for branch network expansion and asset growth (loans/advances and investment securities portfolio), fortification of its information technology infrastructure and to leverage emerging opportunities in Nigeria and the operating environments where it maintains banking presence,” the company said.
“The bank also plans to leverage the strengthened balance sheet to tap into emerging opportunities across Nigeria and the operating environments where it maintains banking presence,” the statement added.
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