Galloping Profit: NIBSS, National Assembly and Cybersecurity Charges

Galloping Profit: NIBSS, National Assembly and Cybersecurity Charges

By Aoiri Obaigbo

Setting out from your home on a journey, or even when going to work or visiting your friends, the Nigerian road user is besieged by a cocktail of uniformed men, wielding anything from Ak-47 to sticks and koboko. They could be soldiers, policemen without name tags right down to community boys in sundry khaki.

Law and order, preventing crime are the furthest items in their minds. Obtaining money by any excuse imaginable is the sole purpose of all that shakara on our roads. State actors and non-state actors alike feel entitled to obtaining money or at least wasting the time of citizens who dare to leave their homes.

Since 1993, effectively, since 1994, the Central Bank of Nigeria (CBN), through the special purpose vehicle of Nigeria Inter-Bank Settlement System (NIBSS), joined the business of extorting Nigerian depositors and all other prisoners of the financial system.

The recent introduction of a 0.5 per cent charge on bank transactions by the CBN ostensibly for handling cyber security, has pushed an alarm button which the National Assembly (NASS) must attend to if they indeed represent the Nigerian people. This levy, charged by the CBN, said to be for the Economic and Financial Crimes Commission (EFCC), supposedly for cyber security efforts, is a duplication of what the NIBSS has been mining since banking went digital.

There’s no law setting up the EFCC that allows them to tax Nigerians for the purpose of tracking cyber crime. They don’t have the infrastructure for policing cyber crime and were never set up for that purpose.

Even before this duplicitious manoeuvre of plucking a cyber security charge out of thin air, the impact of the NIBSS charges on small businesses in Nigeria was increasingly worrisome. Small and medium enterprises (SMEs) are the backbone of the Nigerian economy and any financial policy or fee structure can have a profound effect on their operations. These seemingly small fees accumulate over time and become burdensome for SMEs operating on thin margins.

Consequently, small businesses bear the brunt of these costs, which can deter them from fully utilis ing digital payment systems.

For small businesses, cash flow is crucial and the administrative burden associated with managing multiple taxation and fees can be overwhelming. High transaction costs can be a barrier to financial inclusion for small businesses.

Small businesses may find themselves at a competitive disadvantage compared to larger corporations that can absorb additional costs more easily.

In light of these impacts, it is crucial for NASS to review the role of the NIBSS and ensure that its fee structure does not disproportionately affect small businesses. Aligning with models from countries like Singapore, India and Brazil, where financial systems support SME growth and development, could provide a roadmap for Nigeria.

The imposition of this new forced deduction by the CBN, therefore, begs the question: Why is there a need for an additional cyber security fee when such functions have been under the purview of the NIBSS? It’s part of the deductions already in place. It also brings in focus how the NIBSS—a private enterprise— has moved from a quick fix and a compromise to something that wakes thoughtful people from their sleep.

NIBSS) established under military rule, at a time when the financial landscape was different from today’s dynamic digital era. As a pivotal institution in Nigeria’s financial ecosystem, it is crucial that the NIBSS undergoes a comprehensive review under the civilian administration to ensure its operations align with democratic principles and the public interest.

NASS, representing the will of the people, must spearhead this review. It should scrutinise the NIBSS’s expanded functions, particularly those that have emerged following the advent of mobile phones and the internet.

This scrutiny is not without precedent; financial systems in Singapore, India and Brazil offer models of how technology has been integrated into national financial systems while maintaining rigorous standards of accountability.

As a private entity entrusted with state roles, it’s not sufficient for a department of CBN to chair the NIBSS. There must be a comprehensive review of its activities since its inception in 1993, especially considering the significant changes in its operational landscape after the mobile network era.

There has been a drift in the purpose of setting up the NIBSS. Owned by all licensed banks and discount houses in Nigeria, including the Central Bank of Nigeria (CBN),

NIBSS) established under military rule, at a time when the financial landscape was different from today’s dynamic digital era. As a pivotal institution in Nigeria’s financial ecosystem, it is crucial that the NIBSS undergoes a comprehensive review under the civilian administration to ensure its operations align with democratic principles and the public interest.

NASS, representing the will of the people, must spearhead this review. It should scrutinise the NIBSS’s expanded functions, particularly those that have emerged following the advent of mobile phones and the internet.

This scrutiny is not without precedent; financial systems in Singapore, India and Brazil offer models of how technology has been integrated into national financial systems while maintaining rigorous standards of accountability.

As a private entity entrusted with state roles, it’s not sufficient for a department of CBN to chair the NIBSS. There must be a comprehensive review of its activities since its inception in 1993, especially considering the significant changes in its operational landscape after the mobile network era.

There has been a drift in the purpose of setting up the NIBSS. Owned by all licensed banks and discount houses in Nigeria, including the Central Bank of Nigeria (CBN), NIBSS commenced operations in June 1994 with the goal of modernising inter-bank payment infrastructure. The Deputy Governor, Financial System Stability of the CBN serves as the chairman of NIBSS’s board.

From the government point of view, stability was the reason for buying in. For the banks and other financial institutions, it was meant to be an infrastructure for convenient exchanges and ease of inter bank transactions. Gradually, they have become more and more Machiavellian and profit focused, with the public on the receiving end of this profiteering.

According to the CBN audited report, NIBSS’s annual profit spiked more than 42 per cent to N15.467 billion in 2022. In comparison, in 2021, NIBSS reported a profit of N10.882 billion.

This significant increase demonstrates the company’s aggression towards the citizens without corresponding satisfaction on the part of the public. This new spike in the burden of the common man amounts to copying the exploitative tendencies of NIBSS without any foreseeable dividends to those of us at the receiving end of the bullwhip.

The duplication of roles between the EFCC and the NIBSS in the realm of cyber security is a matter that cannot be taken lightly. It is a precedent that, if left unchecked, could lead to a slippery slope of inefficiency and potential mismanagement of funds. NASS must act swiftly to address this issue, ensuring that the functions of cyber security doesn’t become something like the Nigerian express roads where all sorts of uniformed men are entitled to extorting money from citizens.

It is imperative for NASS to query the activities of the CBN and the EFCC in this regard. The introduction of a charge for a service that is already catered for by an existing entity raises concerns about the transparency and efficiency of the use of these funds.

NASS must take a stand to scrutinise this development critically. It is their duty to ensure that the hard-earned money of Nigerians is not frittered away under the guise of cybersecurity. They must question the rationale behind this levy and its implementation strategy.

Furthermore, being neither fish nor bird, the settlement system as it is now is due for a proper legislation that should delineates the roles of governmental functions and private entities as coexisting in the NIBSS. It leaves a latitude for greed which is unhealthy for banking citizens.

NASS is called upon to exercise its legislative powers to remove any ambiguity surrounding the roles of government and private entities in the financial sector, ensuring that the operations of entities like NIBSS are transparent and the CBN has veto power over their financial system. This should go beyond being chair of a board loaded with banking privateers. The agenda of the hawk and that of the mother hen can’t be as harmonious as the present pretence.

The Senate Committee on Banking, Insurance and Other Financial Institutions chaired by Mukhail Adetokunbo Abiru must ensure that the rights of consumers in financial transactions is a priority. The committee must safeguard consumers’ financial rights and promote transparency and accountability.

NASS should review the NIBSS’s adherence to due process in its financial dealings and the extent to which it has managed public funds with integrity and efficiency. The review should also examine the NIBSS’s impact on the financial inclusion of ordinary Nigerians and its role in facilitating or hindering the growth of the digital economy.

The legislators have a duty to ensure that the NIBSS operates within a framework of transparency and accountability. This is not only essential for the integrity of Nigeria’s financial system but also for the confidence of international investors and partners. The time has come for the NIBSS to be accountable to the Nigerian public since CBN has a stake in the enterprise.

It’s charges and operations must be carefully evaluated to support the growth and sustainability of small businesses, which are essential to the nation’s economic prosperity.

NASS should consider revising the policies that govern financial transactions to reduce the burden on small businesses. CBN needs to revert to its crucial role of maintaining financial stability, rather than be horse drawn by the harsh drive for galloping profit by its NIBSS majority.

To start off the reviews, the relevant Senate committee should urgently summon and engage in a fact finding conversation with all the uneasy stakeholders in the settlement system .

*Aoiri is a novelist and former Editor of Mister*