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Sustaining startup growth in Nigeria

Nigeria is currently known as a haven for startups and continues to outshine other African countries in terms of global fund attraction yearly. However, stakeholders are worried that government policies may kill this burgeoning sector of the economy. SAMSON AKINTARO reports

Against the backdrop of the recently leaked National Information Technology Development Agency (NITDA) Bill 2021, many stakeholders in the country’s ICT industry have expressed concerns over how the Bill, if passed into law, would jeopardise the current growth being experienced in the startup segment of the industry. The Bill, which seeks to replace the current NITDA Act 2007, is viewed as an antithesis to government’s professed commitment to supporting the startups as it puts them under stringent regulations. Before now, industry analysts had been lamenting how government policies in the country are working against innovations, which is the bedrock of the startup community. One of such instances was the recent policy of Lagos State government, which brought to an abrupt end a burgeoning ride-hailing service in the state with millions of youths who were hitherto engaged by the startups thrown back into the labour market. However, NITDA has debunked the insinuations that the proposed Bill will stifle innovation. Rather, it said one of the aims of the Bill is to promote startup growth in Nigeria.

Areas of concerns

For the startup stakeholders, while the current NITDA Act is indeed outdated and needs to be reviewed, some of the provisions of the proposed Bill are, however, raising concerns about the future of startups in the country. Among these worrying provisions is a new sub-section, which gives the agency the power to “enter premises, inspect, seize, seal, detain and impose administrative sanctions on erring persons and companies who contravene any provision of the Act subject to the order of a court of competent jurisdiction.” They also frown at the fact that NITDA would also have the power to “fix licensing and authorisation charges, collect fees and penalties as may be necessary for the exercise of its functions under this Act.” This bill will also introduce a new regime of licences and penalties. Section 20 would give NITDA power to issue regulations regarding licences and authorisations for operators in the information technology and digital economy sector — which the Agency is to determine. These licences are classified into three categories: Product Licence,Service Provider Licence, and Platform Provider Licence.

Other provisions

While the current NITDA Act 2007 also makes provision for the establishment of NITDEV, the new Bill expands the categories of companies that will be contributing to the fund. The Act stipulates the companies to contribute one per cent of their profit before tax to the fund as GSM service providers and all telecommunications companies; cyber companies and internet providers; pensions managers and pension-related companies; banks and other financial Institution; and insurance companies. The Bill, however, expands the net to include digital platform operators and providers; foreign digital platforms targeting the Nigerian market; information technology, e-commerce companies; and “such other companies and enterprises as determined by regulations from time to time by the agency.” Section 6 of the Bill empowers the Agency to “implement all government policies on information technology and digital economy; test, and approve the use of information technology infrastructure and services before adoption in Nigeria; and develop regulations, guidelines and directives on the use of information technology and digital services in every sector of the economy to attain the purpose of the agency.”

NITDA’s position

The Agency has, however, said the Bill is in the interest of startups and the entire ICT industry. NITDA, in a statement signed by its Head, Corporate Affairs and External Relations, Mrs. Hadiza Umar, said the review of the NITDA Act 2007 aimed to address contemporary digital issues, revamp Nigeria’s economy, build trust and protect the rights and interests of players in the ecosystem. According to NITDA, the review will serve as an enabler for the growth and development of Nigeria’s digital economy. It added that some of the highlights of the repeal included amongst others,creating a framework for promoting the startup ecosystem; promoting indigenous products and services through standardisation; collaborating with the requisite public and private sector partners to carry out activities that will assist in electronic waste disposal; fostering collaboration to facilitate the implementation of robust cybersecurity measures aimed at building trust in Nigeria’s digital economy; facilitating capacity building through the digital literacy and skills initiative; entrenching stakeholder participation in developing regulations through the rule-making process; and promoting the safe use of digital technologies, including social media, for the attainment of national objectives. “The proposed NITDA Bill aims to create a regulatory framework to accelerate Nigeria into the digital economy and substantially catalyse prosperity. This will include promoting and implementing policies that support indigenous content, access to digital services, investments in the sector, adoption of emerging technologies, innovation, research, and development, with a particular focus on the rights of citizens and national interest. “NITDA, as the apex regulator of the IT sector, will leverage the proposed NITDAs Bill to extensively engage with crucial IT stakeholders and protect its stakeholders’ interests in the best possible way. However, this can only be achieved through more excellent connectivity and collaboration by registration and licensing processes,” it said.

Need for review

NITDA noted that the need to repeal the existing Act became necessary with the launch of the National Digital Economy Policy and Strategy (NDEPS), which effectively replaced the Nigerian National IT Policy, 2000. “You may recall that the vision of the National IT Policy was to make Nigeria an IT capable country by 2005. We can all attest that Nigeria has gone beyond the vision of using IT but aiming to become the digital economy capital of Africa,” it stated. It added that since the enactment of the NITDA Act 2007, the Agency had operated as the catalytic government agency for developing and regulating the information technology sector. “However, in light of recent advancements in information technology and the shift in the global economy paradigm, the NDEPS was envisioned to “transform Nigeria into a leading digital economy, providing quality life and digital economies for all. “This current reality has necessitated the reimagination for the establishment of NITDA. It is a known fact that digital technologies have created new forms of economic activities that have been beneficial to the global economy,” it said. NITDA added that the digital technologies come with their promises and perils such as cybercrimes, privacy invasion and other social problems, which necessitated the need to proactively manage their adoption through the development of a stakeholder-led robust regulatory architecture to enable Nigeria to maximise the benefits of such technologies and mitigate the negative consequences. “Therefore, the need for a more agile and practical approach to regulations, standards-setting and guidelines development for the country, with a focus on digital and emerging technologies, cannot be overemphasised,” the agency stated.

Due process

Assuring stakeholders that due process would be followed before the Bill is passed into law, NITDA noted that considering its importance, the Bill would be presented to the National Assembly as an Executive Bill. It said the Agency would initiate the process by sending the initial draft to its supervisory ministry, the Federal Ministry of Communications and Digital Economy, for policy review. “Upon completion of the policy review, the Federal Ministry of Communications and Digital Economy conveys the initial draft Bill to the Office of the Attorney-General of the Federation and Minister of Justice Office for legal drafting and statutory review; the Attorney-General of the Federation and Minister of Justice Office will revert with their legal opinion to the Federal Ministry of Communications and Digital Economy. “NITDA will engage all IT stakeholders in line with the Rulemaking Process of the Agency; NITDA will send the updated draft Bill to its supervisory Ministry, the Federal Ministry of Communications and Digital Economy; the Bill will be presented to the Federal Executive Council (FEC) and upon approval, the President will transmit the Bill to the National Assembly for the enactment process, which will include public hearings and more stakeholder engagements; and upon passage by the National Assembly, it will be transmitted to the President for assent,” NITDA explained. While assuring stakeholders of transparency in the whole process, NITDA said: “As an accountable Agency, we assure information technology sector stakeholders as well as the general public that the process will be transparent and subjected to comprehensive stakeholder engagements. “We, therefore, count on the support of Nigerians towards the successful passage of the Bill and eventual signing into law. This will undoubtedly help towards ensuring that Nigeria harnesses the potentials of the ever-expanding digital economy.”

Last line

While there is no doubt that the current NITDA Act was due for a review to be in tune with today’s realities in the tech world, areas of concern by the stakeholders should be looked into before the bill is passed into law. NITDA as an agency of government that has shown commitment to growing the tech startups through its various programmes should not be seen destroying the same through unhealthy regulation.

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