Analysis of the National Information Technology Development Agency (NITDA) Bill 2021

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Introduction

In March 2021, the Director-General of the National Information Technology Development Agency (NITDA), Mallam Kashifu Inuwa Abdullahi, presented a proposal to the relevant committees of the National Assembly for the NITDA Act 2007 to be realigned with the principles of the Nigeria Digital Economy Policy Strategy and Fourth Industrial Revolution (4IR).[2] According to him, a new law is necessary for creating a regulatory framework for the development of the Nigerian IT sector and digital economy.

Accordingly, the focus of the proposed bill is to properly transform Nigeria into Africa’s foremost digital economy, provide an innovative environment for all to thrive by addressing contemporary digital issues, build trust as well as protect the rights and interests of players in the ecosystem; to ensure that every sector or business, private or public, commercial, or otherwise operating in the Nigerian technology ecosystem is captured and regulated by the Bill.[3]

Usually, an attempt to amend an existing law implies an effort to align its provisions with current socio-economic realities and should be met with a warm reception. But, the NITDA bill has raised concerns amongst stakeholders within the digital economy over a possible duplication of laws given that the bill is coming on the heels of conversations about a Start-up legislation which will no doubt regulate innovative companies leveraging on technology particularly fintech and agritech companies.[4]

In what has been described as walking a tightrope for most governments globally,[5] regulating the digital economy on the one hand could bring about a safer and more improved environment for digital innovation; whilst on the other hand, this ‘regulation’ may introduce new provisions that could stifle digital innovation. The latter is the major concern of most stakeholders and users in the technology space.

  • Objectives of the Bill

The purpose of the Bill is to promote and implement policies and strategies on information technology and the digital economy, promote and support initiatives that provide access to digital services in an efficient, inclusive, secure, and affordable manner,[6] as well as encourage local and foreign investments in information technology and the digital economy through regulatory interventions and emerging technologies in Nigeria.[7] The bill amongst other things also seeks to promote indigenous research and development, protect the rights and interest of all stakeholders,[8] ensure digital inclusion for persons with special needs, minors and vulnerable persons; as well as promote and safeguard national interests, safety and the security of citizens and foreigners[9] in the use of information technology and digital services.

  • Scope of Application

The Bill is applicable to the provision, deployment and use of information technology systems, practices, and digital services within Nigeria and on any aircraft or vessel registered in Nigeria.[10]

This article intends to consider some major changes/amendments proposed by the NITDA Bill 2021 and how these would impact the technology and digital economy space.

  1. AMENDMENTS SOUGHT TO BE INTRODUCED BY THE BILL
    • Preamble

The Preamble expands the scope of the Act to provide for the administration, implementation, and regulation of information technology systems and practices as well as the digital economy in Nigeria as against the 2007 NITDA Act which simply states that its purpose is for the establishment of the National Information Technology Development Agency (NITDA) and related matters.

This portends that the Bill is robust in nature, covering multiple sectors and businesses and contains provisions that may either positively or negatively affect the network of professional, commercial and all forms of economic activities and transactions enabled by Information Communication Technology (ICT) in Nigeria; including without limitation businesses operating e-commerce, digital banking, fintech, health-tech and other traditional sectors like agriculture affected by the impact of emerging technologies.[11]

  • Establishment, Composition, Power and Functions of the National Information Technology Development Agency

The Bill like the 2007 Act also established the National Information Technology Development Agency (NITDA) as a body corporate with perpetual succession that may sue or be sued in its corporate name.[12] However, the Bill modified the functions of the Agency to reflect the current reality of the technological sector especially with the aftermath of the Covid-19 pandemic as follows:

  1. Section 5 (5) extends the function of the Agency to facilitate the establishment and maintenance of appropriate infrastructure and information technology systems and to support the development of digital services application in Nigeria.[13]
  2. Section 5 (7) provides for incentives to promote the use of information technology such as the setting up of Information Technology Parks, promotion of innovation, start-up initiatives, digital entrepreneurship, the promotion of digital commerce, digital government services, privacy, and trust.[14]

Notable provisions introduced by the Bill include:

  • monitoring and evaluation,
  • promotion of private sector investment; digital skills and job creation,
  • regulation of the use and development of digital services; emerging technologies such as robotics and artificial intelligence, etc.[15]
  1. The Bill further introduced a new Section 6 which provides for the powers of the Agency. This section empowers the Agency to implement all Government policies on information technology and the digital economy in Nigeria, as well as supervise, regulate, and carry out other activities, which may be deemed necessary by the Agency to ensure its efficient performance including implementation of the functions under Section 5 of the Act.[16]
    • Establishment and composition of the National Information Technology Development Agency Governing Board
  2. Section 7 establishes the National Information Technology Development Agency Governing Board and introduced “A Part-time Chair” as against “A Chairman” in the 2007 Act.
  3. Section 7 (2) (b) (i) provides for a representative from the “Federal ministry in charge of Information Technology and Digital economy” without explicitly naming any ministry as was done in the 2007 Act. This is, however, out of place because there is currently no such ministry under our Ministerial structure in Nigeria.[17]
  4. In an apparent contrast to the 2007 Act, the Bill replaces technologically savvy members of the Board with regular people with integrity and reduced the number of this class of members from six to four.[18]
  5. Section 8 provides for the office of the Director-General of the Agency who shall be appointed by the President; and who shall serve as the Chief Executive and Accounting officer of the Agency.[19] The ideal candidate must possess academic qualification and cognate experience of not less than ten (10) years, in the fields of either Administration, Engineering, Finance Management, Information Technology or Law.[20]
    • Establishment of the National Information Technology Fund
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Section 13 of the Bill retains the provisions establishing the National Information Technology Development Fund but amended it to include a purpose for the Fund – which is to advance the Country’s digital economy objectives and related purposes. Companies with an annual turnover of One Hundred Million (N100,000,000.00) and above are required to pay 1% of their profits before tax into the fund.[21] These companies include, mobile and fixed telecommunications companies, information technology, e-commerce companies, digital platforms operators and providers, foreign digital platforms targeting the Nigerian Market, banks, financial institutions, and companies providing financial services using IT tools, insurance companies and such other companies and enterprises as determined by the regulations from time to time.[22] Monies accruing to the fund are not subject to income tax.[23]

  • Licenses and Authorisations

Section 20 (1) empowers the Agency to issue by regulation, licenses, and authorisations for operators in the information technology and digital economy sector, and such regulation shall provide for licensing and authorisation criteria including renewal, suspension, and revocation conditions to promote free-market operation and competition, amongst others. This implies that companies operating in the technology and digital space can expect a new set of rules and regulations which grants them the authorisation to operate and for many companies, particularly start-ups in the tech industry and indeed the consumers, this may do more harm than good because it portends higher operating costs which are invariably transferred to the consumers.

Section 21 provides for classification of licenses and authorisations but is silent as to the requirement or qualification for each class.[24]

  • Offences and Penalties

The offences created by Section 22 of the proposed Bill include, non-payment upon expiration of a demand notice of an assessed levy within 2 months by a corporate body;[25] failure to comply with the regulations, standards, guidelines, frameworks, circulars, directives or any subsidiary legislation issued by the Agency;[26] denying any person authorised by the Agency or by law, entry into premises or access to records or data;[27] importation or usage of any technology requiring approval without first obtaining such approval or complying with the conditions imposed by the Agency;[28] and failure to obtain the requisite license.[29]

Besides creating offences, the bill seeks to impose huge fines as penalties on persons and companies in violation. Individuals found guilty by the Agency shall be liable to a fine of not less than N3,000,000.00 (Three Million Naira only) or imprisonment for a term not less than a year or with both fine and imprisonment; whilst corporate bodies found guilty shall be liable to a fine of not less than N30,000,000.00 (Thirty Million Naira only) or imprisonment for the principal officers for a term of not less than 2 years or both.[30]

These penalties and fines as prescribed in the bill have been perceived as unfriendly towards the target operators to be regulated by the proposed Act.[31]

  • Administrative Redress Process

Section 25 makes provisions for an Administrative Redress mechanism for the resolution of disputes in respect of the regulatory activities of the Agency;[32] and Section 26 makes provision for a Rule Making Process to promote inclusiveness and transparency.[33]

  • Establishment of the Digital Infrastructure and Service Provision Company (Galaxy Backbone)

Section 27 of the Bill provides for and sets out the membership for a Digital Infrastructure and Service Provision Company referred to as Galaxy Backbone.[34]

  1. The functions of the Galaxy Backbone company include providing digital infrastructure services to the Ministries, Departments, Agencies, and public service institutions of the Federal Government of Nigeria in a non-exclusive manner; conducting training for staff of the Ministries, Departments, Agencies and public service institutions of the Government to promote digital services, promoting Nigerian content and digital services; providing quality services at competitive pricing to ensure customer satisfaction; exploring and engaging in international business opportunities on approval of the Board of the company; and performing any other function that may be assigned to the company by the Agency.[35]
  2. It is also pertinent to note that Section 27 (2) (d) provides for a representative of the Jigawa State Government as a member of the Company;[36] and the functions of the Jigawa State Representative are also not clearly stated. It has become an issue of concern among stakeholders and operators as to what role a representative from Jigawa State has to play on the Board of the Company and explanations are required from the drafters of the Bill.[37]
  3. The Company shall be funded from its profits and earnings from services and products; subventions and budgetary allocations from Federal Government of Nigeria for targeted projects and services and grants-in-aid from national, bilateral, and multi-lateral agencies.[38]
  4. Conclusion and Recommendations
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Granted that the main intent of the drafters of the Bill is to holistically regulate the Information Technology Sector and the Digital Economy of Nigeria, but the concerns of stakeholders is also understandable especially in the light of the following considerations:[39]

  • For example, the licensing and authorisation provision of the Bill creates some sort of conflict with the roles of the Nigeria Communications Commission (NCC). The NCC in line with Section 70 of the Nigerian Communications Act 2003 (NCA 2003), is empowered to make and publish regulations on matters such as, written authorisations, permits, assignments and licences granted or issued under the NCA 2003. Part of the powers of NCC as derived from Section 3 of the NCA 2003 includes, giving written directions to licensees and consulting with consumers, commercial and industrial organisations.[40]

Flowing from the above, it would mean that digital and mobile telecommunication companies (which also form part of the digital economy regulated by the NITDA Bill) may likely go through the hurdles of both the NCC and the NITDA compliance protocols which may in the end, result to multiple licensing/authorisations, which may in the medium to long term create a clog in the technology development and innovation wheel across board. The drafters of the Bill thus need to carry out a comparative analysis of the Bill with already existing legislations and mandates of similar regulatory bodies to obviate unnecessary conflicts and/or duplication of roles and functions which may impact operators and consumers adversely thus stifling the burgeoning technology and digital economy ecosystem.

  • Further, the definition of certain technological terms such as “digital platform”, “foreign digital platform”, “Product”, “Service Provider” amongst others, need to be included in the interpretation section of the Bill to provide clarity as to the contemplation of the Bill especially as entities that apply, operate and or deal in these terms are required to pay levies to the Agency.[41]
  • Furthermore, whilst consequences for breaches are meant to serve as a preventive or punitive measure, the offences and penalties for defaulting individuals and corporations stipulated in the Bill seem rather harsh and vindictive in nature; and come across like the Agency is out to short-change the operators and amass revenue for itself. It is therefore suggested that more practical, humane, and realistic penalties and fines can be imposed without compromising deterrence.
  • In addition to the foregoing, whilst it is critical to amend Section 7 of the Bill to ensure that members of the Governing Board of the Agency are professionals and technology experts who are men and women of integrity; the inclusion of a representative from the Jigawa State Government on the board of the Galaxy Backbone Company should be dispensed with as it would appear on the face of it that there is no criteria for its inclusion. At best, the necessity for this inclusion should be clarified in a schedule of some sort so that it can then be a provision based on a national and stakeholders’ rather than personal, pecuniary, or parochial interests.

In conclusion, we are of the view that in considering the NITDA Bill for enactment, critical issues considered herein need to be addressed; and though NITDA is known for consultations in its processes; it should be noted that because of the complaints raised by stakeholders,[42] the Agency may need to engage more elaborate and exhaustive consultations with multi-stakeholders and operators within the technology and digital economy sector in order to create a balanced, harmonised and inclusive legislation. The approach and standards proposed by the World Summit on the Information Society (WSIS)[43] can be adopted in liaising and communicating with all stakeholders.[44]

Overall, the Bill incorporates positive provisions which seek to enhance the digital economy and regulate the information technology (IT) sector for the advancement and general good of the Nation; as well as bringing it at par with the comity of technology driven nations.

For further information on this article and area of law, please contact

Written by Cynthia Njoku, Franklin Okoro, and Juliana Okegbile – Associates at SPA Ajibade & Co., Nigeria. Email: cnjoku@spaajibade.comfokoro@spaajibade.com and jokegbile@spaajibade.com

www.spaajibade.com

Footnotes

[2]       Ibanga I., “The Facts on NITDA Amendment Bill and Tech Stakeholders” available at https://prnigeria.com/2021/08/20/nitda-amendment-tech-stakeholders/, accessed on 25th November 2021.

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[3]       Ibanga I., “NITDA Bill and Viable Stakeholder Engagement”, available at https://economicconfidential.com/2021/09/nitda-bill-viable-stakeholder/, accessed on 25th November 2021.

[4] Ibanga I, “NITDA Amendment Bill and Nigeria’s Tech Sector” available at https://guardian.ng/opinion/outlook/nitda-amendment-bill-and-nigerias-tech-sector/,  accessed 4th November 2021.

[5]       World Economic Forum, “4 Ways Regulators Must Keep up with the Global Digital Economy”  available at https://www.weforum.org/agenda/2021/07/4-ways-regulators-global-digital-economy/, accessed on 17th December 2021.

[6]       Section 1 (1-2) of the NITDA Amendment Bill, 2021.

[7]       Section 1 (3-5) of the NITDA Amendment Bill, 2021.

[8]       Section 1 (6-7) of the NITDA Amendment Bill 2021.

[9]      Section 1 (8-9) of the NITDA Amendment Bill, 2021.

[10]     Section 2 of the NITDA Amendment Bill, 2021.

[11]     Brian Armstrong, “The Digital Economy is Becoming Ordinary, Best we Understand it” available at https://theconversation.com/the-digital-economy-is-becoming-ordinary-best-we-understand-it-130398, accessed on 3rd November 2021.

[12]     Section 4 of the NITDA Amendment Bill, 2021.

[13]     Section 5(5) of the NITDA Amendment Bill, 2021.

[14]     Section 5(7) of the NITDA Amendment Bill, 2021.

[15]     Section 5 of the NITDA Amendment Bill, 2021.

[16]     This provision means that the Agency has the discretion to carry out any such duty or activity it may consider necessary. But the Bill does not provide a measuring matrix, yardstick, or guideline as to what the Agency may consider necessary in this regard which therefore grants the Agency a wide discretionary power in the execution of its duties.

[17]     This is vague and may refer to a number of Ministries (Ministry of Science and Technology, Ministry of Information and Culture as well as Ministry of Communications & Digital Economy; but leaning on the provision of the 2007 Act which clearly provided for the specific Ministry in this regard as well as the fact that NITDA is domiciled under same, it would appear that this is a typographical error on the part of the drafters as the name of the supervisory ministry for information technology in Nigeria as well as NITDA is the “Federal Ministry of Communications and Digital Economy” (See Section 27 of the NITDA Amendment Bill, 2021).

[18]     Section 7 (2) of the NITDA Amendment Bill, 2021.

[19]     Section 10(1) of the NITDA Amendment Bill,2021.

[20]     Section 10 (2) of the NITDA Amendment Bill, 2021.

[21]     Section 13(2) of the NITDA Amendment Bill, 2021.

[22]     Third Schedule of the NITDA Amendment Bill, 2021.

[23]     Section 14 of the NITDA Amendment Bill, 2021.

[24]     Section 21 of the NITDA Amendment Bill, 2021.

[25]     Section 22(1) of the NITDA Amendment Bill, 2021.

[26]     Section 22 (2) of the NITDA Amendment Bill, 2021.

[27]     Section 22(3) of the NITDA Amendment Bill, 2021.

[28]     Section 22(4) of the NITDA Amendment Bill, 2021.

[29]     Section 20(3) of the NITDA Amendment Bill, 2021.

[30]     Section 22 of the NITDA Amendment Bill, 2021.

[31]     Adeyemi Adepetun, “Operators Kick as NITDA Demands New Taxes, Levies Under Proposed Bill”  available at https://guardian.ng/business-services/operators-kick-as-nitda-demands-new-taxes-levies-under-proposed-bill/, accessed on 5th November, 2021.

[32]     Section 25(1) of the NITDA Amendment Bill, 2021.

[33]     Section 26 of the NITDA Amendment Bill, 2021.

[34]     Section 27 of the NITDA Amendment Bill, 2021.

[35]     Section 27(5) of the NITDA Amendment Bill, 2021.

[36]     This is somewhat unclear as there is no explanation given for the inclusion of a representative of the Jigawa State which is neither a technology company or has any established history or relationship in the digital sector.

[37]     Joan Aimuengheuwa, “Api Intelligence Reacts to the Circulating Proposed NITDA Amendment Bill” available at https://techeconomy.ng/2021/08/api-intelligence-reacts-to-the-circulating-proposed-nitda-amendment-bill/, accessed on 4th November 2021.

[38]     Section 27 (6) of the NITDA Amendment Bill 2021.

[39]     Inyene Ibanga, “The NITDA Bill and Demands for a Viable Stakeholder Engagement”  available at https://www.premiumtimesng.com/opinion/484780-the-nitda-bill-and-demands-for-a-viable-stakeholder-engagement-by-inyene-ibanga.html, accessed on 4th November 2021.

[40]     Nigeria Communications Commissions, “Mandate” available at https://www.ncc.gov.ng/the-ncc/mandate, accessed on 30th November 2021.

[41]     Third Schedule of the NITDA Amendment Bill, 2021.

[42]    Ibanga I, “NITDA Amendment Bill and Nigeria’s Tech Sector” available at            https://guardian.ng/opinion/outlook/nitda-amendment-bill-and-nigerias-tech-sector/, accessed on 4th November 2021.

[43]     Wikipedia, “World Summit on the Information Society” https://en.wikipedia.org/wiki/World_Summit_on_the_Information_Society, accessed on 7th November 2021.

[44]     The World Summit on the Information Society (WSIS) is a unique two-phase United Nations (UN) summit that was initiated in order to create an evolving multi- stakeholder platform aimed at addressing the issues raised by information and communication technologies (ICTs) through a structured and inclusive approach; as well as propagating the UN standards on internet governance (https://en.wikipedia.org/wiki/Internet_Governance_Forum) at the national, regional and international levels. On 21 December 2001, the United Nations General Assembly approved Resolution 56/183 which endorsed the WSIS and emphasised on the multi-stakeholder approach to use all stakeholders including civil society and private sector beside the governments. The goal of WSIS is to achieve a common vision, desire and commitment to build a people-centric, inclusive and development-oriented information society where everyone can create, access, utilise and share information.

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