Barka da asuba,
That’s “good morning” in Hausa
In a recent TED Talk
, NITDA Director-General Kashifu Inuwa shared some thoughts on innovation and value creation:
“The best way to create and capture value from innovation in a digital age is through a viable business model.”
To buttress his point, he then referenced Uber and Facebook as examples of innovative companies.
Last week, an amendment to the Act governing Inuwa’s agency was leaked online. And, among other things, it’s seeking to extract value from Nigerian tech companies before many of them actually become viable businesses.
NITDA is the National Information Technology Development Agency.
The best way to explain what they do is to look at the ICT space as a whole.
NITDA’s sister regulator, the Nigerian Communications Commission (NCC), regulates the “C” — the communications space, while NITDA regulates the “IT” — the information technology space.
The first NITDA Act was established in 2007. And in a fast-moving space like IT, it is badly in need of revision.
making the rounds allegedly contains that revision. It is, however, instructive to note that NITDA is yet to comment on it.
by API Intelligence suggests some changes to the proposal, particularly around regulatory overlap and ambiguity. My focus today, though, is on the bit that concerns Nigeria’s growing startup ecosystem.
Eating your young
The proposed NITDA 2021 Act requires tech companies operating in Nigeria to obtain a license, as well as to pay levies of 1% of their pre-tax revenue if they make more than N100m (roughly $200,000).
This is a flat fee, regardless of the size of the company. Or whether it’s in a field of high innovation but commercialization is still early. Or whether the company is profitable. Or whether it has found a viable business model.
If NITDA’s objective is to create valuable businesses in the digital economy, this is hardly a progressive approach.
A look at tech stocks on the Nigerian Stock Exchange exposes the need for more growth-focused, innovation-friendly regulatory policies. Most of the technology companies listed on the NSE are either under the purview of the NCC or were listed before the first NITDA Act. There’s no other way to put it, companies in the general IT space are simply not growing.
Also, many of the country’s largest private technology companies maintain an offshore corporate structure, with their parent companies located in places like the US, Europe and even Mauritius.
These structures exist to:
- Better protect their intellectual property rights and
- Minimize regulatory shocks, such as the proposed NITDA 2021 Act.
Among others things.
A more progressive Act should seek to, first, create an enabling environment for more tech companies to grow and reach scale and, second, reduce the need to incorporate abroad when they do.
And I am actually encouraged that we might get that progressive Act.
The country’s minister of communication and digital economy, Dr Isa Pantami, has been incredibly receptive
to an industry-led startup bill. Also, towards the end of his TED Talk, Inuwa shared some interesting views on value and leadership:
“Creating value is not enough unless you can capture significant value and sustain it. To sustain the value, you need to have competent digital leadership competency. You need to develop the ability to take feedback and acknowledge that others know more than you.”