Commentary@ITRealms:
The
rule of law is more about enforcing existing rules than creating new
laws. Any society that does not abide by some code of conduct whether in
public or private matters tends to become chaotic, and virtually ungovernable.
This
is precisely what happened when the Economic and Financial Crimes Commission
(EFCC), and the Independent Corrupt Practices Commission (ICPC) simultaneously
went into deep slumber until being surreptitiously awoken with the coming of
the new Government of President Muhammadu Buhari.
According
to Yury Fedotov, Executive Director, United Nations Office on Drugs and Crime, “Corruption represents a major threat to rule
of law and sustainable development the world over. It has a disproportionate,
destructive impact on the poor and most vulnerable, but it is also quite simply
bad for business”.
There
is something disturbingly eerie about not enforcing the rules. I am quite
certain that if you have lived in any of the big cities in Nigeria, you may
have had cause to ironically question your sanity when you sit dutifully and
patiently in your lane on a busy traffic day and you see what should ordinarily
be the folly of 'mad people' driving against oncoming cars to beat the traffic.
You can't help fuming inwardly when they suffer absolutely no consequence, and
as a result, car after car drive past you to partake in the maddening spree.
The smart aleks, when challenged, cursorily pass their actions off by reminding
you that “this is Nigeria”; whatever that
is supposed to mean. That is where normality seems crazy and madness
assumes the new normal. The
whole society eventually descends into a macabre dance of impunity. Conscience
is thrown out, and on sale to the highest bidder.
To buttress the
importance and impact of enforcement, consider that Insurance regulation in
Nigeria, vide the
Insurance Companies Act of 1961 was not far behind Banking regulation vide
the The Central
Bank Act of 1958 (which was only
fully implemented in July 1959). While our banks have thrived, expanding across
the continent and beyond, mostly due to stringent regulation and effective
supervision, insurance has fallen very far behind because the regulators have
not made the required bold calls.
Very recently, Honourable Mohammed
Rafiu, House Committee Chairman on banks and other financial institutions shockingly
revealed that only 30% of cars in Nigeria are insured. And that there is
flagrant disregard for the five other compulsory insurance categories in the
country.
Nigeria is a
classic example of a nation rich in laws but weak in enforcement.
This is why the
recent spates of regulatory enforcement brings good cheer to locals and
foreigners alike, albeit some of the fines for infringements have tended to be
quite excessive; most especially the $5.1b record fine on GSM giant MTN, by the
Nigerian Communications Commission (NCC) for mobile phone SIM card registration
infractions.
There have been other high profile regulatory actions by the
Standards Organisation of Nigeria (SON) on Guinness and the Financial Reporting
Council (FRC) on Stanbic Bank.
Enforcement
of regulation however, must be undertaken within the full ambit of the law and
respect for fundamental human rights. The right of appeal must be guaranteed up
to the highest level of jurisprudence.
The
blind application of the law without regard to status, colour or creed is what
enshrines deterrence and increases the value of the real estate of the postcode. There
is no doubt that the recent imposition of a hefty $15b fine by the US
Government on German carmaker, Volkswagen, for emission results falsification
will cause contemporaries to think twice before yielding to any temptation to
similarly cut corners.
It
is the pursuit of deterrence that drives developed countries from sparing any
high ranking members of the society who fall foul of the law, not least their
Presidents, who are rather held to higher account. The celebrated case of
former American President, Richard Nixon in the Watergate scandal is a good
example. On this score we have a lot to do to change the negative perception of
the Nigerian (and indeed African)
postcode. Creating an orderly and equitable society is more edifying and
sustainable than the sheer desperation displayed by our brothers and sisters
who feel stymied by a skewed society, thus seeking to migrate to other climes
by any means possible, not excluding dangerously hanging from the tyres of an
aircraft, to braving raging storms at sea on makeshift rafts.
As
Nigeria turns to ICT and Telecoms for the next wave of economic growth, in the
wake of the oil price collapse, it is imperative that we create an enabling
regulatory environment that will attract entrepreneurs and enable them to
thrive. In ensuring an enabling environment, I shall like to deviate from
the well-worn songs of inadequate power supply and other infrastructure
deficiencies and rather focus on one critical area where we could very easily
be blindsided; the role of the National Office for Technology Acquisition and
Promotion (NOTAP).
NOTAP
was established in 1979 in response to Nigeria’s need to facilitate the
emergence of a strong Innovative, Science and Technology based economy. NOTAP
systematically tracks the inflow of technology into Nigeria and strategizes for
its adaptation and domestication. Essentially, NOTAP is the gate-keeper that
approves all foreign exchange payments to global technology suppliers.
Specifically
with regard to the Software space, and following reports of flagrant flouting
of the rules of the NOTAP Act by the major global software vendors, NOTAP along
with the CBN convened a workshop in September 2007, with all major software
vendors operating in Nigeria to reiterate the rules and emphasize the need for strict
adherence.
Part
of the communique following the workshop included the following: Every foreign
software licensor should set up a Technical Support Centre for software development
beyond their current sales and marketing offices. Review the Annual Technical Support
(ATS) fees from 10% of cost of the software license to a percentage ranging
from 15% to 23%. A minimum of 40% of the ATS fee should be paid to Local Value
Added Resellers (VAR) in local currency and the VAR must be indigenous. Collaboration
with NOTAP to develop a checklist to ensure that Local VARs are not mere
‘commission agents’ but actually acquire marketable competent skills from the
foreign licensors with a view to developing variants of the software which can complement
the foreign software to meet the needs of the local market, while shouldering
their fair share of the workload.
While
the global vendors ensured that they benefitted from the doubling of ATS fees
from 10% to 23% they did nothing about the setting up of technical support
centers in the country nor ensure that 40% of the increased ATS is paid to
local companies who are the channels for delivery of the technical support
services. Once again, lack of enforcement is at the heart of the collapse of an
otherwise fair trade regulation. Unfortunately, this is not without the mal-acquiescence
of the local companies who will rather engage in cut throat competition by
sabotaging the system to collect a paltry 5-10% of ATS fees than insist on the
NOTAP stipulated 40% that had been instituted to protect them from unfair
trade, and help them to grow and thrive and contribute to the economy.
What
the indigenous companies do not realize is that this unhealthy competition and
sabotage of the regulation can only lead to a race to the bottom. Take a
typical case where a local software Value Added Reseller (VAR) receives a
paltry 5% of the ATS fees, and is also expected to bear the full tax liability
on the transaction (including that of the global software company who pays
absolutely no taxes in Nigeria on the transaction). Now the applicable
withholding tax on Software and Services is 10% of the transaction value. In
essence, the local company has already incurred a deficit of 5% in operating margin
(a clear and outright loss, without even factoring in operating expenses). This
is one of the main reasons why most of the local companies are dying at a time
when many economies are booming on the back of technology entrepreneurship,
think Google, UBER and Alibaba.
This
scenario however, does not entirely exonerate NOTAP, as they are charged with
enforcement of the regulation and have all means, power and instruments of
sanction to achieve effective enforcement. What seems lacking is the will to
succeed at our jobs upon which the sustainability of the polity depends; and
this does not apply to NOTAP alone. Many examples abound.
As
a nation, we have two choices; throw our hands helplessly up in the air and
justify our tardiness with the cliché ‘this
is Nigeria’, or we can buckle down to enforce the rules and make our
country an attractive postcode.
Austin Okere is the Founder of CWG Plc, the largest
Systems Integration Company in Sub-Saharan Africa & Entrepreneur in
Residence at CBS, New York. Austin also serves on the World Economic Forum
Business Council on Innovation and Intrapreneurship
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