On the Rebranded Ministry of Communications and Digital Economy
Recently, the Federal Ministry of Communications has been renamed the ‘Federal Ministry of Communications and Digital Economy,’[i] in line with global trends. Several countries have created full ministries for the Digital Economy or Digital technologies.[ii] The name change is in recognition of the fact that digital technologies as a group represent a whole new field of endeavour that cannot adequately fall under the narrow scope of any of our ministries, departments, or agencies. The closest Ministries in Nigeria to the digital technology space by their mandate are the Ministries of Communications and Science & Technology. It is noteworthy that the renaming was the idea of the current Minister of Communications. He suggested the same to the President, who then agreed and endorsed the renaming.
But to ensure that this action does not stop at mere window-dressing, the Ministry must hit the anvil while it’s hot. The rebranded must begin to push its weight around, not as a heavy-handed regulator, but as an enabler of innovation and entrepreneurship.
The Digital Economy is a vast space that accommodates varied internet-driven activities and technologies. It would be foolhardy to try to get involved in all of them at the same time. The Ministry must instead focus its energies on those digital technologies and activities that are already pervasive in the Nigerian socio-economic space. I will be discussing 4 of them in this article.
The CBN is currently working on a comprehensive policy and guidelines for the Fintech industry.[iii] Before this, Fintech companies have had to use cooperative or money lenders license to operate. Such economic arrangements are not wholly suitable for their operations and affect their capacity to raise investment and become profitable. The Ministry should collaborate with the CBN that the Fintech Guidelines are not just suited for their activities, but also accommodating enough to encourage more participants in the space. This collaboration is essential because a previous Guideline issued by the CBN for Payment System Banks (PSBs) required that anyone who wanted to get a PSB license must have a minimum capital base of N5 billion.[iv] Although Fintech operators are eligible to apply for PSB license, the fact that is hardly any Fintech startup can cough out N5 billion as part of licensing requirements.
This occurrence is why the Ministry of Communications and Digital Economy must get involved in this process. Considering the precedent set by the PSB Guidelines, leaving the drafting of the Fintech Guidelines to the CBN might spell doom for this flourishing sector.
Taxing Digital Companies
That the Buhari administration is determined to shore up and diversify Nigeria’s revenue base is not in doubt to all stakeholders. So far, the government has focused on traditional/physical tax bases rather than new internet-based tax bases. One of the causative factors behind this is the fact that Nigeria’s tax laws generally require that a company must have a fixed base in the country for it to liable to tax. This provision limits our capacity to tap fully tap into the wealth of the digital economy as a revenue source, especially for foreign tech companies. According to an Ovum report, local telecommunications companies lost N109 trillion in revenue to platforms like Facebook, WhatsApp, Skype, Viber, and Blackberry Messenger in the space of 6 years.[v] No doubt, companies like Facebook create immense economic and social value in Nigeria, but they also earn billions in revenue for this.
This aspect will prove the most challenging for the Ministry, especially in the issue of lawmaking and amendment. Instead of going on this path alone, the Ministry should collaborate with the Ministry of Finance, the Federal Inland Revenue Service (FIRS), and Joint Tax Board (JTB). These agencies have already done some initial work towards developing tax policies for digital companies. No comprehensive tax policy for digital companies can be complete without the involvement of telecom operators since digital companies rely on their infrastructure. Since the Ministry of Communications and Digital Economy serves as the oversees this space, it is in the best position to use its influence over telecoms companies to the table.
I’ll say again, this aspect will prove the most challenging, but if the Ministry can successfully make headway here, success here can easily overshadow every other achievement and justify its renaming.
Nigeria is already the country with the 2nd most significant volume of bitcoin transactions after China and number one in Africa[vi], without a relevant regulatory framework. Attention is mainly on Bitcoin, which is just one small aspect of Blockchain technology. The Ministry should commence work on a comprehensive Blockchain technology adoption policy. Because Blockchain is ubiquitous in its application, a central policy document will guide all other agencies and Ministries when developing rules for products and services that run on blockchain.
Same as Blockchain, there is a need for a comprehensive policy to guide the adoption of AI and Big Data in Nigeria. Recently, the Ministry of Science & Technology announced plans to set up an AI agency.[vii] In a Twitter thread, I shared my thoughts on this and advised that Nigeria was not ripe for an AI agency[viii] until necessary foundations are in place, such as overhauling STEM education and developing a comprehensive plan that states what Nigeria wants to achieve with AI. In another Twitter thread, I have discussed the AI policies of several countries and how they affect their implementation of AI technology.[ix] Nigeria must first decide what it wants to achieve with AI, before setting up a regulator. Luckily, the current Minister knows his onions in this field as he made the news for developing a device that could be used to teach AI in schools.[x]
Even if Nigeria should set up an AI agency, it should either be domiciled under the Ministry of Communications and Digital Economy, as AI is still a form of digital technology. Alternatively, the agency could be independent and answerable only to the National Assembly and the President. In Chapter 7 of my recently published book, I shared my thoughts on the setup of an AI agency in Nigeria.[xi]
The Ministry could even push for the incorporation of the policies and plans for advanced technologies to be part of the next national development plan that will replace the Economic Recovery & Growth Plan (ERGP), which is set to run its full course by next year.
Generally, the Ministry cannot achieve its renewed mandate without collaborations that cut across ministries, agencies, industries and bring the private and public sector. The jury is out. The naysayers already believe the change in name is merely cosmetic. Its time to put in the work to prove them wrong.
[i] Oge Udegbunam, Buhari renames communications ministry, (Premium Times, 23 October 2019) www.premiumtimesng.com/news/top-news/359229-buhari-renames-communications-ministry.html
[ii] Scotland, Thailand, Tunisia, Benin Republic, and Burkina Faso are examples of countries with Ministries of Digital Economy
[iii] Yomi Kazeem, Nigeria’s Central Bank could hamstring local fintech startups with costly new regulation, (Quartz Africa, 20 November, 2018) https://qz.com/africa/1468309/nigerias-central-bank-could-hamstring-local-fintech-startups-with-costly-new-regulation/amp/
[iv] Maria Rotilu, 10 things to know about CBN’s new payment service guidelines, (The Guardian, 2 January 2019) https://guardian.ng/technology/10-things-to-know-about-cbns-new-payment-service-guidelines/amp
[v] MTN, Glo, others to lose N109tn to WhatsApp, Facebook — Report, (Punch, 11 July, 2016) https://punchng.com/mtn-glo-others-lose-n109tn-whatsapp-facebook-report/amp/
[vi] Diamond Hope, Nigeria is ranked second place globally in Bitcoin trading, (Business Insider by Pulse, 14 December 2017) www.pulse.ng/bi/tech/tech-nigeria-is-ranked-second-place-globally-in-bitcoin-trading/etlkxdw.amp
[vii] Nigeria set to establish AI agency, (Technopreneur, 23 September 2019) https://technopreneur.com.ng/2019/09/23/nigeria-set-to-establish-ai-agency/
[viii] Why Nigeria is not ripe for an AI Agency…yet https://twitter.com/Akin_Agunbiade/status/1177556328744722432?s=19
[ix] How Different Countries view AI, https://twitter.com/Akin_Agunbiade/status/1181159191383293952?s=19>
[x] Zakariyya Adaramola, Nigeria launches device co-designed by Pantami, (Daily Trust, 7 October 2019) www.dailytrust.com.ng/nigeria-launches-device-co-designed-by-pantami.html