Introduction
In February 2024, the African Continental Free Trade Area (AfCFTA) Protocol on Digital Trade (the "Protocol") was adopted. The Protocol seeks to govern the cross-border exchange of goods, services and other tradeable items that are facilitated by digital platforms and technologies. This includes everything from e-commerce and digital payments to software-as-a-service (SaaS) and cross-border data flow.
In this newsletter, we have highlighted some of the regulatory considerations for Nigerian tech businesses that wish to leverage on digital trade.
Key Regulatory Considerations
a. Data Protection and Privacy: As digital trade
relies on cross-border data flow, a critical regulatory
consideration is compliance with data protection laws and
international best practices. The Protocol, particularly in Article
21, mandates government of signatory countries, to ensure that
private companies adopt and publicly disclose their data protection
and cybersecurity policies. The Protocol also states that signatory
countries are to comply with the provisions of the Annex on
Cross-Border Data Transfer once this is made available.
In addition to the foregoing, Nigerian Tech businesses should comply with the Nigeria Data Protection Act, 2023 and create data protection policies that align with best practices on data usage and transfer.
b. Intellectual Property (IP) Rights: Another regulatory consideration for companies leveraging on digital trade, is the protection of their intellectual property and valuable digital assets such as innovative technology. As companies expand into cross-border markets with the AfCFTA framework, it is crucial to align with AfCFTA's IP protocols which aims to harmonize IP laws across member states and provide clear guidelines for protecting digital goods and services.
In addition to the above, Nigerian Tech businesses should ensure that they protect their intellectual property rights in Nigeria and also proceed to protect their IP rights in other African countries where they trade.
By adhering to the above, businesses can reduce the risk of potential disputes over IP infringement, counterfeiting, or unauthorized use of digital products in different African markets. Protecting IP rights not only safeguards innovation of each company, but also strengthens its position in the competitive digital economy.
c. Consumer Protection: With the growth of e-commerce, compliance with consumer protection laws becomes critical. Accordingly, Article 27 of the Protocol requires all contracting parties to adopt and maintain consumer protection laws that prevent misleading, fraudulent or deceptive practices in digital trade. This means that Nigerian companies must focus on ensuring transparency, fair terms and secure payment systems to build trust and foster positive relationships with customers across borders. Nigerian businesses must therefore comply with the Federal Competition and Consumer Protection Act, 2018 as well as consumer protection laws of contracting parties to minimize the risk of legal disputes, protect consumers from harm and ensure fair business practices.
d. Rules of Origin: The Protocol states that businesses are to adopt an Annex on Rules of Origin once this is made available. The Rules of Origin under the AfCFTA is expected to help determine the origin of goods and services, including those from African-owned enterprises, digital platforms and contents.
e. Taxation and Tariffs: Key components of the AfCFTA are tariff liberalization and concessions, which are designed to reduce trade barriers and promote the free flow of goods and services across member states. Participating businesses must ensure that they meet their tax obligations and comply with the AfCFTA tariff modalities which outline the specific tariff reductions and exemptions for goods traded under the AfCFTA.
Conclusion
As highlighted in our previous newsletter, the Protocol offers
businesses in African countries a unique opportunity to build an
inclusive, sustainable, and prosperous trade ecosystem. In order
for businesses to take advantage of the opportunities, it is
important that the Annexes on Cross-Border Data Transfer and Rules
of Origin amongst others are developed and made available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
