INTRODUCTION
In Nigeria’s technological landscape, the National Office
for Technology Acquisition and Promotion (the “NOTAP”) is
the primary government agency responsible for overseeing technology
transfer activities in the country. Technology Transfer Agreements
involve the exchange of technology-related assets, knowledge, and
skills between entities, often from developed countries to
developing ones like Nigeria. Established by the National Office
for Technology Acquisition and Promotion Act of 2004 (the
“Act” or “NOTAP Act”), NOTAP supervises and
protects the interests of both local and foreign entities engaged
in acquisition of technology.
In fulfilling its mandate to move Nigeria from the periphery to
the dominant center of the global industrial power structure within
the shortest possible time, NOTAP has adopted a technology
acquisition strategy and a vibrant innovation, research and
development commercialization program. To this end, NOTAP executes
a series of pivotal functions designed to propel Nigeria’s
technological field forward.
This regulatory spotlight on NOTAP aims to shed light on its
complex role within the legal and regulatory framework established
by the NOTAP Act. Through this newsletter, we will delve into
NOTAP’s core functions and activities, highlighting how they
influence the regulatory environment for Technology Transfer
Agreements. Our analysis will also cover the broad range of
agreements eligible for registration, as specified in both the
NOTAP Act and the 2018 Revised Guidelines for Registration and
Monitoring of Technology Transfer Agreements in Nigeria (the
“Guidelines”). This will offer a thorough insight into
the regulatory landscape, crucial for fostering successful
technological collaborations and innovations.
CORE FUNCTION
NOTAP encourages an efficient process for identifying and
selecting foreign technology, thereby fostering an environment for
innovation and progress. It plays a pivotal role in enhancing the
negotiation skills of Nigerians, ensuring that parties involved in
Technology Transfer Agreements negotiate the best possible terms
and conditions. Additionally, NOTAP streamlines the adaptation of
imported technology, facilitating the integration of cutting-edge
solutions into Nigeria’s local context. Central to its mission
is the registration of all contracts or agreements related to the
transfer of foreign technology to Nigerian parties; a process that
involves scrutinizing the objectives and intentions behind each
agreement to ensure they align with national
interests.1
REGISTRABLE AGREEMENTS
Under the NOTAP Act, any contract or agreement made between a
Nigerian entity2 and a foreign entity in respect of
subject matters specified in the Act, must be registered with NOTAP
in accordance with the prescribed procedure.
Broadly categorized, these contracts or agreements encompass
various purposes, such as the utilization of trademarks, the rights
to use patented inventions, the provision of technical expertise,
supply of engineering services and machinery, and the offering of
operational and managerial assistance, along with personnel
training.3 These aforementioned agreements are
registered by NOTAP under the following titles: (a) Trademark
Licence for manufacturing only (not for selling products or
rendering services); (b) Technical Know-How; (c) Management
Services; (d) Technical Services; (e) Consultancy; (f) Software
License; (g) Franchise; (h) Research and Development (R&D); (i)
Trademark Licence and Technical Know-How Agreement; (j) Technical
Know-How & Management Services; (k) Hotel Management Agreement;
(l) Consultancy and Technical Know-How; (m) Value Added Services;
and (n) Shared Services.4 (“Registrable
Agreement(s)” or “Agreements”).
REGISTRATION AND APPROVAL PROCESS
The Guidelines stipulate a thirty-day application window
following the execution or finalization of the terms of a
Registrable Agreement. Agreements submitted for registration after
this period are subject to penalties for late submission.
To initiate the registration process, a formal application must
be addressed to the Director General of NOTAP. This application
should be accompanied with an executed copy of the Registrable
Agreement, along with the requisite supporting documents.
Submissions must be made through NOTAP’s dedicated registration
portal, following payment of the prescribed presentation fees. Upon
meeting all specified requirements, the Director General will issue
a certificate in the prescribed format.
In line with the registration requirements set forth by the
NOTAP Act, the Guidelines enhance the regulatory framework by
mandating the inclusion of capacity building initiatives in
Technology Transfer Agreements.5 This requirement
underscores the commitment of the Nigerian government to knowledge
transfer and the development of local expertise. According to the
Guidelines, it is essential that every Registrable Agreement
includes specific provisions for capacity building, thereby
emphasizing the critical importance of skill development among
Nigerians in the field of technology acquisition.
Notably, the Guidelines specify that all agreements must include
detailed information regarding Nigerians understudying foreign
experts.6 This strategic provision aims at ensuring not
only the seamless transfer but also the effective domestication of
technology in Nigeria. By mandating the submission of comprehensive
details on the individuals understudying the experts, the
Guidelines actively contribute to the overarching goal of fostering
local expertise and reducing dependence on foreign know-how.
NOTAP may approve these Agreements with or without conditions.
When conditions are applied, Agreements that serve national
interest may undergo adjustments or modifications regarding their
scope of services. This process may also require the submission of
relevant documents, including invoices, tax clearance certificates,
and annual audited accounts, as applicable. Conversely, if it is
determined that the scope of services in the Agreements is: (i)
equitable for all parties involved; (ii) represents value for
money; and (iii) complies with the provisions of the Act, the NOTAP
may grant unconditional approval. Once approval is issued by NOTAP,
companies are obligated to fulfill all stipulations outlined in the
approval letter.
Nevertheless, the Director General has the authority to deny
registration if Agreements deviate from the required
specifications. Such deviations may include: (i) transfer of
readily available technology within Nigeria; (ii) insufficient
consideration for the acquired technology; (iii) including
provisions that confer excessive control to the supplier; (iv)
imposing restrictions on technological research; (v) obligations to
exclusively source from the transferor; and (vi) placing
unwarranted constraints on product resale. Additionally, Agreements
that include provisions: (i) imposing foreign jurisdiction; (ii)
exceeding a ten-year duration; and (iii) mandating unnecessary
design changes will also be considered grounds for
rejection.7
EFFECT OF REGISTRATION
The Act mandates that payments within Nigeria to a foreign party
under a registrable contract can only be made upon presenting a
NOTAP-issued certificate along with a certified copy of the
contract.8 This requirement was further underscored in
the case of Stanbic IBTC Holdings Plc v. Financial Reporting
Council of Nigeria (FRCN) & Anor (2015), (2018) LCN/12169 (CA).
The Court of Appeal clarified by holding that failure to register a
contract prevents payment through, or on the authority of the
Central Bank of Nigeria, or a licensed bank in Nigeria.
CONCLUSION
In conclusion, as Nigeria advances its technological landscape,
the regulatory oversight of NOTAP becomes indispensable in creating
an environment ripe for innovation, collaboration, and sustainable
development. The delicate equilibrium maintained between welcoming
foreign technology transfers and safeguarding national interests
exemplifies the regulatory wisdom underpinning the NOTAP Act and
the Guidelines.
As we navigate the ever-evolving terrain of technology transfer,
it is crucial for stakeholders, businesses, and innovators to be
vigilant and well-informed about the changing regulatory terrain. A
proactive approach not only ensures compliance with legal standards
but also fosters a setting where lasting and fruitful partnerships
can flourish.
Footnotes
1. Section 4 (a)- (e) of NOTAP Act and Regulation 1.2 (a)
– (e) of the Guidelines.
2. Entity in this context refers to natural and legal
persons.
3. Section 4 (d) (i) – (vi) of NOTAP Act and
Regulation 1.2 (d) (i)- (vi) of the Guidelines.
4. Regulation 2.2 of the Guidelines.
5. Regulation 2.1 (c) of the Guidelines.
6. Ibid.
7. Section 6 (2) of the Act.
8. Section 7 of the Act.
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.
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