REGULATORY FRAMEWORK FOR THE TRANSFER OF TECHNOLOGY IN NIGERIA: CHALLENGES AND PROSPECTS

This paper presentation will be logically phased under

concrete heading. Foremost a cursory look at the

background information relating to the under discourse will

be put in place. Also is the definition of essential terms

relating to the subject- matter. Subsequently, we shall

embark upon the examination of legal frameworks and the

relevant bodies responsibility for the transfer of technology

in Nigeria, as well as the challenges and prospects. And then

draw our conclusion and recommendation.

Background Information

Technology transfer is an important aspect of the new

international order, it has been perceived by Third World

states that there can be development without technology

and that the fastest ways of facilitating their development is

with the acquisition of readily available technology from the

industrialized, developed nations of the world. The history of

Nigeria development has essentially been a reflection of the

developments in other third worlds and to a greater or lesser

extent any examination of the Nigerian experience will show

the practical effect of the problems encountered and

solutions applied by the class of states for technology

acquisition.

The 1970’s was an era of indiscriminate import of various

technologies into developing countries – Nigeria especially.

Industrialized efforts mainly of turnkey packages with

technological link to the environment. Uncoordinated

technology inflows. Interaction code of conduct on Transfer

of Technology to developing countries was lacking.

Technology transfer contracts contained a very unfair

conditions: monopoly pricing, restrictive business practices;

export restrictions, high royalty rates; tie-in clauses (with

respect to equipment, raw materials, components etc) little

comprehensive training and management succession

programmes, poor/weak local Research and Development

activities etc.

It is to be noted that the recent increasing privatization of

knowledge, the globalization of technology and the world

economy, the growing technological protection is on the part

of the developed countries, the emergence of new

technologies and the rise of strategic alliances primarily

among the developed countries are threats of diminishing

access to cheap technologies by developing countries like

Nigeria. These developments, as highlighted above makes it

imperative to have a clearer technology acquisition and

development policy that will facilitate access to and mastery

of technologies, create an environment conducive to

technology acquisition and innovation, and promote a more

efficient process of selecting, acquiring, negotiating and

assimilating, imported technologies. To this end, a significant

change in the complexion of institutions involved with

technology transfer and acquisition is desired specifically

that shift to a technology ‘user friendly’ approach oriented

towards promotional and advisory services is needed

compared with the previous regulatory approach of

technology institutions of the 70’s.

Definition of Terms

At this juncture, it is unavoidably imperative to define each

individual word in its ordinary parlance before a

comprehensive definition of the term “Technology Transfer”

will be successfully undertaken. In this case the word

‘technology’ and ‘transfer’ will be definite in isolation in their

literal or ordinary meanings. According to the Dictionary of

Contemporary English defines the word ‘technology’ as “new

machines, equipment, and was of doing things” is being

defined as a the process by which someone or something

moves or is moved from one place , job etc to another. While

the Black Law Dictionary defines transfer as “to convey or

remove from one place or one person to another.3

In a more technical sense, the term technology has been

used in several context depending on the point of view of

the user. A definition that is sufficiently comprehensive for

the purpose of this research is that given by the World

Intellectual Prosperity Organization (WIPO) in their document

“Licensing Guide for Developing Countries” it defines

technology as4:

“The systematic knowledge of the manufacture of a

product, the application of a process or rendering of a

service, whether, that knowledge be reflected in an

invention, an industrial design, a utility model, or a new

plant variety or in technical information or skills or in

the services and assistance provided by experts for the

design, installation, operation or maintenance of an

industrial plant or for the management of an industrial

or commercial enterprise or its activities”

in a more holistic approach, technology transfer according to

the wikipedia5 “is the process of sharing of skills, knowledge,

technologies, methods of manufacturing, samples of

manufacturing and facilities among governments and other

institutions to ensure that scientific and technological

developments are accessible to a wide range of users who

can then further develop and exploit the technology into new

products, processes, applications, materials or services.

While Daniel Chudnovsky in a report prepared at the request

of IDRC 6 defines “technology transfer” as “… the process by

which different elements of production knowledge which are

not directly embodied in machinery and equipment are

transferred to another entity through a contractual

arrangement. Elements like patents, copyrights and trade

marks, technical services, formulae, designs, product and

process engineering, training of personnel are generally

included in a technology transfer contract, though in

different forms and proportions.

In addition to the technology transferable through

contractual arrangements either between independent firms

or between parent and subsidiaries within transnational

corporations (TNCs). Technology transfer can also take place

through non-commercial means as in the form of technical

journals, migration of skilled people, training of students etc.

REGULATORY FRAMEWORK FOR THE TRANSFER OF TECHNOLOGY IN NIGERIA

Many companies, universities and governmental

organizations, now have an “Office of Technology Transfer,

dedicated to identifying research which has potential

commercial interest and strategies for how to exploit it. This

applies to the Nigerian experience with the establishment of

National Office for Technology Acquisition and Promotion

(NOTAP).

In this direction the activities of this body have been

adequately backed by an Act referred to as National Office

for Technology Acquisition and Promotion Act, Cap. N62 LFN

2004. This regulatory body for the transfer of technology

called NOTAP can best be x-rayed under the following

headings:-

3.01 ESTABLISHMENT OF NOTAP

The body was established pursuant to the National Office of

Industrial Property (NOIP) by Decree No. 70 of 1979 which

was changed to National Office for Technology Acquisition

and Promotions (NOTAP) as amended.7 It was established as

a national agency for efficient acquisition (transfer) of

technology under more equitable conditions. The name was

changed from NOIP to NOTAP in 1992, in order to ensure

that new name adequately reflect its entire functions and to

avoid any misconception with regard to the activities of

NOTAP and those of Registry of patent and trademarks.

NOTAP was established with the assistance of the United

Nations’ Development Programme (UNDP). The United

Nations’ Industrial Development Organization (UNIDO),

became operational in 1983 with a mandate to:

“Perfect the interest of the Nigerian economy by

assisting indigenous enterprise in their negotiations

with foreign partners so that the terms and conditions

which they enter into technology agreements are

reasonable , fair and equitable and so that obnoxious

clauses which refrain their economic gains and

innovative capabilities are explained from all

technological or collaboration agreements8”

NOTAP is a body corporate with perpetual succession and a

common seal and may sue and be sued in its corporate

name.9

3.02 FUNCTIONS OF NOTAP

The main functions of NOTAP are set out in the Act as

follows:

a) The encouragement of a more efficient process for

the identification and selection of foreign technology.

b) The development of the negotiating skills of

Nigerians with a view to ensuring the acquisition of

the nest contractual terms and conditions by

Nigerian partners entering into any contract

agreement for the transfer of foreign technology.

c) The provision of a more efficient process for the

adoption of imported technology.

d) The registration of all existing and new contracts or

agreements having effect in Nigeria on the date of

the coming into force of this Act and the all contract

and agreements hereafter entered into the transfer

of foreign technology to Nigerian partners, and

without prejudice to the generality of the foregoing

every such contract or agreement shall be so

registrable of its purpose or interest is, in the opinion

of the National Office wholly or partially for or in

connection with any of the following purposes that is

to say”

i) The use of trade marks

ii) The right to use patent inventions

iii) The supply of technical expertise in form of the

preparation of plans, diagrams, operating

manuals, or any other form of technical

assistance of any description whatsoever;

iv) The supply of basic or detailed engineering,

v) The provision of operating staff or managerial

assistance and the training of personnel and;

vi) The monitoring on a continuous basis, of

execution of any contract or agreement or

agreement registered pursuance to this Act.

From the functions listed above, we can summarize that

NOTAP was established with the objective of monitoring on a

continuous basis, the transfer of foreign technology to

Nigeria.10 It carries out these functions by examining the

quality of imported technology with a view to determining its

price and to check fairly obvious abuses (e.g. overpricing of

real, fake or obsolete technology, etc)

Overtime, the office has acquired considerable capability in

fulfilling its functions as the authority in charge of evaluating

and regulating the flow of technology into the country.12 This

predominating regulatory role of NOTAP became insufficient

vis-à-vis the changing needs of the country particularly at

the period when the Federal Government embarks on

National Economic Reconstruction.

3.03 NEW FUNCTIONS

In response to the new challenges resulting from the

dynamics of global technological advancement and in

accordance with the government policy of encouraging

foreign investment into Nigeria, NOTAP has since 1988

shifted its focus from regulatory and control activity to

promotional and development roles. The objective is to

attract foreign technology and investment, re-emphasize

local manpower development with a view to strengthening

local technological capabilities. The office therefore renders

the flowing additional promotional and development

functions:

Rendering technological advisory services to the public and

the private sectors of the economy.

Training of Nigerians entrepreneurs in all stages of the

development of technological capabilities,

Providing technology information.

Acting as patent attorney or patent agent to assist in

patenting indigenous innovations,

Creating awareness on the concept of Build-Operate-Transfer

(BOT) scheme and strategic alliances as alternative

mechanism for the acquisition of foreign technology and

investment profiles,

Undertaking techno-economic survey on industrial project

profiles, and

Organizing seminars and workshops on various issues

relating to technology acquisition and negotiating for the

public and the private sectors.

4.0 REGISTRATION

The Act makes it mandatory to register NOTAP

Not later than six (6) months every contract or agreement

which on the date of coming into force of the Act had been

entered into by any person in Nigeria and which still has

effect on the commencement of the Act in relation to any

matter referred to in section 4(d) of the Act.13

Not later than sixty (60) days from the execution or

conclusion thereof, every contract agreement entered into

by any person in Nigeria with another person in Nigeria with

another person in Nigeria with another person outside

Nigeria in relation to any matter referred to in section 4(1) of

the Act.

4.01 FORM

The Act provides that all applications for registration of

contracts or agreements subject to the Act shall be

addressed to the Director and shall be accompanied by such

member of Certified True Copies (CTCs) of

contract/agreements and with all other related documents

including annextures thereto and such other documents and

information as may be specified in any particular case by the

Director.14

4.02 PROCEDURE FOR REGISTRATION

The procedure for registration is as follows:

i) The recipient or transferee of the technology lodges

with NOTAP a duly completed NOTAP application

form (Revised Form NOTAP -84),

ii) The application must be accompanied with the

following documents:

a) An application fee of one hundred Naira (N100)

made out in bank draft payable to the Director of

NOTAP,

b) Memorandum and article of Association of the

company,

c) Two certified true copies of the agreement

registered,

d) Two copies of duly completed questionnaires (viz a

revised from NOTAP 2 – 84)

e) A copy of the relevant feasibility study; and

f) Annual audited account (if not new company) and

if it is a new company a copy of the certificate of

incorporation should submitted as evidence

thereof.

iii) The NOTAP then securitizes the agreement in detail

and the body may request from the applicant more

relevant information

iv) When the agreement is finally approved by NOTAP

(either in its original form or in an amended form) a

registration free becomes payable to NOTAP.

4.03 CONTRACT NOT REGISTRABLE WITH NOTAP

The Act expressly sets out that the following contracts are

not registrable

Where its purpose is transfer of technology freely available

in Nigeria,

Where the price or other valuable consideration therefore is

not commensurate with the technology acquired or to be

acquired,

Where provisions are included therein which permit the

supplier to regulate or intervene directly or indirectly in the

administration of any undertaking belonging to the

transferee of the technology and are in his opinion,

unnecessary for the due implementation or execution of

such contract or agreement.

Where there is onerous or gratvitous obligation on the

transferee of the technology to assign the transferee or any

other person designated by the transferor patents, trade

marks, technical information, innovations or improvements

obtained by such transferee with no assistance from the

transferor or such person,

Where there is an obligation therein to acquire equipment

tools, part or raw materials exclusively from the transferor or

any other person or given source,

Where it is provided that the exportation of the transferee’s

products or services is prohibited or unreasonably restricted

or where there is an obligation in such transferee to the

products manufactured by it exclusively to the supplier of

the technology concerned any such contract or agreement

or any provisions thereof; and

Where limitations are imposed on technological research or

development by the transferee.

THE EFFECT OF REGISTRATION

Registration enables the agreement/contracts to be

enforceable and binding on parties especially with respect to

payment made in Nigeria to credit of any person outside

Nigeria.

Section 7 of the Act specifically states

“… No payment shall be made in Nigeria to the credit of

the Central Bank of Nigeria or any licensed Bank in Nigeria in

respect of any payment due under a contract or agreement

mentioned in this Act unless a certificate of registration

issued under the Act is presented by the party or parties

concerned together with a copy of the contract or agreement

certified by the National Office in that behalf.16

CANCELLATION OF REGISTRATION

The Director is vested with powers to cancel the certificate

of registration where he is satisfied that any contract or

agreement has subsequent to the registration thereof been

amended or modified in contravention of the provisions of

the Act. The Director is however obliged to give notice linting

to the parties concerned of his intention to cancel the

certificate.17 where the Director gives notice, the parties

concerned may have recourse to the provisions of the Act,

relating to appeals contained in section 9(1) – (4). It suffices

that the Directors’ judgment can be questioned if his

conclusion are faulted by the council and the parties

registration restored.

MISCALLANEOUS AND SUPPLEMENTARY PROVISIONS

The Act makes some supplementary and miscellaneous

provisions some of which are important and listed as follows:

a) Power to obtained information

b) Penalties for false returns and obstructions

5.00 CHALLENGES AND PROSPECTS

5.01 CHALLENGES

whether or not NOTAP has achieved the aim for its creation

can only be ascertained from how it has been discharging its

statutory responsibilities. A cursory look at some of the

challenges faced in the cause of its operation, may give one

an insight as to the inefficiency and ineffectiveness of the

body. Some of the challenges are here to wit:

In practical terms, it seems that NOTAP is primarily

concerned with the registration of contracts where the

fees payable are remittable in foreign currency. It has

been posited that no obligation to registration with

NOTAP may arise if the fees , related to the contract are

dominated in local currency without any intention to

remit same. In such circumstances, even if the

technology purported to be acquired is workless, no one

will be able to ascertain it as it will not be within the

ambit of NOTAP

Secondly, the quality of the staff of NOTAP is not specifically

stated in the Act. One is likely to assume that the staff

will be mainly administrative staff with no special

related skill or knowledge to appraise the contract that

come before them critically to understand their effect

on Nigeria. This handicap is shared with such other set

ups to the patents and Registry Act pursuant to the

patents and Deign Act 2004;

The criteria for evaluating applications brought before

NOTAP for registration appears cumbersome.18 It

therefore follows that an efficient administrative

machinery must be put in place to ensure that

applications are considered with dispatch. It is

regrettable that the Act did not specify the time limit

that it will take NOTAP to process applications brought

before it as this would have served as a check against

dishonesty practices, laziness of administrative staff

and other bureaucratic bottlenecks that characterize

our public institutions;

It has also been argued that it might only be possible to

minimized disreputable conduct in the sale and

purchase of technology and not to eliminate it as

NOTAP seeks to do;

Finally, there seem not to be any obligation to register

technical or management agreements with NOTAP

where these agreements relate to projects funded in

the country by international finance institutions who

usually provide their foreign exchange components.19

5.02 PROSPECTS

The prospects associated with NOTAP can be viewed from

the perspective of benefits of imported technology. No doubt

that, these benefits are many and some of them are:-

a) Improving the growth of the national economy

b) Promoting employment especially in the skilled

categories,

c) Reducing prices and improving quality of goods and

services,

d) Saving and earning foreign exchange,

e) Encouraging business competitiveness and innovation,

f) Improving scientific and technological capability of the

country, and

g) Generating more taxes and income for government.

6.00 RECOMMENDATIONS

a) The Act should be amended to bring all

contracts/agreements purporting to acquire technology

within the jurisdiction of NOTAP whether or not

payments under such agreements/contracts are

designated in foreign currency,

b) Special care should be taken to select professional staff

for NOTAP. The staff should have not only

administrative skills but the technical competence to

discern the effect of clause contained in the

agreement/contracts brought before them to

registration,

Contracts/agreements relating to international finance institutions

should also be registrable with NOTAP, to be able to

ascertain their technological worth to the nations.

d) There is therefore a need for NOTAP’s functions to be

performed efficiently and effectively. This will help

inspire confidence in foreign investors and discourage

them from “cutting corners” in order to avoid

bureaucratic bottlenecks;

e) It is also suggested that the National Office of Industrial

Property Act.20 should be subject to frequent evaluation

to ensure that it is coping with our present date

requirement. This means that we should constantly

examine the operation of NOTAP and where areas are

found wanting, should corrected to keep the law

abreast with the changing world;

f) It is also suggested that zonal office should be

established all over the country to make their

operations more effective and efficient; and

g) The penalty of N2,000 is very meager that multi-

nationals could so easily pay. The amount must be

reviewed upwards.

CONCLUSION

Intellectual Property Rights clearly provides platform for

transfer of technology, but they do not by themselves

guarantee transfer of technology. For Nigeria to attain

technological threshold, i.e. posses requisite skill/capability,

have enabling domestic environment and posses adequate

support base. There is need to revisit Article 66 (2) of TRIPS

“Developed countries members shall provide incentives

to enterprise and institutions in their territories for

purpose of promoting and encouraging technology

transfer to less- developed country members, in order

to enable them create a sound and viable technological

base”.21

In concrete summation, the origin of NOTAP from the

Enabling Legislation of 1979 has been vividly drawn into

focus. The rationale for the establishment of NOTAP, the

functions it was set out to perform and how all these of

functions have to be adjusted over time in response to new

challenges result from the dynamics of global technological

changes have all been treated. The power of NOTAP and

offences created under the Act, also came under close

scrutiny. Also requirements for technology acquisition are

bound to be imperfections. These criticisms regarding the

Act and the personnel that administer it was also

coordinated.

Finally, an attempt was made to proffer options and

recommendations which if implemented could assist NOTAP

in meeting aspirations of its foundi