Nigeria is in the midst of a digital revolution, with a burgeoning online presence and increasing engagement on social media platforms such as Facebook and TikTok.
However, the country’s potential benefits from this growth are being hampered by inadequate government policies on taxation and regulation. Omotunde Dada, a prominent voice in Nigeria’s digital landscape, recently emphasized the urgent need for policy reforms to unlock Nigeria’s digital potential.
“Without proper taxation and regulatory frameworks, Nigeria is losing billions of dollars annually,” Dada highlighted. This shortfall is a significant missed opportunity for Nigeria, which could otherwise fully leverage its digital economy.
Social media platforms have a strong foothold in Nigeria. Yet, their current business models limit direct financial benefits to Nigerian content creators and the broader economy. For instance, Facebook pays Nigerian creators through intermediaries in other countries, adhering to those nations’ tax laws and bypassing potential Nigerian revenue. Similarly, while Nigerian businesses spend substantial sums on these platforms, the country sees no tax or direct investment returns.
“The lack of stringent regulatory oversight allows unchecked data mining and advertising by foreign companies in Nigeria, raising serious concerns about data privacy and consumer protection,” Dada remarked. TikTok’s policy, which restricts Nigerians from running paid ads while allowing free donations, further underscores the absence of beneficial financial arrangements for Nigeria in the digital realm.
The inaction in regulating and taxing digital companies is costly for Nigeria. The potential tax revenue that could fund essential public services is enormous. Moreover, the absence of a robust regulatory framework hampers the country’s ability to fully benefit from the digital economy.
To address these issues, the Nigerian government has recently introduced a Value Added Tax (VAT) on digital transactions. “This is a positive step but should have been implemented much sooner, potentially with retroactive revenues from when these companies began operations in Nigeria,” Dada argued. Additional measures are necessary to ensure direct payments to Nigerian content creators, which would help open global markets for Nigerian digital content and foster job creation and innovation.
Creating a responsive regulatory environment that prioritises customer feedback and swift governmental responses will encourage more content creators to thrive. “Such an approach will not only ensure that revenues remain within the country but also build a robust digital economy that benefits all stakeholders,” Dada stated.
Omotunde Dada urges the Federal Government to take these necessary steps, emphasizing that Nigeria’s digital economy holds enormous potential. “Realising this potential requires proactive measures in creating effective taxation and regulatory structures,” Dada concluded. By doing so, Nigeria can transform this missed opportunity into a significant advantage for the future of its economy and society.
