Introduction
Nigeria is by far Africa’s biggest economy both by nominal and per capita gross domestic product (“GDP”). This owes to different factors, one of which is its population and the other being its thriving businesses, tech and non-tech. These businesses are believed to have so thrived largely because of the innovativeness and relentless efforts of their owners/stakeholders and not to regulatory laws or government policies, most policies having been found regulating SMEs and startups to death. One of such policies may well be the recent ban of Twitter by the Federal Government wrapped in the move to license social media and over the top (“OTT”) platforms operating in the country.
With the foregoing, this Article seeks to factor the effect of the suspension of Twitter and the regulation of other social media and OTT platforms in Nigeria on the country’s economy, as well as its impact on micro, small and medium scale enterprises (MSMEs) and startups with local roots. Whether Nigeria can be an attraction for foreign direct investments is a puzzle which will be answered in the Article.
Background
On the 4th day of June 2021, the Federal Government of Nigeria (“the Government”), through its Information Minister, Lai Mohammed, announced a country-wide indefinite suspension (ban) of Twitter. According to the Government, the suspension of the popular tech and microblogging platform was necessary to stop the threat posed to Nigeria’s corporate existence by the continuous use of the social media. Two days before the announcement, Twitter removed a tweet made by President Mohammadu Buhari from its platform, and a tweet by the Chief Executive Officer of Twitter, Jack, attributed the removal to violation of Rule Number 4 of the platform’s “Safety and Freedom”. Although no direct connection has been drawn, the suspension is speculated to be a response to the deleted tweet.
The importance of Twitter to Nigerians had since made them resort to the use of private virtual network (VPN) services to stay online. A VPN is a software that helps internet users evade certain location boundaries while surfing the net, therefore ensuring digital footprints are left undetected. The Government expressed its displeasure to this development (the use of the VPNs) and promised to deal with the violators of the suspension order. To carry out this threat, the Government, reportedly, contacted China with the intent of building a firewall that will give the Government absolute control over the internet space in the country. The Government also mandated the National Broadcasting Commission (NBC) to immediately commence the licensing of all social media and OTT operations in Nigeria. This means that popular social media and OTT with Nigerian presence such as Facebook, Instagram, Netflix, YouTube, Zoom, Skype, Pinterest, TikTok, Likee, Snapchat and LinkedIn will be regulated by the Government.
Several fundamental human rights guaranteed by the Nigerian Constitution, the African Charter on Human and People’s Rights and the International Covenants on Civil and Political Rights were reported to have been breached by this action, resulting in the Socio-Economic Rights and Accountability Projects (“SERAP”) filing a lawsuit at the ECOWAS Court against the Nigerian Government on June the 8th, four days after the suspension was declared.
MSMEs, Startups and the Nigerian Economy
Nigeria economy, a middle-income, mixed economy and emerging market economy with expanding manufacturing, financial, service, communications, technology and entertainment sectors, is ranked the 27th largest economy in the world in terms of nominal GDP and the largest in Africa. The nominal GDP of Nigeria for 2019 was reported by the World bank to be 448.1 billion dollars with 49.73 percent from the services sector. In 2020, the country’s GDP reduced to 442.9 billion dollars equaling a per capita GDP of 2.4 thousand dollars, a population that thrives on small and medium businesses like the sale of beauty and skin products, barbing salons, and the rest.
A survey report carried out by the National Bureau of Statistics in 2010 in collaboration with SMEDAN, revealed SMEs in Nigeria to be strategically positioned to improve per capita income by providing 80 percent of jobs in the country. In 2019, however, SMEs were reported to contribute about 48 percent of the country’s nominal GDP, 96 percent of businesses and 84 percent of employment.
Startups are similar to SMEs but they are not necessarily qualified as SMEs. Startups are contemporary businesses that bring a new product or service to the market with their innovative or creative business model that focuses on rapid and expanded growth. SMEs in themselves do not have these characteristics as they are not necessarily creative or innovative, contemporary nor seek to rapidly grow beyond its founders. Although categorically different, SMEs and Startups play a very similar role in the economic growth of Nigeria. Over the years, tech Startups like OPay, Paystack, ULesson, 54Gene, PalmPay, PiggyVest, Jiji, Flutterwave, Jobberman, Cowrywise, Jumia, Interswitch have disrupted business efficiency in Nigeria with their technology innovation. Startups and MSMEs chiefly make up the informal sector of the economy.
The Effect of the Suspension and Social Media Regulation
It is no gainsaying that the advent of Twitter boosted the sale of the product and services of most MSMEs and Startups, and consequently contributed significantly to Nigeria’s GDP. But the effect this ban has occasioned and will occasion on Nigerians and businesses (MSMEs and Startups) who ploys or may ploy Twitter as a source of income is gargantuan. The losses cut across daily income gained by reason of their presence and activities on digital and social media platforms (Twitter inclusive) where they communicate and pitch their brands to local and foreign customers, clients, investors, partners and stakeholders. An instance is Cowrywise, a Nigerian-grown savings and investment company, which utilised Twitter to raise three million dollars ($3M) in investment funding for the company. One of the participating investors was Sahil Lavingia, the founder of ‘Gumroad’, a San Francisco-based startup. After investing in Cowrywise in January 2021, Lavingia took to his twitter account: “Excited to invest in another African startup! The power of Twitter.”
Another showcase is the rise of two Nigerian-grown fintechs, Flutterwave and Paystack, to the status of unicorn (startups valued at one billion dollars). It is widely believed that the ease with which these Startups attracted foreign investors was largely down to their Twitter presence and activism as they had difficulty in convincing investors about regulatory risks and policies.
Between June the 4th and June the 10th, social media-based Nigerian brands and Nigerian-grown businesses have been at the losing end of profits and investments. The suspension of Twitter may send the wrong signal to foreign investors which may affect small businesses on an immediate, short and long-term forecasts. One very recent instance emerging from Twitter is a tweet from the account username “@simplyEromz” decrying the situation of a friend who had an international investor pulling out of a deal which was going to create jobs for many Nigerians through a freelancing platform made for Nigerians. The project was said to be four months underway and the investor, upon the news of the Twitter ban, rested on Nigeria’s government policies as the reason for pulling out. The ban may also impact individuals and brands who depend on the endorsement of social media influencers to promote their skills, experiences, products and services, the social media influencers majorly finding their stage on Twitter.
Reports from NetBlocks (a watchdog organization that monitors cybersecurity and internet governance globally) reveals that a day of social media suppression costs Nigeria about 2.5 billion naira in losses, and a day of absolute internet blackout could cost the country about 49 billion losses in Nigerian currency. Nigeria is further estimated to lose about 11 billion naira if WhatsApp, Facebook, Instagram, YouTube are all shutdown. Ultimately, report carries that 7.5 billion naira has been lost within four days of the suspension of Twitter in the country. That’s remarkable!
The regulation of social media and OTT operations in Nigeria through the condition of licensing with the NBC may further bring these estimated loses to fruition and may increase Nigeria’s tech and investment hostility since the Government will determine their control and censor their operations at will. This is especially so when it is recalled that Facebook have plans of opening an office in Lagos within the second quarter of 2021 (and June marks the end of that quarter). This will be Facebook’s second centre of operations in Africa after its South African office. This is coming after two tech giants recently chose other countries for an extension, sidelining Nigeria, Africa’s largest tech eco-system. First, it was this same Twitter, who in April 2021, announced that it was going to site its African Headquarters in Ghana, a country whose entire population (31.4 million) is less than the number of Twitter users in Nigeria (39 million). Justifying their decision, Twitter described Ghana as a champion for democracy, a supporter of free speech, online freedom and the open market. Shortly after, Amazon revealed that it will pitch its African office in South Africa, not Nigeria. Following the recent ban, it is believed by many that their decisions cannot be faulted.
Social Media Suppression in Other Countries
Nigeria would not be the first country to conceive the ban of social media, OTT or regulate them. Countries like China, North Korea, India, Bangladesh and Iran have banned social media in time past; even the United States recently considered banning TikTok. In China, for instance, Google, Facebook, Twitter and Instagram are not in operation. The country, nevertheless, has a wide internet access and an active social media industry but filters search to information within China. Foreign IP addresses are blocked and external contents erased using a technological barricade system called “The Great Firewall of China”.
This internet censorship in China extends to both the publishing and the viewing of online content and is said to severely restrict the freedom of the press. The censorship is also backed up by law; a legislative move for the censorship having begun in 1996 but made real in 2010. This censorship system may just be what the Government subtly proposes to use in regulating social media operations in the country on a long run as it promises unlimited control over social media activities.
The case in China somewhat differs from Nigeria’s. China is a developed country with myriads of technological advancements. The country has a self-sustaining economy and has locally developed social media and OTT platforms like WeChat, TikTok, Likee, and YY. All these are absent in Nigeria. Nevertheless, the negative role the censorship and regulation played in the spread of the covid-19 pandemic and its resultant effects cannot be forgotten in a hurry. World economies are still recovering from the hit.
Conclusion
The Companies and Allied Matters Act 2020 (CAMA) and other recently commercial-based legislation were enacted under the informal slogan of “Making Nigeria an easy place to do business”. The very recent policies (including the ban of cryptocurrency trading by the Central Bank of Nigeria and the Security and Exchange Commission’s warning against trading on Securities listed on foreign markets using online investment trading platforms) may have sent a contradicting message and may just stiffen the growth of home-grown Startups and SMEs. Without a doubt, the suppression of Twitter undermines Nigeria’s economic potentials as the giant of Africa and calls on the Government to rethink its economic direction heralded by its policies; unless a cogent reason is given for the policy.
Although the National Assembly had ordered Nigerians to continue with the use of Twitter (using VPN being the only route), this may not prove to be the solution to what is believed to be the country’s strings of backward-looking, investment diminishing, morale demoralizing, right infringing and abrupt policies, and would not necessarily turn the tides of the Twitter ban nor ameliorate its cursory effects on individuals, businesses and the economy. If similar policies are allowed to thrive, Nigeria may completely lose its position as the tech-destination for tech giants as the decisions and reasoning of Twitter and Amazon may be followed. And flowing from the statistics, an estimated GDP growth of the country in 2021 by 1.9 percent from 2020’s is unlikely.
Summarising the effect of recent Government policies on the Nigerian economy, Ayo-Bankole Akintujoye, a Lagos SME Bootcamp convener, lamented: “Digital media, especially Twitter, is a mega massive industry that generates billions of naira in revenue and employment opportunities for thousands of Nigerians. It is foolhardy for a government to issue a hurried suspension for the sole purpose of feeding the President’s ego. The federal government keeps making the jobs of strategists and entrepreneurs so difficult. It gets harder by the day to build a business case for investing in Nigeria, especially in the digital era. We just have to do better.” The suspension does make Nigeria a less competitive destination for investors and tech Startups will be most affected.
AUTHORS PROFILE
Ujong Okpa is a Corporate/Commercial Attorney with specialty in Intellectual Property and Technology Law. Ujong completed his undergraduate studies in 2018 where he obtained the Bachelor of Laws (LL.B) Honours from the University of Calabar, Nigeria. In 2019, he was called to the Nigerian Bar, and is an active Member of the Nigerian Bar Association, having practiced in states like Taraba, Cross River and Rivers where he works as an Legal Associate of Tents and Towers. As a researcher and scholar, Ujongs desire to contribute to knowledge and solve problems has seen him authoring and publishing several peer-reviewed journals and several blog articles. He also is a critical thinker who has edited several academic works and non-academic works. Due to his outstanding academic heights, he was offered a full Scholarship by the Kent Law School in 2020 for a Masters in Law program one of the most prestigious international scholarships from the United Kingdom to the World. Other than intellectual property law, he is keenly interested in Privacy and Data Protection, Energy and Environmental Law and Taxation Law as he is relentless in his quest for more knowledge, skills and experience. He may be contacted via ubokpa@gmail.com
