The National Office for Technology Acquisition and Promotion (NOTAP) is the agency responsible for evaluating and registering Technology Transfer Agreements in Nigeria. NOTAP provides some general as well as specific requirements for technology transfer agreements. Below are a few requirements:
1. Rights Conveyed and Period Covered by the Agreement: The technology transfer agreement must state that the recipient enterprises in Nigeria acquires explicit rights to use and exploit the technology in question. The agreement must also specify the period covering these rights and the methods for domestication of the technology.
2. Capacity Building for Nigerians: NOTAP requires that all technology transfer agreement make provision for capacity building and that specific details on the Nigerians understudying the experts should be readily available to ensure that skills are domesticated.
3. Taxes: All technology transfer agreements in Nigeria are required to make provision for deduction of appropriate local taxes, such as withholding tax, etc.
4. Arbitration: All Nigeria Government Projects must be governed by Nigerian Laws of Arbitration and the seat of arbitration should be in Nigeria.
5. Sourcing of Raw Materials: If a company obtains over 75% of its raw materials from outside Nigeria, it will not enjoy enhanced technology transfer fees, especially if it has been in operation in Nigeria for more than 5 years, without making effort to source its raw materials locally. NOTAP recommends that companies that find themselves in this position render technical support services and encourage indigenous entrepreneurs to produce raw materials or intermediary products that will meet the required standard.
6. Food Items and Short Technical Services: Technology transfer agreements relating to food items such as bread, noodles, sausage, etc., are generally not allowed. Payment will only be approved where the agreement is for short technical services for installation, commissioning of plants, training, etc., to enable the recipient company commence operation. However, 1-2% of the net sales may be approved for a food start-up company to enhance its smooth take off.
7. Telecom Sector and Trademark License Agreements: In the telecom sector, no Trademark License Agreement is allowed as the reputation of the service provider has been considered by the Nigerian Communications Commission (NCC) before telecom license was granted. However, for purposes of ownership and also to prevent infringement, trademarks can be registered at the Trademarks Registry in Abuja.
8. Software License Agreements: Three different types of fees are usually approved for Software License Agreements depending on the components of the agreement and the request from the parties. The fees include a software license fee, implementation fee and annual technical support fee.
Software License fee – A lump-sum depending on the type of software product, the number of end-users and the prevailing rates of fees for similar products by the same licensor in the industry where the software is to be used.
Implementation fee – A lump-sum depending on the obligations to be rendered by the licensor i.e. whether the implementation involves any/all of customization, upgrading, training etc.
Annual Technical Support (ATS) fee – A fee between 15% and 23% of the Software License fee. The payment of the fee should commence after the first year of implementation of the agreement and shall not last for more than 3 years.
9. Manufacturing or Services Agreements: Detailed information about the technical experts coming to tender the services in Nigeria i.e. the qualification, duration of stay, per diem or monthly rate must be submitted. Evidence of entry of the experts into the country such as copy of the visa page, immigration stamp of the expert’s international passport must also be submitted. If the duration of stay of the experts is more than six months, they should be paid salaries in local currency, which they can later remit to accounts outside the country.
10. Cost of Services Rendered in the Banking Sector and Payment of Expatriate Staff: NOTAP specifically states that no fees, whether for Management or Technical Support Services should be tied to the profit or sales of any Bank. Fees must be based on the cost of services rendered. NOTAP also requires that all expatriate staff of banks be paid salaries in naira.