Tiwalade Aderoju
Olympus Solicitors and Advocates
December 2022
A. INTRODUCTION
The emergence of electronic commerce (“e-commerce”) becomes inevitable due to the technological advancement and its related infrastructures that the world has witnessed over the past two decades. In Nigeria in particular, e-commerce activities are rapidly growing as a result of vast improvements in telecommunication services in the country. 1 The current e-commerce spending in Nigeria is around $12
billion, and is projected to reach $75 billion in revenues per annum by 2025, according to reports from McKinsey. 2 As with any innovation, e-commerce has given rise to various legal challenges which, among others, include the admissibility of evidence in relation to online transactions, identity theft, formation of “online” contracts, data protection privacy, taxation and the governing law concerning such transaction. 3 Against this background, this article explores the extant legal framework for e-commerce in Nigeria, and their deficiencies.
B. WHAT IS ELECTRONIC COMMERCE?
United Nations Commission on International Trade Law (“UNCITRAL”) defines e-commerce as the exchange of every kind of data message in the scope of commercial activities. 4 The World Trade
1 Ugo Chuks Okolie and Awulika Happiness Ojomo (2020). “E-Commerce in Nigeria: Benefits and Challenges.” Humanities and Social Sciences Journal. Vol. 28, Issue 2. University of Latvia Press: Latvia.
2 E. I. Agbo and E. O. Nwadialor (2020). “E-Commerce and Tax Revenue.” Nobel International Journal of Economics and Financial Research. Vol. 05, No. 08, pp: 80-91. Nobel Academic Publisher: Nigeria. http://napublisher.org/?ic=journals&id=2
3 Eze Uzoamaka Gladys (2018). “Legal Framework for the Protection of Online Pr=oducts Consumers in Nigeria.” 21 Nigerian L.J. 24. HeinOnline. https://heinonline.org/HOL/LandingPage?handle=hein.journals/nlj21&div=6&id=&page= Accessed
24/05/2022
4 The United Nations Commission on International Trade Law, Model Law on Electronic Commerce, GA/Res/51/162, 30 January, 1997 Article 1.
Organization (“WTO”) defines e-commerce as performing production, advertisement, selling, and distribution of goods and services over telecommunication networks. 5 E-commerce, therefore, simply means conducting commercial transactions through the internet. It has helped to revolutionise the mode of business transactions by providing customers with the ability to purchase, distribute, bank, invest, communicate, explore and research from virtually anywhere, anytime, where there is internet access. 6
C. UNICITRAL MODEL LAW ON E-COMMERCE AND THE ELECTRONIC TRANSACTIONS BILL
The United Nations Commission on International Trade Law (“UNCITRAL”) 7 adopted the Model Law on E- Commerce as far back as 1996, to serve as pioneer e-commerce legislation for countries to copy and enact in their respective jurisdictions. 8 The Model Law resulted from the exploratory work on e-commerce at the beginning of that period, in recognition of the need for a set of principles that would provide a basic legal framework for electronic commerce, but one that would facilitate, rather than regulate, e-commerce. 9 The purpose of the Model Law is to offer legislators of adopting States a set of internationally acceptable guidelines that detail how several legal obstacles to the development of electronic commerce may be removed, and how a more secured legal environment may be created for e-commerce. 10 As a Model Law, the legislative text may be tailored to meet the needs of an adopting State which, where appropriate, such State may modify or leave out some of its provisions. 11
As of June 14, 2022, the legislation based on or influenced by the Model Law has been adopted in 82 States and a total of 162 jurisdictions. 12 Nigeria is not one of the States. The fact remains that Nigeria is yet to domesticate any of the international legal instruments on e-commerce. The Electronic Transactions Bill (“ETB”), which is modelled on the UNCITRAL Model Law on E-Commerce,
has been introduced several times before the National Assembly since 1999. ETB has suffered setbacks withholding it from being passed into law. 13 The Electronic Transactions Bill 2019 is the recent species of such a Bill currently before the National Assembly. If passed into law, the ETB seeks to provide a legal and
5 WTO General Council, Work Programme on Electronic Commerce, adopted by the General Council on 25 September 1998, 30 September 1998 WT/L/274.
6 Ugo Chuks Okolie and Awulika Happiness Ojomo (2020). “E-Commerce in Nigeria: Benefits and Challenges.” Humanities and Social Sciences Journal. Vol. 28, Issue 2. University of Latvia Press: Latvia.
7 The General Assembly of the United Nations established UNCITRAL in 1966, with the general mandate to promote harmonisation and unification of international trade law.
8 M. Nuruddeen, Dr. Y. Yusof and Dr. N. Abdulla (2016). “Legal Framework for E-Commerce Transactions and Consumer Protection: A Comparative Study.” BJPCL. Bayero Journal of Private and Commercial Law
9 R. Sorieul, J. Clift and J. Estrella-Faria (2001). “Establishing a Legal Framework for Electronic Commerce: The Work of the United Nations Commission on International Trade Law (UNCITRAL)”. 35 International Law 107.
10 Ibid.
11 Ibid.
12 Status: UNCITRAL Model Law on Electronic Commerce (1996). https://uncitral.un.org/en/texts/ecommerce/modellaw/electronic_commerce/status (Accessed on June 6,
2022)
13 For instance, Former President Goodluck Jonathan could not assent to the Electronic Transaction Bill 2015 before he vacated office in May 2015.
regulatory framework for conducting transactions using electronic or related media, and for the protection of the rights of the consumers and other parties in electronic transactions and services, as well as facilitation of electronic commerce in Nigeria.
The ETB allows some legal requirements to be satisfied by electronic means, while ensuring that most electronic transactions and information have the same legal effect as paper-based equivalents. 14 The Bill provides for electronic signatures, protection of data, the validity of contracts, matters of evidence, payment systems, among other issues. It must be pointed out, however, that the enactment of the Cybercrimes (Prohibition, Prevention, Etc.) Act, 2015 and the Evidence Act 2011 are giant strides toward establishing the adequate legal framework for e- commerce in Nigeria.
D. THE EXISTING LEGAL FRAMEWORK AND THEIR DEFICIENCIES
CYBERCRIMES (PROHIBITION, PREVENTION, ETC.) ACT, 2015 The Cybercrimes Act makes extensive provisions that, if effectively implemented would create cyber security and provide much-needed regulation of electronic transactions. 15 It provides for the prohibition, prevention, detention, response, investigation, and prosecution of cybercrimes and other related matters in
Nigeria. It makes extensive provisions on issues relating to interception of electronic messages, email, and electronic money transfers; 16 computer-related forgery; 17 computer-related fraud; 18 identity theft and impersonation; 19 electronic signature, 20 among other offences. While the Cybercrimes Act is a great law in the right direction, there has been observation about difficulties with the regulation of cyberspace by laws of a single jurisdiction. 21 Apart from the fact that national law is difficult to apply and enforce, given the inherent transactional nature of the internet, it is also sometimes impossible to discern what country’s laws would be the most appropriately applied. 22
EVIDENCE ACT 2011
The emergence of e-commerce has brought about evidential issues concerning online transactions. 23
14 A. Abubakar and F. Adebayo (2014). “Analysis of Electronic Transactions Bill in Nigeria: Issues and Prospects.” Mediterranean Journal of Social Sciences. Vol. 5, No. 2. MCSER Publishing: Italy.
15
16 Cybercrimes (Prohibition, Prevention, Etc.) Act, 2015, s. 9.
17 Ibid., s. 13
18 Ibid., s. 14.
19 Ibid., s. 22.
20 Ibid., s. 17.
21 TI Akomolede (2008). “Contemporary Legal Issues in Electronic Commerce in Nigeria.” Vol. 11 No. 3. PER/PELJ
22 Ibid.
Section 84 of the Evidence Act 2011 makes provision for the admissibility of electronically generated evidence, by setting out certain conditions to be followed. Section 93 (3) of the Act also recognises electronic signature to satisfy the rule of law as to signature.
As laudable as the foregoing provisions are, they cannot address all the salient issues relating to e- commerce. The criteria laid down for admissibility of electronically generated evidence have been observed to be difficult to prove, most especially when the original of the document is not available. 24
DATA PROTECTION: THE CONSTITUTION AND THE NDPR
Data has been variously noted to be the world’s most valuable asset. The protection of personal data, including communications over the internet, is one of the major legal issues facing e-commerce in Nigeria. Often, a large number of personal data of consumers and users are required when conducting online transactions. This has led to agitations from the public for an adequate legal framework.
There is currently no specific or comprehensive legislation for data protection in Nigeria. The 1999 Constitution of the Federal Republic of Nigeria (as amended) (“Constitution”), however, provides generally for the protection of privacy of Nigerian citizens. The Constitution provides that “The privacy of citizens, their homes, correspondence, telephone conversations, and telegraphic communications is hereby guaranteed and protected.” 25 The Nigerian Data Protection Regulation (“NDPR”) issued by the National Technology Development Agency (“NITDA”) sets out to deal comprehensively with the protection of the personal information of Nigerian citizens and anyone resident in Nigeria. 26 There are, however, conflicting positions as to the efficacy and enforceability of the NDPR, considering that it is not an Act of the National Assembly. 27 Although there are a few industry-specific regulations on data protection, the position remains that there is no comprehensive law on data protection in Nigeria. The Data Protection Bill 2020, which was introduced to provide a comprehensive regulatory framework for the protection and processing of personal data and to
safeguard the rights and freedoms of data subjects which are guaranteed under the Nigerian Constitution, has been reported to be abandoned by the federal government in a bid to draft afresh a new comprehensive data protection legislation.
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23 Gboyega Phillip Ogundele, “Developing Legal Framework for Electronic-Commerce in Nigeria: Some Lessons from the UK and Singapore” Available at: https://www.academia.edu/36679961/DEVELOPING_LEGAL_FRAMEWORK_FOR_ELECTRONIC_COM
MERCE_IN_NIGERIA_SOME_LESSONS_FROM_THE_UK_AND_SINGAPORE
24 Ibid.; See Dickson v. Kubor (2013) ALL FWLR (Pt. 676) 392 at 429
25 See 1999 Constitution of the Federal Republic of Nigeria, s. 37.
26 Udoh Victoria Imoh and David Ademola Olajide (2021). “Data Protection in Nigeria: A Review of the Nigerian Data Protection Regulation 2019 and the Need for Nigeria to Sign the African Convention on Data Protection”. Available at SSRN: https://ssrn.com/abstract=3766819 or http://dx.doi.org/10.2139/ssrn.3766819
27 “The NDPR and the Data Protection Bill 2020” https://www.pwc.com/ng/en/publications/data-protection- bill-2020.html Accessed 03/08/2022
28 Tosin Omoniyi (2021). “Data Protection: Indignation as FG abandons draft bill, seeks ‘consultants’ for fresh process”. Premium Times Newspaper https://www.premiumtimesng.com/news/top-news/495768-
THE FINANCIAL ACT 2021
Nigeria passed the Financial Bill 2021 into law principally to modify the country’s tax laws to enhance the taxes collectable by her from electronic commerce. 29 For instance, the Financial Act 2021, which became operational in 2022, made several changes to the Companies Income Tax Act 30 (“CITA”) to incorporate the taxation of e-commerce.
Section 4 of the Financial Act 2021, which amends Section 13 of the CITA, makes provision for the inclusion of digital services i.e., electronic commerce, application store, high-frequency trading, electronic data storage, online adverts, participative network platform, online payments, among others, as part of the taxable income derived by foreign companies, to the extent that such foreign companies have a presence in Nigeria and profit can be attributed to such activities. The Section further provides for the taxation of
profits arising from consultancy or professional services, including technical and management services in relation to offshore services rendered by a person outside Nigeria to a person resident in Nigeria, to the extent that the company has a significant economic presence in Nigeria. 31 While the amendment to the Financial Act to incorporate e-commerce taxation is a step in the right
direction, the nature of e-commerce still poses serious challenges for the Nigerian tax system. The Personal Income Tax Act (“PITA”), for instance, makes no provision for taxation of revenue generated by individuals through e-commerce, despite changes made to PITA by the Financial Act. 32 The extant law, like in most other countries, is premised on the assumptions of the physical presence of the parties to business transactions. 33
E. CONCLUSION
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The Cybercrimes (Prohibition, Prevention, Etc.) Act, 2015 and the Evidence Act 2011 are giant strides in the facilitation of e-commerce in Nigeria. There is, however, the need for Nigeria to enact comprehensive legislation on e-commerce. The enactment of the Electronic Transaction Bill and a comprehensive data data-protection-indignation-as-fg-abandons-draft-bill-seeks-consultants-for-fresh-process.html Accessed
03/08/2022
29 E. I. Agbo and E. O. Nwadialor (2020). “E-Commerce and Tax Revenue.” Nobel International Journal of Economics and Financial Research. Vol. 05, No. 08, pp: 80-91. Nobel Academic Publisher: Nigeria. http://napublisher.org/?ic=journals&id=2
30 Cap. C21, Laws of the Federation of Nigeria, 2004.
31 E. I. Agbo and E. O. Nwadialor (2020). “E-Commerce and Tax Revenue.” Nobel International Journal of Economics and Financial Research. Vol. 05, No. 08, pp: 80-91. Nobel Academic Publisher: Nigeria. http://napublisher.org/?ic=journals&id=2
32 Meshach Umenweke and Ginikachi Onyenukporo (2020). “An Examination of the Legal Framework for Electronic Commerce Taxation in Nigeria: The Finance Act 2019 in Perspective.” Vol. 2 No. 1. International Journal of Comparative Law and Legal Philosophy.
33 E. I. Agbo and E. O. Nwadialor (2020). “E-Commerce and Tax Revenue.” Nobel International Journal of Economics and Financial Research. Vol. 05, No. 08, pp: 80-91. Nobel Academic Publisher: Nigeria. http://napublisher.org/?ic=journals&id=2
protection law will remove several legal obstacles to the development of electronic commerce in the country.
