The World Trade Organization (WTO) and the World Bank have cautioned that Nigeria's inadequate infrastructure and regulatory shortcomings may hinder the nation from realizing the opportunities within its multi-billion-dollar digital economy.
They believe that inadequate broadband infrastructure and loopholes in regulations could hinder the nation's ability to capitalize on the digital trend.
The World Trade Organization issued a strong caution through a recent report developed together with its Secretariat and the World Bank, published under the Digital Trade for Africa initiative.
The study evaluated Nigeria in comparison to five additional nations—Benin, Côte d’Ivoire, Ghana, Kenya, and Rwanda—and highlighted potential prospects and obstacles in developing robust digital trade frameworks.
The report commended Nigeria for advancements in developing digital infrastructure, yet cautioned that internet access continues to be very uneven, especially between urban and rural regions.
According to the WTO report, “expanding fibre optic infrastructure and enhancing last-mile connectivity are crucial to bridging Nigeria’s urban-rural divide and fostering a more inclusive digital economy and strengthening competition in the telecommunications sector could further drive affordability and service quality for consumers and businesses.”
The joint initiative "Digital Trade For Africa," written in collaboration with Antonia Carzaniga from the WTO and Nigorakhon Sadikova and Martín Molinuevo from the World Bank, emphasized the key role of Nigeria's service industry, especially services provided digitally, in fostering economic development.
From 2019 to 2021, Nigeria's exports of digitally provided services saw significant variations, with financial and insurance services facing considerable drops. Nevertheless, starting from 2021, exports in all key service sectors have risen consistently, indicating Nigeria's growing involvement in global digital markets.
Although Nigeria still trails behind Ghana in digital commerce, the report revealed that it has surpassed many other ECOWAS nations, highlighting the robustness of its long-term prospects.
Nigeria has made significant global commitments regarding digital trade. It approved the WTO's Trade Facilitation Agreement, TFA, and pledged under the General Agreement on Trade in Services, GATS, in areas like telecommunications.
It is also involved in two active WTO rule-setting processes: The Agreement on Electronic Commerce, which "seeks to create a supportive environment for international digital trade."
The Agreement on Investment Facilitation for Development, aimed at "enhancing the investment and business environment, simplifying operations and expansion for investors across all economic sectors, including digital trade."
However, the report warned that Nigeria has "not committed its trade system to other important digital trade-supporting services, such as computing, distribution, or postal services," and has "not removed tariffs on information technology products under the WTO's Information Technology Agreement, ITA."
In terms of regulation, it was noted that Nigeria has made significant progress in data protection and cybersecurity, with the report highlighting this as "especially important considering the early stage of the country's digital industry."
Expressing concern over remaining major policy gaps, they emphasized that Nigeria should: “Define the extent of data storage and processing rules for cross-border data transfer (‘data sovereignty’).”, “Strengthen the regulatory and organizational structure for online consumer rights and protection,” “Establish guidelines for electronic transactions and digital signatures,” and “Create a fair system for platform responsibility to boost transparency and confidence in digital markets.”
Although commending Nigeria's reforms, the report highlighted the dangers of being too confident, stating: "Nigeria has the groundwork to utilize digital trade as a key driver of economic growth, but without immediate improvements in infrastructure, regulation, and competition, the nation risks missing out on its digital opportunity."
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