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Local IT firms groan over ATS fee, rebuffs NOTAP role

Some local Information Technology (IT) firms in Nigeria, particularly Value Added Resellers (VAR) are groaning over trade engagement between them and the Original Equipment Manufacturers (OEM) in the country as they accuse the OEM for flagrant flouting of the code of guidelines for trade engagement.

The Value Added Resellers also accused the National Office for Technology Acquisition and Promotion (NOTAP) of dereliction in the enforcement of the guideline.

According to the VAR, instead of the OEMs sticking to the NOTAP’s guideline, which specifies that the OEMs take 60 percent of the Annual Technical Support (ATS) fee, while the local VAR takes 40 per cent, most of the local IT firms get a contemptible 5 percent to 10 percent and also acquire some of the liabilities of the OEMs.

NOTAP’s record did not disclose none compliance of 40 per cent local payment of ATS fee, but the 40 percent applies only to ATS fee; not license fee.

A senior staff who spoke in Lagos on condition of anonymity for the Value Added Resellers revealed that the inability of the OEMs to follow the NOTAP’s code of guideline, with regards to the Annual Technical Support (ATS) fee is one of the main reasons most local companies are dying.

The staff highlighted that based on the NOTAP’s code of guideline for engagement between OEM and VAR, big companies like Microsoft, Oracle and the others that have offices in Nigeria are supposed to empower their local support partners by giving them 40 percent of the Annual Technical Support (ATS) fee, but so far the sharing formula has been ignored.

“The NOTAP guideline stipulates that the OEMs take 60 percent of any technical support contract, while the local VAR takes 40 percent of the support revenue,” he added.

Mr. Austin Okere, the Founder of Computer Warehouse Group PLC,(CWG) said Nigeria needs assistance in the area of trade engagement because most of the technology transfer agreements between Local companies and their foreign counterparts have not been strictly observed.

“One of the areas where help is needed in Nigeria is fair trade. The National Office for Technology Acquisition and Promotion (NOTAP) as part of its regulatory function has a code of guidelines for engagement between Original Equipment Manufacturers (OEM) and Value Added Resellers (VAR), which was derived from consultative meetings, after which a communiqué was published. But from all indications these guidelines are being vagrantly flouted by the big companies,” Okere said.

He explained that the essence of the code of guideline was to establish fair trade terms for both the local firms and OEMs, stressing that the guideline also specifies that the VAR be trained to acquire the competence to earn her share of 40 per cent.

“NOTAP and all the parties involved in the guideline were very clear in their intention, but as I speak to you, local companies do these support jobs for less than the 40 per cent and also incur the liabilities of the OEMs,” he emphasized.

The inability of the OEMs to adhere to the code of guideline between them and the Value Added Resellers is one of the main reasons why most of these local companies are dying in Nigeria.

According to Okere such liabilities include burdening the resellers with the taxes of the OEMs, which ordinarily should be their responsibility.

“How much taxes do these multinationals pay? By the time these taxes are withheld, the local companies end up making a loss. This is one of the main reasons why most of these local companies are dying. While NOTAP acted in the best interest of the local companies, enforcement of the guideline is seriously lacking,” he moaned.

The National Office for Technology Acquisition and Promotion (NOTAP) said the companies that cry of not receiving 40 percent of the Annual Technical Support (ATS) fee did not pass their agreements through it.

Dr. DanAzumi Mohammed Ibrahim, Director General/CEO of the government parastatal agency, whose mandates include evaluation/registration of technology transfer agreements; promotion of intellectual property; technology advisory and support services, stated that it is not on NOTAP’s record that there is none compliance of 40 percent local payment of Annual Technical Support (ATS) fee, but stressed that the 40 per cent applies only to ATS fee; not license fee.

“As a matter of regulation, NOTAP does not even wait for companies to reduce the Annual Technical Support (ATS) fee by 40 per cent rather it reduces it and directs that the invoice for payment be issued in the value of the 60 percent. It is therefore not in NOTAP’s record that there is none compliance of 40 per cent local payment of ATS fee. But the 40 percent applies only to ATS fee; not license fee,” he added.

He advised local firms to always pass their technology transfer agreements through NOTAP, stressing that NOTAP enforces the compliance to technology transfer guidelines by always ensuring that agreements have capacity building provision and compliance to local jurisdictions and regulations are maintained.

The DG affirmed that NOTAP most of the time refuses to approve agreements when the parties fail to comply with any of the laid down guidelines, noting that the enforcement is therefore in the refusal to approve the agreement.

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