By Olalekan O. Akinwumi
The issue of the Federal Executive Council accepting the National Intellectual Property Policy and Strategy (NIPPS), is a turning point in the quest by Nigeria to become a knowledge based economy. Traditionally, IP in Nigeria has been a legal tool that is mostly used to safeguard creative works, as well as industrial innovation. IP is now being re-packaged with the support of FEC as a strategic economic asset, which will be able to attract investment, open credit doors, expand capital markets, and form the global competitiveness in the creative and digital economy of Nigeria.
Now that the policy has come to stay, there is a need to begin to analyze its economic implications on one hand, and, the operational role of government agencies, financial institutions, and insurers in the new IP-based economy.
Intangible assets, software, copyrights, GI, patents, data, and design rights, which are strengthened towards an Intangible Asset Economy, take up more than 80 percent of corporate value in developed economies.
Nigeria has been functioning below this rate because there are disjointed registries, poor enforcement, low valuation skills, and low use of IP assets by the financial sector. The fact that the FEC has approved it is an indication that the country is willing to streamline this landscape. A single policy framework has given government institutions an obligation to incorporate IP in economic planning, industrial policy, export strategy, and as well as capital formation.
Economic Implications are immeasurable; growth of access to credit using IP-backed lending. The most direct economic effect is through allowing access to credit by micro, small, and medium enterprises (MSMEs) by intangible collateral. Technology, pharmaceuticals, and FMCG, as well as digital services and entertainment, are the main industries where IP is the most valuable asset. The policy: enhances the validation of IP as security; requires the increased effectiveness of registration and verification platforms; offers regulatory guidance to banks, DFIs, and fintech lenders.
With the incorporation of IP into the National Collateral Registry and the lending policies of CBN, Nigeria can open up new avenues of credit to the businesses that do not qualify as assets in the conventional asset-backed lending. This increases the liquidity, stimulates creativity and increases the survival rates of MSMEs.
Capital Market Development through IP Securitisation: The policy offers a structural basis of the securitisation of royalty streams, licensing revenues, and other IPR-related cash flows. In developed markets, the IP securitisation is used to finance films, music catalogues, pharmaceutical rights, and software licenses. The capital market of Nigeria will have three advantages it:
Non-traditional instrumentation of investable assets.
These are new monetization methods of creatives, tech founders, and brands. Greater liquidity in the market via specialised SPVs and asset-backed securities. SEC’s control over these instruments will enable them to draw pension funds, private equity, insurance companies, and DFIs that want to have long-term assets with yields.
Enhanced Foreign Investment and Technology Transfer: Enforcement of IP protection, increases investor confidence, decreases legal risk, and facilitates joint ventures, licensing relationships, and the exchange of technology across borders. With multinational companies, the understanding of the ownership of IP, the enforcement of the same, and commercialisation is a requirement before conducting business in high-risk jurisdictions. The policy puts Nigeria as a more reliable choice of creative and technology based FDI.
Positive Impact on Employment and Innovation: Better IP governance is the practice that promotes innovation in universities, research institutes, technology hubs, and manufacturing. It encourages the creation of jobs in knowledge in: software engineering, digital media production, branding and marketing, industrial design, legal, and valuation services.
This grows the non-oil GDP and has a spillover effect on export competitiveness.
Importance of Major Government Agencies FMITI and NIPO (IP Registries).
These bodies are mandated with the role of digitising, modernising, and harmonising the Trademarks, Patents and Designs Registry. They are their economic deliverables: the rapid verification of ownership; the enhancement of the quality of data; the automation of the banks and insurers; and the decrease in the time of registration.
Effective registries lower the transaction costs and raise the bank’s confidence in treating IP as collateral. The IP finance is anchored on the Central Bank of Nigeria (CBN). It has the responsibility of issuing regulatory acknowledgement of IP as qualified collateral; revising prudential principles of risk evaluation of intangible assets, instructing banks to frame IP lending models; and partnering with Direct Foreign Investments (DFI) to finance pilot lending schemes. The presence of CBN will make sure that the policy is translated into the adoption stage in the financial sector.
Securities and Exchange Commission (SEC). To ensure securitisation takes root, the SEC will:
Implement disclosure, valuation, and investor protection rules; authorize SPV structures of IP-backed securities; facilitate market ready IP instruments.
This increases IP to the balance sheets of corporations to the mainstream investment portfolios.
The Ministry of Justice and Judiciary, Enforcement is the main pillar of any IP economy. They are supposed to take the following responsibilities: reinforce IP courts or commercial divisions; speed up the process of dispute resolution; enhance anti-piracy activities in cooperation with other agencies, such as NCC and Customs. Enforcement is more effective and adds value to any IP asset and minimizes risk to investors.
The financial Institutions, commercial banks, microfinance institutions, DFIs, and fintech lenders role will require: to create IP-based credit scoring models; to implement valuation-based underwriting policies; to work with certified IP valuers and insurers; to provide creative and tech enterprise lending products. The financial sector turns out to be the channel through which IP is transferred into working capital and investment capital.
Function of the Insurance Sector: Insurance plays an important role in IP transaction de-risking. The policy generates demand for: IP enforcement insurance; infringement liability insurance; royalty-payment default insurance; securitised IP portfolio insurance. NAICOM needs to collaborate with the insurers and international reinsurers to develop local capacity. Well organised insurance products will stabilise IP-backed lending and draw in institutional investors.
The adoption of the National IP Policy by FEC is a watershed move to the transformation of Nigeria to an intangible-asset economy.
The economic consequences of the policy are quite numerous: widens access to credit, a more developed capital market, increases investor confidence, improved innovations, and the appearance of new financial spheres of professional services. Nonetheless, the actual worth will become a reality when government agencies, financial institutions, and insurers are organized to conduct the implementation.
When it is implemented in a disciplined and systematic manner, Nigeria will have the potential to open up billions of dollars in frozen IP value, improve creative and technological ecosystems, and emerge as a major hub of knowledge in Africa.
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