An Overhaul of the Legal and Regulatory Framework for Hospitality and Tourism in Nigeria

Introduction

The Hospitality and Tourism sector in Nigeria is fast growing and gaining teeth and currency with the passage of each day. This is influenced by the unvarnished fact that the sector enjoys global recognition and has proven to stimulate the economy of countries that invest greatly in it. It has also benefited and is still benefiting so many developed and developing countries all over the world today.  In the light of this, Nigeria has, in a bid to promote the Hospitality and Tourism sector, set up laws and legislation for the regulation of Hospitality and Tourism in Nigeria. This paper is aimed at taking an overview of the Hospitality and Tourism Laws in Nigeria.

The Hospitality and Tourism Sector in Nigeria

There are various sectors making up the Nigerian economy, like:  the Agriculture, Industry, Trade, Real Estate, Oil & Gas, Financial, Communications, Entertainment, and others, among which is the Hospitality and Tourism Sector and this is the area of discuss in this paper.

The Hospitality and Tourism Sector covers three main areas of activities, and they include: accommodation, e.g. (hotels & guest houses), restaurant services e.g. (restaurants, cafes, etc.), and tourism planning and management e.g. (tourism centres, museums, zoo, game reserve, monuments, national parks, resorts, festivals). Some very popular tourist attractions in Nigeria today are the Yankari Game Reserve in Bauchi State, Obudu Ranch in Cross River State, Coconut Beach in Lagos State, Durbar Festival in Katsina State, Eyo Festival in Lagos State, Osun Festival, Kano Dye Pits, etc.

The Hospitality and Tourism sector in Nigeria has so far, been contributing to Nigeria’s Gross Domestic Profit (GDP) but this contribution has only been miniature, and this is because Nigeria has not really paid absolute attention, or invested so much in the Hospitality and Tourism sector, as more attention is paid to other sectors in Nigeria, like: Oil & Gas sector, Real Estate, etc.  In 2013, the World Travel and Tourism Council recorded that the direct contribution of travel & tourism to Nigeria’s GDP in 2013 was only 1.6% of the total GDP,[1] and this indeed belittles Nigeria’s capacity because she has enough beautiful tourist centers and natural resources to utilize and be rated as one of the countries that enjoys the highest economic contribution from hospitality and tourism.

It has, however, been discovered from the effect of the Hospitality and Tourism sector on other countries, that this sector can stimulate rapid economic growth and enrich every economy that invests in it, as it cuts across and boosts up other sectors like transportation, housing, agriculture, trade, etc.[2] This has brought the need for Nigeria to pay attention and invest more in the Hospitality and Tourism sector in Nigeria and since Nigeria decided to make this move, the Hospitality and Tourism sector has been making some improving effects on the income of the Nigerian economy, even though it has been fluctuating and has not been very impressive because Nigeria has not fully harnessed her enormous resources to cause the effective change.  This improving effect was seen in another record of the Hospitality and Tourism effect on Nigeria’s GDP in 2019 which was recorded to be 2.10%.[3] The fluctuation with the statistical effect of Hospitality and Tourism has persisted since the record of 2019 but in all, there has not been a rapid economic impact of the Hospitality and Tourism sector on the Nigerian economy and one is only hoping that it makes rapid effect soon.

An Overhaul of the Legal and Regulatory Framework for Hospitality and Tourism in Nigeria

There are laws regulating the Hospitality and Tourism sector in Nigeria and these laws include the following:

1. The Nigerian Tourism Development Corporation Act Cap N137, LFN, 2004
2. The Companies and Allied Matters Act 2020
3. The Companies Income Tax Act Cap C21, LFN, 2004
4. National Office for Technology Acquisition and Promotion Act, Cap N62, LFN 2004
5. The Nigerian Investment Promotion Commission Act Cap17, LFN 2004
6. The Nigerian Tourism Development Corporation Act Cap N137, LFN, 2004

The Nigerian Tourism Development Corporation (NTDC) Act is a major law and the apex regulation guiding Hospitality and Tourism sector in Nigeria. The NTDC Act, by virtue of section 1, established the NTDC as a body of perpetual corporation with common seal, to carry out the regulations of the Act.  The functions of the Corporation include the following:[4]

1. To encourage people living in Nigeria to take their holidays in Nigeria and people abroad to visit Nigeria.
2. To encourage the provision and improvement of tourism amenities and facilities in Nigeria, including the development of hotels and ancillary facilities.

The Corporation is also conferred with the authority to perform advisory services and promote research in the field of tourism and undertake other things.[5]

The NTDC Act also creates a state Tourism Board,[6] and Local Government Tourism Committee,[7] to assist the Corporation with the implementation of the Act.[8]

The Act also empowers appointment of Executive Directors, Secretaries, Employees of the Corporation and establishment of Hotel Inspectorate Division and empowerment of other regulations.

With the above provisions notwithstanding, there is a present 2017 Bill of the NTDC Act[9] that has been proposed to cover other areas which the NTDC Act of 2004 could not cover. While we await the passing into law of the NTDC Bill of 2017, the NTDC Act of 2004 remains the regulating legislations of the Hospitality and Tourism sector in Nigeria.

2. The Companies and Allied Maters Act, 2020

The Companies and Allied Matters (CAMA) Act is another legislation regulating the Hospitality and Tourism sector in Nigeria. It does this by controlling the formation and regulation of both local and foreign companies and businesses in Nigeria, that carry out hospitality, restaurant, catering and tourism services and other related activities done by other organizations that are not government owned, as government owned corporations for tourism are empowered by and form part of the Nigerian Tourism Development corporation.

Part B of the CAMA governs the formation and regulation of companies that wish to provide hospitality and tourism services. Part C provides for Limited Liability Partnerships established for hospitality and tourism activities, Part D provides for provide for Limited Partnerships and Part E governs the formation and regulation of the businesses whose purpose is to establish and promote hospitality and tourism activities.

3. The Companies Income Tax Act Cap C21, 2020 (as Amended)

The Companies Income Tax Act regulates Hospitality and Tourism sector by providing and regulating charges of income tax payable by companies, trades and businesses that go about hospitality and tourism activities, which are not subject to tax under the Capital Gains Tax Act, Petroleum Profits Tax Act and Personal Income Tax Act. [10]

By virtue of this Act, taxes are deducted from companies’ profits, both for local and foreign companies made from dividends, interests, royalties, discounts, charges or annuities, loans etc.[11]  However, foreign loans and loans from agricultural productions are exempted from tax.[12] The Act provides certain tax rates for small companies, medium- sized companies and large sized companies.[13] The payable taxes are to be paid via a Tax Identification Number[14]

It is important to note that the aspect of Hospitality and Tourism Organisation that pay tax are the individually owned companies and business, e.g. hotels, restaurants, individually owned resorts, parks, etc. Government statutorily owned facilities like some tourist centers, parks and game reserves are exempted from paying tax by virtue of section 23 of the Income Tax Act.

The Act also provides relief or incentives for foreign companies under the commonwealth nation or Ireland, with companies in Nigeria, that have paid Commonwealth income tax. The companies in this category have been allowed to enjoy a relief from the Companies Income Tax by paying a highly subsidized amount of tax[15] The Act also allows reliefs from other non-commonwealth counties outside Nigeria, which are to be paid according to the tax payment arrangement between Nigeria and those countries.

4. National Office for Technology Acquisition and Promotion Act, Cap N62, LFN 2004

Another important law that regulates the Hospitality and Tourism sector in Nigeria is the National Office for Technology Acquisition and Promotion (NOTAP) Act.  The NOTAP Act is a regulation under the Federal Ministry of Science and Technology and the Act has by virtue of section 1, established the National Office for Technology Acquisition Promotion to carry out functions that relate to transfer of foreign technology to Nigeria, some of which are used for hospitality and tourism activities. These functions of the NOTAP are particularly listed below.[16]

1. To promote the encouragement of more efficient process for identification and selection of foreign technology.
2. The development of the negotiation skills of Nigerians with a view to ensuring the acquirement of the best contractual terms by parties entering into agreements of transfer of technology.
3. Provision of a more efficient process for the adaptation of imported technology.
4. Registration of all contracts and agreement having effect in Nigeria for the transfer of foreign technology to Nigerian parties for registrations which have connection with the following purposes: for the use of trademarks, patented inventions, supply of technical services, engineering and machinery plants and facilities, etc.
5. The monitoring on a continuous basis, the execution of any contract or agreement registered pursuant to this Act.

The Act also establishes a governing council, which would be making policies for governance of the affairs of NOTAP for effective implementation of the regulations contained in this Act.[17]

The Act also allows for the appointment of a Director,[18] who shall oversee the registration,[19] and cancellation[20]of all technology acquisition contracts under this Act. The director of NOTAP therefore, registers a lot of contract agreements that are used in the Hospitality and Tourism Sector today, like the Technical Service Agreement, Technology Transfer Agreement, Management Service Agreements, Hotel Management Agreement, for foreign hotels that wish to import some foreign facilities and structures into Nigeria, etc.

5. The Nigerian Investment Promotion Commission Act Cap17, LFN 2004

The Nigerian Investment Promotion (NIPC) Act regulates the Hospitality and Tourism sector with the help of its established corporate body known as, the Nigerian Investment Promotion Commission, which was established by virtue of section 1 of the NIPC Act, for the purpose of promoting, encouraging and co-ordinating investment in Nigeria and this investment also relates to investment made in the Hospitality and Tourism sector both by Nigerian and non-Nigerian investors. The NIPC achieves this purpose by doing the following:[21]

1. Being the agency of the Federal Government to co-ordinate and monitor all investment promotions in Nigeria.
2. Initiating the support measures which shall enhance the investment climate in Nigeria for both Nigerians and non-Nigerians’ investors.
3. Promoting investments in and outside Nigeria through effective promotive means.
4. Collecting, promoting, analyzing, and disseminating information about investment opportunities.
5. Registering and keeping records of all enterprises, to which this Act applies.
6. Identifying specific projects and inviting interested investors for participation.
7. Initiating participation in promoting activities like exhibitions, conferences, and seminars for the stimulation of investments.
8. Maintaining a good relationship between investors and Government departments.
9. Assisting incoming and existing investors by providing support services.
10. Evaluating the impact of the Commission in investments in Nigeria and making appropriate recommendations.
11. Advising Federal Government on policy matters, designed to promote the general development of the economy.
12. Performing such other functions as are supplementary or incidental to the attainment of the aims and objectives of this Act.

The Act also empowers the Commission to make other enactments or do other things expedient for the performance of its functions under this Act.[22]  Apart from Nigerian investors, the Act also allows non-Nigerians to invest and participate in owning an enterprise,[23] however, such investment and enterprise must not relate to products in the negative list mentioned in section 31 of this Act.[24]  Examples of products in the negative list are: production of arms, ammunition, dealing on narcotic drugs, psychotropic substances, etc. The permitted Nigerian and non-Nigerian enterprises must first be registered by the Corporate Affairs Commission (CAC), which oversees registration of  companies and enterprises in Nigeria and after the registration with CAC, the non-Nigerian enterprises must proceed to register with the NIPC before they can successfully operate in Nigeria.[25]

The Act also allows incentive for special investments that aim at promoting a particular project, which the government supports.[26]

Other Subsidiary Laws Regulating Hospitality and Tourism in Various States in Nigeria

Apart from the legislation in charge of the Hospitality and Tourism sector in Nigeria, which have national applicable effects, some states in Nigeria have enacted laws regulating the Hospitality and Tourism sector in those respective states. Some of these laws include the following:

1. The Hotel Licensing (Amended) Law 2010, applicable in Lagos State.
2. Lagos State Hotel Proprietors Law 1990 etc.

Conclusion

In Nigeria today, the few legislation highlighted above are the laws in charge of the Hospitality and Tourism sector. It is a great thing to know that Nigeria has legislation regulating the Hospitality and tourism sector. However, having these laws as regulatory legislation, is not enough. There is a greater need to place high level of importance and value on these laws, by implementing the tenets of these laws so that Nigeria can benefit more from the stimulating effects of the Hospitality and Tourism sector. Laws are nothing and of no effect when they are not implemented. Nigeria should not only place heavy reliance on oil and gas sector, real estate, agriculture, etc., but should also pay good attention to the Hospitality and Tourism sector and harness her beautiful resources in this sector to create an attractive Hospitality and Tourism sector that everyone in the world, both far and wide, would be attracted to visit.

To promote more hospitality and tourism activities in Nigeria, it is important to enact even more laws with active regulatory bodies, that would introduce advancement and great improvements to the Hospitality and Tourism sector in Nigeria. Nigeria should do all she can to put in more effort, to build a viable Hospitality and Tourism sector and make strategies targeted towards the development of this sector, so there can be a more workable and pragmatic Hospitality and Tourism sector that would be to the benefit of Nigeria as a whole.

FOOTNOTES:

[1] Regulatory Framework for Tourism in Nigeria – Primera Africa Legal (primeraal.com) – Accessed 22^nd September, 2021.

[2] Ibid.

[3]Nigeria Tourism Statistics 1995-2021 | MacroTrends -Accessed 24^th September, 2021

[4] Section 4 (1) of the Nigerian Tourism Development Corporation Act

[5] Section 4 (2 & 3) of the Nigerian Tourism Development Corporation Act

[6] Section 7 of the Nigerian Tourism Development Corporation Act

[7] Section 10 of the Nigerian Tourism Development Corporation Act

[8] Section 7 of the Nigerian Tourism Development Corporation Act

[9]ntdc News — Latest On NTDC — The Gu6526ardian Nigeria News – Nigeria and World News – accesses 24^th September, 2021

[10] Section 9 of the Companies Income Tax 2020 (as Amended)

[11]Section 13 of the Companies Income Tax 2020 (as Amended)

[12] Section 11 of the Companies Income Tax 2020 (as Amended)

[13] Section 40 of the Companies Income Tax 2020 (as Amended)

[14] Section 10 of the Companies Income Tax 2020 (as Amended)

[15] Section 44 of the Companies Income Tax 2020 (as Amended)

[16] Section 4 of the National Office for Technology Acquisition and Promotion Act.

[17] Section 2 of the National Office for Technology Acquisition and Promotion Act

[18] Section 10 of the National Office for Technology Acquisition and Promotion Act

[19] Section 6 of the National Office for Technology Acquisition and Promotion Act

[20] Section 8 of the National Office for Technology Acquisition and Promotion Act

[21] Section 4 of the Nigerian Investment Promotion Corporation Act

[22] Section 5 of the Nigerian Investment and Promotion Commission Act.

[23] Section 17 and 19 of the Nigerian Investment and Promotion Commission Act

[24] Section 18 of the Nigerian Investment and Promotion Commission Act

[25] Section 20 of the Nigerian Investment and Promotion Commission Act

[26] Section 22 of the Nigerian Investment and Promotion Commission Act