NTDA Act 2022: A Long-Awaited Booster for Tourism
This article by learned Senior Advocate, Dr Chuka Agbu examines the key provisions of the recently enacted Nigerian Tourism Development Authority Act 2022 and concludes that that while the new law which took the NTDA Director-General, Folorunsho Coker six years to have amended is a good work in progress, there may be areas that still require tweaking
Background
The National Assembly enacted the now repealed Nigerian Tourism Development Corporation Act, Cap. N137, Laws of the Federation of Nigeria, 2004 in 1992. The Nigerian Tourism Development Corporation (NTDC) was established pursuant to the Act. By the provisions of Section 4(2)(d) of the said Act, the NTDC was mandated to register, classify, grade, and regulate all hotels, motels, hospitality and tourism enterprises, travel agencies and tour operators.
The NTDC Act was challenged during its subsistence, by the Lagos State Government (LSG). In 2003, the LSG passed into law, the Hotel Licensing Law Cap. H6 Laws of Lagos State of Nigeria 2003 which also seeks to regulate, register, classify and grade all Hotels, Motels, Guest Inns, and other tourist-related establishments. This law was directly in conflict with the provisions of the NTDC Act.
In the year 2009, the LSG published notices in various Newspapers for the attention of Hoteliers and operators of Tourism related establishments operating in Lagos State, that the registration, regulation, licensing and classification of Hotels and other Tourism related establishments now form the exclusive responsibility of the Lagos State Ministry of Tourism and Inter-Governmental Relations, or any other established Lagos State authority empowered in that regard by the Lagos State House of Assembly.
The NTDC viewed the legislative actions of Lagos State, as an attempt to usurp and undermine the statutory mandate and responsibilities of the NTDC, which has the implication of compromising the uniformity of registration, classification and grading of hotels and other tourism facilities in Nigeria, with negative implications for tourists’ safety and National Security.
Further to the foregoing, the Attorney-General of the Federation subsequently filed an action at the Supreme Court (in its original jurisdiction) asking the Court to declare that the Lagos State Laws conflict with the provisions of the NTDC Act, an Act of the National Assembly duly passed under the powers conferred on the National Assembly by Section 4(2)(3) Item 60, part 1 of the 2nd Schedule of the Constitution of the Federal Republic of Nigeria, 1999.
The LSG maintained the position that it was within its legislative vires to enact the laws by virtue of Section 4 of the 1999 Constitution (as amended), which divides legislative powers between the National Assembly for the Federation and the House of Assembly for the State in the Exclusive and Concurrent Legislative Lists, and Residual List which include items not contained in the Exclusive and Concurrent Legislative Lists. By this argument, the LSG escalated the obvious point that hospitality and tourism enterprises, not being among the items in the Exclusive and Concurrent Legislative Lists, are residual matters for the State Governments to legislate on.
The LSG also argued that it is the NTDC Act that had failed the constitutional test of validity as regards subject-matter competence, and was therefore, unconstitutional, null and void. The only sub-sector of tourism within which the Federal Government could play a role, according to the LSG, was in the regulation of tourist traffic under Item 60(d) of the Exclusive Legislative List. Only the ingress and egress of foreigners coming into Nigeria as tourists, may be regulated by way of visas and limitation of periods that tourists may remain in the country. The power does not extend to the registration, classification, and grading of hospitality enterprises as the argument went.
The Supreme Court gave judgement in favour of the Lagos State Government, thus, validating the laws passed by the Lagos State House of Assembly which seek to regulate, register, classify and grade all Hotels, Motels, Guest Inns, and other tourist-related establishments.
Against the background of the foregoing, it became imperative that the NTDC Act be repealed as some of its provisions were at variance with the Constitution. This led to the enactment of The Nigerian Tourism Development Authority Act, 2022 (hereinafter ‘NTDA Act’ or ‘the Act’ ).
The NTDA Act
The NTDA Act establishes the legal and administrative framework for the promotion of tourism in Nigeria and revisions the involvement of the NTDA in the hospitality sector of the Nigerian tourism industry within the scope of the legislative powers of the National Assembly. Quite remarkably, instead of legislating directly on the accreditation, grading, registration and classification of hotels, Section 24 of the Act provides that the Authority established under the Act, may enter joint-venture partnerships with States and other stakeholders for the development of tourism sites and hospitality establishments. The State Tourism Boards established under the repealed Act have now been discarded.
Section 18 of the Act provides for the establishment of a Tourism Development Fund for tourism development and tourism-related projects and programmes. The fund can also be applied to the marketing and promotion of Nigeria as a tourism destination, capacity building, market research, and development of tourism infrastructure.
The sources of the Fund are listed under Section 20 of the Act to include:
Intervention funds, contributions, loans, grants from the Federal Government, donations from States, the Federal Capital Territory, Local Government Councils, Area Councils, public agencies, private organisations and companies, multinational companies, organisations, agencies, and individuals, 3% of funds from the Tourism Development Levy, money earned from any investment financed from the fund, and any other money that the Minister responsible for finance may determine with the approval of the President.
The Act creates a governance structure for the Fund, different from the Governing Board of the Authority. Section 21 establishes the Tourism Development Fund Management Board to manage the Fund which shall be warehoused at the Central Bank of Nigeria in accordance with the Treasury Single Account policy.
The Board of the Fund shall be responsible for the control, investment, and administration of the Fund. The Board comprises a Chairman, a Director-General and other members who shall be appointed by the President on the recommendation of the Minister.
A combined reading of Sections 19(b) and 22(3)(f) reveals that the Authority can only ‘approve’ programmes and projects for funding subject to the powers of the Management Board of the Fund to evaluate, approve, review, and monitor the execution of the said projects.
Section 23 provides for a tourism development levy which shall be used to promote tourism and support the Fund where necessary. This levy includes tourism visa fees, a tourism development contribution levy of 1% per room rate, or a flat rate or any rate as may be prescribed by the Authority, a tourism departure levy to be paid by tourists leaving Nigeria, and other levies as may be prescribed.
While tourism visa fees, tourism departure levy and other levies directly related to the movement of tourists can be aggregated under Item 60, part 1 of the 2nd Schedule of the Constitution of the Federal Republic of Nigeria, 1999, the 1% per room rate tourism development contribution levy to be imposed on hotels may not easily fall within the ambit of ‘tourist traffic’ as defined by the Supreme Court in the AG Federation v AG Lagos State case.
It is however, safe to conclude that, under Sections 24, 25, 26, 27, 28, and 29 of the Act, the 1% flat rate in item (ii) above can only be sourced from hotels under the Tourism Alliance.
The Act allows the Authority to accredit all hospitality and tourism establishments, to create a tourism alliance. This is to ensure standardisation, quality assurance, consumer protection, and public health and safety of establishments under the Alliance. The Authority can also control the grading and classification of all tourism enterprises, under the alliance.
There is no gainsaying the fact that the Authority’s sphere of control concerning the accreditation, grading and classification of hotels is limited to establishments that form part of the Alliance. The 1% levy per room rate would therefore, be consideration for the benefits accruing to members of the Alliance under Section 29 of the Act.
Section 29 of the Act provides for incentives for members of the Tourism Alliance. These incentives are not within the statutory realm of the NTDA to give. A realisation, therefore, of the intendment of Section 29 would be dependent on the agencies within whose statutory purview the powers to make such concessions lie.
Fiscal reliefs, tax exemption and Customs duty exemptions for members of the Alliance as provided in the Act, are matters for the Ministry of Finance. Similarly, the authorisation by the Central Bank of Nigeria (CBN) to hotels to purchase and sell foreign currency, is a matter for the CBN.
With the different political dynamics under each Agency and the Agencies’ respective statutory control over the intended incentives, the NTDA will have to form several inter-agency/ministerial alliances before the incentives for members of the tourism alliance can be actualised.
Added to the foregoing, is the qualification for the incentives under Section 29 of the Act. A member of the Alliance who has fulfilled the requirements of membership must also meet the requirements for the incentive itself, as determined by the relevant regulator. For example, it is very unlikely that a member of the Alliance operating a hotel, with an interest in purchasing and selling United States of America dollars or other foreign currencies will get a waiver of the steep regulatory requirements from the CBN to do so.
Section 5(d) of the Act provides that the Authority is to oversee the administration of the Tourism Development Fund to ensure that it is utilised for the required purpose.
Section 21 of the Act creates a Management Board of the Fund to control, invest and administer the Tourism Development Fund. Just like the Governing Board of the Authority, the Management Board comprises a Chairman, a Director General, and other members to be appointed by the President on the recommendation of the Minister.
The Act did not expressly subject the Management Board, to the Governing Board of the Authority. In fact, by Section 22(3)(f) of the Act, the Management Board has the power to review projects approved by the Authority. Herein lies a dilemma.
Section 22(3) donates very far-reaching and absolute powers to the Management Board to source for, collect and disburse the Fund.
The Act does not provide for any checks and balances and/or an audit process for the Management Board of the Fund as it provided in Section 16, for the Authority’s obligation to render accounts to the ‘appropriate Authority’ not later than 30th June every year. This means that the power of the Management Board of the Fund to disburse the Fund, is statutorily and administratively unfettered.
Although, the Act does not subject the Management Board’s powers to scrutiny by an ‘appropriate authority’, the law under Section 11 of the Interpretation Act cap. 123, Laws of the Federation of Nigeria is that he who appoints a person into office, has the power to suspend or remove him. This statutory principle can be applied in forming the deduction that the Management Board reports to the President who appointed its principal officers, subject to any legislation to the contrary. All said, here lies a weighty legal issue of two captains in one ship, an issue which has to be expeditiously resolved with clarity and authority that flows from the Presidency. Who is primus inter pares – The Governing Board of the Authority or the Management Board of the Tourism Development Fund?
Conclusion
The NTDA Act is a good work in progress, and there is always room for improvement. Ambiguities and lacunas where any exist, can amongst other tools be remedied with the instrumentality of guidelines and subsidiary legislation. The cooperation of States and private stakeholders in the sector is a sine qua non for a seamless and progressive application of the Act. It is expected that with the clear delineation of roles between the Federal and State Governments, conflicts relating to the implementation of the new Act and guided direction of Tourism development in Nigeria will be a thing of the past.
Dr Chuka Agbu, SAN, Lexavier Partners
