US technology firms are struggling with mounting regulatory and operational challenges in Nigeria and Kenya, according to the United States Trade Representative (USTR). These two countries widely recognized as leading tech ecosystems in Africa have come under scrutiny for persistent corruption, weak intellectual property enforcement, and evolving tax regimes that target foreign digital service providers.
In its latest Foreign Trade Barriers report, the USTR highlighted that both nations have failed to effectively implement reforms promised to investors. Jamieson L. Greer, the USTR, criticized Nigeria in particular for allowing widespread intellectual property violations, including counterfeit software, pirated media, and unchecked online copyright infringement that undercuts legitimate operators.
“Enforcement remains insufficient due to underfunded agencies, porous borders, and systemic corruption,” Greer noted, underscoring how these gaps deter American companies from fully investing in the region.
Beyond IP concerns, US businesses in Nigeria report routine demands for unofficial ‘facilitation’ payments from public officials, adding complexity to their operations. The report further emphasized the role of political instability and a weak judiciary in hampering anti-corruption initiatives.
While Kenya has earned praise for nurturing its startup ecosystem, the USTR raised red flags over recurring instances of bribery and inconsistent enforcement of IP rights. American firms say they often lose out to less scrupulous competitors who offer bribes or exploit regulatory loopholes to gain market access.
The report points to Kenya’s delayed ratification of the World Intellectual Property Organization (WIPO) Copyright Treaty, despite signing it nearly three decades ago. The absence of formal ratification creates legal uncertainty and enables rampant digital copyright violations.
Recent changes to tax regulations in both countries have also unsettled major US digital companies such as Amazon, Google, Meta, Netflix, and Microsoft.
In December 2024, Kenya replaced its prior digital services tax with a Significant Economic Presence Tax a 3% levy on gross revenues earned by foreign digital platforms without a permanent physical presence in the country. The new framework applies to companies generating at least KES 5 million (approximately $38,800) annually from Kenyan users.
Meanwhile, Nigeria has adopted a broader tax approach since 2020, requiring non-resident tech companies to pay both income and value-added taxes on services rendered to local users. This dual tax structure has triggered concern among US firms about increasing compliance costs and the unpredictability of enforcement.
The release of the USTR report coincides with fresh geopolitical tensions, as President Donald Trump threatens to impose higher tariffs globally. Although these measures are currently on hold, affected nations including Nigeria and Kenya have been given until June to roll back trade restrictions seen as harmful to US interests.
