On October 19, 2022, a ray of hope was raised for Nigerian startups when President Muhammadu Buhari passed the Nigerian Startups Act, which seeks to create a friendly environment for technology-based startups in Nigeria.
daily confidence points out that in addition to the fact that a company must obtain a certificate known as a start-up label in order to be labeled as a start-up company, there are other interesting features inherent in the law.
Seed capital for startups
In the law, startups can access a special seed fund created under the law. The law establishes a Seed Fund for Investment in Startups, which is designated only for startups. It will provide financial and technological help for new businesses. This implies increased access to funding that will grow the startup ecosystem. It will be easier for new businesses to finance their operations by taking advantage of the grants and loans that will be available to them.
Companies labeled as startups are expected to benefit from some tax breaks and incentives under the bill. New businesses are eligible for pioneer status incentives and other tax breaks. Labeled start-ups with at least ten employees, where 60 percent of employees have no prior work experience within three years of graduation or any vocational program, would have access to a percentage-based tax break.
Consequently, the law also improves regulatory support for new businesses. It envisages collaboration with regulatory bodies to facilitate seamless processes for labeled start-ups. The provision of regulatory support applies to agencies such as the Corporate Affairs Commission, the Nigerian Copyright and Trademark Commission, Patent and Design Registries, Securities and Exchange Commission, National Technology Acquisition and Promotion Office, Bank Central Nigeria and Nigerian Exchange Limited.
The bill also provides for acceleration and incubation programs that will grow the startup ecosystem. These incubators are expected to help start-ups solve the operations they face in running their businesses, provide workspace at little or no cost, and serve as breeding centers for start-ups.
Create an institutional framework for startups
The law clearly establishes the National Council for Innovation and Digital Entrepreneurship. The Council has the institutional powers over start-ups and the responsibility to formulate policies that encourage the development of start-ups, monitor and evaluate start-up regulatory frameworks, approve and support start-up programs such as grant awards .
The act also introduces a program that will enhance the training and development of talent in Nigeria’s startup ecosystem. It provides support to academic research institutions oriented to the development of emerging companies. The implication of this is that startups and their employees will have access to educational programs that will give them the right skills and improve their competitiveness in the industry. It also provides for the establishment of hubs and innovation parks that will provide registration support, free or subsidized work space, and will facilitate the entry of new companies in foreign markets, etc.
In conclusion, the main objective of the law is to position Nigeria as a leading technology hub in Africa. That is why it seeks to improve the ease of doing business in the Nigerian tech space and promote local and foreign investment in the ecosystem of tech startups.
As the Law is already in force, it will take advantage of the growing digital economy in the country. A regulatory framework like this will give birth to several technology companies and make the existing ones prosper. It will also make tech startups attractive for investment.
In conclusion, the Minister of Communications and Digital Economy, Dr. Ali Isa Pantami, said that the Law had a provision to establish a Presidential Council that would be chaired by the President, the Vice President would act as Vice President and the Minister of Communications would preside over its affairs, in case of absence of the 2 main officers.