What to know about Nigeria’s new start up law
On 19th October 2022, a glimmer of hope was raised for Nigerian startups as President Muhammadu Buhari assented to the Nigeria start-ups Act which seeks to create a friendly environment for tech-based startups in Nigeria. Daily Trust notes that besides the fact that a company must obtain a certificate known as start-up label to be […]
Nigeria’s new start up law
On 19th October 2022, a glimmer of hope was raised for Nigerian startups as President Muhammadu Buhari assented to the Nigeria start-ups Act which seeks to create a friendly environment for tech-based startups in Nigeria.
Daily Trust notes that besides the fact that a company must obtain a certificate known as start-up label to be labelled a startup company, there are other interesting features inherent in the law.
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Seed capital for startups
In the law, startups can access a special seed fund created under the law. The law establishes a Startup Investment Seed Fund, which is designated for startups alone. It will provide finance and tech relief for startups. This entails increased access to funding which will grow the startup ecosystem. It will be easier for startups to fund their operations by leveraging the grants and loans that will be available to them.
Tax Relief
Companies labelled as startups are expected to benefit from some tax reliefs and incentives under the Bill. The startups are eligible for pioneer status incentives and other tax reliefs. Labelled startups with at least ten employees, where 60 per cent of the employees have no prior work experience within three years of graduation or any vocational program, would have access to percentage-based tax relief.
Consequently, the law also enhances regulatory support for startups. It provides for collaboration with regulatory bodies to facilitate seamless processes for labelled startups. The provision for regulatory support applies to agencies like the Corporate Affairs Commission, Nigerian Copyright Commission, and Trademarks, Patent and Design Registries, Securities and Exchange Commission, National Office for Technology Acquisition and Promotion, Central Bank of Nigeria, and Nigerian Exchange Limited.
Incubation programmes
The bill also provides for accelerator and incubator programmes that will grow the startup ecosystem. These incubators are expected to help startups solve operations that they are bound to face in running their business, provide workspace at little or no cost, and serve as breeding hubs for the startups.
Creates an institutional framework for startups
The law clearly establishes the National Council for Digital Innovation and Entrepreneurship. The Council has the institutional powers over startups and the responsibility to formulate policies that encourage the development of startups, monitor, and evaluate startup regulatory frameworks, approve and support startup programmes such as giving of grants.
The law also introduces a program that will enhance the training and development of talents in the Nigerian startup ecosystem. It provides support for academic research institutions geared towards startup development. The implication of this is that startups and their employees will have access to educational programs that will empower them with the right skills and enhance their competitiveness in the industry. It also provides for the establishment of hubs and innovation parks that will provide registration support, free or subsidised workspace and facilitate the entrance of startups into foreign markets, etc.
Attracting FDIs
Conclusively, the major objective of the law is to position Nigeria as a leading tech hub in Africa. This is why it seeks to enhance the ease of doing business in the Nigerian tech space and promote local and foreign investment in the tech startup ecosystem.
As the Act is now in force, it will leverage the growing digital economy in the country. A regulatory framework like this will give birth to several tech companies and cause existing ones to thrive. It will also make tech startups attractive for investment.
Conclusively, the Minister of Communications and Digital Economy, Dr. Ali Isa Pantami, said the Act had provision for setting a Presidential Council to be chaired by the President, the Vice President to serve as Vice Chairman, and the Minister of Communications would preside over its affairs, in the event the 2 principal officers were absent.