A New Dawn for Nigeria’s Growing Tech Ecosystem

The Nigeria Start-up Act is a transformative legislative initiative aimed at harnessing the potential of Nigeria’s growing tech ecosystem through a collaborative approach involving the tech community and the Nigerian Presidency.

The genesis of the Nigeria Start-up Act began in May 2021, when key stakeholders in Nigeria’s tech industry met with representatives of the Nigerian Presidency. The aim of which was to discuss the creation of the country’s first start-up bill which was signed into law by President Muhammadu Buhari on October 19, 2022. This Act sought to create a regulatory environment that is clear, structured, and supportive of tech start-ups, ultimately fostering the growth of the ecosystem and attracting sustainable investments.

The Nigeria Start-up Act is vital for several reasons. For example, it addresses the challenges that have stifled innovation and hindered the growth of start-ups in the past, such as regulatory setbacks. Instances like the crackdown on bike-hailing services and the suspension of cryptocurrency transactions through banks have raised concerns about the ability of start-ups to flourish in Nigeria. The Act aims to reverse this narrative by creating an enabling environment where tech-preneurs can pursue their ambitions without unnecessary obstacles. It also represents a concerted effort to ensure that the growth of the tech ecosystem is sustained and start-ups can thrive in a conducive environment.

Here are some of the provisions stated by the committee to foster the blooming Nigeria tech space:

1. Funding: One of the critical issues the Act addresses is funding for start-ups. It provides mechanisms to encourage investment in start-ups and establishes a Start-up Seed Investment Fund managed by the Nigeria Sovereign Investment Authority (NSIA). This fund is designed to support early-stage start-ups in developing their minimum viable products (MVPs) without the immediate need for external investors. Additionally, investors in labelled start-ups are granted tax credits and exemptions from capital gains tax, making it more attractive to invest in Nigerian start-ups.
2. Talent Development: The Act also emphasizes the importance of talent in the tech ecosystem. It includes provisions for training and capacity development, ensuring that entrepreneurs and their employees can access training facilitated by the Industrial Training Fund (ITF) and other partner organizations. Furthermore, digital technology acquisition centres will be established across all six geopolitical zones to nurture competency in digital technology, thereby addressing the talent gap in the industry.
3. Regulation: To provide a supportive regulatory framework, the Act introduced start-up labelling, the creation of technology zones, and the establishment of a start-up engagement portal and consultative forum. These initiatives are designed to streamline regulatory processes, provide tax waivers, and support start-ups in listing on the Nigerian Stock Exchange (NGX). By ensuring that start-ups operate under a clear and consistent regulatory framework, the Act enhances their legitimacy and boosts public confidence in their products and services.

The Nigeria Start-up Act is already in the implementation phase, with various stakeholders working to ensure its successful adoption at the state level. The Act’s provisions promise a significant boost to Nigeria’s tech ecosystem, with the potential to propel the country to the forefront of global technology innovation.

However, not all start-ups may benefit from the Act. The criteria for classification under the Act are designed to ensure that it serves the intended beneficiaries—Nigerian start-ups. These criteria include:

• Registration as a limited liability company under Nigerian law
• focus on digital technology innovation,
• having at least 51% Nigerian ownership.

While these requirements are stringent, they are necessary to promote local content and ensure that the benefits of the Act are directed towards the growth of Nigeria’s tech ecosystem.

The Nigeria Start-up Act represents a new dawn for Nigeria’s tech ecosystem. By providing a clear, structured, and supportive legal framework, the Act aims to unlock the full potential of Nigeria’s digital economy. With the right implementation and continued collaboration between the government and the tech community, the Act will pave the way for the next generation of Nigerian start-ups to achieve global success and drive economic growth in the country.