Friday, December 2, 2022

In praise of Nigeria Start-up Act 2022

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Few pieces of legislation in recent times have attracted the kind of commendation that the passage and eventual signing into law of the Nigeria Start-up Act 2022 has received.

President Muhammadu Buhari signed the bill into law on October 19, 2022. This came less than three months after both chambers of the National Assembly passed the bill. The speed with which both the Executive and the Legislature handled the processes leading to the signing of the Act was quite indicative of the seriousness that the federal government attaches to the local tech industry. This Act has a lot of uniqueness that deserves to be commended.

It is significant to note that this Act began its journey as an Executive Bill, in other words, it was initiated by the Executive Arm of the government, working in conjunction with Nigeria’s tech start-up ecosystem.  Taken together with this administration’s creation of the current Ministry of Communication and Digital Economy, this clearly illustrates the importance that the administration attaches to the Information and Communication Technology sector.

A number of features of this legislation endear it to the generality of the Nigerian populace, especially the youth, to whom belongs the tech ecosystem. Prominent among these features is the innovation that it brought into the government’s determination to exploit the potential of Nigeria’s digital economy.

By its various provisions, the Act has laid a foundation on which Nigeria can build a sound tech ecosystem with a capability to catapult the country into the league of technology-driven nations. The nation’s communication and digital economy has achieved significant growth, from its contribution to the country’s GDP of 8.69% in 2014, to 14.72% in the first quarter of 2020. With this Act, it can do more.

Unlike some acts of the parliament that do not involve the people in the process of their formulation, the Nigeria Start-up Act 2022 is actually based on inputs supplied by those for whom it was made. Its origination involved a grassroots consultation through which the nation’s young start-ups and innovators identify the challenges that faced them with respect to such issues as intellectual property, financing, regulation and incentives.

Interestingly, it was the inputs from such engagements with the young minds that the need for the Nigeria Start-up Act emerged, according to the accounts of this process as given by the Minister of Communication and Digital Economy, Prof Isa Ali Pantami.

Based on the facts gathered from such interactions, the Act set out to address the identified three key challenges bedevilling startups in the country. These are the lack of an enabling environment, hazy regulatory framework, and inadequate local content support.

As already noted above, this Act has brought innovations that can impact in significant ways on the growth and development of Nigeria’s startup ecosystem.

One of these is the provision for the establishment of a National Council for Digital Innovation and Entrepreneurship. The membership of this council tells how important it is.  Its members include the president, the governor of the Central Bank of Nigeria, representatives of the Startup Consultative Forum, the Director-General of Nigeria’s information and technology regulator, and others drawn from both the public and private sectors.

In an effort to tackle the limitations imposed on startups by financial constraints, the Act provides for the establishment of a Startup Investment Seed Fund, which is to be managed by the Nigerian Sovereign Investment Authority. The seed fund is specifically targeted at startups. Its function is to provide finance and technical assistance for startups.

For the avoidance of ambiguities, the Act makes clarification the qualifications of a startup and makes a declaration that only companies that meet this qualification can be allowed to access the fund. For a company to be recognised and labelled as a startup, its owners/founders have to apply for and be issued a Startup Label Certificate.

Apart from being a registered limited liability company, a startup must not be over 10 years in existence, in addition to at least one of its founders being a Nigerian. There is a proviso, however, that the Nigerian founder/co-founder will share from profit or revenue from the sale of shares.  

Daily Trust welcomes and applauds the signing into law of this bill. We welcome particularly the uncommon approach to this legislation that makes its beneficiaries the centre of its purpose. It recognizes the role of innovation in the trailblazing achievements of tech startups across the world today, including Africa. The fact that many African startups are either located in Nigeria or have their roots in the country, makes the relevance of this particular Act both timely and significant.

We at Daily Trust believe therefore that the Act has come at an opportune time when the country is on the verge of a change in political leadership. It is our hope that the next administration would take it to a higher level to ensure its success.

We emphasise the importance of implementation and ask that it should be implemented to the letter. There should be massive enlightenment on the benefits of this law.

No effort should be spared in making the country truly the capital of Africa’s startup revolution.

 



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