From Nigeria Startup Bill to Nigeria Startup-Act. It is quite fascinating how the yearning for business and technology development in Nigeria engulfed stakeholders in the innovation startup ecosystem to actively engage in driving the bill which eventually became law on the 19th of October 2022.
The Nigeria Startup Act was an executive bill, initiated by both Office of the Chief of Staff and the Ministry of Communications and Digital Economy as a legal framework to help create an enabling environment and make provision for startups to have access to public and private funding amongst others.
Interestingly, one of my recent articles highlighted the significance of tax relief in the startup ecosystem to ease business development but with the bill now a law, access to numerous incentives has been enabled by the Act which is now deemed effective for all startups across the nation.
A startup simply refers to a business that is just starting, which in the past suffered from dealing with multiple layers of regulations to secure the necessary licenses needed to operate as a business.
The process of startup founders seeking registration or license is often hindered by factors like aggressive government policies, ambiguous regulatory policies, oversaturation of startups in certain locations, talent shortages, high business costs, funding difficulties, etc.
It is for this reason that the federal executive council decided to engage with key stakeholders in the ecosystem to co-create clearly-defined legislation and incentives that will benefit and allow startups and innovators to thrive in an environment where their interest is well protected.
By providing a legal and institutional framework for the development of Nigerian startups, the Act is also creating an enabling environment for the establishment, development, and operation of startups in the country.
For instance, the Act applies to all companies incorporated under the Companies and Allied Matters Act and grants the startup label and organizations and establishments, whose activities affect the creation, support, and incubation of labelled startups in Nigeria.
In order to determine the startups with the right metrics to be considered tech-enabled, the Act provides for “labelling” which is a merit granted to qualified startups and grants them access to incentives.
According to the provisions of the Act, for a startup to be eligible for labeling, it must meet the criteria to be a limited liability company under the Companies and Allied Matters Act and has been in existence for a period not more than 10 years from the date of incorporation.
This means that the startup objectives are innovation, development, production, improvement, and commercialization of a digital technology innovative product or process amongst others as entrenched in the NSB Act.
To ensure startups’ access to funding, the Act contains the provision for the creation of the Startup Investment Seed Fund (Fund), to be administered by the Nigerian Sovereign Investment Authority.
The sum of not less than N10,000,000,000 (ten billion Naira) is expected to be paid into the fund annually for the purpose of providing finance to early-stage startups and also providing relief to technology laboratories, accelerators, incubators, and hubs. There are provisions for a Credit Guarantee Scheme with ensures access to grants and loans administered by the Central Bank of Nigeria (CBN), the Bank of Industry, and other bodies statutorily empowered to help entrepreneurs and SMEs.
Under the Pioneer Status Incentives (PSI) Scheme from the Nigerian Investment Promotion Commission (NIPC), startups that qualify for pioneer status may receive expedited approval for tax reliefs and incentives. This is to encourage both local and foreign investors to invest in startups in Nigeria. Through this arrangement, an investor may receive a tax credit of up to 30 percent of the investment and also partake in the free repatriation of funds.
Despite this innovative legislation, many startups are still lost on how to register their businesses. Although the Act fosters the enabling environment and creation of a portal to serve as a platform for registration and other purposes, the need for awareness creation to enlighten people on the benefit of NSA is important and must be prioritized.
Firstly, the startup is to create an account with Corporate Affairs Commission before registering the company. The Companies Registration Portal (CRP) can be accessed through these links: https://pre.cac.gov.ng/home and https://post.cac.gov.ng/llogin.
By creating an account, the applicant would be able to electronically submit documents and statutory returns to the commission.
Secondly, the applicant would follow further instructions on the CAC official website and log on to the e-registration portal for further details.
Meanwhile, at the just concluded Digital Nigeria Conference2022, a group of startup founders commended the effort of the federal government for making the Startup Act to become a reality.
While discussing the topic “Unlocking Nigeria Innovation Potential for Economic Growth and Prosperity”, the startups acknowledged the significance of the new law to the ecosystem and described it as a new dawn for startups in the country. They agreed that the use of technology to solve problems is paramount in every nation and the Nigeria Startup Act will help startups and existing companies gain access to skills, finance, and other vital resources in the future.
Stakeholders and startups expressed gratitude to National Information Technology Development Agency (NITDA) for creating various platforms for ecosystem players to gather and collectively discuss the way forward in the unfolding startup revolution in the country.
The Office of the Nigeria Digital Innovation ONDI, a subsidiary of NITDA, also received commendations for their consistent effort in promoting the growth of indigenous innovators and innovation-driven enterprises by organizing strategic programmes and initiatives to empower young Nigerian entrepreneurs to refine their business models to deliver innovative products, services, and processes to the global market.
Most importantly, let me acknowledge the relentless effort of the Federal Executive Council, the Ministry of Communications and Digital Economy, its agencies, and stakeholders in accelerating the enactment of the Nigeria Startup Act to motivate more young indigenous talents to generate job opportunities, create wealth for a growing a successful and sustainable digital economy.
Zeenat O. Sambo, a staff writer of Techdigest writes from Wuye District, Abuja