What the newly signed Startup Act means for Startup Businesses in Nigeria
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President Muhammadu Buhari recently signed the Nigeria Startup Bill into law much to the delight of industry stakeholders. The new act, which seeks to provide an enabling environment for technology-enabled businesses in Nigeria, has been described as a game-changer for the burgeoning startup ecosystem in the country.
Among other things, the act will ensure that federal laws and regulations are clear, planned, and designed to work for the tech ecosystem. With the new Act, Nigeria’s tech ecosystem is expected to see an improved enabling environment soon.
According to the Minister of Communications and Digital Economy, Isa Pantami, the act is a major achievement of the digital transformation era of President Muhammadu Buhari. He added that there are provisions in the act that will change the narrative of the industry. One such provision is the Council for Digital Innovation and Entrepreneurship, which the president will lead as the chairman.
The main function of the council is to ensure the monitoring and evaluation of the regulatory framework. It will also formulate and provide general policy guidelines for the realisation of the Startup Act’s objectives and give overall directions for the harmonisation of laws and regulations that affect a startup.
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What does the Act mean for the startups?
Highlighting the impacts expected, a communications volunteer for the Nigeria Startup Bill Project, Stephen Edache, said:
“This ground-breaking achievement will usher in a new era and set in motion new rules of engagement for the startup ecosystem. Crucially, it brings an end to some of the challenges that may have held the startup ecosystem back since its rapid rise within the last decade.
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“The Nigeria Startup Bill, now an act, positions the startup ecosystem to thrive through its targeted provisions. These policies, collaborative in their making, will now guide the operations of startups in Nigeria. The president’s assent makes it one of the most historic pieces of legislation in Nigeria.”
A telecom lawyer, Mr Adeyemi Adeoti, told Nairametrics that “the signing of the Nigeria Startup Bill is a good development for the tech ecosystem in Nigeria. It means that the sector and the players in the ecosystem now have legal backing. This will also ensure the protection of young Nigerians that are coming up with innovative ideas without the requisite knowledge of dealing with international investors. The offer of incentives such as tax holidays will allow startups to scale without the burden of taxation in their formative years.
“If this Act is implemented to the letter, we should see the establishment of a Startup Investment Seed Fund soon. According to the Act, this will be designated for startups alone to provide finance and tech relief for startups. This means increased access to funding that will grow the startup ecosystem. It should now be easier for startups to fund their operations by leveraging the grants and loans that will be available to them.”
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Aside from the creation of the Startup Fund, the act also 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, etc.
Companies labelled as startups under the act are eligible for pioneer status incentives and other tax reliefs.
Labelled startups with at least ten employees where 60% of the employees have no prior work experience within three years of graduation or any vocational program have access to percentage-based tax relief.