On Oct 19, 2022, President Muhammadu Buhari has signed into law the Nigeria Start-up Bill 2022, after emanating in May from the President through the office of his Chief of Staff in collaboration with the Ministry of Communications and Digital Economy, and was passed by the Senate on 27 July and the House of Representatives on 28 July.
According to Isa Pantami, the Minister of Communications and Digital Economy, the new law will now provide the legal and strategic framework for the growth of the digital economy sector and will Birth so many benefits in the country.
This bill is expected to tackle challenges faced by young innovators, which include the ease of doing business in Nigeria. The Bill also aims to provide a clear and detailed framework for the regulation of the start-up ecosystem.
Key details you should note
1) The Nigeria Start-Up Act establishes the National Council for Digital Innovation and Entrepreneurship, a self-regulatory body with a mandate to formulate and provide general policy guidelines for the realization of the objectives of the Bill, provide comprehensive directions for the harmonization of laws and regulations that affect a startup, monitor the regulatory framework for the development of startups, approve the Secretariat programmes, implement the Secretariat policies and programmes, support digital technological development, create and modify regulations for effectuating the functions of the Secretariat and appoint a Council agent for the execution of the Council functions.
However, To enjoy any of the incentives under this Act, you’d have to obtain a certificate from the Nigerian Startup Act Secretariat, which will grant you the label of “startup”. To be eligible for this certification, you must be a registered Limited Liability Company running for not more than 10 years. Of course, you’ll be using tech to solve a problem in Nigeria, but you must have, at least, one Nigerian co-founder.
2) Seed funding for startups: The act makes provisions for the establishment of a Startup Investment Seed fund. The fund will be managed by the Nigeria Sovereign Investment Authority (NSIA). The body will set out to provide early-stage financing for startups on the recommendation of the Fund Manager (NSIA) and provide relief to technology laboratories, accelerators, incubators, and hubs.
3) Fiscal Incentives: In recognition of the importance of tax reliefs to the growth of startups, labelled startups may apply to the Nigerian Investment Promotion Commission (NIPC) for tax reliefs and incentives, provided that such startup operates within the industries captured under the Pioneer Status Incentives (PSI) Scheme. Additional tax relief may be granted by the Federal government under fiscal incentives. Access to export amenities, government grants, loans and facilities, and Credit Guarantee Scheme should be provided for the growth and development of startups.
A national policy is to be developed and executed by the Federal government to offer incentives to individuals, investors, capitalists, funds, companies, accelerators or incubators investing in a labelled startup or the startup ecosystem, with the opportunity of enjoying tax credits on their investments.
4) Regulatory assistance: The NSB council will create a startup portal that will help startups work with relevant government agencies like the Corporate Affairs Commission (CAC), the Central Bank of Nigeria (CBN), and the Securities and Exchange Commission (SEC).
A major pain point for fintech startups is the challenges with securing licenses from relevant agencies like the CBN, and the SEC. Young aspiring fintech operators will have the opportunity to liaise with these agencies and ease their registration process.
5) Training, Capacity Building and Talent Development
The proposed Act mandates the Secretariat to design and implement training and capacity-building programmes for start-ups using the startup portal to disseminate necessary information.
The Bill empowers the Secretariat to create centres for the acquisition of digital technology across the country, collaborate with the National Universities Commission and tertiary institutions within Nigeria to develop modules, programmes and support academic research aimed at impacting industry knowledge, whilst collaborating with relevant agencies and sectors for the promotion of digital technology utilisation, strengthening of digital technology management capability, and information systems.