BrandArena: 5 Things You Should Know About the 2022 Nigeria Startup Act

Monday 24 October 2022

5 Things You Should Know About the 2022 Nigeria Startup Act

On Wednesday, October 19, 2022, President Muhammadu Buhari signed the Nigeria Startup Bill (NSB) into law after its passage by the National Assembly.

The new Nigeria Startup Act (NSA) is to make the tech sector more appealing to both domestic and foreign investors by easing the challenges that tech startups and innovation have faced in Nigeria.

These are five critical points of the new act that you may want to pay much attention to:

1. New Startups Will Require Certification
To be recognized as a startup and/or qualify for any benefits of the new regulation, you must meet the NSA's requirements and obtain certification, known as a 'startup label'.

You must obtain a certificate granting you the title of "startup" from the Nigerian Startup Act Secretariat, located at the headquarters of the Nigerian Technology Development Agency, in order to take advantage of any of the incentives provided by this Act (trust us, you'd want to) (NITDA).

You must be a registered Limited Liability Company operating for more than 10 years to be eligible for this certification. You must be solving a problem in Nigeria through the use of technology, and must at least have one Nigerian co-founder.

2. Tax Reductions
For tech startups in Nigeria, the new law provides tax exemptions and other financial incentives, such as pioneer status programs. However, there are conditions that must be satisfied before you can benefit from these benefits. Tech startups are eligible for tax breaks, and their founders are also eligible for some tax relief; for a period of four years after their founding/labelling years. This provision is on S. 24 of the Act.

3. Startup Investment Seed Fund
This new act established Startup Investment Seed Fund to provide capital/ seed funding for tech startups that might struggle to raise seed fund to scale. According to S. 19 of the act, every labelled startup is qualified and eligible to apply for this seed fund.

4. Regulation of Startups
The Act establishes the National Council for Digital Innovation and Entrepreneurship (the Council). The Council has the primary responsibility of formulating and implementing the policy guidelines for the realisation of the objectives of the Act, which the Council. Implementation of the Council’s directives and regulations is carried out by the Council’s secretariat and the Portal Coordinator.

5. Capacity-building and training
The NSA council makes provision for startups to assess training and capacity-building workshops. The council plans to collaborate with colleges, universities, and polytechnics to provide students with the training they need to launch and manage a startup.

In Conclusion
In order to bring technological innovations to the Nigerians at large, this new act proposed the establishment of tech hubs and innovation parks throughout the 36 States of the federation and the federal capital territory. This is the clause in S. 43.

To entice foreign investors, the act made it simple for them to repatriate their funds and profits in S.40.
Nigeria is not the first African nation to pass legislation aimed at promoting entrepreneurship. 

The Tunisian Startup Act was passed in 2018 making the country the first nation in the continent to do so. Last year, Senegal also passed its own startup legislation in an effort to support the nation's expanding startup scene and seize the opportunities it presents for the economy.

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