Understanding the Nigeria Startup Act 2022: What You Need to Know

Understanding the Nigeria Startup Act 2022: What You Need to Know

The Nigeria Startup Act 2022 is a significant piece of legislation that aims to create a favorable environment for technology-enabled startups in Nigeria. The act addresses the challenges faced by startup founders and seeks to position Nigeria's startup ecosystem as a leading digital technology ecosystem in Africa. This article provides a comprehensive overview of the Nigeria Startup Act 2022, including its key highlights, takeaways, and implications for startups, founders, and entrepreneurs.

What is the Nigeria Startup Act (2022)?

The Nigeria Startup Act is a law that aims to provide an enabling environment for the establishment, development, and operation of startups. The bill was signed into law on 20th October 2022 by President Muhammadu Buhari. The Act is a joint initiative of Nigeria's tech startup ecosystem and the Presidency, aimed at harnessing the potential of the country's digital economy through co-created regulations.

Startup Labelling

One of the key highlights of the Nigeria Startup Act is the introduction of "Startup Labelling." This is a certification that grants startups status to access to funding, regulatory support, and other incentives under the Startup Act. Startups must meet certain eligibility requirements for a startup label, including being registered as a limited liability company in Nigeria and having existed for not more than ten years from the date of incorporation. The company's objectives must be innovation, development, production, improvement, and commercialization of a digital technology innovative product.

Institutional Framework for Startups

The Nigeria Startup Act establishes the National Council for Digital Innovation and Entrepreneurship, which is a corporate body. The Council has institutional powers over startups, including formulating policies, giving overall direction for the harmonization of laws/regulations that affect startups, monitoring and evaluating startup regulatory frameworks, approval, and support of startup programs, alteration or revocation of rules subject to the provision of the Act.

Startup Support and Engagement Portal

The Startup Support and Engagement Portal is an online platform established by the Nigeria Startup Act to facilitate the registration and application processes in agencies for startups in Nigeria. The Council administers the portal through a Coordinator and is also responsible for creating opportunities for startups, facilitating the issuance of permits to labeled startups, and providing a platform for interaction between startups, the federal government, private institutions, angel investors, venture capitalists, incubators, accelerators, and other relevant institutions.

Tax and Fiscal Incentives

The Nigeria Startup Act provides tax and fiscal incentives targeted towards startups, investors investing in labeled startups, employees of labeled startups, and external service providers of labeled startups. Startups are exempted from income tax and any other tax chargeable on its income or revenue for up to a period of five years. Labeled startups also have access to grants and loan facilities from the Central Bank of Nigeria (CBN) and the Bank of Industry.

Training, Capacity Building, and Development

The Nigeria Startup Act mandates the secretariat to design and implement training and capacity-building programs for startups. This would be achieved by collaborating with universities and other tertiary institutions through developing modules, seminars, and workshops geared towards impacting essential knowledge for the establishment of startups. The secretariat is also encouraged to provide support for academic research institutions by financing research systems, developing appropriate human resources, and developing research capacity in the areas of science, technology, and development all geared towards startup development.

Regulatory Support to Labeled Startups

The Nigeria Startup Act provides regulatory support for labeled startups. This support and collaboration with regulatory bodies are to fast-track and reduce regulatory constraints on startups, to ensure that applications submitted by startups in the various agencies are seamless. It would also reduce the challenges that startup founders experience with these agencies.

Accelerator and Incubation Programs

The Nigeria Startup Act mandates the secretariat to formulate a national policy for accelerators, incubators, and other programs for startups. The Act empowers the secretariat to develop standards and guidelines to regulate the relationship between accelerators, incubators, and startups. It further provides for incentives, grants, aids for research, development, training, and expansion projects.

Establishment and Operation of Startup Innovation Clusters, Hubs, Innovation Parks, and Technology Development Zones

The Nigeria Startup Act provides for the establishment of innovation clusters, hubs, and innovation parks in each state of the federation. These hubs are to be used for the generation of businesses between startups and large companies, accumulation of professional advice and expertise, provision of resources for startups, and promotion of partnerships between startups. These clusters, hubs, and innovation parks are to provide registration support, free or subsidized workspace and facilitate the entrance of startups into foreign markets, among others.

Implications for Startups, Founders, and Entrepreneurs

The Nigeria Startup Act is a significant milestone in the quest to create a favorable environment for technology-enabled startups in Nigeria. The Act provides startups with access to funding, regulatory support, and other incentives that will facilitate their growth and development. It also provides tax and fiscal incentives targeted towards startups, investors investing in labeled startups, employees of labeled startups, and external service providers of labeled startups. The act provides regulatory support for labeled startups, fast-tracking and reducing regulatory constraints on startups, ensuring that applications submitted by startups in the various agencies are seamless. The act mandates the secretariat to formulate a national policy for accelerators, incubators, and other programs for startups. Overall, the Nigeria Startup Act will position Nigeria's startup ecosystem as a leading digital technology ecosystem in Africa.

Conclusion

The Nigeria Startup Act 2022 is a significant piece of legislation that seeks to create a favorable environment for technology-enabled startups in Nigeria. The Act addresses the challenges faced by startup founders and provides startups with access to funding, regulatory support, and other incentives that will facilitate their growth and development. The act provides regulatory support for labeled startups, fast-tracking and reducing regulatory constraints on startups, ensuring that applications submitted by startups in the various agencies are seamless. The Act will position Nigeria's startup ecosystem as a leading digital technology ecosystem in Africa, and it presents a unique opportunity for startups, founders, and entrepreneurs to thrive in Nigeria's growing digital economy.