ISSUES IN THE STARTUP ACT
President Muhammadu Buhari recently signed the Startup Bill into law, drawing plaudits from many stakeholders. The new act, which seeks to provide an enabling environment for technology-enabled businesses in Nigeria, is seen as a game-changer for the burgeoning startup ecosystem in the country. Among other things, the act would ensure that federal laws and regulations are clear, planned and designed to work for the industry. It specifically seeks to provide a legal and institutional framework for the development of startup in Nigeria as well as an enabling environment for its operation. We join other stakeholders to commend the president for the initiative.
That Nigeria has become a top flyer in the start-up ecosystem is no longer news. Out of the seven privately held startup companies in Africa, otherwise known as ‘Unicorns’, five are from Nigeria, each with a market value of over $1billion. In May this year, the World Economic Forum (WEF) listed six African startups, including Nigeria’s Okra among its 100-strong innovative global tech startups codenamed ‘Technology Pioneers of 2022’. Also, a few months ago, search engine company, Google, announced the selection of 60 eligible startups across Africa with funding to enable them scale up their ongoing work. Nigeria came tops with 23 slots. The programme, Google Black Founders Fund (BFF) for startups in Africa, is the second phase of the global tech giant’s funding for the continent.
Remarkably, Nigerian technology startups raised over $1.37 billion in funding in 2021 as the nation’s Information and Communications Technology (ICT) sector has continued to grow, contributing 18.42 per cent to the Gross Domestic Product (GDP) this year alone, while the overall contribution of communication and digital economy is in excess of 40 per cent. To all intents and purposes therefore, the emergence of the Startup Act is a welcome development to further stimulate growth and prop up more of such ideas.
With the worsening economic conditions in the country characterised by high youth unemployment rate, encouraging the growth of startups is a step in the right direction. We also applaud the federal government for setting up a N10 billion investment fund for young innovators as well as the provision for incentives and tax holidays to encourage local innovators.
However, we hasten to note that in this part of the world, our problems are not rooted in the absence of beautiful pieces of policies or enabling laws, but rather in diligent implementation. It is therefore important that the federal government follows through with creating the environment necessary to attract the much-needed investment; not just for the start-up companies but also for the development of the necessary infrastructure required for businesses to grow and thrive. A clear implementation of the Startup Act, through tax and fiscal incentives for investors and even accelerators, would yield room for more attraction of funds from both local and international investors, which would positively impact the economy.
In order to draw maximum benefit from the new legislation, establishing a multi-stakeholder implementation and collaboration would be critical for inclusive impact and sustainability. Regulatory support provisions to link and collaborate with agencies of government will also help to reduce the operational burdens for startups trying to scale such hurdles. The temptation for nepotism and every form of bureaucratic bottlenecks must also be avoided if the law must thrive.
It is to the eternal benefit of the country for the present government and the incoming administration to ensure a robust implementation of the law by relevant agencies of government with support from other actors from the ecosystem, including the civil society and industry groups. With the Startup Act, Nigeria’s tech ecosystem is expected to witness a much more structured, improved and enabling environment.
