• Cautious Optimism Over New Startup Act • It Will Create Jobs, Boost Entrepreneurship, Say Experts • Has Capacity To Woo Foreign Investors To Nigeria • Poor Implementation, Nepotism May Mar Prospects • Funding Threshold Of N10b Grossly Inadequate — Uwaje • FG Must Secure States’ Buy-in, Aluko Advises
Experts in digital economy and economists have lauded the Startup Act 2022, saying it would further unlock inherent
economic potential of Nigerians, especially youths.The experts, who spoke with newsmen, appreciated President Muhammadu Buhari for signing the Startup Bill into law last Wednesday, but observed that multi-stakeholder implementation and collaboration would be critical for inclusive impact and sustainability.
According to them, it was also very important to avoid nepotism and every form of bureaucratic bottlenecks if the Act must be successful.
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 would ensure that federal laws and regulations are clear, planned and designed to work for the tech ecosystem. With the Act, Nigeria’s tech ecosystem is expected to see an improved enabling environment soon.
While reports had it that Nigerian technology startups raised over $1.37 billion in funding in 2021, the Nigeria Startup Act began its progress in June 2021 and was passed by the country’s National Assembly in July. It was a joint initiative by Nigeria’s tech startup ecosystem and the Presidency aimed at harnessing the potential of the country’s digital economy through co-created regulations.
The Minister of Communications and Digital Economy, Prof. Isa Pantami, had said the Act is a major achievement of the digital transformation era of President Buhari. He added that there are provisions in the Act that would change the narrative of the industry.
One such provision, according to Pantami, is the Council for Digital Innovation and Entrepreneurship, which the President would 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.
The Act bridges the gap between regulators and the rest of the startup ecosystem. Globally, this relationship is fraught with tension, but the new Act now sets mechanisms and opens channels for stakeholders to constantly engage.
Speaking on the impact of the Act, Co-founder, Domineum Blockchain Solution Ltd and Founder, Startup Arewa, Mohammed Ibrahim Jega, said the Act was designed in a way to ensure it creates more opportunities for startups, especially early-stage ones, stressing that it creates easy access for startups to harness the benefits and opportunities through the Startup portal.
Jega said the Startup Act, through tax and fiscal incentives for startups, investors and even accelerators, would provide room for more attraction of investments from both local and international investors, which would positively impact the economy.
According to him, through the regulatory support provisions to link and collaborate with agencies of government, this would reduce the operational burdens for startups trying to scale regulatory hurdles.
To maximise the benefits, the Startup Arewa Founder said robust implementation by relevant agencies of government with support from other actors from the ecosystem (civil society and even industry associations would be critical.
He said states should adopt the Act to drive the level of impact desired for startups to grow and even scale, adding that accountability should be instilled on relevant actors responsible for implementation
Jega posited that creation of awareness and education on the Startup Act and the roles to be played by each stakeholder within the ecosystem should be prioritised.
On his part, the Founder, Jidaw Systems and Science, Technology and Innovation (STI) Policy Advisor, Jide Awe, said to maximise the benefits of the Act, there must be a multi-stakeholder implementation and collaboration for inclusive impact and sustainability.
Awe said government and stakeholders must now undertake activities to achieve the aim of the Act.
According to him, recognition of the startup ecosystem has to be practical, with implementation being simple, efficient and not bogged down by bureaucratic red tape.
“Government and stakeholders should faithfully implement the Act in line with its intentions. For example, the special startup fund established under the Act needs to be functional and practical to facilitate more accessible access to capital and expand the startup ecosystem,” he added.
The STI Policy Advisor said in recognition of the fact that the Startup Act aims to create an environment that promotes and supports tech startups and entrepreneurship in the country, to boost local content development and innovation, the expectation was that this would lead to the creation of more jobs locally and attract foreign investments to Nigeria.
He added: “The Act aims to make it easier for ecosystem participants to interact and collaborate more deeply with those in business, education, research and development, finance and government. New products/services, improved productivity and efficiencies introduced by startups expand the digital economy, creating new social and economic opportunities. In addition, it is an avenue to boost youth innovation and bring more young people into the startup space; it can contribute towards enabling Nigeria’s large population of young people – one of the largest youth populations in the world – to realise their potential.
“Improving the ease of doing business with startups provides a welcoming environment for tech-based enterprises while attracting investors and new players to Nigeria’s tech startup ecosystem,” he stressed.
For the Chairman, Mobile Software Nigeria, Chris Uwaje, beyond the economy, “the entire nation is destined to benefit and gain from the immense opportunities presented by the enactment of the Startup Act (which indeed is long overdue) because it will unleash accelerated innovation for sustainable national development.”
Uwaje, who commended President Buhari and Pantami, said the Act would generate massive new employment opportunities and jobs.
According to him, research data informs that the technology Startups Ecosystem creates more employment opportunities in any country that buys into the development model than large multinational corporations in the same sector.
“Therefore, with the growing large population of the youth in Nigeria and indeed Africa, startups will help reduce youth restiveness, societal conflicts and unemployment. Also, it would help to transform Nigeria’s consumer-based economy into a production process economy and earn foreign exchange. Its benefits are many,” Uwaje stressed.
The Mobile Software Chairman, however, warned that it was not yet uhuru, saying the journey ahead would be long and tough, because “you cannot build a skyscraper with the foundation of a bungalow.”
Uwaje added: “For example, the proposed startup funding threshold of N10 billion is grossly inadequate. In my opinion, the standoff point to earn the benefits of the emergence of startup requires an initial investment outlay of about $50 billion – since the software capability and competences nationwide has the ability to generate $10 billion yearly if well organised. These are numbers with the audacity to attract global Venture Capitals and deliver innovation soonicorns and unicorns within the shortest possible time.”
According to him, that estimate was probably based on inadequate database and expert National Baseline Study of the state of Startups in Nigeria in comparison with their global counterparts in South Africa, India and China.
“Putting the perspective in context, China’s Tech startup generated $131 billion in 2021, while the United States of America generated $396.6 billion in the same year. Available records estimates the number of Startups in Nigeria to be about/ranging from 4,500 to 6,700 as the largest in Africa, but the scaling and survival ability is very low due to limited and organised infrastructure such as IT/Knowledge Parks, Standard Innovation Hubs, Accelerators and Investment Promotion circuits.
“Also important is the linkage between Academia/Education and Industry. Indeed, we must buy into the concept of establishing Startup entrepreneurship in our education curriculum and encourage the female gender with STEM education.
“There is a lot to do in the global struggle with digital transformation, Climate Change and human population – a challenge that has now been magnified by the future of education, works, health care and entertainment,” he added.
A telecoms expert, Kehinde Aluko, also pointed out that going forward, the Federal Government would need to get the buy-in of the states.
Aluko said states’ belief in the project was critical if it must succeed.
“I read recently that some states like Anambra, Lagos, Kaduna, Ekiti, Yobe and Zamfara have shown interests. Others must be brought in to guarantee success. There is a need to drive the Startup Act into the states. People are interested in policies that fit into their business plans,” Aluko said.
According to him, to avoid challenges of Right of Way that telecoms operators are facing in some states, there was need to get everybody involved in the implementation. He said every state was meant to compete on policy, stressing that policies and natural resources are what should differentiate states.
Aluko submitted that the most important thing to get the Startup Act working was to ensure that the implementation was devoid of delay, bureaucratic bottlenecks and any form of nepotism.
Special Adviser to the President of African Development Bank (AfDB) on Industrialisation, Prof. Adebanji Oyeleran Oyeyinka, also acknowledged that if well implemented and transparently managed, Nigerian startups could reap massive investment benefits from the Act.
His words: “Startup initiatives broadly are intended to build a strong ecosystem that is conducive for the growth of startups. Its objective is to empower startups to achieve growth through innovation and acquisition of technology.”
“As part of a country’s industrial policy, tools as this help to promote economic growth, create high skills jobs in the area of the Fourth Industrial Revolution (4IR).
“The provisions of the Start Up Act while benefiting mostly young entrepreneurs would help the Nigerian economy enormously.
“The usual benefits include relaxed conditions for business registration, tax exemption, access to finance, potential grants and access to patent all reading to lower transaction costs.”
Oyeyinka, however, noted that “one cannot legislate progress and this includes provisions of such an Act,” adding: “We have seen several initiatives that work excellently in other countries but in our context they fail. Why? When a model works it’s because the precept (theory) is sound. Policy and practice are mediated through human agency and this is where we fail. When a person in charge of a policy insists on bending rules or deviating from the policy factors that make a model work, it’s going to fail.
“When the custodian of rules insists on pursuing private not public purpose, the model fails. When we have the mindset that ‘this is Nigeria now’ with all its negativity the model and efforts behind it is in vain.”