Stakeholders in the communications and digital economy space are confident the Federal Government will execute the Startup Act to achieve its objectives, TEMITAYO JAIYEOLA writes
Nigeria is in the eye of the technology world after it signed its Startup Bill into law. The nation is no stranger to attention on the global tech scene since it reportedly has the highest number of tech startups and receives the largest amount of tech funding on the continent. Also, occurrences like a Twitter ban are not so far from the government.
Regulation in the country is a tale of bans, sanctions, and threats. It is believed that regulators typically wield the big stick before attempting to understand the terrain. At various times, the government has tried to create a framework or regulation for the ecosystem which has usually been met with criticism.
In 2021, a bill for the tech ecosystem by the National Information Technology Development Agency leaked and revealed how the agency was pushing to provide for the administration, implementation, and regulation of information technology systems and practices as well as digital economy in the nation.
The agency was seeking the power to issue regulations and authorisations for operators, including licensing and authorisation criteria such as renewal, suspension, etc.
The bill document did not paint a picture of how it would help players thrive but dwelled more on penalties. The bill was kicked against as players in the ecosystem raised strong arguments about how the process of drafting the bill did not involve those with industry experience.
Increases in funding, revenue generation, and valuation have overtime increased government interest in the nation’s tech ecosystem. And with an increasing need to diversify its income sources from oil, one can understand why numerous agencies have tried to approach the tech ecosystem with an extractive approach.
However, the new Startup Act serves as a breath of fresh air. It was a joint initiative by the nation’s tech startup ecosystem and the Presidency to ensure that the nation’s laws and regulations are clear, planned, and work for the tech ecosystem.
According to the Nigeria Startup Bill website, the bill will help to create an enabling environment for the growth, attraction, and protection of investment in tech startups.
While confirming the presidential assent to the bill, the Minister of Communications and Digital Economy, Isa Pantami, disclosed that the bill was the outcome of engagements with innovators and start-ups across the country.
He said, “The approach we adopted was to allow our young start-ups, our young innovators all over the country to identify the challenges they were confronted with in regard to intellectual property, financing, regulation, and incentives, among others.
“So, young innovators were engaged across the country through their geo-political zones, where we encouraged them to voice out their challenges with regards to the ease of doing business.
“And from their inputs, we discovered there was the need to have Nigeria start-up Act in place so that it will provide the enabling environment for them to continue to thrive and be successful.”
According to Pantami, this new law will now serve as the legal framework for the growth of the sector.
On the NSB website, the President, Muhammadu Buhari was quoted as saying, “Our young people are our most valuable natural resource, at home and abroad. Their ingenuity, creativity, innovation, and entrepreneurial spirit is evident to all.
“We will partner with the legislature to develop an enabling environment to turn their passions into ideas that can be supported, groomed and scaled.”
Nigeria joins Tunisia and Senegal as African countries that have enacted a startup bill. Mali, Ghana, Ivory Coast, the Democratic Republic of Congo (DRC), Rwanda, and Kenya, are also at varying stages of enactment.
Since 2019, Nigerian startups have raised about $3.6bn. A study by Tony Blair Institute for Global Change estimated that African startups would attract about $90bn in tech startup funding by 2030. Nigeria is the leading destination for startup funds on the continent.
According to experts, executing a law that enables the growth of the tech ecosystem is crucial to the continued success of a space where many young individuals have found and are finding their feet.
A report by Disrupt Africa revealed that tech startups in the nation had a staff strength of 19,344 as of August 2022.
A lot is yet unknown of the act but a copy of the draft bill that was made available in 2021 revealed that the bill sets out to tackle challenges such as a lack of an enabling environment, unclear regulatory framework, and inadequate local content support.
It also seeks to protect and incentivise startups with tax breaks, create incentives to attract foreign capital, and access to an exclusive list of public and private-led local funding opportunities which could include a N10bn fund from the federal government.
Speaking recently to The PUNCH, the Senior Special Assistant to the President (Digital Transformation) and Lead, Nigeria Startup Bill, Oswald Guobadia, revealed that the Startup Act would serve as an enabler for the tech ecosystem to attain sustained growth.
The Nigeria Startup Act has a start-up council that is intended to provide government resources and more to the startups in the nation. According to Guobadia, startup founders and investors will get incentives to encourage the growth of the sector.
He said, “The Nigeria Startup Bill serves as an enabler for tech hubs to attain sustained growth. State adoption, for instance, will encourage this.
“The NSB also has a seed fund which will be accessed by founders, hubs, and accelerators in Nigeria. This fund is to be managed by the NSIA. We are intentionally attempting to create that fabric of innovation across the country and the states must adopt it so that we can see the dividends.”
According to him, the now signed act increased private sector participation in the council, has a revamped tax section, and has changed its labeling requirements from 51 per cent to 1/3 Nigerian ownership.
He revealed, “The bill is subject to the annual finance bill, income tax exemption for 3 years with a possible extension of two years. Tax reductions against expenses on research conducted. Exemption of ITF if it offers training to its employees. Then there are tax incentives for investors.”
The Chief Executive Officer, Prunedge, Joel Ogunsola, described the act as one that would have a positive impact on the ecosystem. He stated that now the focus should be on execution.
He said, “The startup bill has a good number of positive impacts. Now that it has been passed into law, we need to move into the execution phase.
“When you consider what the bill intends to do, such as startups getting access to big investments, and how there is something for both employers and employees in startups. The bill doesn’t just focus on businesses, it focuses on the people working in them too. It recognises and encourages startups to employ people with minimum level of experience, young graduates.”
The Cofounder, GetEquity, Ekundayo Temitope, believes the law will protect the ecosystem and investors in the space. According to him, the government is making the right move, but the execution of the act is more important that the funfair of getting it passed.
He said, “I think the government is finally acting right by providing funding, in form of venture capital, for these companies.
“But it still goes back to execution because we don’t want a conflict between NITDA and NDEP, and all the other different organisations who think that these young companies are money making or not. Because, basically, they are not. They are just still testing their models, so they need to be supported.
“Really deep support by the government to provide access, sandbox access, actual guides. The idea should first be to understand, engage, and help than to query and dismiss or punish which has usually been the modus operandi around here.”
He added, “Also, there is a need to harmonise regulation and systems. We probably do not want to have multiple agencies vying for the same things and producing their own different policies to bill people and make money from them.”
According to the Chief Executive Officer, TruQ, Williams Fatayo, the government is aligning itself with the ecosystem with the act.
He said, “There is this popular insinuation in the ecosystem that entrepreneurship is hard anywhere in the world but it’s incredibly harder in Nigeria.
“Half of this particular difficulty is thanks to the erstwhile misalignment between the government and the ecosystem. So much that a sizeable amount of the progress made so far by entrepreneurs in the ecosystem has been recorded inspite of rather than as a result of, but this signing of the startup bill changes everything.
“Now Nigeria effectively becomes a catalyst and a partner in the progress of the ecosystem going forward and I dare say the whole ecosystem is incredibly excited to see what lies ahead.”
It is still early days, and while excitement and euphoria are still colouring the news of the bills’ assent, experts are looking ahead to its execution. To them and the watching world, the bill’s execution will determine if it is worth its hype.
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