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Editorial

Nigeria should urgently enact ‘Startup Act’

“Micro, Small and Medium Enterprises (MSMEs) play a key role in our society. These organizations create jobs, contribute to global GDP and, most importantly, they are fundamental in driving innovation. This is particularly the case of MSMEs focused on providing products and services through the use of Information and communication technologies (ICTs), also known as “tech MSMEs”. The rise of new technologies has created a momentum for tech MSMEs, which have become important actors at local, national, and global level”- Houlin Zhao Secretary-General ITU.

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Startup Act

Globally, Micro, Small and Medium Enterprises (MSMEs) are a major engine of economic growth and job creation.

MSMEs make up more than 95% of all businesses worldwide and two thirds of all formal jobs, ITU re-emphasized.

Evidence also suggests that these MSMEs account for 60-70% of gross domestic product (GDP) globally.

Most importantly, MSMEs often represent a potential path out of poverty for many developing countries.

In Nigeria, a report in 2015 suggests there are 37 million MSMES in the country. By now, the number should be clocking 40 million small businesses without shields or guides against the raining day.

The International Telecommunications Union (ITU) through its blog ‘ITU News’ sent out an e-newsletter on December 16, 2016 with the title: “How ICT ministries are supporting tech MSMEs and startups: new ITU report”.

In that post, the Strategy and Policy Coordinator at ITU’s Corporate Strategy Division, Jose Maria Diaz Batanero, shared how a few months ago, when preparing the Geneva celebration of the 2016 World Telecommunication and Information Society Day (WTISD 2016) –  which focused on the theme: “ICT entrepreneurship for social impact”-  the team at the ITU had a very intense discussion around the concrete role that ICT ministries are playing around the world in support of tech Micro, Small and Medium Enterprises (MSMEs) and startups.

Jose‘s team where actually searching on which ICT ministries and countries have been more active to date in this domain? What can we learn from the experiences available across ITU Membership? Is there a concrete role (leading role vs. supporting role) emerging from the different ecosystems and regions? :

This discussion led to the initiation of a mapping of initiatives of ITU Member States, which started by looking at a group of 10-15 countries, and gradually expanded to cover close to 100 countries in less than four months.

The goal of the research, according to Jose was to learn from the interventions undertaken by ICT ministries in support of their entrepreneurial ecosystems, and to make these experiences available to ITU Membership at large.

New report profiles eight countries’ efforts 

The result of this exercise is the report “Trends in tech MSMES and startup development” which presents an overview of the results obtained through this research, and which resulted in the identification of over 50 countries currently engaged in supporting tech MSMEs and startups through the ministry of ICT.

The report zooms into the experiences of eight countries that presented a very active level of engagement: Bangladesh, Colombia, Costa Rica, Estonia, Italy, Malaysia, Rwanda and Spain.

For each of these countries, the report presents a country profile with a sample of the interventions undertaken by each administration.

The preparation of this new report has allowed ITU to acquire a better understanding of how ICT ministries are currently engaging with the local tech MSMEs and startup community, how they promote and support tech MSME development, the tools that have been used, and to identify which countries are the most engaged in these types of programmes, which include interventions such as Italy’s Startup ActMalaysia’s Technology Innovation For Globalisation Fund (TIG) or  Colombia’s App.co accelerator.

Accelerating entrepreneurship for social impact

” We hope that this new publication will promote the exchange of experiences between administrations working on this domain and encourage more ICT ministries to look at how they can accelerate ICT entrepreneurship for social impact”.

ITU went ahead to invite all administrations to further share their experiences with ITU by contacting us at [email protected]nt.

Well, we wouldn’t know if (or what) the Ministry of Communications (Nigeria) is preparing any document for submission, but definitely, the country needs an Act to provide ‘cover’ for the startup ecosystem.

It will not be a misrepresentation to say that most laws in Nigeria were carefully drafted to off larger enterprises safer haven, thereby exposing the startups to life of struggles; even when they are the future of the economy.

Italy Example:

When TechEconomy.ng followed the report on Italy, we a forward thinking nation; people that understand the times the global economy are in.

On 2 May, 2016, the Italian Ministry of Economic Development published the document: “A new industrial policy for economic development and competitiveness”, showing

Italy’s aims  “to create favourable conditions for the establishment and the development of innovative enterprises in order to contribute significantly to economic growth and employment, especially youth employment.

The new law actually seeks to stimulate a knowledge spill-over in the whole economic fabric and, more specifically, supports a new Italian production oriented towards high-tech and high-skill sectors.

Not only that: supporting innovative entrepreneurship contributes to greater social mobility; strengthens the links between universities and businesses; makes people more incline to take business risks; and contributes to making the country more attractive for foreign capital and talents.

To reach these goals, the Italian Government has worked since 2012 on the creation of a complete and coherent legislation directed towards the development of an ecosystem of innovative startups with high technological content.

Such work has culminated in the DecreeLaw 179/2012 on “Further urgent measures for Italy’s economic growth”, converted into Law 221/2012. Law 221/2012 includes many of the policy proposals put forward in the Restart, Italia! Report – a report elaborated by a task force of 12 experts, which was set up in April 2012 by the Minister of Economic Development – as well as suggestions coming from a vast consultation with the main players making up the Italian startup ecosystem.

With the law in question, a definition of innovative startup, that is a new innovative enterprise of a high technological value, has been introduced into the Italian legal system.

For the very first time, this type of enterprise could draw upon an exhaustive corpus of regulations (articles 25-32) that launched new instruments and support measures regarding subjects which have an impact on the whole lifecycle of a company: since its incorporation to its growth, development and maturity stages .

Why Nigeria should borrow a leaf from Italy

It is important that the Ministry of Communications engages the private sector to draft a policy document that should be forwarded to the National Assembly for urgent consideration.

We saw the dents left on the economy during the naira/dollar impasse between 2015 and early 2017 (not that the race is won), the startups were hugely subjected to a harsh economic state. Some even closed shop because they couldn’t fulfil obligations to the international business partners.

Flip to last quarter 2017, as we speak, Konga has sacked about 60% of the workforce, though a business decision, but if it has met growth projections, such decision wouldn’t have been made. Recall, Konga has raised millions of dollars since launch. It’s not yet uhuru.

Secondly, with the wave of startup hubs and young people forming clusters to support themselves, now is the appropriate time to thinker on a Startup Act to boost their confidence and provide support. Presently, any government programme meant to cater for the start-ups are seen as ‘Government doing them a favour’, not necessarily as ‘Government’s responsibility’.

Truly, the Nigerian startup ecosystem is picking up, thanks to technology and slight growth in broadband availability, but we can do better. They need the regulatory backbone to break even. We have Bank of Agriculture with a mandate to cater for the sector it represents; Bank of Industries ought to represent the interests of the small businesses, but they would prefer to ‘support’ a shoe maker than a software developer.

Not that a show-maker doesn’t require support, but the software developer’s value is not appreciated or the BoI is yet to understand the intellectual property collateral.

If care is not taken, we are bound to witness the case of NCC/NIPOST growth and dwarf. Since the enactment of the Nigerian Communications Act 2003, NCC has moved on; leveraging the regulatory powers to transform the telecommunications sector, whereas, the Nigerian Postal Service has continued to struggle, because the law has remained unchanged since over 32 years the telecommunications and post split.

The incumbent Minister of Communications, Adebayo Shittu, has been trying to reform the NIPOST through the backdoor, hence NIPOST Act amendment has lingered at the floor of the upper chambers since 2004.

Dr. Bukola Saraki, led Senate should see this as a clarion call to address multifaceted challenges faced by these startups, who toil daily to remain afloat, most times, without government backing.

The startups shouldn’t be subject to untold hardship because they are ‘defenceless’; they are the fertile grounds for a lucrative economy tomorrow. Earlier we support and provide shock-observers, better for the economy in terms of youth employment, and GDP growth.

NOTE:  Part of this editorial is culled from the second publication released by ITU in the area of tech MSME, after the launch of the report “A review of Micro, Small and Medium Enterprises in the ICT sector” at the recent ITU Telecom World 2016, held in Bangkok, Thailand from 12 to 14 November 2016. 

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@TechEconomyNG connects past-present-emerging technological impacts on Businesses, People and Cities. All Correspondence to: [email protected]