Nigeria has witnessed a significant amount of growth in its tech startup ecosystem. More fintech, edutech, agritech, etc. are springing up, attracting investments both local and international.
The number of tech startups in Nigeria was estimated at around 3,300 in 2020, the highest number in Africa, according to Statista. To follow, South Africa and Kenya counted approximately 660 and 600 startups in the same year, respectively.
As a fact, the ecosystem is still at the peripheral stage and one common argument is that Nigeria’s tech ecosystem is too fragmented. However, one of the initiatives that is envisaged to be a catalyst for growth is the Nigeria Startup Bill which is now a law.
The much anticipated Nigeria Startup Bill was assented to on the 19th of October, 2022, by President Muhammadu Buhari. What this means is that the Bill has now become a law (Nigeria Startup Act, 2022).
The overall goal of the Nigeria Startup Act, (NSA) 2022 is to harness the potential of the country’s digital economy and tech ecosystem through co-created regulations that are concise.
The Nigerian government believes that the Act will contribute to the creation of an enabling environment for the growth, attraction, and protection of investment in tech startups.
Recall that the NSA was an Executive Bill, initiated by both the Office of the Chief of Staff and the Office of the Minister of Communications & Digital Economy.
“Our young people are our most valuable natural resource, at home and abroad. Their ingenuity, creativity, innovation, and entrepreneurial spirit are 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.”
NSA as a Catalyst for Growth
The Nigeria Startup Act is one of the laws that had both the private and public sectors collaborate to create a law that works for startups. “It means that we are headed in the right direction as a nation,” Mohammed Ibrahim Jega, Founder, of Startup Arewa, told TechEconomy
According to Jega, the Act tends to focus on providing more access to startups to grow and scale. He said the sections that describe the Startup Portal, Incentives, Regulatory Support from NITDA, etc., clearly indicate a forward-thinking approach to regulation in Nigeria.
Jide Awe, Public Policy Consultant on Science, Technology, and Innovation, said the Nigeria Startup Act aims to create an environment that promotes and supports tech startups and entrepreneurship in the country.
“This development will boost local content development and innovation. As a result, the expectation is that this will lead to the creation of more jobs locally and will attract foreign investment to Nigeria.”
In a note to TechEconomy, Jide reiterated that 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 and services, improved productivity, and efficiencies introduced by startups expand the digital economy, creating new social and economic opportunities.”
Implications for Tech Ecosystem
The tech ecosystem will be highly impacted by the Act, and Jega believes that the ecosystem will see more early-stage startups grow in such a way that startups that are operated in remote areas can have access to items such as the seed fund and even other relevant tax and fiscal incentives.
There are projections that the NSA will catalyze startups. “We should expect more funding as the plan is to also continuously position the country as an investment destination for startups, and there are even incentives for such an investment attraction for VCs, PE firms, angel investors, and others.”
“It would be wise for the ecosystem to try to get their startups labeled to even harness more benefits from the Act.”
In addition, Jide asserted that the Act 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 realize 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.”
If there is no implementation of what has already been outlined, the Act will remain a mere Act. The ecosystem’s potential will only be harnessed if actions are taken.
In his words, Jega said a lot of work is still ahead in terms of the need for robust implementation and continuous collaboration from within the ecosystem to ensure we can achieve the optimal impact of the Act.
He said there is still a need for states to key into the Act and ensure they can adopt the Act to drive growth and competitiveness at state levels.
Jide suggested that there is a need for multistakeholder implementation and collaboration as it remains critical for inclusive impact and sustainability. “The government and stakeholders must now take action to achieve the Act’s goal.”
”Recognition of the startup ecosystem has to be practical. Implementation should be simple, efficient, and not bogged down by bureaucracy. The 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.
The tech ecosystem needs to continuously show support for the Act by participating and engaging in areas such as implementation for the potential of the Act to come to fruition.
In the medium to long term, Nigeria needs to experience more growth in the ecosystem that will create hundreds of unicorns emanating from the country and drive full employment for the country.