The decision comes after months of questions about how the document was prepared and checked before publication.

Cabinet approved the draft policy in March 2026, and government published it in April for public comment.

Questions emerged soon after, when media reports found that several citations did not exist or pointed to journals that never published the work. The findings forced a formal withdrawal of the document on 26 April 2026.

Minister of Communications and Digital Technologies Solly Malatsi told Parliament that the department missed the problems before they became public.

He said, “The department had not picked up that there were issues with the references in the draft policy document before the events were exposed in news reports,”

Two officials involved in drafting and checking the document have since been suspended. The department also admitted gaps in its internal review process, especially around how sources were verified before publication.

Malatsi said the government moved to contain the damage after the issue became public. He stated, “It was then that we got the responses to protect the integrity of the policy development process and, obviously, the stain that it has caused not just on the department but also on the government’s overall process of formulating and finalising policy,”

On 14 May 2026, the government appointed an independent panel to rebuild the policy framework. The group is chaired by Professor Benjamin Rosman of the Machine Intelligence and Neural Discovery Institute at the University of the Witwatersrand.

It includes Professor Vukosi Marivate, Professor Alison Gillwald, Heather Irvine, Dr Tshepo Feela, cybersecurity specialist Jabu Mtsweni, and cyber lawyer Lufuno Tshikalange.

Officials expect the revised framework to go back for public comment in January 2027. Until then, South Africa will remain without a formal national AI policy, even as both government and private firms continue to deploy AI systems in daily operations.

The episode has led to queries about oversight in policy development and the growing use of generative AI in official work.

It also places South Africa in a tighter race with countries such as Kenya and Nigeria, which are advancing their own national AI strategies.

Attention has currently shifted to whether the new panel can restore confidence and produce a framework that holds up to standards, both locally and across the continent.

But they cannot act in isolation. Government, donors and the private sector need to move as one if resilience is to take root in Nigeria.

In late May 2025, flooding in Mokwa in Niger State killed at least 117 people and left several still missing. Earlier, heavy rains destroyed homes and claimed at least 21 lives in north-central Nigeria. 

On August 6, the federal government issued flood alerts for 19 states, warning of further extreme rainfall between August 5-9. 

These events show a pattern of high climate risk: poor drainage, urbanisation, infrastructure vulnerability and changing rainfall patterns all combine to raise the stakes for agriculture, food security and human lives.

Why this is important – the drivers

• Scale of the hazard. Floods are not occasional. The Mokwa event was one of the deadliest in recent years. Lives and livelihoods are being wiped out.
• Underlying drivers. Rapid urban growth, informal settlements without drainage, old dams or reservoir‐releases (the latter implicated in past flood alerts) and infrastructure that wasn’t built with climate resilience in mind. 
• Financial gap. According to the latest report by Climate Policy Initiative, Nigeria mobilised about $2.5 billion in climate finance in 2021/22, up from $1.9 billion in 2019/20, but the annual gap (the amount needed vs the amount mobilised) is around $27.2 billion. 
• Data & systems weakness. There are limited hydrological sensors, weak last-mile alerting, and procurement systems that favour large infrastructure over agile tech-solutions.

What startups can build (and why)

Here are four areas of opportunity where startups can move from idea to impact.

1. AgTech for small-holder resilience

Startups can deliver climate-smart advisory (micro‐weather + seasonal forecasts), flood/drought-tolerant seed systems, bundled micro-insurance linked to weather triggers, and credit for replanting after floods. 

The reason: agriculture is highly exposed; floods destroy farmland and disrupt planting cycles. A viable business model could be subscription advisory plus revenue share on inputs and insurance commissions.

2. Urban resilience & data-driven infrastructure

A startup might build flood-risk mapping using satellite & local sensors, dashboards for municipalities or utilities, plus partnering with local contractors for nature-based drainage solutions. 

Drainage failures, particularly in fast-growing urban zones, magnify losses. Monetisation may come via B2G contracts (municipalities), and SaaS for decision-makers.

3. Disaster early-warning & last-mile alerting

Existing forecast agencies (e.g., the Nigeria Meteorological Agency and Nigeria Hydrological Services Agency) generate data. The gap is last-mile: reaching communities with actionable alerts, setting up evacuation triggers, and automating cash transfers tied to events. 

Startups can provide alert platforms, community-volunteer networks, and cash-trigger logic. Revenue comes from contracts with federal/state agencies or donors financing early‐warning programmes.

4. Data & risk-finance platforms

Startups can build APIs that feed river/dam sensor data, flood-indexes for insurers, and platforms that match resilience projects with blended finance. 

This matters because insurers, lenders and investors require data and pipelines to underwrite risk and invest in adaptation. Business models: licensing data/APIs, performance-based contracts, or match-making fees.

Real barriers—for clarity

I don’t want to sugar-coat it. To succeed, startups must navigate tough obstacles:

• Demand and payment risk. Many users (farmers, low-income communities) either cannot pay or are unwilling; commercial viability is weak without subsidy or public procurement.
• Procurement friction. Governments usually prefer big infrastructure contracts; small pilots are easier but scaling is slow.
• Finance constraints. As CPI found: “affordability of finance” and “limited supply of bankable projects” are major limitations. 
• Data gaps & interoperability. Without local sensors, standardised APIs or institutionalised data-sharing, solutions remain brittle.
• Policy/regulation lag. If legal frameworks, open data mandates and procurement reforms don’t keep pace, startups are left in limbo.

Government role – what must happen

If I were advising a government, I’d urge these five actions:

1. Commit to rapid procurement windows: allocate dedicated budgets for resilience tech (not just studies) so startups can contract and scale.
2. Mandate open data/ APIs from agencies like NiMet and NIHSA; make hydrological & meteorological data accessible.
3. Establish blended-finance/guarantee facilities that de-risk private investment in resilience (so startups can raise funding).
4. Embed impact-based early-warning systems in national disaster-risk management plans; authorise automatic triggers (e.g., cash transfers, evacuation alerts) when thresholds are exceeded.
5. Support local capacity at state and municipal level: invest in drainage, sensors, maintenance funds and community-volunteer networks.

Donors & development finance – their move

Donors and multilateral funds should focus on enabling, not just funding studies:

• Provide first-loss and outcome-based grants to make resilience commercially viable for startups.
• Fund data infrastructure: sensors, river gauges, ground monitoring networks and software platforms.
• Support risk transfer mechanisms, e.g., parametric insurance tied to flood/crop loss, accessible for rural farmers.
• Act as procurement catalysts: fund multi-year contracts that governments can absorb, reducing risk for startups.

Quick wins in next 12 months

• Launch a low-cost river-gage + SMS alert pilot across 1-2 high-risk LGAs identified by federal alerts.
• Bundle climate-smart advisory + micro-credit + parametric insurance for crop planting next season.
• Co-develop with NiMet a verified API feed for flood forecasts and package it commercially to insurers.

Medium to long-term (1-5 years)

• Build integrated river-basin monitoring (NIHSA + regional partners) and link to automated insurance triggers.
• Expand urban-resilience programmes: retrofit drainage, deploy nature-based solutions, create maintenance markets.
• Develop national procurement frameworks & climate-resilient infrastructure codes so tech innovation is institutionalised.

KPIs worth tracking

Choose measurable indicators:

• Time from warning to evacuation (hours) in pilot areas.
• Number of smallholders covered by parametric protection.
• % reduction in crop loss in project pilot zones year-on-year.
• Time from pilot to procurement contract for a resilience startup (months).
• Amount of blended finance mobilised (USD) for resilience.
• Number of municipalities using startup-delivered dashboards.

Risks & ethical issues

• Beware of “tech-solutionism”: technology alone won’t solve structural issues. Community involvement matters.
• Data privacy: especially for farm, household or geospatial data. Ensure consent and benefit sharing.
• Elite capture: resilience programmes must reach marginalised groups, not just well-connected players.

I believe we have a real opportunity in Nigeria. Startups are prepared to build the tools; the urgency is undeniable. But without policy clarity, finance reform and institutional buy-in, innovation will stall in pilots. 

If the next 12 months see coordinated action among startups + government + donors, we’ll move from reactive relief to proactive resilience.

The government’s new tax act is the latest example. Tucked inside it was a 5% fuel surcharge that would have pushed up the cost of transportation, logistics, and ultimately, digital services. But after public outcry, implementation has been delayed.

The suspension may look like a reprieve, but the episode reveals Nigerians no longer trust that reforms are designed with them in mind. The digital economy, from ride-hailing to food delivery, from fintech transfers to e-commerce, now sits at the centre of this trust issue.

What’s in the New Tax Act?

The Finance Act 2026 was meant to strengthen revenue collection in a country struggling with deficits and a weakening currency. Among its provisions was a 5% fuel surcharge, to be applied across petrol and diesel usage. The government argued it would fund infrastructure and stabilise the economy.

But the context matters. Inflation is at 21.88%, food inflation stands at 22.74%, and the naira last week closed at ₦1,535/$1 in the parallel market. Nigerians still feel squeezed by subsidy removals, FX adjustments, and high bank charges. Adding a fuel surcharge on top of that was bound to ignite resistance.

Why the 5% Surcharge Matters

Transport is the backbone of Nigeria’s economy, and the digital economy in particular. A surcharge on fuel does not stay at filling stations. It ripples into delivery costs, ride-hailing fares, and the price of moving goods.

Take Lagos as an example: an average Bolt ride costs about ₦5,000. With the surcharge, that would have jumped by at least ₦250. Scale that across 100,000 rides daily in the city, and consumers alone would have shouldered ₦25 million extra every day.

For SMEs relying on Jumia or GIG Logistics, higher delivery charges mean higher product prices or thinner margins. Either way, trust in both government policy and platform pricing takes another hit.

The Digital Economy at the Crossroads

Nigeria’s digital economy contributed 17.68% of GDP in 2024 (NBS data). That is larger than oil in some quarters, however, its growth depends on affordability and adoption.

Platforms like OPay and PalmPay have already introduced transfer fees that led to public backlash. Add higher logistics and energy costs, and Nigerians will begin to question whether digital platforms are easing life or taxing them.

The tension is way beyond cost. It is about ownership. Are Nigerians building a digital economy for themselves, or are they bankrolling platforms while struggling with fees and unpredictable policies?

The Trust Deficit

Trust is the real casualty here. Nigerians are used to policies that land without warning and change without explanation. The removal of fuel subsidy, the central bank’s constant currency adjustments, sudden banking charges, and now a tax law that has been rolled out, suspended, and may yet return.

An Afrobarometer survey (2024) showed that only 28% of Nigerians trust government to do what is right most of the time. That figure is not surprising when reforms look like experiments and citizens feel like test subjects.

Platforms and banks are caught in the middle. They bear the cost of compliance, pass it down to users, and in the process, lose consumer trust as well.

Winners and Losers

• Winners (short-term): The government, if revenue targets are met; platforms, if they successfully shift costs to users.
• Losers: Consumers, who pay more for transport, deliveries, and digital services. SMEs, whose logistics bills eat into profits. And ultimately, the digital inclusion agenda, as people turn back to cash to avoid charges.

The long-term danger is that if reforms drive people out of the formal system, Nigeria will stall in its effort to boost digital adoption.

Lessons from Elsewhere

Kenya introduced a digital service tax in 2021, starting at 1.5% of transaction value. It has since risen to 3%, but its rollout was gradual, with public communication at every stage. South Africa relies more on VAT collection from platforms than on adding transport surcharges.

Nigeria’s approach  “tax first, explain later”, risks increasing the gulf between policy intent and public trust.

A Way Forward

Nigeria needs revenue, but it cannot afford to erode digital adoption in the process. Three steps could help:

1. Transparency: show clearly how revenue will be used. Citizens are more likely to accept taxes when they see results.
2. Phased rollouts: allow businesses and households time to adjust.
3. Protection for low-income groups: exemptions or reliefs to cushion the impact on the most vulnerable.

If Nigeria’s economic reforms were an app, many citizens would uninstall it. But since that is not an option, the least government can do is fix the bugs before asking users to pay for premium.

The suspension of the fuel surcharge is just a warning. Unless policies are designed with transparency, fairness, and trust in mind, every new tax will be met with suspicion, and every platform caught in the middle will struggle to hold consumer confidence.

Entrepreneurs here don’t just contend with the market; they contend with the state itself. Sudden tax reforms, unpredictable import bans and contradictory regulations hit them; the environment is usually more like a minefield than a marketplace. 

The question is no longer whether you can compete with other businesses, but if you can survive policy shocks long enough to compete at all.

The Context & Stakes

The country’s business environment is high-potential but high-risk. Reforms are truly designed to improve revenue, regulate emerging industries, and boost infrastructure. But in practice, the unpredictability of these changes usually destabilises businesses before they can adapt.

With a tax-to-GDP ratio of just 9%, one of the lowest in Africa, the government is having challenges in widening the tax net. The Nigeria Tax Act 2025 introduced a 4% Development Levy on assessable profits, consolidating several existing levies. While aimed at simplifying compliance, such measures often arrive with little transition time, leaving businesses struggling to rework budgets overnight.

This is not a problem unique to big corporations, as small businesses, which form the backbone of Nigeria’s economy, face their own version of this challenge. Those with turnover under ₦100 million are exempt from Companies Income Tax, but exemptions exclude professional service firms, creating uneven relief and distorting competition.

When the rules change faster than you can adapt, even the most promising venture can collapse.

The Four Big Obstacles

a) Ever-Changing Tax Regimes

Tax changes here are not occasional; they’re constant. Beyond the new Development Levy, digital asset taxation is now law. Profits from crypto and virtual assets are taxable under the new framework, but enforcement is still tricky due to valuation gaps and anonymity challenges. 

The speed and frequency of such reforms mean businesses are perpetually in a state of adjustment, burning resources on compliance rather than growth.

b) Lack of Infrastructure

Nigeria’s infrastructure stock stands at just 30% of GDP, far below the World Bank’s benchmark of 70%. This gap, projected to reach $878 billion over the next 26 years, is the reason SMEs spend twice as much producing goods as their peers in better-served economies. 

Unreliable power forces reliance on generators. Overstretched ports and congested roads delay shipments. Even with 35 governors planning to spend ₦17.51 trillion on infrastructure this year (a 54% increase from 2024), execution is still not certain.

c) Regulatory Whiplash

Few sectors illustrate this better than crypto and fintech. In 2021, the CBN banned crypto transactions, but by 2023, the ban was reversed. Now, under the Investments and Securities Act 2025, crypto is recognised as a regulated digital asset under SEC jurisdiction. 

Fintech companies are caught between overlapping oversight from the CBN and SEC, creating compliance confusion that slows innovation and drives some startups underground.

d) Corruption & Rent-Seeking

The UNODC’s 2024 Nigeria Corruption Survey shows over 70% of Nigerians refused to pay a bribe at least once, a sign of commendable resistance. But corruption still ranks among the country’s top three challenges. 

From procurement to licensing, rent-seeking behaviour inflates costs and wastes time. Many entrepreneurs silently admit that bribes remain “the price of getting things done,” even when they affect trust in institutions.

Survival & Growth Strategies

• Diversify Revenue Streams: Relying on a single source of income is dangerous when a policy change can erase it overnight.
• Stay Policy-Aware: Join trade associations, attend policy briefings, and actively monitor regulatory developments. Being caught off-guard is expensive.
• Build Flexible Models: Design operations that can shift quickly, for example, businesses that can toggle between import and local sourcing depending on customs rules.
• Invest in Digital Agility: E-commerce, remote service delivery, and cloud-based operations can help bypass some infrastructure constraints.
• Collaborate for Scale: Partnerships reduce exposure. Shared logistics, pooled procurement, or joint advocacy can soften the blow of policy changes.

An SME owner in Lagos recently told me:

“Every time I hear ‘new policy,’ I don’t think about how it will help. I think about how much it will cost me this time.”

Another, a fintech founder, described the constant pivoting as “building on shifting sand.” The frustration is the unpredictability, not limited to the cost.

Macro Takeaway

In Nigeria, policy is a central player, not just the background noise of business. And for many, it feels less like a referee and more like a competitor.

Scaling through goes beyond market fit; it includes policy resilience. Entrepreneurs need to be as skilled at reading government gazettes as they are at reading balance sheets. The prize for those who adapt is a market with huge potential, and the cost for those who can’t is early extinction.

So, I leave you with this:
If you could design one policy to protect Nigerian entrepreneurs from sudden shocks, what would it be?