It is official that the Nigerian Startup Bill was passed on July 20, 2022, by the Nigerian Senate. The Startup Bill 2022, which is awaiting Presidential assent, seeks to create a friendly environment for tech-based startups in Nigeria.
But that’s not everything about this piece of legislation.
Here are 10 things you need to know about the Startup Bill:
1. Special certification for startups
- Before a company can be labelled a startup, it must obtain a certificate known as the startup label. This means that only companies with the startup label will be recognised as startups.
- The bill mandates that a Startup Support and Engagement Portal should be established to facilitate the issuance of the startup label and also bridge the gap between regulators and startups. It also spells out the requirements for a company to obtain a startup label. Companies issued with a startup label have obligations under the bill and failure to comply with these obligations can revoke their startup label.
- According to the bill, For a company to be named startup, it must be a registered limited liability company that has been in existence for not more than ten years from the date of incorporation, amongst other requirements.
2. Seed Fund for startups
- Startups can access a special seed fund created under the Bill. The Bill establishes a Startup Investment Seed Fund, which is designated for startups alone. It will provide finance and tech relief for startups. This means increased access to funding that will grow the startup ecosystem. It will be easier for startups to fund their operations by leveraging the grants and loans that will be available to them.
3. Tax Incentives
- Companies labelled as startups will benefit from some tax reliefs and incentives under the Bill. These labelled startups are eligible for pioneer status incentives and other tax reliefs. Labelled startups with at least ten employees where 60% of the employees have no prior work experience within three years of graduation or any vocational program have access to percentage-based tax relief.
4. Bridges the gap between regulatory bodies and startups
- The bill enhances regulatory support for startups. It provides for collaboration with regulatory bodies to facilitate seamless processes for labelled startups. The provision for regulatory support applies to bodies like the Corporate Affairs Commission, Nigerian Copyright Commission, and Trademarks, Patent and Design Registries, Securities and Exchange Commission, National Office for Technology Acquisition and Promotion, Central Bank of Nigeria, and Nigerian Exchange Limited.
5. Provides for Incubation Programmes
- The bill also provides for accelerator and incubator programmes that will grow the startup ecosystem. These incubators will help startups solve operations that they are bound to face in running their business, provide workspace at little or no cost, and serve as breeding hubs for the startups.
6. Creates a legal framework for startups
- The bill eradicates the legal uncertainties that have trailed the startup industry in the past. It provides for what qualifies a company to register and obtain startup status. Hence, there is a clear-cut definition of what a labelled startup is and what it is not. It also specifies the legal rules that govern this sector. Flowing from this bill, other authorities can also make policies for the sector.
7. Creates an institutional framework for startups
- It clearly establishes the National Council for Digital Innovation and Entrepreneurship. The Council has the institutional powers over startups and the responsibility to formulate policies that encourage the development of startups, monitor, and evaluate startup regulatory frameworks, approve and support startup programmes such as giving of grants, etc.
8. Enhances the training of talents in the industry
- The bill introduces a program that will enhance the training and development of talents in the Nigerian startup ecosystem. It provides support for academic research institutions geared towards startup development. The implication of this is that startups and their employees will have access to educational programs that will empower them with the right skills and enhance their competitiveness in the industry.
9. Create an enabling environment for tech-based startups
- The bill creates a friendly environment for tech-based startups and promotes the ease of doing business. This means that the tech space will become more attractive to investors and usher in new entrants into the market. So, it will give birth to new startups and cause existing ones to thrive.
- The bill also provides for the establishment of hubs and innovation parks that will provide registration support, free or subsidised workspace and facilitate the entrance of startups into foreign markets, etc.
10. Positions the Nigerian Startup Ecosystem Strategically
- The core objective of the bill is to position Nigeria as a leading tech hub in Africa. This is why it seeks to enhance the ease of doing business in the Nigerian tech space and promote local and foreign investment in the tech startup ecosystem.
When this bill receives presidential assent and comes into force, it will leverage the growing digital economy in the country. A regulatory framework like this will give birth to several tech companies and cause existing ones to thrive. It will also make tech startups attractive for investment.