Nigeria Promotes Innovation, Becomes Latest African Country to Pass Startup Act

With presidential assent marking its final passage into law, the Nigeria Startup Bill has become the Nigeria Startup Act as of Wednesday (Oct. 19).

Intended to foster innovation and create a hospitable environment for new businesses, the act first defines what type of business gets classified as a startup and then introduces a range of incentives such as tax breaks, funding and access to an assisted licensing pathway.

And FinTechs, most of which are often held back by the significant resources businesses require to obtain the necessary licenses to operate in the financial services sector, can breathe a sigh of relief.

Read more: 5 Things to Know About the Nigeria Startup Bill

The Startup Act mandates the Central Bank of Nigeria (CBN) and the country’s Securities and Exchange Commission (SEC) to “ease the licensing procedures for labeled startups that operate as financial technology companies.”

As well as helping to elevate the country’s startup scene in general, many are hoping the Nigeria Startup Act will help to distribute the country’s tech innovation and foster a culture of innovation beyond the popular clusters in Lagos and Abuja to all 36 states.

One of the contributors to the Act, Oswald Osaretin Guobadia, senior special assistant to the president on digital transformation, said this week that the government intends to support states as they implement the act, as part of efforts to create opportunities for the whole country.news, EMEA, international, MENA, Ghana, Kenya, Mali, Nigeria, startups, legislation, innovation,

Building Regional Startup Playbook

While Nigeria is the latest country to drive the needed growth in the startup space at the policy level, the West African nation is not the first country to make the legislative move.

In 2018, Tunisia became the first country in the region to pass a startup act. Four years later, over 700 Tunisian companies have received their designated startup label, many of which, such as enterprise AI startup InstaDeep, have gone on to international success.

Learn more: 4 Years After Passing Its Startup Act, AI Proves to Be Winner for Tunisia

Senegal followed suit a year later, becoming the second African country after Tunisia to pass a dedicated Startup Act in December 2019.

Work is also being done to drive startup growth on a regional scale. The African Union (AU), which consists of 55 member states, has made regulatory reform and startup support key pillars of its digital transformation strategy.

Against this backdrop, James Manyika, Google’s senior vice president for technology and society, revealed earlier this month during the 2022 Google for Africa event that the tech giant has partnered with the AU to guide the institution on how it can support more African countries in formulating startup bills.

Read more: Internet, Cloud Capabilities Define Google’s Billion-Dollar Africa Investment

At present, governments in Ghana, Kenya and Mali are in various stages of debating, amending and ratifying their respective startup bills, while politicians and entrepreneurs have called for similar measures in South Africa and Cote D’Ivoire.

Ultimately, interest in legal frameworks that accelerate startup formation and innovation reveals the promise such initiatives hold for African economies.

While private sector investment and the associated incubators and mentor schemes are also critical, legislative acts that create linkages between businesses and government can have a huge impact on sectors such as financial technology, where the burden of regulation can be intense and difficult to navigate.

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