10 Notable Innovations of the Startup Bill which is now the Startup Act

The Startup Bill

The startup bill is an initiative by Nigeria’s tech start-up ecosystem and the Federal Government to harness the potential of the Nigerian digital economy, with the primary objective to bridge the engagement gap between startups and regulators. it is an Act to provide for the creation and development of an enabling environment for technology-enabled startups in Nigeria and for related matters. Interestingly, the Nigerian Startup Bill was passed on July 20, 2022, by the Nigerian Senate and it is awaiting Presidential assent, as it seeks to create a friendly environment for tech-based startups in Nigeria.

As far as the Bill goes, it does not place any mandatory obligation on startups but simply offers an opportunity for startups to operate under the framework.

Companies that can benefit from the incentives under the Bill include incorporated companies that are granted the startup label upon compliance with the startup labelling process under the Act (“labelled startups” or “startups”).

Outlined below are some of the notable innovations of the startup bill

1. There is an established fund known as the “Startup Investment Seed Fund” which shall be managed by the Nigerian Sovereign Investment Authority, and these funds shall be applied to provide a labelled startup with finance; also provide relief to technology laboratories, accelerators, incubators, and hubs. Cue s.19
2. Academic Research institutions shall be supported by the National Information Technology Development Agency (the Secretariat) for the development of Startups through, and not limited to financing research systems for startups, amongst other things. Cue s.23
3. Startups operating within the industries under the extant Pioneer status incentives (PSI) scheme may apply to the Nigerian Investment Promotion Commission (NIPC) for tax reliefs under the PSI scheme. Cue s.24
4. The Bill provides for the collaboration between the Secretariat and the Nigerian Copyright Commission and Trademarks, Patent, and Design Registries by designating a separate section on the Startup Portal to ease the registration of intellectual property for Startups. Cue s.34
5. There shall be a designated section on the Startup portal to ease technology transfer registration for Startups. There shall also be a discount on all applicable fees for technology transfer registration. s.36
6. The Council shall engage in collaborative efforts with the Nigerian Exchange Limited to enable Startups to meet the eligibility requirement for listing, such as granting them incentives that aid their growth and development. s.39
7. The Bill encourages the establishment of innovation hubs and parks in each state of the Federation. This will promote innovative collaboration between startups, and foster business between startups and stakeholders in the ecosystem. s.43
8. The Bill proposes the establishment of Technology Development Zones with the aim of spurring the growth and development of startups, accelerators, and incubators across Nigeria. s.45
9. The Bill also provides incentives for employees. Such that an eligible employee shall be entitled to a 35% tax exemption.s.31
10. There shall be a Credit Guarantee Scheme with a primary objective of the provision of financial and credit information to Startups. s.29

The Startup Bill is an evolving piece of legislation that will surely oscillate with the demands of the ecosystem and we are glad to have such progressive legislation in Nigeria. More importantly, when this bill receives presidential assent and comes into force, it will leverage the growing digital economy in the country to foster the development and growth of technology-related talent and position Nigeria’s startup ecosystem as the leading digital technology hub in Africa.