Nigeria’s president, Muhammadu Buhari, on Wednesday signed the startup bill into law. The Startup Bill, also known as the Nigeria Startup Act 2022, is the result of a collaboration between the executive and stakeholders in Nigeria’s startup ecosystem.
According to the Minister of Communications and Digital Economy, Isa Pantami, the startup bill will empower tech entrepreneurs and startups in Nigeria.
As per the provisions of the law, the Nigerian government plans to set up a N10 billion fund to support startups in the country.
Pantami added that the Information and Communications Technology sector contributed 18.42 percent of GDP this year alone.
How does the Startup Act work?
The startup bill comes with several conditions for startups in Nigeria. Let’s have a look at their intricacies.
Startups Must Obtain a Label Certificate
One of the key features of the Startup Bill is startup founders must obtain a Startup Label Certificate to operate. This certificate will be made available on the Federal Ministry of Communication and Digital Economy’s website. The Act, however, does not specify how much this certificate will cost.
A Nigerian Founder or Co-founder is a Must
A Nigerian startup must be a registered liability company that has been in operation for less than ten years and have at least one Nigerian as a founder or co-founder who shares profit or revenue from the sale of shares. Some technology experts have expressed their reservations, as an innovative startup shouldn’t take too long to be registered.
Nonetheless, the Act specifies that the goals of a startup should include the development, production, improvement, and commercialisation of a digital technology innovative product or process.
Holding Companies or Subsidiaries of Established Companies aren’t Covered
The Startup Act does cover holding companies or subsidiaries of existing companies that are not registered as startups. According to experts, this could be a difficult feature for tech companies that are registered in another country as holding companies but operate in Nigeria as subsidiaries.
The Act establishes the National Council for Digital Innovation and Entrepreneurship. One of the council’s functions is to formulate and provide general policy guidelines for the achievement of the Act’s objectives, as well as to provide overall direction for the harmonisation of laws and regulations that affect startups.
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