Presidential Assent of the Nigeria Startup Bill
The Nigeria Startup Bill, which was drafted between June and September 2021 by over 30 tech leaders finally got the presidential assent on Wednesday, the 19th of October. Being signed into law, The Nigeria Startup Bill will now be known as The Nigeria Startup Act.
The law serves as a response to many problems besetting the Nigerian startup scene, some of which include infrastructural decay, poor access to funding and a challenging regulatory environment.
It is not uncommon to witness new policies and regulations spring up suddenly that negatively affect the operations of startups. The new law will bridge the gap between startups and regulators and ensure that the laws work for those in the tech ecosystem. With the enactment of this law, the President has given a renewed assurance of the support of the government to promote the development of startups and the ecosystem at large.
As of July, six Nigerian states: Lagos, Yobe, Kaduna, Ekiti, Edo and Anambra were already in discussion and showed readiness to adopt the bill as it then was, once passed into law.
The participation of different states is of utmost importance for a nationwide effect.
With adoption from these states, one is expected to see a thriving tech ecosystem in the coming months, the birth of new startups, friendly government regulations, and an enabling environment.
What can we expect now from the Nigeria Startup Act?
1. Regulatory certainty
On the 5th of February 2021, the Central Bank of Nigeria (CBN) sent out a circular to commercial banks reminding them that “dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited” and ordered them to close any accounts transacting with cryptocurrencies.
This is just one of the many regulatory disruptive changes that have affected the Nigerian startup scene in recent years.
With the Nigeria Startup Act in place, the gap between startups and regulators would be bridged. The unclear regulatory framework concerning startups will be in the past as the law proposes a council made up of parties from the tech ecosystem and regulatory bodies working together to harmonize laws and policies.
2. Funding for startups
Under the Nigeria Startup Act, startups can access a special seed fund created for startups alone. This will make it easier for startups to fund their operations while leveraging these opportunities to scale.
Increased access to funding will enable growth in the ecosystem.
3. Tax incentives
Tax incentives can help startups preserve cash for reinvestment in the business.
Under the Act, Companies labelled as startups will benefit from some tax reliefs and incentives; these startups are eligible for pioneer status incentives and other reliefs.
This is a great way to encourage entrepreneurship and boost the startup ecosystem in the country. Startups are always on the lookout for funds. These tax incentives are a way for companies to save money and use it to further their business plans.
By implementing these objectives, the government plans to nurture a strong startup ecosystem, encourage innovation and increase sustainable economic development.
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