Nigeria’s President Muhammadu Buhari looks set to hand the country’s vibrant tech ecosystem an olive branch, following years of fraught relations with the sector.
The startup bill is expected to be signed into law next year as it awaits a vote by Nigerian parliament, The National Assembly, after winning cabinet approval.
The NSB will set in stone a new relationship between Nigeria’s regulators and startups, after the country’s executive approved a year long collaboration between the government and startup investors, law firms, entrepreneurs, policy advocacy groups.
The bill is not yet public, but according to those at the heart of the draft, it aims to create a new regulatory framework that allows emerging tech firms to thrive, by addressing challenges such as poor infrastructure, access to capital and high taxes.
As Africa’s top tech hub, Nigeria has homegrown four fintech unicorns Interswich, Flutterwave, Andela and Opay, who all achieved valuations of over $1 billion.
Despite their successes, acrimony abounds between Nigeria’s tech industry and the government, with tech firms accusing Abuja of stifling growth with an operating environment considered hostile to startups and investors.
Aggressive regulation on motorcycle taxis preceded Buhari banning Twitter for three months this year, after the social media giant removed a controversial post from the Nigerian president.
Laying further stumbling blocks, the Central Bank of Nigeria (CBN) asked commercial banks to stop facilitating cryptocurrency transactions in February, removing a critical financial artery at a time when the Naira devaluation was biting down on the Covid-struck economy.
In August, the Nigerian Information and Technology Development Agency proposed licensing fees for tech companies, the introduction of tax levies, and also prison sentences for those who defaulted on payments.
What will the NSB do?
Yet behind the scenes, the creators of the new startup bill and 300 volunteers have been clearing a pathway forward.
“The bill addresses startup levelling processes, where a startup is going to be labeled,” said Isa Ali Pantami, the minister for communication and digital economy, in an event in Lagos, last week.
“The bill also will establish the startup investment Seed Fund, where there is going to be a dedicated fund to be provided by the federal government for our young innovators all over the country… in order to begin their own process if they need that,” Pantami said.
Alongside a government seed fund which will increase access to capital, the NSB recommends tax holidays for up to four years for startups, and incentives to attract local and foreign investors.
Nigeria has over 1,200 startups according to Briter Bridges Intelligence, a London-based firm that tracks investments into Africa. This is the highest number on the continent, and the NSB’s implementation is set to ease doing business in the country, while removing the current state of regulatory confusion in which firms operate.
“The bill is being proposed to provide an enabling environment for the growth of startups and guard against different challenges faced, such as seemingly disruptive regulations, lack of regulatory certainty, and weak infrastructure like broadband, open data, and digital platforms that limit the optimisation of the many benefits of the digital economy,” says Kola Aina, Founder and General Partner of Ventures Platform Fund, and one of the contributors to the bill.
When parliament passes the NSB, Nigeria will join Senegal and Tunisia in enacting legislation designed to aid startups, as Abuja tries to diversify west Africa’s biggest economy. South Africa and Kenya continue to work on their own startup bills.
The big-tent approach to getting the bill into motion has shown a willingness on behalf of the Nigerian government to work with stakeholders, and “the inclusive nature of the bill is the result of a concerted lobbying effort by Nigeria’s tech entrepreneurs, to safeguard their livelihoods and the attractiveness of the Nigerian market,” says Joachim MacEbong, a senior analyst at SBM Intelligence.
If the NSB gets implemented into law, then the potential of Africa’s biggest tech ecosystem can be better harnessed. Friendly regulation, increased funding and an inviting investment climate will water the growth of the sector, and provide new jobs as talent development, and university-industry collaboration, forms part of the bill.
“Hopefully there are few landmines in the legislature – especially because it is a rubber stamp for the executive more or less – and the bill can pass swiftly, MacEbong told African Business.