Regulatory uncertainty has caused the chequered relationship between the Nigerian startup ecosystem and the state, which is one of the problems the Nigerian Startup Bill (NSB) is expected to solve.
It doesn’t take much to analyse the political factors that affect the Nigerian startup ecosystem, with numerous examples of how the ecosystem and government/regulators have not often seen eye to eye.
Lagos state halted the mini-boom of bike-hailing startups when it announced a ban on commercial motorcycles and tricycles in the city’s major residential and business districts in January 2019. The Central Bank of Nigeria (CBN) did the same thing to cryptocurrency startups when the apex bank banned the sale and exchange of cryptocurrency. Digital media startups and Nigerians had to access Twitter with VPNs during the Nigerian government’s eight-month ban on the social media platform.
In each case, startups affected by these regulations and bans had to innovate with their products. Most ride-hailing companies pivoted to logistics, peer-to-peer trading became popular in the cryptocurrency community, while VPNs became the most downloaded apps during the Twitter ban.
Imagine having to spend months, sometimes years, to launch a startup with your product, only to have it all shut down or forced to pivot due to a government policy or regulation. This situation has been a significant challenge and often casts a tremendous pessimism on PESTLE Analysis reports of the Nigerian startup ecosystem.
This regulatory uncertainty has caused the chequered relationship between the Nigerian startup ecosystem and the state, which is one of the problems the Nigerian Startup Bill (NSB) is expected to solve.
The Nigerian Senate, on Wednesday, June 20, 2022, passed the bill after almost four months that the bill reached the National Assembly, accompanied by a letter from the Presidency. 30 leaders in the Nigerian tech ecosystem, including Adia Sowho of MTN, formerly of Thrive Agric, Iyin Aboyeji, founder of Future Africa, Tomiwa Aladekomo of Big Cabal Media, etc., in collaboration with the Office of the President of the country and Minister of Digital Economy, Isa Pantami drafted this Startup Bill.
It was first submitted to the Presidency and the Federal Executive Council (FEC) in October 2021 and approved by the FEC three months later. In February 2022, Nigerian President Muhammadu Buhari passed the bill to the National Assembly, which was received by the Nigerian Senate a month later.
Having passed the Nigerian Senate, the bill is expected to pass through three readings in the lower chamber of Nigeria’s bicameral National Assembly, the House of Representatives (HoR). If passed by the HoR, the bill will be sent to the president for his assent before it becomes law.
The Startup Bill is one everyone in the ecosystem should keep an eye on because it addresses the gap between startups and regulators. The bill checks the harmful regulations that stifle startups while regulations are co-created by the Nigerian tech ecosystem and the regulators.
The main objectives of the bill are to provide an enabling environment for the establishment, development and operation of startups in Nigeria, foster the development and growth of technology-related talent and position Nigeria’s startup ecosystem as the leading digital technology hub in Africa.
These objectives tie around improving the relationship between the ecosystem and the state, leading to the whole ecosystem enjoying incentives like tax breaks, government loans, credit guarantee schemes, training, capacity building and development.
When this bill finally passed into law, startups registered as a Limited Liability company under the Companies and Allied Matters Act 2020, have not been in existence for more than 10 years, with innovative technological products, and with at least 51% of their shares held by one or more Nigerians are eligible to benefit.