The Nigerian start-up ecosystem is experiencing remarkable growth, with increasing numbers of entrepreneurs launching innovative businesses. In recognition of this surge, the Nigerian government passed the Nigeria Start-Up Act (NSA) 2022 to create an enabling environment that fosters the growth and development of start-ups. This article explores the key provisions of the NSA and their potential impact on start-ups and entrepreneurship in Nigeria.
What is a Start-Up?
Under the NSA, a start-up is defined as a company that has been in existence for no more than 10 years, primarily engaged in the creation, innovation, production, or adoption of a unique digital technology product, service, or process. For companies to be recognized as start-ups, they must obtain a start-up label, which is only granted when specific criteria are met. These criteria include having a Nigerian founder, owning registered software, or being a holder of digital technology products or intellectual property with a focus on innovation and research.
Implementation of the Act
The National Council for Digital Innovation and Entrepreneurship is tasked with implementing the NSA’s provisions, overseeing the labelling of start-ups, and maintaining a directory of start-ups, incubators, and accelerators. The Council will also work with key stakeholders to provide funding and mentorship opportunities. Additionally, the Act introduces the Start-Up Support and Engagement Portal (SSEP), a platform designed to streamline the start-up labelling process and enhance collaboration between regulators and entrepreneurs.
Fiscal Incentives under the Act
One of the NSA’s most appealing provisions is the offering of fiscal incentives to eligible start-ups. These companies can enjoy various tax reliefs, including exemptions from income tax for up to five years. The Act also facilitates access to Pioneer Status Incentives (PSI) from the Nigerian Investment Promotion Commission (NIPC), providing additional tax exemptions and making it easier for start-ups to reinvest in their research and development activities.
Access to Funding under the Act
Financing is critical to the success of start-ups, and the NSA addresses this by creating a Start-Up Investment Seed Fund managed by the Nigeria Sovereign Investment Authority. This fund, which allocates at least ten billion naira annually, provides both equity and debt financing to help start-ups scale. Furthermore, start-ups can access additional funding through loans and grants from the CBN, the Bank of Industry, and other SME-supporting institutions. The Act also opens avenues for start-ups to raise capital through crowdfunding platforms.
Conclusion
The Nigeria Start-Up Act 2022 represents a significant step forward in supporting the nation’s entrepreneurial ecosystem. Its provisions for fiscal incentives, access to funding, and support for innovation position Nigeria as a fertile ground for start-ups. However, improvements could be made, particularly in areas such as intellectual property rights protection. The success of the Act will largely depend on the seamless collaboration among government agencies and the contribution of the private sector.
At Moland Partners, we specialize in offering legal advisory services for start-ups, including regulatory compliance, IP protection, and securing financing. If you’re a start-up seeking expert guidance on navigating the Nigerian Start-Up Act and ensuring your business’s growth, our team is here to support you every step of the way. Contact us todayÂto unlock your company’s potential in this vibrant ecosystem.
