E-Business
Improving the Startup Environment with Nigerian Startup Act
By Lere Ojedokun
On October 19, 2022, the Nigerian technology and innovation space, and in particular the tech-enabled startup ecosystem received a major boost when President Muhammadu Buhari signed the Nigeria Startup Bill (NSB) into law.
With the presidential assent, the Nigeria Startup Act (NSA 2022) came into effect, principal objective of which is to further grow the country’s ICT sector which, according to the Minister of Communications and Digital Economy, Prof. Isa Pantami, contributes 40 per cent to the Gross Domestic Product (GDP) annually, with 18.42 per cent already recorded in 2022 alone.
He added that the new act – a joint initiative by Nigeria’s tech startup ecosystem and the Presidency, was aimed at harnessing the potential of Nigeria’s digital economy through co-created regulations, and to emplace well-laid laws and regulations that work for all stakeholders in the tech ecosystem.
Pantami also said the act provides the legal and strategic framework for innovators to make their contributions to the country, stating that out of the seven unicorns in Africa, five are from Nigeria, and that the market value of each unicorn is worth US$1billion.
In a nutshell, the intention of the Nigerian Startup Act 2022 includes recognition of legally incorporated tech startups 10 years downward, whose activities support the creation and incubation of innovations and tech solutions.
It further seeks to provide an enabling environment for the establishment, development, and operation of startups; provide for the development and growth of technology-related talent; and position Nigeria’s startup ecosystem as the leading digital technology centre in Africa.
To achieve the intended objectives, the act makes provisions for the establishment of a startup seed fund; tax incentives for startup businesses, new employees and angel investors, accelerators, and venture capitalists; training and capacity building support; as well as facilitating smooth working relationships between startups and relevant government agencies.
Startups under the Nigerian Startup Act 2022 are defined as any company in existence for not more than 10 years, with its objectives being the creation, innovation, production, development, or adoption of a unique digital technology innovative product, service, or process.
This definition connotes that the Act will apply to tech-enabled startups, that is, companies like Alerzo, Kuda, Bamboo, etc that leverage innovations and technological advancements to solve operational issues or improve customer experience.
The new act, indeed, is a huge step towards addressing the yearnings of players and stakeholders for a more enabling operating environment. This is more so, because, despite the huge socio-economic potential and benefits that digital innovations, products and services can offer Nigeria’s economic recovery and growth, the space is fraught with certain challenges.
For instance, McKinsey & Company in a report, Harnessing Nigeria’s Fintech Potential (September 2020), stated that Nigeria is home to over 200 fintech standalone companies offering fintech solutions, plus fintech solutions offered by banks and mobile network operators. The report added that the Nigerian fintechs raised more than US$600 million in funding between 2014 and 2019.
Quartz Africa, however, lamented the high failure rate of Nigerian startups. It said 61 per cent startup failure rate was recorded from 2010-2018 due to various factors including poor infrastructure such as roads, inefficient electric power, inconsistent government policies, regulatory bottlenecks, over-saturation of startups in select locations, dearth of talent, high operating cost, funding challenges, etcetera.
It is gratifying also that tech-backed B2C and B2B e-commerce startups like Alerzo (AlerzoShop), TradeDepot, Omnibiz, Njalo etcetera are also among the principal beneficiaries of the new act. As an important driver of the digital economy, they also face similar challenges of policy inconsistency, lack of access to funding, exclusion from official foreign exchange window, high lending rate by commercial banks, high operating cost, poor supporting infrastructure, overlap in regulation by government agencies, multiple taxations and insecurity, amongst others.
The new act offers the much-sought political will towards addressing the challenges of tech startups. It is also an acknowledgement of the significance of tech-enabled startup businesses as enablers of national socio-economic growth which e-commerce platforms are a part of.
Despite the challenges in the emerging B2B e-commerce ecosystem, the resilience of the segment as a significant contributor to the manufacturing and distribution value chain is never in doubt. Over the past years, operators have consistently invested in ICT infrastructure and human capital to impact the entire value chain – manufacturers, distributors and retailers – by enabling Factory-to-Retail distribution for consumer goods companies.
Nigeria’s informal retail market is estimated to worth US$100 billion, yet faces peculiar challenges including limited inventory, lack of access to finance for expansion, unregulated and clustered market, distance to market or supply source and high transportation cost, all of which increase cost of operation.
Alerzo is prominent among the tech-enabled e-commerce platforms that are empowering informal retailers in the sub-urban and rural areas with faster distribution of consumer goods using first-party relationship platforms, enabling manufacturers and top-tier primary suppliers to clear their inventory faster, while it absorbs the burden of last-mile supply and delivery to the retailers. The new Act could enable it to do more when the cost of doing business is low.
During COVID-19 and post-pandemic, Alerzo helped to bridge the demand-supply shortfalls by leveraging its ecosystem of digital solutions and logistics platforms to empower informal retailers to access a wide assortment of consumer products with ease and faster from FMCG companies such as Flour Mills, Unilever, Nestlé, Procter & Gamble, PZ Cussons and Dangote at zero delivery cost to the retailers.
More angel investors, accelerators and venture capitalists partnering with B2B e-commerce platforms like Alerzo and others in critical areas such as logistics and warehousing services would mean more goods will pass through the supply chains faster to the consumers.
Businesses will reduce their operating cost and increase profitability; more jobs will be created, economic wealth will be distributed to more people; quality of life will improve, while the economy will be significantly impacted.
The act, by offering incentives, provides a buffer for startup businesses like Alerzo to achieve stability or withstand macroeconomic headwinds. Incentives like pioneer status for tech businesses aged zero to 10 years in critical industries like technology and agriculture and possible tax holiday, up to between three and five years, are highly commendable.
Also allowing startups to employ entry level talent with no more than three-years of post-graduation experience and offering income tax relief up to five per cent of profit generated, and Personal Income Tax relief of 35 per cent for two years for such employees can help them attract the right talents.
By enabling angel investors, accelerators, and venture capitalists to enjoy tax credits, up to 30 per cent of their investment in a startup, can attract more investors into the segment.
The future of tech startups in Nigeria is bright, no doubt. McKinsey & Company, in the report cited earlier, revealed that Nigeria’s fintech ecosystem attracted US$122 million, representing 25 percent of US$491.6 million total funds raised by African tech startups in 2019 alone, coming second to Kenya which attracted US$149 million.
It noted further that Nigerian startups retained US$1.37 billion of Africa’s US$4 billion funding in 2021, showing that Nigeria has the highest volume of startups in Africa. Quartz Africa further affirmed Nigeria as hosting the most startups in
Thus, Nigeria Startup Act 2022 can be a stimulus to accelerate the growth of Nigeria’s tech startups to an enviable height in the not-too-far foreseeable future.
Ojedokun, a policy analyst and development advocate, contributes this piece from Lagos.
The federal government and the United Kingdom signed an agreement Tuesday to combat the growing threat of cyber-crime. The Memorandum of Understanding was signed following a courtesy visit by David George Hanson, minister of the home office, UK, to the Nigeria Police Force headquarters, Louis Edet House in Abuja.
Transnational crime is a big problem for both the UK and Nigeria, so the governments intend to strengthen existing collaboration efforts to crack down on cyber-criminals and protect their industries from unlawful activities.
Offences such as online fraud, identity theft, digital extortion, and ransomware , operate across many jurisdictions, and frequently necessitate sophisticated cooperation efforts, according to the two governments during a press conference.
Furthermore, Lateef Fagbemi, Nigeria’s attorney-general and minister of justice, established the Joint Case Team on Cybercrime, which aims to address the need for a coordinated and robust approach to combating cybercrime, as stated in the Cybercrimes Act of 2015, which criminalises cyber-related offences.
Hanson underlined the importance of ongoing cooperation efforts to combat international crime in a number of areas, affecting vulnerable individuals.
He said: “We need to look again at how we can build cooperation between the Federal Government, the federal police, and our police forces and National Crime Agency to take action against these international criminals, who are exploiting vulnerable people in a whole range of areas. The National Crime Agency, the Home Office Fraud Department, and the High Commission need to make sure we make a big impact on this transnational crime.”
“The collaboration between the Nigerian Police Force and National Crime Agency continues to serve as a model in international law enforcement cooperation. We have successfully conducted joint operations into many cases of cybercrimes and online fraud. With your [UK government] cooperation, we have continued to bust other criminal networks around the world,” added inspector-general of Nigerian Police Force, Kayode Adeolu Egbetokun.
Corporate Affairs Commission (CAC) has reaffirmed its commitment to enforcing business registration laws in Nigeria, warning that individuals and organizations operating unregistered businesses will face prosecution.
In a statement, the CAC emphasized that conducting business without proper registration violates the Companies and Allied Matters Act (CAMA) 2020, undermining transparency and accountability in the corporate sector.
The commission stressed that registration is not only a legal requirement but also a gateway to formal business opportunities, including access to bank loans, government grants, and partnerships.
The enforcement drive will be nationwide, targeting small and medium-sized enterprises (SMEs), online vendors, and informal traders who have failed to comply despite previous awareness campaigns and registration amnesty windows.
The CAC disclosed that enforcement teams, in collaboration with security agencies, will be deployed to identify and prosecute defaulters.
The commission urged business owners to take advantage of its simplified registration platform to regularize their status, noting that compliance will boost investor confidence and improve Nigeria’s ease of doing business. It warned that ignorance of the law will not be accepted as an excuse.
Business owners are advised to act promptly to avoid legal consequences, as the CAC moves to ensure a more structured and regulated business environment in Nigeria.
Nigerian Copyright Commission (NCC) has pledged to enforce its legal obligations to combat online intellectual property infringement and urged commercial music users to obtain proper licences from rights holders or their representatives.
The Commission stated that this ensures creators are fairly compensated, supporting the music industry’s sustainable growth.
In a statement commemorating the 2025 World Intellectual Property Day, themed “IP and Music: Feel the Best of IP,” the NCC announced plans to enforce the Copyright Act 2022, which allows for the takedown of infringing materials and blocking of websites hosting illegal content.
Signed by Mrs Ijeoma Egbunike, director of Public Affairs, the statement outlined an aggressive anti-piracy campaign in collaboration with the private sector, targeting the online environment.
Egbunike affirmed the NCC’s commitment to establishing enforceable standards for transparency, digital audits, and real-time royalty reporting to protect creators’ rights. She stated, “The NCC will continue to champion policies that support the growth of the music industry, improve the livelihoods of Nigerian musicians, and foster a culture of creativity and respect for intellectual property.”
Despite the global success of Afrobeats and other Nigerian genres, the NCC noted that many musicians face low royalty returns due to rampant digital piracy.
To address this, the Commission revised its Collective Management Regulations to enhance transparency and accountability among Collective Management Organisations (CMOs).
The NCC emphasised that proper licensing is a legal obligation and vital for Nigeria’s creative economy, stating, “Music must feel the beat of intellectual property for the full potential of creativity to be realised.”
The Commission highlighted that creators’ livelihoods depend on fair royalty compensation.
Recent enforcement measures include the NCC’s designation by the Attorney-General of the Federation as an authority under the Proceeds of Crime (Recovery and Management) Act 2022.
This, combined with the Copyright Act 2022, empowers the NCC to order takedowns and block illegal music distribution websites.
NITDA Inaugurates Start-up Consultative Forum
NFIU Alerts Nigerians of Rising Ponzi Schemes, Unregulated Crowdfunding Scams
Firm Warns Against AI Password Generation @ World Password Day
FG Partners UK to Combat Cross-border Cyber-crime
CBN Slams ₦250m Fine on Paystack Over Zap Wallet Operations
News3 days agoNBC Loses Appeal as Tribunal Upholds ₦190m Fine for Misleading Packaging
Telecom3 days agoMTN’s Talent Hunt Returns: A Stage for Nigeria’s Next Creative Stars
E-Financial22 hours agoCBN Slams ₦250m Fine on Paystack Over Zap Wallet Operations
E-Business2 days agoCAC to Prosecute Business Owners Operating Without Registration
Telecom2 days agoEmerging Technologies, Cybersecurity, Others Form Key Focus of NCA 2003 Review
E-Financial3 days agoCBN Urges Banks to Source FX for PAPSS Settlement Through NFEM
News3 days agoUS Identifies Corruption as Key Barrier to Trade and Investment in Nigeria
General News22 hours agoNITDA Inaugurates Start-up Consultative Forum