The Nigerian former President, Muhammadu Buhari, signed into law the Nigerian Startup Act on October 19, 2022, one year after the commencement of deliberations by stakeholders in the burgeoning startup ecosystem in Nigeria. Certain provisions were made by the Act targeted at enhancing the growth of this sector in Nigeria after the country joined Senegal and Tunisia to establish related acts. This sector in Nigeria has taken the major stage in the economic development of the country by facilitating the transfer of value, creating jobs, and attracting foreign investments in the last decade.
However, development can most times be hindered by the policies of the government — a situation well known to business owners in Nigeria — which brought about the Act. In spite of the applause it garnered, the success mostly rests on collaboration and statewide adoption between federal units. Out of 36 States in Nigeria, 12 states expressed their interest in March this year concerning domestication of the Act. These twelve states include the startup capital of Nigeria, Lagos, Zamfara, Osun, Rivers, Oyo, Nassarawa, Niger, Imo, Anambra, Ekiti, Kwara, and Kaduna.
Council for Digital Innovation and Entrepreneurship.
Domestication of the Act has been done by Kaduna State — the very first of the twelve states to do so — after a law was signed for the Development of Tech-Enabled Startups in the state. The bill was signed by Senator Uba Sani, the state governor, on July 12, this year. The Senior Special Assistant on ICT to the Kaduna State Government, Shuaibu Kabir Bello, commented on the startup act that was signed into law, stating that implementation of every plan, law, or policy requires government institutions and structures, which is also the next step of the state. Also, the state hopefully aims to make itself a leading destination for investors and startups in the country.
This bill also aims to make the startup ecosystem in Kaduna to lead the digital technology centre in Nigeria, providing an enabling environment for the establishment, operations, and development of this sector in Kaduna. There would be an establishment of the Kaduna State Council for Digital Innovation and Entrepreneurship to achieve the goal and oversee the implementation of the objectives of the law. Twelve members will be assigned for the council, including the deputy governor and the commissioners for business innovation, and finance, planning and budget. Other members are three representatives from each of the three senatorial zones — one of whom must be a woman — two academicians in related fields, the Executive Secretary of Kaduna Investment Promotion Agency, the Managing Director of Kaduna Enterprise Development Agency and Directorate of Information and Communication Technology.
There will be an allocation of N250 million every year.
Moreover, the Kaduna Enterprise Development Agency will act as the secretariat of the councils. The responsibilities of the councils will have to do with advising the Council on the implementation of the law, maintaining a directory of startups, coordinating activities between the public and private sectors and labelling. It must be appropriately registered with the Kaduna Enterprise Development Agency and labelled by the National Information Technology Development Agency (NITDA), and 31 percent of the employees must be residents in Kaduna while a minimum of 51 percent shares ought to be owned by each person. A five year valid certificate will be issued to the eligible ones.
Creation of a Startups Grants and Investments Fund will be ensured to fund the early-stage businesses from the Sovereign Wealth Growth Fund and annual budget of the state. There would be a review every three years with allocation of N250 million yearly. A filmmaker and resident of Kaduna State, Ridwan Abdullateef, said that he has his own capital to run his own business and with the aid of incentives provided by the government, he believed that this sector will grow in the state. However, insecurity in the state can impede the execution of this goals due to the security report of the Q1 in 2023, giving details of 746 abduction and 214 death records in the state.
Partnership between the private sector and the government is crucial.
Additionally, another challenge that the state will encounter in the journey of startup is talent development, and the numbers of candidates in the state can only be used for nothing more than three startups. Also, the minimum cost of living when comparing Abuja and Lagos attracts many tech candidates to Kaduna. For instance, half of Lagos house rents (N850,000) is what is paid in Kaduna for the same accommodation. One of the biggest economies in Nigeria, with Nominal Gross Domestic Product of N3.1 trillion is Kaduna, capable of attracting investors. Partnership between the private sector and the government is crucial.
Nigeria startup act: Website