The Nigerian Startup Bill (NSB) has been signed into law by President Muhammadu Buhari. The announcement was made by Isa Pantami, Nigeria’s Minister of Communications Digital Economy through a tweet.
The law is set in place to govern the multi-billion dollar tech ecosystem in the country. This is coming after its first draft was published in May 2021. The law is also known as the Nigerian Startup Act of 2022.
Why it matters:
The initiative for the NSB was launched in May 2021, by the Presidency, in partnership with key stakeholders of the tech ecosystem including Ventures Platform founder Kola Aina and Future Africa founder Iyin Aboyeji, officials of the National Information Technology Development Agency (NITDA), and the Minister of Digital Economy Isa Pantami.
It had passed readings at both the senate and house of representatives. The signing of the Act would lead to the forming of a Council for Digital Innovation and Entrepreneurship. This council will be responsible for the formulation and provision of general policy guidelines for the realization of the objectives of the Bill and also give overall direction for the harmonization of laws and regulations that affect a startup.
The proposed Council will be led by the President of Nigeria, the Vice President, Ministers of Digital Economy, Finance, Trade and Investment, Science and Technology, the Governor of the Central Bank of Nigeria, three representatives of the Startup Consultative Forum, two representatives of the Nigeria Computer Society and the Director General of National Information Technology Development Agency–NITDA.
What is a Nigerian startup, according to NSB?
According to the Act, a (Nigerian) startup is an innovation or technology-driven company that meets the following criteria:
It is registered as a company under the Companies and Allied Matters Act and has been in existence for not more than ten (10) years from the date of its incorporation or registration.
It has as its objective, the innovation, development, production or improvement and commercialisation of an innovative product or process.The company has its headquarters in Nigeria.
It has at least 51% of its shares held by one or more Nigerians, provided that where the level of foreign participation exceeds this prescribed threshold, the entity may still be entitled to enjoy the benefits provided under the Act if the ultimate beneficial owners of its foreign shareholders are Nigerian citizens.
It has as its innovative product or process, new technology or a product/process which is technology-enabled.
Has at least 15% of its expenses attributed to research and development activities; and has less than 100 direct employees, excluding casual workers, consultants and personnel engaged through Business Process Outsourcing.
The Act has also been amended with existing relevant laws, including the Nigeria Data Protection Regulation 2019, Nigeria Export Processing Zones Act (NEPZA) and the Industrial Training Fund (Amendment) Act 2011.
With the signing of the bill as an act into law, it would seek to create a workable plan for the six (6) states who are currently in discussions to adopt the bill. This would serve as a breakthrough for other states to domesticate the bill.