The president assented to the Nigerian Startup Act, yesterday, the 19th of October, 2022. This new law basically, is to ameliorate the huddles technology innovation and tech-centric startups have been facing in Nigeria and make that sector highly attractive for investors both foreign and local investors to invest in it.
These are five key points of the new act that you may want to pay much attention to:
In order to attract foreign investors, the act provided in S.40 for easy repatriation of capital and profits by foreign investors. One of the major hurdles foreign investors encounter while investing in a Nigerian business is the repatriation of their capital and gains back to their home country. This law has made provisions to ensure that foreign investors will no longer encounter this challenge.
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This new act provides for Tax reliefs and other fiscal incentives like pioneer status schemes for tech startups in Nigeria. Although there are condition precedents before you can enjoy these incentives. Tech startups can enjoy tax breaks for a period of four after their inception/labeling years while their founders can also enjoy some tax reliefs. This is the provision of S. 24 of the act.
This new act established Startup Investment Seed Fund to provide capital/ seed funding for tech startups that may have struggles with raising seed capital for scaling. Every labeled startup is qualified and eligible to apply for this seed fund and this is the provision of S. 19 of the act.
Tech startups have access to grants and loans from CBN and other financial institutions of the government. Some of these loans are interest-free while some attract minimal interest and a flexible repayment period. This loan and grant are totally different from the seed funding we earlier talked about. This is the provision of S. 28 of the act.
Finally, for the purpose of driving technological innovations to the grassroots in Nigeria, this new act proposed the establishment of tech hubs and innovation parks across the 36 States of the federation and the federal capital territory. This is the provision of S. 43.