The Nigerian tech ecosystem has recorded impressive growth in recent years, as envisioned by many startups — including five unicorns — and an impressive venture funding haul. Thanks to its large population and growth potential, Nigeria, which is considered Africa’s leading tech hub, has always had the largest share of startup funding on the continent.
Last year, Nigerian startups raised over $1.2 billion, according to data from Africa: The Big Deal, a newsletter that focuses on startup funding in Africa. A booming tech ecosystem and a large market, for sure, are a thing of pride. But whiplash government regulations and uncertain policies threaten Nigeria’s tech sector, though this situation is gradually changing.
In October 2022, the Nigeria Startup Bill (NSB), the messiah legislation many players in the tech ecosystem have billed as the long-awaited reform that the space needs, became the law of the land. Now the Nigeria Startup Act (NSA), the law — among other things — offers tax breaks for startups and their employees, a path to dialogue with government officials, and the Startup Investment Seed Fund for founders.
For the second instalment of our Policy and Tech series, Technext spoke exclusively to Victor Famubode, the Project Manager of the Nigeria Startup Act, about the law, the intersection between regulatory policies and the tech ecosystem, among other issues.
For Fabumode, an artificial intelligence (AI) policy researcher and digital government specialist, the Nigeria Startup Act represent “a support mechanism” for the Nigerian tech ecosystem, one that will foster greater collaboration between tech players and the government in the nearest future.
This interview has been edited for length and clarity.
You were deeply involved in the formulation of the Nigeria Startup Act. Walk me through the journey from the buildup to the point of its passage into law.
The Nigeria Startup Act took a bottom-to-top approach. That meant that the ecosystem was heavily involved in the whole process right from the start. Having looked at Nigeria’s thriving startup ecosystem and huge potential, it became essential for us to actually have a piece of legislation that can help improve the growth of the ecosystem and equally harness the potential of our digital economy.
Also, in Nigeria, we are still battling issues around regulatory uncertainties. This called for the need to have an act in place that actors in the ecosystem can fall back on to help them propel the level of growth that they need for their businesses.
So we brought everybody- government representatives and players in the ecosystem- together and started formulating the bill. We held focus group sessions with different stakeholder groups to get their input and town hall meetings across the country’s six geopolitical zones.
We equally engaged the concerned ministries, departments, and government agencies to see the blockers and enablers. These various inputs later became a draft bill adopted by the executive. It went through the usual scrutiny of the parliament, especially for such momentous legislation. Afterwards, it returned to the president for his assent and was signed into law in October 2022.
The whole process took 13 or 14 months — which was extremely fast. In fact, we initially gave ourselves a target of 6 months. But we are happy that, nonetheless, we were still able to achieve what we sought to do.
The Nigeria Startup Act is a landmark piece of legislation. Beyond its offerings, what would you say this law signifies for the ecosystem?
What it signifies is a support mechanism. You’d see that the entirety of the Nigeria Startup Act is about the government trying to support or collaborate with the ecosystem by filling some of the existing gaps.
First, it is an Act that brings everybody together, which means we can start talking about how best to reduce the trust deficit between the government and the ecosystem. Before now, when we had conversations about the ecosystem, we always took the government out of the picture, and it was because of distrust. The Nigeria Startup Act has brought the government closer to the ecosystem.
In truth, there is no ecosystem without the government. So it is important that the government become an enabler. The Nigeria Startup Act is a win-win: the ecosystem can now trust the government to deliver its end, and the government can equally understand how startups work.
One thing that stands out in the Nigeria Startup Act is the Startup Support and Engagement Portal, which means that we are moving to an era where the whole idea of government delivering public services will be digitized. This, for me, is a step in the right direction.
Whenever most players in the tech ecosystem hear the word “regulation”, it sends shivers down their spines, with many harbouring the fear of government control. What’s your take on this?
In terms of issues of government control, what people should do right now and going forward, is to demand more from the government. There must be a process when the tech ecosystem continues advocating for better policies. That way, we can bridge the gap regarding government control and its accompanying fear. What needs to be done is to continue to put the government on its toes. By doing that, the government becomes aware of the concerns of the startup ecosystem and sees the need to intervene accordingly.
It’s been three months since the bill was passed into law. What is the progress in its implementation?
We have already kickstarted the process of implementation. The National Information Technology Development Agency (NITDA), which happens to be the secretariat of the National Council for Digital Innovation and Entrepreneurship (one of the key provisions of the Nigeria Startup Act), is leading this process. Recently, we visited Tunisia — the only African country that has successfully implemented a startup act — to understudy what they are doing differently, particularly how the law is impacting their ecosystem.
We also visited some startups in the country, including InstaDeep, one of the success stories coming out of Tunisia and Africa at large. We observed that nearly all the startup founders we interacted with had good things to say about Tunisia’s startup act.
That same ownership mentality was what defined the Nigeria Startup Act. Any moment from now, the implementation itself will begin properly. However, I think the ecosystem should continue to ask questions about the progress of the Nigeria Startup Act and, more importantly, ensure that the government delivers on its promises to the ecosystem.
Lagos has already commenced the domestication of the Nigeria Startup Act. Are there plans to engage other states to follow suit?
For starters, I’d like to clarify something. It isn’t domestication. It’s more of localizing or adopting the Nigeria Startup Act. Of course, we have been working closely with the Lagos State Government through its Knowledge, Innovation, Technology, and Entrepreneurship (KITE) project. We are also doing what we call state adoption of the Act. Some states have already reached out to kickstart the process. Apart from Lagos, which is miles ahead, we have others like Kaduna, and Yobe states.
Read also: Tubosun Alake discusses government intervention and challenges of tech in Lagos
It’s often said that the Nigerian tech ecosystem’s success depends on the government to drive success through well-thought policies. What’s your take on this?
Before now, the government wasn’t fully carried along in the tech space. Most of the things we have been able to achieve so far have been majorly driven by the private sector — think of fundraising and interesting, innovative solutions built by startups, among others.
But this success story cannot be entirely complete without the government enabling the ecosystem’s growth. The role of the government is to help create more access to startups, even in the remote areas of the country, and ensure those startups gain from the benefits of policies like the Nigeria Startup Act.
We acknowledge that startups are very big in cities. However, we need to replicate this feat in other states where the ecosystem might not be as booming as Lagos. For instance, if we want to solve issues around poverty and unemployment, we look at the startup ecosystem because that is the engine of the growth we are looking for. And to achieve that, we need government participation as much as possible to ensure that they create that enabling environment across all boards. Now the Startup Act tries to provide an instrument to help with providing support to the ecosystem.”
Last December, the Securities and Exchange Commission (SEC) approved the listing of startups on the newly created Nigerian Exchange Technology Board. What are the implications of this move for the tech ecosystem?
It’s a confidence booster. That means that the government has created a special oversight for tech startups at the level of the SEC. It equally means that local investors can have confidence in our capital market. When we look at startups incorporated in places like Delaware, it’s because investors are sure that they have government backing in case issues arise. So, I think we should continue to build on these ideas around the intersection between policy and tech in Nigeria and ensure that we continue to grow as an ecosystem.
The 2023 elections are billed to hold next month, and a new president will emerge. Would a government change affect the implementation of the Nigeria Startup Act?
What I know is that the Nigeria Startup Act is a law that already exists. In terms of implementation, we are trying as much as possible to ensure things go according to plan. The Act serves as a blueprint, an instrument to improve the tech sector. For us, a change in government doesn’t stop the implementation. Even if a new government comes in and wants to continue from where we stopped, that’s fine. What is important is ensuring that they are improving on the existing standards. Notwithstanding, I think we should do our part as the private sector by asking the right questions.
How can the Nigerian tech ecosystem and the government build greater collaboration for the future?
We are doing that already, though it can get better. For instance, NITDA is at the forefront of the implementation of the Act. However, there is private sector support that is pushing the process. Even the learning trip to Tunisia involved NITDA, JICA, and the private sector — it just creates that balance. I believe that this culture of collaboration should be maintained. Everybody needs to get involved, own the process, and keep contributing in their own way.
Related article: How Nigerian startups attracted $1.2bn in funding in 2022.
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