Nigeria as Africa’s Startup Destination: FG Approves Tax Reliefs, Others

By Dwelleth Morountodun

With the ironclad determination of its burgeoning start-up youths and their groundbreaking innovativeness within the continent’s ICT landscape, Nigeria is no doubt inching towards becoming Africa’s definitive hub for Africa’s startups and innovators.

The question however, is can Nigeria beat Kenya, South Africa, Egypt and few others to the number status?

To further encourage the youth toward the realization of the National Digital Economy and Strategy Policy (NDEPS) drive, the Federal Executive Council (FEC) on Wednesday approved a plan to incentivise and harness Nigeria’s burgeoning digital innovation and entrepreneurship ecosystem.

This followed the presentation of a memo by the Minister of Communications and Digital Economy, Professor Isa Ali Ibrahim Pantami, during its meeting during the week.

The Technical Assistant Research and Development, to the Minister of Communications and Digital Economy, Dr. Femi Adeluyi, said the approval will enable the implementation of strategies to encourage and support the development and growth of more Innovation-Driven Enterprises (IDEs), which have the potential to create millions of additional jobs in the country.

This, he said will also help to develop innovative solutions to societal problems, and rapidly grow, as well as diversify the Nigerian economy, in line with NDEPS for a Digital Nigeria.

A number of the proposed strategies resulted from recommendations that were made at an interactive forum held on 22nd February 2022, where the Minister led a Federal Government Delegation on a working visit to the Lagos digital innovation ecosystem.

According to him, the visit provided a useful platform for open and interactive discussions on the ecosystem’s pertinent challenges and interventions required from the government to enable the ecosystem achieve its full potential. The forum was attended by 143 ICT and Startup Companies.

The delegation also paid a visit to 3 selected tech startups, namely: Flutterwave (currently valued at $3 billion), Treepz (with a current funding of $3.1 million) and Reliance Health with $48.3 million in funding).

Recall that under President Muhammadu Buhari, Nigeria became home to 5 of about 8 Unicorns (startup companies valued at over $1 billion) on the African Continent. 

Furthermore, Nigeria’s startup ecosystem attracted about 35% (estimated at US$1.4 billion) of the over US$4 billion raised by African startups, which is the highest raised by any startup ecosystem on the continent. Most importantly, it has created a significant number of jobs. For instance, Jumia, an indigenous e-Commerce company, provides over 3,000 direct jobs according to Jobberman’s 2020 Digital Sector Report. The report also asserts that the Nigeria’s Digital Economy has the potential to create an average of 1.3million tech-enabled jobs across industries in 5 years.

To further strengthen the ecosystem, FEC approved the following recommendations,  in line with the Executive Order 003 and 005: that the Federal Ministry of Finance, Budget and National Planning and the Nigerian Investment Promotion Commission (NIPC) should prioritise the granting of tax Reliefs and other Incentives such as the Pioneer Status Incentive (PSI) Scheme to the technology and innovation ecosystem, that the Nigerian Copyright Commission, the Trademarks Registry, and the Patents and Designs Registry should work with the National Information Technology Development Agency (NITDA) in developing an Intellectual Property (IP) Framework for the Technology and Innovation Ecosystem within 2 months.

He added that the Bureau of Public Procurement (BPP) should work with NITDA to develop a framework that will ensure the involvement of technology innovation startups in government procurement processes to encourage ideation, innovation and design of solutions to solve development challenges within 2 months.

The Nigeria Startup Bill (NSB) was earlier approved by FEC and forwarded to the National Assembly and the process is about 90% complete. 

The approval of the incentives at the Council will consolidate the gains recorded for far in the NSB process.

The implementation of NDEPS emphasises the importance of the innovation and startup ecosystem to the development of an indigenous digital economy.

According to Adeluyi, the Ministry will continue to position Nigeria to develop this ecosystem in order to transform Nigeria into a country with a sustainable and thriving digital economy.

However, the overarching role of the National Office for Technology Acquisition and Promotion (NOTAP) as currently being driven by Dr. DanAzumi Mohammed Ibrahim, its CEO under the Ministry of Science, Technology and Innovation (STI) cannot be overlooked.

NOTAP, is government agency that regulates all technology transfers into the country to ensure that they are done in line and in conformity to the country’s law even though it has saved the country humongous monies that would have been exported out of the country as capital flight.

The agency through its statutory functions has grown Nigeria’s Intellectual Property Rights from 6 in 2006 to 60 in 2016, it is therefore in pursuant of the knowledge-based economy the ecosystem synergise to fast track Nigeria as a leader Africa’s innovation hub.

 Dr. Femi Adeluyi Technical Assistant (Research & Development) to the Minister of Communications and Digital Economy 18th May, 2022.

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