Nigeria’s Startup Act’s Impact on Innovation

March 14, 2024

In October 2022, Nigeria made a significant move to boost its innovation and technology sector with the enactment of the Nigeria Startup Act. This law can be a game-changer for Africa’s most populous country’s digital landscape, aiming to position Nigeria as a key player in Africa’s innovation and technology industry. At its core, the Act is about creating the right incentives and eco-system for startups to innovate and grow.

Key features of the Nigeria Startup Act

Under the Nigeria Startup Act, companies can be officially recognized as startups through a certification process, opening up new opportunities for local entrepreneurs. For example, SMEs can obtain a “Startup Label” from the National Information Technology Development Agency (“the Secretariat”), which is granted to companies meeting certain criteria. To be eligible, a company must be a limited liability entity registered under Companies and Allied Matters Act, 2020, operating for no more than ten years, and primarily engaged in developing digital technology products or processes. Additionally, it must have at least one Nigerian founder or co-founder with a stake in the company’s profits or revenue. The application process for this label involves submitting necessary documentation and fees on the startup portal.

Once a company fulfills all the requirements, it receives the startup label, valid for ten years. Companies with this label are eligible for the incentives provided under the Act, which range from tax relief, access to export facilities, access to government grants and loans, as well as incentives for investors in a labelled startup. The Act also establishes a startup portal, serving as a hub for registration, information exchange, and interaction among stakeholders in the startup ecosystem. Maintaining this label requires adherence to all relevant national business laws, regular reporting on various business aspects, and proper financial record-keeping.

The formation of the National Council for Digital Innovation and Entrepreneurship is one of the Act’s standout features. Chaired by the President of Nigeria, this council brings together top government officials and industry stakeholders. The role of this council is crucial: to set policies, align existing laws with startup needs, and provide financial support to the tech sector. Such measures can integrate government efforts with the dynamic world of startups.

Intellectual property

The Startup act also places a strategic focus on intellectual property (IP) rights, as set out in Section 31 of the Act, underscoring its critical role in the entrepreneurial landscape. A concerted effort is being made to not only encourage startups to harness and commercialize their IP assets, but also to facilitate their expansion into global markets. This initiative is marked by a collaborative effort with key institutions like the Nigerian Copyright Commission and the Trademarks, Patent, and Design Registries.

A notable development is the integration of a dedicated IP registration section on the Startup Portal, tailored specifically for startups that have achieved the requisite labeling. The Secretariat's involvement will be instrumental in helping these startups enter global markets, as it simplifies and streamlines the process for international trademark and patent registrations. This streamlined approach not only bolsters the framework for IP registration and protection but also amplifies the operational effectiveness and global market presence of Nigeria’s emerging startup sector. This progress is important considering Nigeria’s shift away from its economy’s dependence on oil, with the Information and Communication Technology (ICT) sector now contributing nearly 20% to the country’s GDP (in the second quarter of 2023).

Emphasis on technology

Technology transfer is another area the Act focuses on. The Secretariat, working with the National Office for Technology Acquisition and Promotion, aims to make it easier for startups to register technology transfers at a discounted fee. This move can help turn innovative ideas into marketable products and services, an essential process for startup growth. The Act also facilitates easier licensing procedures for fintech startups and aims to keep them informed about new regulations. This is done in collaboration with the Central Bank of Nigeria and the Securities and Exchange Commission, ensuring a regulatory environment that supports fintech growth.

What health startups are saying about the Nigeria Startup Act?

The Startup Act’s true measure of success will be how it influences the perceptions and operations within the startup ecosystem. Kemisola Bolarinwa, the founder and CEO of Nextwear Technologies, is a trailblazer in Nigeria’s fem-tech scene as the leader of the country’s first wearable technology startup. Nextwear Technologies’ product, the Smart Bra – a wearable, battery-operated device – is a significant innovation in the early detection of breast cancer, blending technology with a profound commitment to women’s health. WIPO’s Global Challenges Division has interviewed Ms. Bolarinwa as part of the WIPO Mission Imagination Series.

Ms. Bolarinwa expresses overall optimism that the Nigeria Startup Act can inspire startup initiatives across the country, potentially leading to a broader wave of technological and entrepreneurial growth in Africa. She notes that the law seems to have potential to attract investments and nurture startups. According to her, the widespread awareness of the Act is testament to the government’s successful efforts in promoting the law’s reach. “We’re not really exposed to it,” she observes about IP awareness. “Only a few innovators are aware of the need to protect their ideas. This lack of knowledge around intellectual property is significant. So, this bill is going to be a game-changer. It will support innovators who might have heard about IP but don’t fully understand it, or those who haven’t considered it at all.”

However, Ms. Bolarinwa points out some the gaps in the Act. She mentions the limited inclusion of startups in the health sector, suggesting this as a potential oversight in an otherwise comprehensive bill. She nonetheless notes that the view of Nigerian technology firms was taken into consideration while shaping the bill. “This collaboration between the government and key players in the tech sector underscores a partnership that’s vital for fostering a thriving tech ecosystem. It shows a symbiotic relationship where industry insights are integral to legislative processes”, she says.

Next steps

The Nigeria Startup Act signifies a substantial advancement in promoting innovation. This legislation can elevate Nigeria’s technology industry, particularly emphasizing the crucial role of intellectual property rights as underscored in WIPO’s engagements. Industry leaders like Kemisola Bolarinwa accentuate the Act’s potentially transformative impact, especially in promoting the understanding and application of IP rights in health- and technology-sector startups.