Incentives under the Nigerian startup act, eligibility, and more.

Introduction

The Nigeria Startup Act 2022 (the ‘Act’) provides the legal and institutional framework for developing and operating startups in Nigeria in a bid to create an enabling environment for the establishment, development, and operation of startups in Nigeria.

Application

The Act applies to;

1. Companies that are labeled startups, i.e. Companies incorporated under the Companies and Allied Matters Act and granted the startup certificate by National Information Technology Development Agency. It is important to note that an holding company or subsidiary Company of an existing company may not qualify to be registered as a startup.
2. Organizations and establishments, whose activities affect the creation, support, and incubation of labeled startups in Nigeria.

Key Highlights of the Act:

1. The Council & the Secretariat:

The Act established ‘The National Council for Digital Innovation and Entrepreneurship’ (the ‘council’) headed by the President and Vice-President of Nigeria in the capacity of Chairman and Vice-Chairman, respectively.  Section 9 of the Act also designates the National Information Technology Development Agency (NITDA) as the Secretariat of the Council (the ‘Secretariat’).

2. The support portal & the Consultative Forum:

Subject to the Council’s approval, the Secretariat is to set up the Startup Support and Engagement Portal to make it easy and simple for startups to register with regulatory agencies, receive start-up labels, licenses, and permits, access tools and resources, resolve complaints, etc, in addition, the “Startup Consultative Forum” the forum will provide labeled startups necessary information required to carry out their business and take advantage of government incentives.

3. Startup Label Certificate and Startup Register:

The Act provides that subject to fulfillment of stated requirements, the coordinator shall with the approval of the Secretariat enter the name and particulars of the applicant in the register of startups and issue to the startup, a startup label. (Startup certificate).

4. Incentives: Tax and Fiscal Incentives:

The Act provides for various tax and fiscal incentives like seed funding, private equity funds, accelerators, incubators, etc.

5. Training:

The Act provides for the training and capacity-building of startup employees to be facilitated by the Industrial Training Fund and other organizations that partner with the Secretariat, for the training of entrepreneurs and their employees.

6. Establishment of a Technology Development Zone:

The Act provides that the Secretariat is to collaborate with the Nigeria Export Processing Zones Authority to establish a Technology Development Zone in Nigeria to spur the growth and development of startups, accelerators, and incubators.

Eligibility:

A startup is eligible for labeling and other incentives under the Act if it meets all of the following requirements.

1. It is registered as a limited liability company under the Companies and Allied Matters Act
2. It has been in existence for a period not more than 10 years from the date of incorporation.
3. The object of the Startup includes innovation, development, production, improvement, and commercialization of a digital technology innovative product or process.
4. It holds or owns a product or process of digital technology or a registered software.
5. It has at least one-third of local shareholding held by one or more Nigerians as founder or co-founder.
6. In the case of a sole proprietorship or partnership, the Startup satisfies conditions set out in paragraphs 3, 4, and 5 of the eligibility requirements listed above.

Incentives

Incentives available to startups under the act are as follows:

1. Capital investment & financing through the Startup Investment Seed Fund.
2. Assistance in Intellectual Property Rights Protection, in addition to this, measures are put in place to prevent the infringement of the intellectual property rights of Labelled Startups.
3. Discounts and technical assistance in the transfer of foreign technologies.
4. Repatriation of Capital and Profits is guaranteed at the official conversion rate provided that the investor presents a Certificate of Capital Importation.
5. Access to Export Facilities and financial assistance from the Export Development Fund, Export Expansion Grant, and the Export Adjustment Scheme Fund.
6. Establishment of National accelerator and incubator programs that will grow the startup ecosystem to resolve operational challenges and serve as breeding hubs for the startups
7. Training and Talent Development of employees of labeled startups, etc.

It is important to note that only a labeled startup can enjoy the incentives provided in the Act.

If you would like to know more about your startup’s eligibility, and other available incentives, or require legal advice with regard to the Nigerian Startup Act, please contact info@berkeleylp.com

The information provided in this article is for general informational purposes only and does not constitute legal advice.