On the 19th of October 2022, President Muhammadu Buhari signed the Startup Act (the Act). The Act is a significant legislation for the Nigerian technology and innovation ecosystem as Nigeria has increasingly become a prime destination for startup funding in Africa despite inadequate regulatory framework. In 2021, out of the $4billion startup funding in Africa, Nigeria attracted the largest portion of $1.37 billion1 . Also, in 2021 several start-ups were each valued at $1billion (specifically Flutterwave (founded in 2016), Opay (founded in 2018) and Andela (founded in 2014)) with the space receiving over $1.3 billion in investment. The passing of the Act was therefore necessary to pave way for a legal and regulatory framework that offers clarity to the operations of startups in Nigeria.

We will commence this four-part series with an overview of the Act which will subsequently be followed by a review of the incentives available in the Act for startups. A key consideration for doing business in Nigeria is the sectoral regulatory framework, accordingly, the third series will examine the regulatory regime under the Act. In the concluding part of the series, we will focus on the financing regime proposed under the Act and highlight general financing options for Startups.

Objectives of the Act

The Act seeks to provide a legal and institutional framework particularly for the development of fintech startups in Nigeria. The other objectives of the Act include2:

  1. providing an enabling environment for the establishment, development, and operation of startups in Nigeria;
  2. fostering the development and growth of technology – related talent; and
  3. positioning Nigeria's start up ecosystem as the leading digital technology hub in Africa, having excellent innovators with cutting edge skills and exportable capacity.

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2. Section 1(1) Nigerian Startup Act, 2022

Originally Published 07 November 2022

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