The Federal Government has approved tax reliefs and other incentives for tech startups to harness the potential of the sector.
The approval was given by the Federal Executive Council (FEC) to further harness the country’s digital innovation and entrepreneurship ecosystem, during its meeting following the presentation of a memo by the Minister of Communications and Digital Economy, Prof Isa Pantami.
The gesture 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 will also help to develop innovative solutions to societal problems, and rapidly grow, as well as diversify the economy, in line with the National Digital Economy Policy and Strategy (NDEPS) for a Digital Nigeria.
Some of proposed strategies resulted from recommendations that were made at an interactive forum held on February 22, 2022, where the minister led a Federal Government delegation on a working visit to the Lagos digital innovation ecosystem. The delegation included the Director-General of NITDA, the Executive Vice Chairman of the Nigerian Communications Commission (NCC), the Post-Master-General and the Managing Director of Galaxy Backbone Plc. 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 three selected tech startups, namely: Flutterwave, valued at $3 billion; Treepz, with a funding of $3.1 million and Reliance Health, with $48.3 million in funding. It is worthy to note that under the administration of President Muhammadu Buhari, Nigeria became home to five of about eight Unicorns-startup companies valued at over $1 billion, on the African continent.
Furthermore, Nigeria’s startup ecosystem attracted about 35 per cent, estimated at $1.4 billion, of the over $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 Nigeria’s Digital Economy has the potential to create an average of 1.3million tech-enabled jobs across industries in five years (that is by 2025).
To further strengthen the ecosystem, FEC approved the following recommendations, in line with the Executive Order 003 and Presidential Order 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 two months; and 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 two months.
The Nigeria Startup Bill (NSB) was earlier approved by the Federal Executive Council and forwarded to the National Assembly and the process is about 90 per cent complete. The approval of the incentives at the Council will consolidate the gains recorded for far in the NSB process. The implementation of the National Digital Economy Policy and Strategy (NDEPS) emphasises the importance of the innovation and startup ecosystem to the development of an indigenous digital economy. 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.