The Federal Executive Council (FEC), Nigeria’s highest decision making organ, has approved pioneer status incentive and tax reliefs among other incentives to startups.
The approval, this week in Abuja, is part of government’s plans to incentivise and further harness Nigeria’s digital innovation and entrepreneurship ecosystem.
RELATED: Startup Bill to address 90% challenges confronting Nigerian innovators – Pantami
Based on a memo by the Minister of Communications and Digital Economy, Professor Isa Ali Ibrahim Pantami. to the FEC, the approval will enable the implementation of strategies to encourage, support the development and growth of more Innovation-Driven Enterprises (IDEs), which have the potential to create millions of additional jobs in the country.
According to Pantami’s memo, “this will also help to develop innovative solutions to societal problems, and rapidly grow, as well as diversify the Nigerian economy, in line with the National Digital Economy Policy and Strategy (NDEPS) for a Digital Nigeria.”
The memo reflects a number of the proposed strategies resulted based on “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. 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 (currently valued at US$3 billion), Treepz (with a current funding of US$3.1 million) and Reliance Health (with US$48.3 million in funding). It is worthy to that under the able administration of President Muhammadu Buhari, Nigeria became home to five of about eight Unicorns (startup companies valued at over US$1Billion) on the African continent.
“Furthermore, Nigeria’s startup ecosystem attracted about 35% (estimated at US$1.4Billion) of the over US$4Billion 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 (i.e. by 2025).”
According to a statement signed by Pantami’s Technical Assistant (Research & Development), Dr. Femi Adeluyi, “to further strengthen the ecosystem, the Federal Executive Council 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 (2) 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 (2) months.”
The Nigeria Startup Bill (NSB) has earlier been approved by FEC and forwarded to the National Assembly and the process is about 90% complete.
“The approval of the incentives at the FEC 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.”