Thursday, August 11, 2022

FG Approves Tax Relief, Other Incentives For Startups

Startup

The Federal Government has approved a plan to incentivise and further harness Nigeria’s digital innovation and entrepreneurship ecosystem by granting tax relief and making other incentives available to the nation’s vibrant start-ups.

The approval was given by the Federal Executive Council sequel to the presentation of a memo by the Minister of Communications and Digital Economy, Prof. Isa Pantami during its meeting on May 18, 2022.

A statement by the minister’s technical assistant on research and development, Dr. Femi Adeluyi, said the approval 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 Nigerian economy in line with the National Digital Economy Policy and Strategy (NDEPS) for a digital Nigeria.

“A number of the 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,” it said.

The delegation, it said, included the director-general of NITDA, the executive vice-chairman of the Nigerian Communications Commission (NCC), the post-master general of the Federation 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 to achieve its full potential. The forum was attended by 143 ICT and startup companies.

“The delegation also paid a visit to 3 selected tech startups, namely: Flutterwave (currently valued at US$3 billion), Treepz (with current funding of US$3.1 million) and Reliance Health (with US$48.3 million in funding).

“It is worthy to note that under the able administration of President Muhammadu Buhari, Nigeria became home to 5 of 8 unicorns (startup companies valued at over US$1billion) on the African continent.  

“Furthermore, Nigeria’s startup ecosystem attracted about 35 per cent (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 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),” it added.

The statement further said that to further strengthen the ecosystem, the Federal Executive Council approved the following recommendations, in line with the Executive Order 003 and Presidential Order 005: 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) 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 to transform Nigeria into a country with a sustainable and thriving digital economy,” it added.

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