E-Business
Improving the Startup Environment with Nigerian Startup Act
By Lere Ojedokun
On October 19, 2022, the Nigerian technology and innovation space, and in particular the tech-enabled startup ecosystem received a major boost when President Muhammadu Buhari signed the Nigeria Startup Bill (NSB) into law.
With the presidential assent, the Nigeria Startup Act (NSA 2022) came into effect, principal objective of which is to further grow the country’s ICT sector which, according to the Minister of Communications and Digital Economy, Prof. Isa Pantami, contributes 40 per cent to the Gross Domestic Product (GDP) annually, with 18.42 per cent already recorded in 2022 alone.
He added that the new act – a joint initiative by Nigeria’s tech startup ecosystem and the Presidency, was aimed at harnessing the potential of Nigeria’s digital economy through co-created regulations, and to emplace well-laid laws and regulations that work for all stakeholders in the tech ecosystem.
Pantami also said the act provides the legal and strategic framework for innovators to make their contributions to the country, stating that out of the seven unicorns in Africa, five are from Nigeria, and that the market value of each unicorn is worth US$1billion.
In a nutshell, the intention of the Nigerian Startup Act 2022 includes recognition of legally incorporated tech startups 10 years downward, whose activities support the creation and incubation of innovations and tech solutions.
It further seeks to provide an enabling environment for the establishment, development, and operation of startups; provide for the development and growth of technology-related talent; and position Nigeria’s startup ecosystem as the leading digital technology centre in Africa.
To achieve the intended objectives, the act makes provisions for the establishment of a startup seed fund; tax incentives for startup businesses, new employees and angel investors, accelerators, and venture capitalists; training and capacity building support; as well as facilitating smooth working relationships between startups and relevant government agencies.
Startups under the Nigerian Startup Act 2022 are defined as any company in existence for not more than 10 years, with its objectives being the creation, innovation, production, development, or adoption of a unique digital technology innovative product, service, or process.
This definition connotes that the Act will apply to tech-enabled startups, that is, companies like Alerzo, Kuda, Bamboo, etc that leverage innovations and technological advancements to solve operational issues or improve customer experience.
The new act, indeed, is a huge step towards addressing the yearnings of players and stakeholders for a more enabling operating environment. This is more so, because, despite the huge socio-economic potential and benefits that digital innovations, products and services can offer Nigeria’s economic recovery and growth, the space is fraught with certain challenges.
For instance, McKinsey & Company in a report, Harnessing Nigeria’s Fintech Potential (September 2020), stated that Nigeria is home to over 200 fintech standalone companies offering fintech solutions, plus fintech solutions offered by banks and mobile network operators. The report added that the Nigerian fintechs raised more than US$600 million in funding between 2014 and 2019.
Quartz Africa, however, lamented the high failure rate of Nigerian startups. It said 61 per cent startup failure rate was recorded from 2010-2018 due to various factors including poor infrastructure such as roads, inefficient electric power, inconsistent government policies, regulatory bottlenecks, over-saturation of startups in select locations, dearth of talent, high operating cost, funding challenges, etcetera.
It is gratifying also that tech-backed B2C and B2B e-commerce startups like Alerzo (AlerzoShop), TradeDepot, Omnibiz, Njalo etcetera are also among the principal beneficiaries of the new act. As an important driver of the digital economy, they also face similar challenges of policy inconsistency, lack of access to funding, exclusion from official foreign exchange window, high lending rate by commercial banks, high operating cost, poor supporting infrastructure, overlap in regulation by government agencies, multiple taxations and insecurity, amongst others.
The new act offers the much-sought political will towards addressing the challenges of tech startups. It is also an acknowledgement of the significance of tech-enabled startup businesses as enablers of national socio-economic growth which e-commerce platforms are a part of.
Despite the challenges in the emerging B2B e-commerce ecosystem, the resilience of the segment as a significant contributor to the manufacturing and distribution value chain is never in doubt. Over the past years, operators have consistently invested in ICT infrastructure and human capital to impact the entire value chain – manufacturers, distributors and retailers – by enabling Factory-to-Retail distribution for consumer goods companies.
Nigeria’s informal retail market is estimated to worth US$100 billion, yet faces peculiar challenges including limited inventory, lack of access to finance for expansion, unregulated and clustered market, distance to market or supply source and high transportation cost, all of which increase cost of operation.
Alerzo is prominent among the tech-enabled e-commerce platforms that are empowering informal retailers in the sub-urban and rural areas with faster distribution of consumer goods using first-party relationship platforms, enabling manufacturers and top-tier primary suppliers to clear their inventory faster, while it absorbs the burden of last-mile supply and delivery to the retailers. The new Act could enable it to do more when the cost of doing business is low.
During COVID-19 and post-pandemic, Alerzo helped to bridge the demand-supply shortfalls by leveraging its ecosystem of digital solutions and logistics platforms to empower informal retailers to access a wide assortment of consumer products with ease and faster from FMCG companies such as Flour Mills, Unilever, Nestlé, Procter & Gamble, PZ Cussons and Dangote at zero delivery cost to the retailers.
More angel investors, accelerators and venture capitalists partnering with B2B e-commerce platforms like Alerzo and others in critical areas such as logistics and warehousing services would mean more goods will pass through the supply chains faster to the consumers.
Businesses will reduce their operating cost and increase profitability; more jobs will be created, economic wealth will be distributed to more people; quality of life will improve, while the economy will be significantly impacted.
The act, by offering incentives, provides a buffer for startup businesses like Alerzo to achieve stability or withstand macroeconomic headwinds. Incentives like pioneer status for tech businesses aged zero to 10 years in critical industries like technology and agriculture and possible tax holiday, up to between three and five years, are highly commendable.
Also allowing startups to employ entry level talent with no more than three-years of post-graduation experience and offering income tax relief up to five per cent of profit generated, and Personal Income Tax relief of 35 per cent for two years for such employees can help them attract the right talents.
By enabling angel investors, accelerators, and venture capitalists to enjoy tax credits, up to 30 per cent of their investment in a startup, can attract more investors into the segment.
The future of tech startups in Nigeria is bright, no doubt. McKinsey & Company, in the report cited earlier, revealed that Nigeria’s fintech ecosystem attracted US$122 million, representing 25 percent of US$491.6 million total funds raised by African tech startups in 2019 alone, coming second to Kenya which attracted US$149 million.
It noted further that Nigerian startups retained US$1.37 billion of Africa’s US$4 billion funding in 2021, showing that Nigeria has the highest volume of startups in Africa. Quartz Africa further affirmed Nigeria as hosting the most startups in
Thus, Nigeria Startup Act 2022 can be a stimulus to accelerate the growth of Nigeria’s tech startups to an enviable height in the not-too-far foreseeable future.
Ojedokun, a policy analyst and development advocate, contributes this piece from Lagos.
Kaspersky, a global cybersecurity company, and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) have signed a memorandum of understanding (MoU) to assist small and medium businesses in the country to become more cyber-aware and less vulnerable to developing cyber threats.
The MoU reflects a shared view that SMEs, being the backbone of economy, require strong cybersecurity measures. Kaspersky and SMEDAN will work together on information sharing, training programmes, and other practical steps to raise awareness of digital threats and cybersecurity measures.
“Small and medium business owners are juggling a dozen things – accounting, promotion, legal issues. They are not cybersecurity experts. But they are being targeted by cybercriminals through malware, phishing, and online schemes using social engineering tactics that make them look realistic.
“Our aim is to provide these organisations with some best practice tools and inform about measures that will help them stay safer online,” says Chris Norton, General Manager for Sub-Saharan Africa at Kaspersky.
The cooperation will feed into SMEDAN’s wider SME development efforts, with Kaspersky contributing cybersecurity knowledge and joining forces on awareness campaigns. The idea is to bring cybersecurity-focused guidance into existing business support channels, and to do it in a way that actually makes sense to entrepreneurs who may not have technical teams behind them.
Charles Odii, DG/CEO of SMEDAN, comments: “Since the COVID-19 pandemic, digital adoption among business owners has accelerated significantly. Many now operate WhatsApp shops, use online banking, and send invoices via email, which has increased their exposure to cyber risks.
Together with Kaspersky, we intend to strengthen cybersecurity awareness and practices across Nigeria, helping SMEs protect their businesses as they embrace the digital economy.”
SMEDAN has long been a government agency that has consistently shown up for small business owners in Nigeria. Its work cuts across industries, regions, and stages of growth from traders and artisans to early-stage tech startups trying to get formalised. This partnership gives it another tool to help those businesses operate more securely in a digital world. For Kaspersky, the collaboration is part of a wider push across the continent to support under-resourced sectors that are quietly being targeted online.
Kashifu Inuwa, CCIE, the Director General of the National Information Technology Development Agency (NITDA), has emphasised that integrating intelligence, security, and sustainability is critical to driving Nigeria’s digital transformation and global competitiveness.
Inuwa made the remarks on Tuesday in Kano while delivering a goodwill message at the opening of the 19th International Conference (CONNOVATE 2025) of the Nigerian Computer Society (NCS), themed “Intelligent, Secure, and Sustainable Innovations for a Connected World.”
Represented by Engr. Salisu Kaka, Director of E-Government and Digital Economy Development, Inuwa said the three elements were now indispensable drivers of national progress. He highlighted the need for their convergence to unlock new opportunities in Nigeria’s technology sector, citing Estonia’s X-Road platform — which enables 99% of government services online — as a global model.
“In Nigeria, trust is the ultimate currency in our high-stakes digital environment, where scams and cybercrime are prevalent. Security builds and protects this trust,” Abdullahi said.
He stressed that while security provides the foundation, intelligence builds the structure, pointing to Artificial Intelligence (AI), Machine Learning (ML), and data analytics as tools for addressing Nigeria’s complex challenges. Warning that “innovation without security is unsustainable,” he likened it to “a high-performance race car without brakes.”
The DG urged the next wave of Nigerian startups to go beyond digitising existing processes to creating new value, citing AI-powered wealth management and ML-driven remote diagnostics as examples.
He further highlighted the various Federal Ministry of Communications, Innovation and Digital Economy (FMCIDE) initiatives supporting this vision, including the National Centre for Artificial Intelligence and Robotics (NCAIR), the Computer Emergency Readiness and Response Team (CERRT), the Nigeria Data Protection Act (NDPA) 2023, the national digital identity programme, interoperable payments, and human capital initiatives such as the 3 Million Technical Talent (3MTT) and Digital Literacy for All (DL4ALL) programmes.
Inuwa cited example with International Federation for Information Processing (IFIP) President, Antony Wong, that called for stronger protection and strategic use of data in the Global South to safeguard indigenous knowledge. He stressed the importance of legal clarity on data ownership as Nigeria’s cultural heritage in medicine, ecology, and art is digitised and incorporated into AI systems. Wong praised Nigeria’s role in the recent World Intellectual Property Organization (WIPO) treaty protecting genetic resources and traditional knowledge.
Delivering his welcome address, the NCS President, Dr. Muhammad Sirajo, said the conference would serve as a platform for IT professionals to address critical issues, including intelligent systems, fintech, sustainable energy, and innovations in agriculture, health, education, and national planning.
“This conference will provide an interdisciplinary platform for researchers, practitioners, and educators to present and discuss recent innovations, trends, and solutions for improving technological systems,” Sirajo said.
The week-long event includes plenary sessions, a doctoral consortium, a youth and entrepreneurship forum, the Fellows Forum, the Annual General Meeting, an IT quiz competition for students, and an induction ceremony for new members. It will conclude with the election of new national executives, a dinner, and an awards night honouring contributions to the ICT sector.
The African Development Bank (AfDB) is betting big on Artificial Intelligence (AI) as a catalyst for delivering Africa’s ambitious Agenda 2063.
With hands-on training in tools like ChatGPT and Google Gemini, the Bank believes the results could redefine how the continent plans, measures, and delivers its development goals.
Through its Joint Secretariat Support Office, the AfDB has provided technical and financial support to the 5th annual training workshop for African Union member states, focusing on the use of AI to track and implement the second ten-year plan (2024–2033) of Agenda 2063.
The five-day workshop, held in Lusaka, Zambia, was co-organised by the African Union Commission and the African Capacity Building Foundation.
Participants from across the continent rolled up their sleeves for hands-on training with emerging AI platforms like Ailyse, Google AI Studio, and Perplexity.
The goal of Africa’s multilateral development finance institution is to turn complex development data into actionable insights that can drive smarter decisions, faster interventions, and more accountable governance.
AbibuTamu, lead programme co-ordinator at the AfDB, said AI was now an indispensable tool for Africa’s future.
“These tools are not only revolutionizing how data is collected, analysed, and reported, they are also enabling more targeted policy interventions and efficient resource allocation,” Tamu told delegates.
Agenda 2063, dubbed “The Africa We Want,” is the African Union’s 50-year blueprint for inclusive growth and sustainable development. The second 10-year plan prioritises industrialisation, digital transformation, and sustainable livelihoods.
With AI now in the mix, African policymakers can track progress in real-time, spot bottlenecks before they choke projects, and reallocate resources where they are needed most.
The AfDB’s backing underscores a broader strategy of boosting both human and institutional capacity that propels African states to harness the digital revolution.
Beyond technical skills, the Lusaka workshop doubled as a peer-learning platform, with countries sharing real-world success stories on integrating AI into national planning and reporting.
“If Agenda 2063 is Africa’s long-term roadmap, this AI training is about upgrading the continent’s GPS that ensures leaders not only know the destination, but also have the intelligence to navigate every twist and turn on the way,” said Tamu.
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