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Improving the Startup Environment with Nigerian Startup Act

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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.

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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.

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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.

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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.

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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.

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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.

 

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E-Business

New NIMC Act Strengthens Data Protection, Privacy – Director

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Uche Chigbo, coordinating director of Operations, National Identity Management Commission, (NIMC), has said the newly enacted NIMC Act strengthens data protection and privacy, expands identity coverage to include everyone in Nigeria and Nigerians in the diaspora, and provides the legal framework for a secure and trusted digital identity ecosystem.

New NIMC Act Strengthens Data Protection, Privacy - Director

She said the new law replaces the 2007 NIMC Act, which had become outdated due to rapid technological advancements, evolving cybersecurity threats, the growth of the digital economy, and the enactment of the Nigeria Data Protection Act.

According to her, the updated legislation better positions the Commission to deliver Nigeria’s digital identity agenda and improve access to government and private sector services.

“The Act itself has taken in a whole lot of things to make sure that NIMC is well-positioned to be able to deliver on the identity agenda and program of Nigeria. The area of universal coverage was expanded within the Act so that NIMC can enroll everybody that is within the soil of Nigeria—male, female, children, whether they are IDPs or orphans or whatever it is, and even Nigerians in diaspora.

“There is quite a lot within the Act that over the few days and weeks, even with my Director-General’s courtesy visit, we are trying to sensitize and educate the general public, and also bring awareness to this new Act so that people will know what are the rights that exist within it, what are the obligations, what are the stronger enforcement and penalties that has also been expanded within the Act, and then what are also the regulatory autonomy that has been given to NIMC to make sure that they drive the digital identity ecosystem in Nigeria,” she explained.

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“There’s a lot of provisions and changes with the new Act. Um, the NIMC 2007 Act has been operating for close to 19 years now. So, we can see that, um, you can actually say it’s almost obsolete. And then with a lot of technological advancements in the world now, with the enactment of the Nigeria Data Protection Act, and then with also a lot of evolving security challenges, cybersecurity challenges, as well as the ever-growing digital economy, it became very necessary that a comprehensive review of the NIMC Act should be done.

So, that 2007 Act has been repealed and a new NIMC 2026 Act is in place,” she explained.

Chigbo clarified that the National Identification Number (NIN) is Nigeria’s unique identifier and the only valid means of identification for accessing government services.

She added that it enables secure identity verification and improves access to services.

“NIN has been designated as the unique identifier in Nigeria and then by the government of Nigeria establishing it as the only valid means of identification for assessing government services. So, NIN, it’s positioned to be a valuable tool for empowering citizens and legal residents to facilitate access to service delivery in Nigeria. And it’s also a tool for people to be able to prove their identity as they go about their daily businesses,” she said.

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Speaking on identity harmonisation across government agencies, Chigbo said NIMC is integrating identity databases to enable Nigerians to access services seamlessly using the National Identification Number (NIN), while other agencies continue to issue functional identities for specific purposes.

“There’s a distinction between a foundational identity and a functional identity. NIMC provides the foundational identity, which answers the question, ‘Who are you?’ Are you a Nigerian or a legal resident? Who are you? That’s what NIMC is providing. All these other agencies that you have mentioned, they provide functional ID, which is an ID that relies on the foundational ID, where they have established who you are and then they are now trying to answer the question, ‘Are you now eligible to have these services? Are you now eligible to benefit from this transaction or scheme?’ So, those are two different distinctions.”

However, Chigbo said NIMC’s mandate is to harmonise and integrate identity systems across government, with the amended Act designating the Commission as the sole repository for biometric data.

“However, NIMC mandate is to make sure that we harmonize and integrate with all these agencies so that you’re one and the same person in any of the databases or registries that you have. The Act that has been expanded and amended also positions NIMC as the only repository for biometric data capture so that we can have effective identity management and coordination in Nigeria.

“So, that harmonization is already happening, the integration is already happening,” she stated.

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She also disclosed that NIMC has introduced an online modification portal that allows Nigerians to begin the process of correcting or updating their personal information from the comfort of their homes or offices.

“But also, NIMC we have a modification portal that enables you to sit in the comfort of your home or office to be able to start the process of correction or updates of your data. We already have a self-service modification portal that allows you to make corrections,” she disclosed.

On the cost of obtaining a NIN, Chigbo clarified that enrolment and issuance of the National Identification Number are free.

She, however, noted that some other identity-related services attract approved fees, which are published on the NIMC website and paid electronically through the government Remita platform.

“Enrollment for the issuance of the National Identification Number, NIN, is free. There are other services, identity services that NIMC provide. Those ones have their charges, and those fees and charges are publicized on the NIMC website so that people can see what those charges are. And NIMC does not collect cash. Our transactions and the charges are paid electronically through the government Remita platform,” she said.

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IMF Keeps Nigeria’s Growth Forecast at 4.1%, Raises Alarm Over Food Inflation

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International Monetary Fund (IMF) has retained Nigeria’s economic growth forecast at 4.1 per cent for 2026, while warning that rising prices of essential goods could worsen poverty and food insecurity in the country.

IMF Keeps Nigeria's Growth Forecast at 4.1%, Raises Alarm Over Food Inflation

IMF

The IMF made the projection in its July 2026 World Economic Outlook (WEO) Update, released on Wednesday.

According to the report, Nigeria’s Gross Domestic Product (GDP) is projected to grow by 4.1 per cent in 2026 and improve to 4.3 per cent in 2027, with both forecasts unchanged from the Fund’s April outlook.

The IMF also maintained its growth projections for sub-Saharan Africa at 4.3 per cent in 2026 and 4.5 per cent in 2027.

The Fund said Nigeria’s economic outlook continued to benefit from improved macroeconomic stability and favourable terms of trade but cautioned that the rising cost of essential commodities remained a major concern.

“Nigeria is supported by improved macroeconomic stability and favourable terms-of-trade effects, though higher prices for essentials are expected to further aggravate poverty and food insecurity,” the report stated.

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The IMF noted that economic performance across sub-Saharan Africa would remain uneven, reflecting differences in policy implementation, reform progress and countries’ exposure to external shocks.

It added that oil-importing and non-resource-intensive economies would likely face increased pressure from rising food and energy prices, while some larger economies continued to benefit from earlier macroeconomic reforms.

Globally, the IMF revised its 2026 growth forecast downward to 3.0 per cent from the 3.1 per cent projected in April but raised its 2027 forecast to 3.4 per cent.

According to the Fund, the downgrade for 2026 reflects the impact of the ongoing conflict in the Middle East, although stronger demand driven by advances in artificial intelligence and technology adoption has helped cushion some of the adverse effects.

Despite the resilience of the global economy, the IMF warned that risks remained tilted to the downside.

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It identified renewed trade tensions, geopolitical conflicts and tighter global financial conditions as key threats to economic growth.

The Fund urged governments to rebuild fiscal buffers through credible fiscal consolidation, improved revenue mobilisation, stronger tax administration, efficient public spending and increased investment in infrastructure, skills development and targeted social protection programmes.

It also advised commodity-exporting countries to avoid excessive public spending during periods of high commodity prices.

“Economies benefiting from commodity windfalls and the upturn in the global technology cycle should avoid procyclical spending and save or redeploy gains within a credible medium-term fiscal framework anchored in debt sustainability,” the report stated.

The IMF further called on policymakers to accelerate structural reforms aimed at boosting productivity, strengthening labour markets, expanding digital and physical infrastructure, promoting predictable trade policies and enhancing international cooperation to support sustainable economic growth.

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Data Protection Industry Hits N16.3Bn in 3 Years- NDPC

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Nigeria’s data protection industry has grown into a N16.3 billion ecosystem within three years of formal regulation, according to the Nigeria Data Protection Commission (NDPC).

Data Protection Industry Hits N16.3Bn in 3 Years- NDPC

Olufemi Ibitayo, head of Finance Management and Control, NDPC, announced the milestone at the Regional Data Governance Exchange in Nairobi, Kenya, where he represented Dr Vincent Olatunji, national commissioner and chief executive officer, NDPC.

Presenting Nigeria’s progress, Ibitayo said the country’s strong regulatory framework and the establishment of an independent data protection authority have strengthened confidence in the digital economy and enhanced Nigeria’s reputation as a destination for foreign investment.

The Regional Data Governance Exchange, organised by the Data Governance in Africa Initiative and hosted by the Office of the Data Protection Commissioner in Nairobi, brought together African data protection authorities to strengthen institutional capacity, deepen collaboration and promote peer learning on data governance. Photo: NDPC

He said the Commission’s “Compliance First, Not Punishment” approach encourages organisations to meet their obligations through dialogue and voluntary compliance, while ensuring effective regulatory oversight.

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Ibitayo added that the NDPC is developing regulatory technology solutions, a regulatory sandbox and a data privacy innovation laboratory to further strengthen Nigeria’s data governance ecosystem and support future growth.

United Nations Commission on International Trade Law (UNCITRAL)

The ongoing UNCITRAL session has brought together delegates from Nigeria, Australia, China, Ghana, France, the United States and other member states to develop harmonised legal frameworks aimed at facilitating secure, trusted and efficient cross-border digital commerce. Photo: NDPC

Meanwhile, Olatunji reaffirmed Nigeria’s commitment to global data governance during a meeting with Nigeria’s Permanent Representative to the United Nations, Ambassador Jimoh Ibrahim.

He made the remark on the sidelines of the ongoing United Nations Commission on International Trade Law (UNCITRAL), where Nigeria is participating alongside delegates from several member states to advance harmonised legal frameworks for secure and trusted cross-border digital commerce.

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The NDPC boss highlighted the Commission’s achievements since its establishment, noting that strategic institutional reforms have positioned Nigeria as a leading voice in the global data protection ecosystem.

He said the country’s data protection framework has continued to earn international recognition, adding that the Commission remains committed to promoting trusted data governance as a driver of digital transformation, economic growth, innovation and sustainable development in line with the Renewed Hope Agenda of President Bola Ahmed Tinubu.

During the meeting, Ambassador Ibrahim commended the Commission’s progress since the enactment of the Nigeria Data Protection Act 2023 and called for the establishment of a comprehensive national data bank to support evidence-based policymaking, research and national development.

 

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