Nigeria is set to introduce a $40 million fund to support early-stage technology startups, funded jointly by the Japan International Cooperation Agency and the Nigeria Sovereign Investment Authority. This initiative is part of the broader Nigeria Startup Act aimed at enhancing the startup ecosystem. The fund will help codify successful practices and address awareness challenges regarding the law’s benefits, encouraging innovation in the burgeoning sector.
The Nigerian government plans to launch a $40 million fund aimed at investing in early-stage technology startups. This initiative responds to the necessity for enhanced support for entrepreneurs who historically depended on private funding. Half of the fund will be provided by the Japan International Cooperation Agency, while the Nigeria Sovereign Investment Authority (NSIA) will contribute the corresponding amount. According to Kashifu Inuwa Abdullahi, head of the National Information Technology Development Agency (NITDA), the final agreement for this fund is expected to be signed next month.
This fund aligns with the commitment to strengthen Nigeria’s startup ecosystem as established by the 2022 Nigeria Startup Act. The NSIA, which oversees Nigeria’s sovereign wealth fund containing over $2 billion in assets, will manage the $40 million fund as mandated by the startup legislation. Historically, Nigeria has led Africa in attracting substantial investments, securing over $2 billion from 2015 to 2022.
Numerous companies, such as the fintech Paystack and pan-African startups like Flutterwave and Andela, have become prominent players in the region, achieving billion-dollar valuations primarily through their Nigerian operations. The establishment of the startup law and related fund intends to create a permanent framework that draws from past successes, thereby enabling new ventures to flourish and replicate this success.
The newly introduced fund signifies a significant stride towards the practical implementation of the startup law, which was conceived through cooperation among local investors, entrepreneurs, and international advisors. One notable outcome thus far is the registration of approximately 13,000 businesses as startups under NITDA guidelines, allowing new entities to benefit from a three-year income tax exemption. Investors in these startups are also eligible for tax credits.
Despite these advancements, there is a challenge concerning the communication of the law’s benefits. Abdullahi expressed the intention to conduct nationwide outreach efforts to ensure all states and territories are informed about these initiatives before the year ends. It is crucial for government-supported venture capital to play a role in these ecosystems, providing not only necessary funding but also valuable feedback regarding products without an overemphasis on immediate financial returns.
In conclusion, Nigeria’s forthcoming $40 million startup fund represents a pivotal development in enhancing support for early-stage technology startups. With significant backing from both the Japan International Cooperation Agency and the Nigeria Sovereign Investment Authority, this initiative aims to foster a robust startup ecosystem. The alignment with the 2022 Nigeria Startup Act further reinforces the country’s commitment to nurturing innovation and entrepreneurship, addressing challenges related to awareness and accessibility of benefits under the law. Ultimately, the collaboration between government and entrepreneurial efforts is essential for sustaining growth in Nigeria’s vibrant startup landscape.
Original Source: www.semafor.com
