FG Approves Tax Reliefs, Incentives For Start-Ups
TECHDIGEST – The Federal Executive Council approved a plan to incentivise and further harness Nigeria’s digital innovation and entrepreneurship ecosystem, during its meeting on 18th May, 2022.
This followed the presentation of a memo by the Honourable Minister of Communications and Digital Economy, Professor Isa Ali Ibrahim Pantami.
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 22nd February 2022, where the Honourable 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 3 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 His Excellency, President Muhammadu Buhari, GCFR, Nigeria became home to 5 of about 8 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).
To further strengthen the ecosystem, the Federal Executive Council approved the following recommendations, in line with the Executive Order 003 and Presidential Order 005:
i. 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;
ii. 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
iii. 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) was earlier approved by the Federal Executive Council and forwarded to the National Assembly and the process is about 90% 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 in order to transform Nigeria into a country with a sustainable and thriving digital economy.