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Introduction
On October 19, 2022, President Muhammadu Buhari signed the Commissioning Act (the Act). The Act is important legislation for Nigeria’s technology and innovation ecosystem, as Nigeria has increasingly become a top destination for funding for start-ups in Africa despite inadequate regulatory framework. In 2021, of the $4 billion of seed funding in Africa, Nigeria attracted the lion’s share of $1.37 billion1. Additionally, in 2021, several startups were each valued at $1 billion (specifically Flutterwave (founded in 2016), Opay (founded in 2018), and Andela (founded in 2014)) and the space received over $1.3 billion. investment dollars. Therefore, the passage of the Act was necessary to pave the way for a legal and regulatory framework that offers clarity to the operations of new companies in Nigeria.
We will begin this four-part series with an overview of the Act, which will later be followed by a review of the incentives available in the Act for new businesses. A key consideration for doing business in Nigeria is the sectoral regulatory framework, therefore the third series will examine the regulatory regime under the Act. In the final part of the series, we will focus on the proposed financing regime under the Act and We will highlight the general financing options for Startups.
Objectives of the Law
The Act seeks to provide a legal and institutional framework particularly for the development of new financial technology companies in Nigeria. The other objectives of the Law include2:
- provide an enabling environment for the establishment, development and operation of new businesses in Nigeria;
- encourage the development and growth of technology-related talent; Y
- positioning the Nigerian start-up ecosystem as the leading digital technology hub in Africa, with excellent innovators with cutting-edge skills and exportable capacity.
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Footnotes
1. https://businessday.ng/technology/article/local-investors-outperform-foreign-peers-in-africas-startup-funding/
2. Section 1(1) Nigerian Home Act, 2022
Originally posted on November 7, 2022
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