The digital economy in Africa is one that is filled with complexities, red-tape and regulatory bureaucracy, which can be quite a hindrance for entrepreneurs trying to build successful tech businesses. Unlike their counterparts in the West, who benefit from well-defined startup policies and legislative frameworks, many African founders still operate in regulatory grey zones.
Dedicatedstartup frameworks are critical because they enable innovation, stimulate economic growth and drive job creation. To address this, Nigeria, the continent’s largest economy and a key innovation hub, introduced the Nigeria Startup Act 2022. This landmark legislation is designed to remove structural bottlenecks, foster innovation, and facilitate access to capital, talent and markets.
For investors, accelerators, and founders exploring opportunities in West Africa, the Act is a crucial instrument to understand. It not only defines Nigeria’s approach to startup governance but offers meaningful financial and operational incentives for ecosystem players.
What is a Startup Act?
Astartup Act is a formal policy or piece of legislation designed to make it easier for high-growth, innovative tech startups to establish, operate and scale through the reduction of regulatory burdens. These Acts typically include a combination of tax breaks, funding mechanisms, talent development strategies and regulatory support.
Key goals of a Startup Act:
Simplify regulations and reduce red tape
Improve access to finance and facilitate the development of funding mechanisms
Encourage innovation and ensure tech startups reach sustainable growth
Create a more conducive environment for startups to grow and contribute to the general economy
Signed into law by President Muhammadu Buhari on the 19th of October 2022, the Act is a joint initiative between the country’s tech startup ecosystem and the government to enhance the digital economy. Its core objective is to create a regulatory framework that is startup-friendly, adaptable, and conducive to long-term innovation.
“This we believe will contribute to the creation of an enabling environment for growth, attraction and protection of investment in tech startups,” says the Act.
Main Objectives of the Nigeria Startup Act 2025
The objectives of the Act are outlined as follows:
Provide an enabling environment for the establishment, development and operation of startups in Nigeria.
Foster the development and growth to technology-related talent
Position Nigeria’s startup ecosystem as the leading digital technology hub in Africa
Governance Structure: Who Oversees the Startup Act?
Africa’s regulatory environment is extremely diverse and fragmented because each country develops policies unique to the challenges of each region.
Nigeria’s Startup Act provides for a governance structure that involves a multi-membered council at policy and operational level. To avoid bureaucratic pitfalls, the Act outlines a detailed governance structure designed to ensure accountability, cross-sector collaboration and operational efficiency.
National Council for Digital Innovation and Entrepreneurship Explained
Minister of Communications & Digital Economy (presides over the Council in the absence of the President and the Vice-President)
Director-General of the National Information Technology Development Agency (NITDA) as its Secretary
Ministers with specific portfolios
Governor of the Central Bank of Nigeria
Four representatives of the Startup Consultative Forum, Nigeria Computer Society and Computer Professionals (Registration Council of Nigeria)
The Role of the Council
The functions of the Council are critical to the enablement of tech startups. They include:
Formulating and providing general policy guidelines
Ensuring the monitoring and evaluation of the regulatory framework to drive the development of startups
Review policies and directives of Ministries, Departments and Agencies (MDAs) which may affect the operation, establishment and investment in a startup
The Secretariat and Operational Structures
The National Information Technology Development Agency (NITDA) serves as the Secretariat of the Council (the Secretariat) headed by the Director General of the NITDA. Additionally, the Secretariat also ensures that its National Digital Innovation, Entrepreneurship and Startup Policy is implemented for the development of the local startup ecosystem.
Key Functions of the Secretariat:
Manage the process of labelling a startup
Maintain platforms to provide access to information related to the startup ecosystem
Enter into partnerships with local and international business incubators, accelerators and digital innovation hubs to promote startup growth
Maintain a directory/database of startups, incubators and accelerators
Support research and development activities relating to digital technology innovation and its commercialisation
Advise the Council on issues affecting startups and digital technology innovation entrepreneurship in Nigeria and matters concerning the implementation of the Act
Startup Support and Engagement Portal
Established by the Secretariat of the Act, the Startup Support and Engagement Portal (the Portal) is the primary platform, which streamlines engagement between startups and regulatory authorities.
Through the Portal, startups can:
Apply for startup labels
Register businesses
Access government tools and resources
Apply for permits, licences and incentives
Submit complaints and recommendations
The Secretariat will appoint a dedicated Coordinator, subject to the approval of the Council, to manage the Portal.
A company must be labelled as a startup to receive the benefits under the Act. Startup labels are certificates issued by the Secretariat upon fulfilment of labelling requirements. Labelling eligibility under the Act requires the following:
Must be a registred Nigerian company
Must be operating for less than 10 years
The objectives of the company must be innovation, development, production, improvement and commercialisation of a digital technology innovative product or process
The company must be a holder or repository of a product or process of digital technology, or the author of a registered software
Nigerian shareholder(s) must hold at least one-third of the shareholding at incorporation
The company must apply on the portal in the prescribed form supported by documents prescribed by the Secretariat and have its name entered in the Startup Register kept for that purpose
Note: A sole proprietorship or partnership that meets all the above requirements except being a limited liability company incorporated under theCompanies and Allied Matters Act can apply. However such an entity will be granted a pre-label status for a period of six (6) months to enable it to convert to a limited liability company.
Startup Obligations Under the Nigeria Startup Act
A labelled startup has to meet the following obligations under the Act:
Ensure compliance with all laws governing businesses in Nigeria
Annually provide information on the number of human resources, assets and annual turnover achieved from its approval date
Maintain proper financial records in accordance with International Financial Reporting Standards
Provide an annual report on the use of incentives received as part of the Act
Inform the coordinator of the Portal of any changes in structure, composition, objects within one month
Comply with all obligations issued by the coordinator of the Portal
If a startup fails to meet the above requirements or its compliance obligations, its label can be withdrawn after a 30-day notice. If the startup cannot meet the requirements and its label is withdrawn, it can re-apply for re-issuance.
The requirement on compliance enables startups to ensure they have comprehensivegovernance, risk management and compliance (GRC) structures in place, something investors will want to see.
Tax Incentives & Funding for Nigerian Startups
Labelled startups under the Act will receive the following tax incentives:
Pioneer Status Incentive
Labelled startups are eligible to an income tax holiday of up to five years in line with the e Pioneer Status Incentive under theIndustrial Development (Income Tax Relief) Act. The Pioneer Status Incentive covers software development and publishing, and e-commerce businesses. The relief period commences from the date of issuance of the startup label and may be granted quickly upon application to theNigerian Investment Promotion Commission.
Research and Development Relief
A labelled startup will receive full tax deduction of research and development expenses wholly incurred in Nigeria.
Industrial Training Fund Exemption
Startups will be exempted from contributions to theIndustrial Training Fund, in the case that it provides in-house training to its employees during the period of registration as a labelled startup.
Export Incentives
A labelled startup involved in the exportation of products and services will be entitled to export incentives and financial assistance from theExport Development Fund,Export Expansion Grant and Export Adjustment Scheme Fund.
Access to Grants and Loan Facilities
Startups will have access through the Secretariat to grants and loan facilities administered by the Central Bank of Nigeria, Bank of Industry or other statutory bodies empowered to assist small to medium-sized enterprises (SMEs) and entrepreneurs.
Access to a Dedicated Credit Guarantee Scheme
Labelled startups will gain access to a dedicated Credit Guarantee Scheme established by the Secretariat for the development and growth of startups.
Extended Tax-Free Zone Exemptions
Licensed startups operating in the Technology Development Zone enjoy tax benefits outlined in theNigeria Export Processing Zone Act. Such incentives include exemption from all taxes.
Investor Benefits Under the Nigeria Startup Act
Beyond startup benefits, the Act provides strategic incentives to attract local and international investment into Nigeria’s innovation economy.
Representation on the Startup Consultative Forum
Investors will be represented on the Startup Consultative Forum, allowing for them to contribute to deliberations on matters to be considered by the Council including policy changes or proposals that are relevant to Nigeria’s startup ecosystem.
Development of a National Policy for Incentives
The Federal Government through the Federal Ministry of Finance and other MDAs will develop and implement a national policy for incentives for individuals, impact investors, angel investors, companies, venture capitalist, private equity funds, accelerators or incubators that invest in a labelled startup or in the startup ecosystem to enjoy tax credits on their investments.
Investment Tax Credits
Investors in labelled startups are entitled to:
30% tax credit on their original investment
Application of this credit to any gains subject to tax
Capital Gains Tax Exemptions
Investors receive capital gains tax exemptions from the sale of assets in relation to a labelled startup. This exemption is subject to a 24-month holding period prior to such disposal. However, in the case the asset is disposed of within 24 months, the capital gains tax payable (where applicable) will be reduced by the investment tax credit.
Repatriation of Investment
The Act mandates collaboration between the Secretariat and the Central Bank of Nigeria to facilitate the repatriation of investment proceeds, supported by a Certificate of Capital Importation.
Access to Incentives
Registered incubators and accelerators are entitled to incentives in accordance with the relevant regulations to be issued by the Secretariat. These include access to grants (including those under the Nigeria Digital Innovation, Entrepreneurship and Startup Policy) and aids for research and development, training and expansion.
Why the Nigeria Startup Act Matters in 2025
As Africa continues to digitise, the need for regulatory clarity and investor protections becomes paramount. The Nigeria Startup Act is a bold step forward in aligning public policy with entrepreneurial realities.
For founders, it reduces friction and offers tools to grow sustainably. For investors, it mitigates risk through tax relief and governance frameworks. And for ecosystem enablers like accelerators and incubators, it provides direct access to funding and influence.
In a region often characterised by uncertainty, Nigeria has sent a clear message: the future of tech innovation is not only welcome but actively supported.
Lungile is the Digital Editor for Startup.Africa, with a knack for storytelling, technology and innovative ideas. Working with Startup.Africa, she takes simple ideas and turns them into amazing stories.
Lungile Msomi
Lungile Msomi
