Nigeria Establishes $40 Million Seed Fund for Tech Startups

The Nigerian government is launching a $40 million fund for early-stage technology startups, with half from the Japan International Cooperation Agency and half from the Nigeria Sovereign Investment Authority. This initiative supports the country’s 2022 Startup Act and aims to strengthen the startup ecosystem, enhancing investment opportunities and tax incentives for new ventures.

The Nigerian government is poised to launch a $40 million fund dedicated to investing in early-stage technology startups. This initiative aims to enhance support for entrepreneurs who have traditionally depended on private investors. The Japan International Cooperation Agency will contribute half of the fund, while the Nigeria Sovereign Investment Authority (NSIA) will provide the other half, as confirmed by Kashifu Inuwa Abdullahi, the head of the National Information Technology Development Agency (NITDA).

“We are going to sign the final agreement next month,” Abdullahi stated in an interview with Semafor. This funding aligns with Nigeria’s commitment to nurturing its startup ecosystem under the 2022 Nigeria Startup Act. The NSIA, which oversees Nigeria’s sovereign wealth fund, will manage the new $40 million initiative as stipulated by the startup law.

Despite the startup law’s recent enactment, Nigeria has demonstrated a robust startup landscape, attracting over $2 billion in investments between 2015 and 2022, a feat unmatched by any other African nation, as highlighted by Disrupt Africa. Notable companies, including the fintech Paystack and pan-African enterprises like Flutterwave and Andela, have established significant market presence in Nigeria, positioning the country as a leader in the tech sector.

The startup law and accompanying investment fund were instituted to cement the lessons learned from the past decade into a structured framework to assist emerging startups in replicating successful models. The fund represents a critical advancement in implementing the startup law, which was collaboratively developed by local investors, entrepreneurs, government agencies, and international consultants.

To date, the law has facilitated the registration of approximately 13,000 businesses as startups through NITDA’s criteria. This designation grants new ventures a three-year income tax exemption and provides tax credits for investors in eligible startups. However, there remains a significant challenge in raising awareness about the benefits of the law. Abdullahi noted, “We have a target to go across the country before the end of this year to ensure each of the 36 states and Abuja is carried along.” Government involvement in venture capital is crucial for fostering a supportive startup ecosystem, providing essential capital and constructive feedback without being solely focused on financial returns.

In summary, the Nigerian government’s establishment of a $40 million fund for early-stage technology startups marks a significant advancement in supporting the entrepreneurial landscape. With substantial backing from the Japan International Cooperation Agency and oversight from the NSIA, this initiative aims to enhance investment opportunities and encourage compliance with the new startup law. Although awareness of these benefits remains a challenge, the positive impact on the registration of startups and tax incentives suggests a promising future for the Nigerian tech ecosystem.

Original Source: www.semafor.com