Nigeria’s $40 Million Startup Fund Supported by Japan: A Boost for Entrepreneurs
Nigeria plans to create a $40 million startup fund backed by Japan, managed by the Nigeria Sovereign Investment Authority. This initiative, part of the 2022 Nigeria Startup Act, aims to boost the local startup ecosystem by providing vital support and tax incentives. Awareness of the law’s benefits remains essential for its success across the country.
The Nigerian government is preparing to launch a $40 million fund aimed at investing in early-stage technology startups. This initiative seeks to enhance support for entrepreneurs who have previously depended on private investment. Half of the fund will originate from the Japan International Cooperation Agency, while the remaining portion will be contributed by the Nigeria Sovereign Investment Authority (NSIA), as confirmed by Kashifu Inuwa Abdullahi, the head of the National Information Technology Development Agency (NITDA).
Abdullahi stated that the final agreement for the fund will be signed next month, noting, “Everything has been agreed.” This fund forms part of the broader commitment by Abuja to invest in the startup ecosystem under the 2022 Nigeria Startup Act. NSIA, which oversees Nigeria’s sovereign wealth fund valued at over $2 billion, will manage the newly established fund in accordance with the startup legislation.
Prior to the enactment of the startup law, Nigeria’s startup sector was already flourishing, securing over $2 billion in funding between 2015 and 2022, surpassing all other African nations. Notable companies such as Paystack, Flutterwave, Andela, and Opay achieved significant valuations largely based on their Nigerian operations. The startup law and the corresponding investment fund were developed to encapsulate the successes and challenges of the past decade, fostering an environment conducive to the growth of new ventures.
The establishment of this fund signifies a significant advancement towards the effective implementation of the startup law, crafted with input from local investors, entrepreneurs, government entities, and international experts. A significant outcome of this law includes the registration of approximately 13,000 businesses as startups under NITDA’s guidelines. This designation offers new businesses a three-year income tax exemption and enables investors to receive tax credits for their financial contributions.
Despite the advantages of the new law, a lack of awareness concerning its benefits poses a challenge. 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.” The provision of government venture capital is essential for startup ecosystems, as it affords long-term financial support and valuable feedback without an immediate focus on profits.
The Nigerian government’s initiative to establish a $40 million fund is a proactive measure aimed at reinforcing the startup sector. With half of the funding provided by the Japan International Cooperation Agency and managed by the NSIA, the initiative aligns with the 2022 Nigeria Startup Act’s goals. This fund is intended to provide critical support to new enterprises and foster growth through various tax incentives, enhancing the overall entrepreneurial ecosystem in Nigeria. However, increasing awareness of these benefits remains essential to ensuring successful implementation nationwide.
Original Source: www.semafor.com
