Expert charges tech businesses to leverage Startup Act for growth
The Chairman, Kusamotu and Kusamotu, Mr Ayodele Kusamotu on Tuesday charged technology startup businesses to take advantage of the newly unveiled Startup Act for growth and sustainability.
Kusamotu said this at the Lagos Chamber of Commerce and Industry (LCCI) Information and Communications Technology (ICT) Group and Professional Practice Group seminar with the theme, “Insights into the Nigeria Start-up Act, 2022,” in Lagos.
The Start Up Act was signed into law by President Muhammadu Buhari on Oct. 19 to harness the potential of the country’s digital economy through co-created regulations.
Kusamotu said some of the incentives under the Act included assistance for startups within the pioneer scheme industries to apply for tax relief.
Others, he said, were the five per cent withholding tax on non resident companies providing technical services to a labelled startup and full deduction on research and development expenses in Nigeria.
Kusamotu added that the startups were also exempted from Industrial Trust Fund contributions where it provided in-house training to its employees for the period it was designated as start-up.
“Also, export incentives, access to loans, credit guarantee scheme, investment tax credit equivalent to 30 per cent of the investment in the labelled startup provided, shall be applied on any gains on investment which are subject to tax.
“Additionally, capital gains tax shall not be charged on gains that accrue from the disposal of assets by an angel investor, venture capitalist, private equity fund, accelerators or incubators with respect to a labelled startup, provided the assets have been held in Nigeria for a minimum of 24 months.
“So, this is a commendable effort at empowering the community and fostering innovation and it is critical that startups take advantage of this,” he said.
Kusamotu, however, stressed the need for governance structure for the startup consultative forum in the council.
He added that directive on amount of seed fund to be invested in research and development must be spelt out, and called for rules to back up the law to support the implementation of the Act.
Earlier, LCCI president, Dr Michael Olawale-Cole, said the theme of the seminar was apt considering the fact that the Act supported entrepreneurship, sound regulation, and an efficient tax system for a digital economy.
He added that it also provided support for innovation management in the tech-start-up ecosystem in Nigeria, seeing that the Nigerian ICT sector was one of the fastest growing sectors in the economy.
He noted that the ICT sector remained the only sector with consistent positive growth before and after the coronavirus pandemic, with a growth of 10.53 per cent in the third quarter and a 15.4 per cent contribution to Gross Domestic Product.
He added that Nigeria recorded over 3,300 start-ups in 2020, the highest in Africa compared to South Africa (660 start-ups) and Kenya (600 start-ups).
Olawale-Cole attributed the strong growth recorded by the sector to the innovative activities of ICT operators and policies introduced by government including the National Digital Economy Policy and Strategy (2020-2030), E-Government Masterplan and others.
“The technology startup ecosystem has recorded exponential development, innovation and sophistication.
“No doubt, the Nigerian technology startups seem to be leading in the emergence of startups in Africa despite macroeconomic challenges and numerous regulatory hurdles.
“In order to further harness the potential of the sector, President Muhammadu Buhari signed the Startup bill into law, putting Nigeria on the list of African countries with Startup laws.
“The Nigeria Startup Act project is a collaboration between the executive and stakeholders in the tech startup ecosystem to harness the potential of Nigeria’s digital economy through legislative backing and framework.
“The Act is expected to support the building of a more structured and self-regulated tech ecosystem in Nigeria,” he said.
