The Problem Statement
In the wake of the present economic state of the nation, the Nigerian Government must find new ways to steady the ship in a way that will bring economic relief to her people. With worsening unemployment and underemployment rates, it will take more than quick cosmetic fixes like job creation schemes that are usually unsustainable and put a lot of strain on already scarce funds. It would take well thought out and deliberate policies with both short and long term benefits to bring economic recovery and growth.
The Policy Solution
More than ever before, the Nigerian government needs to create a business-friendly environment that will allow new businesses to spring up and thrive thereby reducing unemployment and increasing the nation’s GDP. There must be a departure from Government policies that stems to stifle the growth of businesses through undue meddlesomeness and factors like multiple taxations that choke businesses to death, to deliberate well thought out policies, like a Startup Act which will stand as a legal framework dedicated to Startups in Nigeria in order to create an environment where new businesses succeed and flourish more easily.
This would mean the government deliberately nursing new businesses thereby increasing their chances of survival and growth.
A Startup Act will mean Nigeria also going the way of other African nations like Tunisia and Senegal. Tunisia, who in 2018, was the first African country to pass a Startup Act into legislation in an effort to revive their economy, not only received international commendation and attraction from global investors but have also begun to feel its positive impact. I have itemized below some proposed policies and some of the policies in Tunisia’s startup act which can be properly adapted by Nigeria in view of our peculiarities.
First, to benefit from such a Startup Act, there must be well-defined criteria in order to capture the right companies as doing so is essential to the success of the policy. Such criteria must include:
- The startup must be registered with the Corporate Affairs Commission and must not be more than 7 years old since its registration.
- Must have less than 100 employees.
- Must be providing a clear innovative solution to an indigenous problem or providing services to the people of Nigeria.
- There must be scalability with a target market of a sizeable demographic.
- Must not have to be involved in any political cause or have any political affiliation.
NIGAC Constructive Take/Opinion
A Startup Act must address the usual challenges of Startups and the Founders. Such legislation will help to increase their chances of succeeding.
- A Startup Founders Living Allowance: A one-year allowance from the government for startup Founders/Co-founders to allow them to focus and deploy available resources in scaling the startup without having to depend on it so early for their personal survival. This is one of the reasons why startups die. However, there must be a minimum and a maximum value to this allowance.
- Leave for Startup Founders: An employee who is a founder/co-founder of a registered startup must have a right to 1-year leave from the place of work, public or private, (except in the case of a private employer employing less than 100 employees) so that he is able to dedicate himself full-time to the launch and development of his Start-up. This is to reduce the risk of failure on the founder who is able to return to his job within one year of leave if the business totally fails or takes on a failure trajectory.
- Tax Exemption: Startups should be exempted from corporate tax for the first 7 years. This is imperative as the burden of taxation kills startups in their infancy. Multiple taxations is already a burden bedeviling even established companies in Nigeria, startups in particular needs the breathing space.
- Startup Grants/non-interest loans: This must also be easier to access without unnecessary bottlenecks that would discriminate against a larger demographic of startups.
- Tax relief for Investors dedicated to startups: This would encourage investment in startup proposals.
- Licenses: The cost of operational licenses for startups below 7 years must be reviewed to the minimum cost possible. In Nigeria, several startups fold up due to their inability to meet up with the cost of operational licenses.
The time for a Startup Act is now! The more businesses we have, the lesser the unemployment problem and the wealthier the nation becomes. This also has a lot of advantages in the future. Imagine a future of a Nigeria of hundreds of Unicorn companies. Imagine the massive economic growth that will bring. Rather than funding unemployment with various free money programs, why not invest in startups and secure the economic future of the nation.