Start-up companies encounter a myriad of obstacles as they strive to evolve from conceptualization to establishing successful ventures, and scaling nationally presents even more formidable challenges. Based on my research, the majority of technology companies in Africa frequently discuss these formidable issues.
- Realistic financing options for each stage of company growth
- Conducive government policy that encourages a startup ecosystem
- Deep human capacity to work at technology firms
- Clear marketing of the ecosystem to potential clients
Access to finance is the highest priority issue in every conversation with entrepreneurs. They all want to know how to find more funding for their nascent companies.
Tunisia Start-up Bill
Tunisia was the first nation in Africa to pass a start-up bill, which was significant legislation. It sought to counter the four main challenges for small firms with unique answers:
- Government policy that specifically recognized start-up firms as a separate business category that needed additional protection and support.
- Start-ups are exempt from capital gains taxes and the government guarantees 30% of venture capital investments in start-ups
- Human capacity was increased by allowing startup founders to return to their old jobs a year, a government stipend to support their efforts, and employment programmes to support staff acquisition.
- Certified start-up firms benefit from a clear government designation that informs potential clients and investors of the company’s legitimacy.
The Tunisia Start-up Bill is based on 20 measures developed with the start-up community. Its overall goal is to change the internal perception of starting a company as too risky, and the external perception of Tunisian firms as hindered vs. helped by their government.
Nigeria Start-up Bill
The Nigeria Start-up Bill is a joint initiative by Nigeria’s tech start-up ecosystem and the Presidency to harness the potential of Nigeria’s digital economy. It provides incentives, structures and programmes for Nigerian start-ups, venture capital companies, hubs and innovation centres to catalyse growth, create value and build a foundation to export tech-enabled services.
Highlights of the Nigeria Start-up Act:
- Establishes the National Council for Digital Innovation and Entrepreneurship (The Council)
- Sets up a consultative forum for Nigerian ecosystem stakeholders to engage and present proposals to the Council
- Provides for the Start-up Investment Seed Fund which will be managed by the Nigerian Sovereign Investment Authority (NSIA)
- Simplifies registrations and access to government services through the Start-up Support and Engagement Portal
Kenya Start-up Bill
Kenya’s President confirmed that the Kenyan Start-up Bill 2022, which seeks to provide employment opportunities for Kenyan youth and tax breaks for start-ups, will be signed into law by April 2024. President Ruto said that by April, 2024, there will be a firm start-up law in Kenya, which will assist Kenyan innovators and de-risk their innovations.
If passed, the Kenyan startup bill will:
- Establish a legal framework to boost tech growth, foster innovation, and attract talent and capital.
- Offer incentives like tax breaks and credit guarantee schemes to registered startups that provides financial support
- Have key roles for national and county governments, such as promoting innovation, facilitating tech transfer, creating jobs and wealth, and connecting research institutions with businesses.
Zambian Start-up Bill
There is a movement within Zambia to create a start-up bill that will support local technology companies to start and grow. There was a Start-up Bill Hackathon to generate the ideas and opportunities relevant to Zambians.
One interesting theme is creative financing. In a recent SLUSH’D conference, the government spoke about a start-up bill that will include a venture capital fund, which is funded by government but administered by the start-up community itself to support nascent technology firms.
The Government discussed making a draft Start-up Bill that will be available to remark and altering. Furthermore, bill drafters discussed submitting it to Parliament in mid 2024. Soon enough, we may have answers to open questions like:
- What challenges will the Zambian Start-up Bill try to alleviate?
- Can the changes to government policy really help tech firms?
- When will these changes be implemented and felt by companies?
- How should other countries alter their policies in response to this?
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