How Governments Are Supporting the Growth of African Tech Startups
In response to outdated regulations, governments in Nigeria, Ethiopia, Senegal, Kenya, and Tunisia have passed individual bills to protect and allow startups to build products and scale up their businesses successfully. Here are some of the ways in which African governments are protecting and encouraging sustainable growth for tech-focused startups.
The Nigerian government, in particular, saw the hardships that misregulation caused on the boom of tech startups and, in response, put in place 'The Nigerian Startup Act 2022'. The Startup Act outlines the implementation of a council to ensure new laws continue to allow for the creation and growth of new startups, it offers the ability to register new businesses, provides access to a Startup Investment Seed Fund, as well as tax and fiscal incentives to encourage continued development.
The Kenyan government published the 'Startup Bill 2020' to encourage the creation of local businesses with the support of foreign and local investors. Through this bill, the Kenyan government hopes to provide modernised options, including incentives for startup founders and increased intellectual property protection. As the Bill focuses on local entrepreneurs, startups hoping to benefit must be majority-owned by at least one Kenyan citizen, with 15% of the startup's expenses comprising research and development activities. The Bill offers benefits for Kenyan-based startups through fiscal and non-fiscal support, with incubation and growth programmes for those who meet the criteria outlined.
The Tunisian government led the movement of government support, implementing the 'Tunisian Startup Act' in 2018. Unlike other Bills created by government representatives or parliamentary members, the Tunisian Startup Act used a participatory approach, allowing those acting within local startups to shape the Act. The Act has since been updated and offers a range of benefits, including tax incentives, freedom of foreign currency and banking within these currencies, support through an online portal, and exemption from certain import taxes and operating costs.
Seeing the success of this model within Tunisia, the Senegalese government followed suit in 2019 by implementing their own 'Startup Act' using a similar framework to that of Tunisia. With a focus on growth, local startups have three tax-free operational years, training for youth and female entrepreneurs, and access to an easy-to-use business registration platform to ensure they meet requirements and can benefit from the Act.
Ethiopia has followed in Tunisia and Senegal's footsteps with the implementation of their own 'Startup Businesses Proclamation' drafted in 2020. Though Ethiopia is currently in the earlier stages of developing its startup ecosystem, the performance of its own Startup Act and high growth within the tech sphere make it an attractive destination for investors.
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