THE NATIONAL STARTUP BILL — EXPECTATIONS AND PROSPECTS

Outline

1. Introduction

2. The Need for a Startup Legislation

3. The Silicon Valley Example- Lessons

4. The National Startup Law-Expectations

5. Recommendations/Conclusion

6. References

Introduction

In recent times, the African tech ecosystem has witnessed tremendous growth, with various start-ups springing up with the intention of solving the continent’s problems ranging from finance to education. Research by Briter Bridges and AfriLabs shows that Africa has 653 active tech hubs, ten African cities including Nigeria are home to about 250 tech hubs while the other hubs are spread out in the rest of the continent. Nigeria has a total of 85 tech hubs, placing the country with the highest number of tech hubs in Africa, followed by South Africa with a total of 80 hubs. These two African countries have the most advanced technology ecosystems in Africa and the hubs offer investment networks and well-established collaborations.

However, despite the apparent growth in the industry, there has been the constant problem of legislation that caters for the general needs of the tech industry. Either the laws or regulations have an adverse effect on the industry or appear to have been copied from other countries thereby not attending to the direct needs of the African tech community.

This paper aims to examine the need for a Nigerian Startup legislation specifically enacted to cater for the Nigerian tech ecosystem, a deep dive into the silicon valley system and highlighting the lessons to be learned, the desired model for the Nigerian startup legislature, recommendations and conclusion.

The Need for a Startup Legislation

Startups are young companies that are founded to develop a unique product or service and bring it to the market. With the level of growth in the Start-up ecosystem and the disconnect between the government and start-ups, there has been a need for a law that prioritizes the interests of entrepreneurs, investors, and other stakeholders. For most African startups. Stringent regulations, inconsistent policies, multiple taxes, and a host of other factors pose serious challenges to their growth.

In Nigeria, several existing legislations have made it difficult for start-ups to raise funds. For instance, the limitations placed on crowdfunding by the Securities and Exchange Commission (SEC) posed a great challenge to budding Startups in the industry. In addition, the procedure for owning drones is also a good example of what these archaic laws do to hamper development among start-ups.

In 2018, Tunisia passed its Start-up Law making it the first African country to enact legislation specifically for start-ups. According to Tarek Chelaifa, Programme Manager at Flat6Labs Tunis, a well-known regional accelerator that provides technology companies with seed capital and mentorship, since the enactment of the law, there has been increased interest in founders and talent to launch their companies, public sector involvement and input in the start-up scene, more pipeline for investment funds to invest, as well as the launch of the start-up fund of funds in Tunisia to feed dedicated VC investment.

The Silicon Valley Example- Lessons

Silicon Valley is the stronghold of modern technological developments bringing out several technologies and companies that have created major impacts globally and have brought about different solutions to existing problems. Although there are many factors to its success, several experts are of the opinion that its proximity to Sanford University was one of the major reasons for its boom. According to HP co-founder, William Hewlett, the presence of Stanford University was a key factor in the development of the technology enterprise now known as Silicon Valley. More than anything, it was Terman, his students, and the encouragements and opportunities that he gave them that enabled this great enterprise to flourish.

Another attractive aspect of Silicon Valley’s culture is that it has firmly and wholeheartedly embraced agile and flexible working, enabled by cutting-edge software tools. Companies deploy modern collaboration platforms like Slack and Microsoft Teams to keep employees connected, and the prevalence of SaaS applications and cloud storage enables staff to be capable and productive from anywhere they choose.

The common thread that runs through all the Valley’s best qualities is fearless pursuit of improvement and innovation. Companies enlist the brightest minds available and then set them loose on problems, unconstrained by the boundaries of conventional thinking or traditional business dogma.

Finally, Silicon Valley’s success can be attributed to law. Legal innovations in the 1990s that reduced liability concerns for Internet intermediaries, coupled with low privacy protections, created a legal ecosystem that proved fertile for the new enterprises of what came to be known as Web 2.0. Laws such as the Communications Decency Act of 1996 (CDA), the Internet Tax Freedom Act, the Children’s Online Privacy Protection Act of 1998 (COPPA), the Digital Millennium Copyright Act (DMCA), the Anti-cybersquatting Consumer Protection Act (ACPA), and the Electronic Signatures in Global and National Commerce Act (E-Sign) are some of the laws that made Silicon Valley thrive. These laws accelerated the developments in cyberspace and encouraged more individuals to create innovative technologies and provided a conducive environment for technological developments.

The National Startup Law-Expectations

Players in the private sector and the tech industry have insisted that Nigeria needs a legal framework that will support founders, entrepreneurs, and innovators like Mark Essien of hotels. ng and many others. It is in that light that the Federal government of Nigeria in collaboration with various stakeholders in the technology ecosystem set off working on the National Start-up Bill. The Start-up Bill is geared toward creating an enabling environment for tech start-ups through co-created regulations with the Nigerian government. While town hall meetings regarding the Bill would hold in August, it is expected that the first draft would be submitted to the National Assembly for its first reading in October 2021.

Various stakeholders have given different opinions on what their expectations are for the Startup Bill. Some are of the opinion that there are already enough laws and regulations that can cater for the needs of start-ups in the country.

One striking feature of the Start-up Bill which sets it apart from the current Nigeria legislation is the fact that for the first time, we now have a law that would be put together by stakeholders and active players in the industry and the government. It is believed that this law would be “Nigerian” in the sense that it would reflect the current situation in Nigeria and cater for the Nigerian public. It would not just be the adoption of foreign laws which do not have any bearing on our present situation in Nigeria. This law also promises to set Nigeria on the world map by setting a new standard of practice for start-ups unique to the present climate.

Factors to be considered before the passage of the Startup Act

Regardless of the positive attributes of the proposed Start-up Law, there are certain factors that should be considered before the enactment of the Law.

I. Is there a need for the passage of the startup Act in Nigeria?

The first question would be if there is actually a necessity for Startups to have specific legislation when we already have so many legislations in place governing the entire technology ecosystem. Instead of a new law, wouldn’t it be better to focus on amending some of our laws which are clearly obsolete so as to make that relevant with the current changes in the technology ecosystem? For instance, our Copyright Act does not solve some of the challenges that have come with technological advancement and an amendment of this law has already been in place to ensure that it meets the global standard of copyright practices. There are also so many regulations that could be enshrined into existing laws to make them relevant and give them a stronger force of law. If the argument for the new Act is that it involves stakeholders in the start-up ecosystem, what makes it impossible to involve these stakeholders in the amendment process of some of our existing laws? To this writer, stakeholders can and should be involved in the amendment process of existing legislation.

II. What model should the law adopt?

The second question is what model would this law adopt? It has been said that this law would be wholly Nigerian and therefore be unique, however, there is the need to have a model which would guide its application and always predict its success in the future. The Silicon Valley model was based on proximity to major institutions, flexibility and favourable legal conditions. If this model was to be adopted here, then now more than ever there is a need to amend our existing laws especially laws governing intellectual property and platform liability. The Silicon Valley model goes to show that good laws are sacrosanct to the development of any ecosystem and this should be considered while we clamour for the enactment of the Start-up Act.

III. What is the level of government intervention in the startup ecosystem?

Another question that needs to be answered is the level of government intervention in the Start-up ecosystem. Are we going to have a system where the government and stakeholders both have 50% control in running the affairs of the system or a situation where stakeholders are given full autonomy to control the space just as we have in the entertainment industry? If the latter is adopted, then creative should be allowed to their work, and the government can maintain their supervisory powers and ensuring that the laws governing the sector adhere to the letter.

Recommendations/Conclusion

In conclusion, it is in my opinion that while Nigeria seeks to enact a law that is indigenous and unique, it is important to study the various models of successful climates in order to fine-tune our law to meet global standards. The Startup bill should contain a hybrid and unique model, one that allows both investors and regulators to participate fully in the growth process, each focusing on its stipulated roles while allowing the ecosystem to grow.

References

1. John Muriuki (2021) The top 10 African Tech Hubs. https://www.africanvibes.com/the-top-10-african-tech-hubs/.

2. Rebecca B, Benjamin C (2021) What Is A Startup? https://www.forbes.com/advisor/investing/what-is-a-startup/

3. 2 Years After Tunisia Startup Act: What’s Changed & What Lessons Can Be Learnt? https://teckexperts.com/2-years-after-tunisia-startup-act-what-s-changed-what-lessons-can-be-learnt-1096.html

4. Adam Shepherd (2020)What can the rest of the world learn from Silicon Valley? https://www.itpro.com/business-strategy/startups/354643/what-can-the-rest-of-the-world-learn-from-silicon-valley

5. Anupam Chander . How Law Made Silicon Valley. Emory Law Journal [Vol. 63:639]

[1] John Muriuki (2021) The top 10 African Tech Hubs. https://www.africanvibes.com/the-top-10-african-tech-hubs/.

[2] ibid

[3] Rebecca B, Benjamin C (2021) What Is A Startup? https://www.forbes.com/advisor/investing/what-is-a-startup/

[4] 2 Years After Tunisia Startup Act: What’s Changed & What Lessons Can Be Learnt? https://teckexperts.com/2-years-after-tunisia-startup-act-what-s-changed-what-lessons-can-be-learnt-1096.html

[5]Adam Shepherd (2020) What can the rest of the world learn from Silicon Valley? https://www.itpro.com/business-strategy/startups/354643/what-can-the-rest-of-the-world-learn-from-silicon-valley

[6] Ibid

[7] Anupam Chander. HOW LAW MADE SILICON VALLEY. EMORY LAW JOURNAL [Vol. 63:639]

[8] Oluwapelumi Omoniyi(2021) Does Nigeria Need A Startup Act? https://www.mondaq.com/nigeria/corporate-and-company-law/1070670/does-nigeria-need-a-startup-act