The Nigeria Startup Act challenges go beyond policy; they highlight gaps in execution, access to funding, infrastructure, and inclusion that require urgent attention.
The Nigeria Startup Act was a bold move aimed at transforming the country’s startup ecosystem. But ask around today, and you’ll hear the same question on many lips: Why isn’t it working as expected?
Here’s the truth: an excellent policy can still fall flat if real-world gaps aren’t addressed. In this article, we break down the most significant hurdles holding back the Startup Act and share practical, founder-focused ideas on how to move forward.
1. Awareness and Adoption Gap
What’s going on?
Outside Lagos, Abuja, and Port Harcourt, many founders haven’t even heard of the Act. State governments and local players are largely out of the loop. One big reason? Communications have been too focused on tech platforms and startup events rather than grassroots outreach initiatives such as community radio, local government workshops, or partnerships with non-tech business associations.
Why it matters:
A national startup policy that’s only alive in a few cities risks widening the digital divide.
What can fix it:
- Launch state-level awareness campaigns through tech hubs, radio, and local events.
- Translate key parts of the Act into local languages and plain English guides.
- Showcase states like Kaduna and Ekiti that are starting to engage.
- Involve local universities, angel networks, and state development agencies.
Learn more about the broader goals of the Act in our companion guide: Benefits of Nigeria Startup Act: What Founders and Investors Need to Know.
For a comparative policy review, see the Nigerian Economic Summit Group’s analysis: Nigeria’s Startup Act 2022 – A Benchmark Assessment.
2. Startup Label Headaches
The problem:
The Startup Label is intended to open doors, including tax breaks, funding, and capacity building, but the process is painfully slow. Many applicants are unsure of their standing.
Real impact:
Delays mean lost time, lost funding, and frustration.
How to fix it:
- The CAC and Startup Secretariat need to simplify the process.
- Publish service timelines (SLAs) for approvals.
- Create a dashboard where founders can track their application status live.
Read more about how eligibility for the Startup Label works in our article: Nigeria Startup Act Eligibility: Who Qualifies, What You Get & How to Apply.
3. Too Many Cooks: Regulatory Overlap
What’s happening:
Startups often deal with NITDA, NOTAP, CAC, NDPC, and more, frequently facing unclear rules and conflicting requirements.
The fallout:
Founders waste time juggling multiple agencies. It’s confusing, time-consuming, and costly.
A better way:
- Push for agency collaboration through formal Memoranda of Understanding (MOUs).
- Establish a dedicated Startup Ombudsman within the Startup Secretariat to assist startups in navigating compliance and resolving conflicts efficiently.
This regulatory tangle is part of a broader challenge in aligning Nigeria’s startup support framework with global best practices. See how Nigeria compares globally.
4. Nigeria Startup Act Challenges: Funding Gaps Beyond the ₦10bn Seed Fund
The issue:
We’ve all heard about the ₦10 billion fund, but how to access it? Who’s gotten it? When? Most founders have no clue.
Why it matters:
When public funding feels out of reach, trust drops, and innovation slows. For founders outside the inner circles, it’s even harder.
Let’s fix that:
- Publish disbursement reports and selection criteria on a regular basis.
- Partner with regional accelerators and angel syndicates to co-invest.
- Offer founder support for applications, especially in underrepresented areas.
- Simplify application steps to eliminate unnecessary bureaucracy.
For a deeper dive into funding realities and founder experiences, see our review of startup capital trends: The Future of Nigerian Startups.
5. Infrastructure Still Holding Us Back
Reality check:
Broadband is patchy. Power is unreliable. Many regions remain offline or are left behind. The Nigerian Ecosystem Report confirms this isn’t anecdotal.
How startups suffer:
With higher costs, smaller customer bases, and more complex hiring, the challenges multiply outside urban centers.
What can help:
- The government should offer tax breaks to ISPs that expand into underserved areas.
- Use public-private partnerships to build reliable infrastructure.
- Prioritize Act incentives by weighting eligibility criteria toward startups creating impact in underserved regions.
Explore how Nigeria’s broader digital strategy aligns with its infrastructure needs in our article Nigeria Digital Economy: Tracking NDEPS Progress to 2025 and Beyond.
6. Talent Is Still Leaving
The concern:
We are training smart developers, designers, and product folks, but many are taking those skills abroad. Local startups can’t always compete with those that stay.
Why it’s happening:
Brain drain, low pay, and limited career growth paths drive talent away. With more companies hiring remotely across borders, Nigerian talent now has more options, and local startups are losing out due to competitive pay and equity issues.
Fixes that work:
- Align with the Digital Literacy Framework, but extend it to include essential startup skills, such as product management and growth.
- Build more founder-academia partnerships with real-world training.
- Explore tax credits for startups offering competitive salaries or equity.
- Support subsidized upskilling tied to retention agreements.
7. Gender & Inclusion Still on the Sidelines
The gap:
Women-led and inclusive startups aren’t getting the attention or support they need. And it shows.
Data to note:
Only 18.5% of funded Nigerian startups in 2024 had a female co-founder.
How to close it:
- Add gender-based incentives and dedicated pitch events.
- Track founder diversity in Startup Portal data using disaggregated metrics.
- Support incubators focused on women and underserved communities.
StartupBlink also profiles Nigeria’s startup ecosystem globally. See: Startup Ecosystem of Nigeria – StartupBlink.
8. Feedback & Monitoring Challenges in the Nigeria Startup Act
What’s missing:
Nobody’s regularly asking: Is this working? There is no clear way to measure progress or identify issues.
Why it’s risky:
Without feedback, we can’t fix what’s broken. Funds and resources could continue to go to the wrong places.
A smarter path:
- Launch a public Startup Act dashboard tracking Label applications, processing times, fund disbursement, geographic reach, and founder demographics.
- Establish independent review councils comprising real founders, diverse by region, gender, sector, and startup stage, to provide regular feedback.
Final Thoughts
The Nigeria Startup Act can still be a game-changer, but only if the friction points are tackled head-on. More transparency, smarter execution, and inclusive access will unlock the potential that this policy was designed to achieve.
Getting it right means creating the conditions for jobs, innovation, and global competitiveness to thrive within Nigeria’s digital economy. Let’s not waste the opportunity.
Solving the Nigeria Startup Act challenges requires clear execution, inclusive planning, and long-term commitment from all stakeholders.
