Nigeria Startup Act Explained: Registration, Benefits & Funding for Founders

Introduction

Nigeria’s startup scene has never lacked ambition but has often lacked structure. In a country bursting with entrepreneurial energy, the Nigeria Startup Act was introduced to bring order, confidence, and momentum to the chaos. But three years after it was signed into law, how much of that promise is becoming reality?

This guide breaks down the Act in plain English, exploring what it offers, how to register, who’s benefitting, and where the cracks are showing. Whether you’re a founder, investor, or ecosystem builder, this is the deep dive you need to understand one of Nigeria’s most talked-about policies.

To understand the environment this Act was meant to correct, consider how fragile the ecosystem was: high burn rates, investor hesitancy, and startup closures. Our article on why Nigerian startups failed in 2024 explores this backdrop in more detail.

Background: Why the Act Was Needed

Nigeria’s startup ecosystem has always operated in spite of regulation, not because of it. Prior to the Act:

• Founders were navigating regulatory grey areas
• Investors were wary of unpredictable policy shifts
• Startups faced bottlenecks in IP protection, tax policy, and public procurement

The Nigeria Startup Act (signed into law in October 2022) set out to fix that by defining what a “startup” is, creating a formal support structure, and enabling founders to access tailored incentives and funding mechanisms.

What the Act Covers

The Act provides a framework for:

• Startup labeling – official recognition for startups that meet defined criteria
• Incentives – tax breaks, IP support, and regulatory sandboxes
• Capacity building – government-backed talent and infrastructure initiatives
• Public procurement access – easier entry to government contracts
• Funding – through a newly established Startup Investment Seed Fund (NSISF)
• Institutional coordination – via the National Council for Digital Innovation and Entrepreneurship (NCDIE)

The Startup Label: Who Qualifies and How

To benefit from the Act, startups must first obtain the Startup Label through the official portal at startup.gov.ng.

Step-by-Step Registration Process:

1. Visit the Portal: Go to startup.gov.ng and create a user account.
2. Profile Setup: Fill out your startup profile with business details, registration documents (CAC certificate, TIN, etc.), team structure, and business model.
3. Apply for the Label: Submit a request for the Startup Label, ensuring your business meets the eligibility criteria.
4. Review Process: The application is forwarded to the Startup Labeling Committee, which evaluates submissions based on compliance with the Nigeria Startup Act.
5. Notification: Applicants receive updates via email and through their dashboard. Those approved receive a digital certificate of recognition.
6. Label Benefits Activation: Once labeled, the startup becomes eligible for incentives, public procurement access, and funding programs outlined under the Act.

As of April 2024, NITDA reports:

• 12,948 startups registered
• 912 venture capitalists, 925 hubs/accelerators onboarded
• A labeling committee has been constituted but feedback suggests many startups are still in application limbo, awaiting decisions

What the Act Gets Right

The Nigeria Startup Act brought a sense of structure to Nigeria’s fragmented innovation policy landscape. Its biggest strength lies in providing startups with a formal status under Nigerian law, supported by institutional mechanisms for funding, collaboration, and regulation. Below are some of the areas where the Act has shown measurable or symbolic success despite the implementation gaps that still exist.

1. Clarity & Legitimacy

For the first time, startups have formal recognition under Nigerian law. This clarity helps streamline operations, particularly in areas like tax, IP registration, and financial reporting, where ambiguous classifications previously hindered access to services and incentives.

2. Structured Government Support

From iHatch (run by NITDA & JICA) to LASRIC (Lagos), AEA (Abuja), and programs in Kaduna and Rivers States, the Act has spurred structured collaboration between government and startups, especially at the state level.

3. New Funding Pathways

The creation of the Nigeria Startup Investment Seed Fund (NSISF), managed by the Nigeria Sovereign Investment Authority (NSIA), is a long-overdue intervention. Though disbursements are still in the early stages, this is the first time Nigeria has established a nationally backed pool of capital explicitly for early-stage startups.

4. Global Signal

The Act sends a message that Nigeria is serious about innovation policy, helping attract partnerships with JICA, Google, Mastercard, and others.

This policy is also part of a broader digital push. If you’re curious about how businesses are adapting to Nigeria’s shifting tech landscape, read our feature on digital transformation in Nigeria.

What’s Still Missing

1. Slow Domestication

Only around 10 states (including Lagos, Enugu, Abuja, Kaduna, and Rivers) have made moves to domesticate the Act. Others remain stalled in consultations or political delays.

2. Funding Still Concentrated

Despite the Act, Nigerian startup funding declined by 17% in 2024 to $331.6 million, according to the African Tech Startups Funding Report 2024. Just two companies, Moniepoint and Moove, accounted for 63% of that. Most early-stage founders remain underfunded.

“Early-stage grants are oversubscribed, leaving many of us reliant on angels,” notes Tunde Adeyemi, founder of EduTech NG.

3. The Labeling Bottleneck

Multiple founders report long delays and a lack of transparency in the labeling process. As of Q2 2024, fewer than 2,000 startups had received confirmed labels.

“The label helped us secure a grant, but the process took six months,” says Adaobi Nwafor, CEO of FarmTech Solutions. “We had to follow up repeatedly before getting feedback.”

4. Policy vs Practice

Many agencies and banks have yet to fully align with the provisions of the Act, especially when it comes to procurement access and tax incentives. Some state procurement portals still require outdated certifications that the Act was meant to waive, creating friction for labeled startups trying to bid for public contracts.

Several Nigerian startups are going global despite the local policy challenges. See how founders are scaling internationally in our article, Nigerian Startups Going Global.

Founder Perspective: A Tool, Not a Shortcut

The Act is not a silver bullet but can be a strategic lever. Startups should:

• Apply for the Startup Label early
• Align business models with tech-driven eligibility requirements
• Leverage regional programs (e.g., LASRIC in Lagos, iHatch for training)
• Build investor credibility using the formal framework the Act provides

Domestication refers to when state governments adopt and implement provisions of a federal law, a necessary step for the Nigeria Startup Act to take effect at the subnational level.

For more on how Nigerian startups are adapting their business models to survive and scale, explore this guide on freemium vs subscription models.

Regional Comparison: How Nigeria Stacks Up

Here’s how Nigeria’s Startup Act compares to similar frameworks across Africa:

This table highlights the trade-offs in policy design and execution:

• Tax Breaks: Tunisia offers the most generous fiscal incentives with an 8-year tax holiday. Nigeria provides tax reliefs, but access depends on receiving the startup label and state-level implementation.
• Funding Access: Nigeria has a dedicated national seed fund (NSISF), but disbursement has been slow. Senegal disburses grants faster through DER, especially to women and rural entrepreneurs.
• Regulatory Ease: Tunisia simplifies bureaucracy with streamlined procedures and a Startup Visa. Nigeria still struggles with bottlenecks in labeling and unclear inter-agency coordination.
• Focus Area: Senegal prioritizes inclusion (youth, women, rural), Tunisia focuses on scale-ready ventures, and Ghana focuses on innovation infrastructure. Nigeria’s approach is broad, but current traction remains urban-centric.

In short, Nigeria leads on structure but lags in execution. If implementation improves, the Act could become the most influential startup policy on the continent.

Conclusion: Nigeria’s Startup Act Is a Foundation – Now We Need the Building

There’s no doubt the Nigeria Startup Act is a milestone. But like any foundation, it’s only as useful as what we build on top of it. Full implementation, state-level adoption, and consistent funding will determine whether this becomes a blueprint for prosperity or another policy left on paper.

PlanetWeb will continue to monitor its impact and advocate for a startup environment where innovation thrives from Lagos to Lafia.

Looking for more insights? Explore the rest of our Nigeria Startup Act series:

• The Essential Nigeria Startup Act for Entrepreneurs and Investors
• Nigeria Startup Act vs Global Startup Policies: Key Insights & Lessons
• Nigeria Startup Act Challenges: Key Gaps and How to Fix Them
• The Future of Nigerian Startups: How the Startup Act Will Shape Innovation

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