Nigeria Startup Act Challenges: What Isn’t Working
The Nigeria Startup Act’s gaps fall into two different categories: some are about how the law itself is being implemented, and some are about broader conditions in the Nigerian startup ecosystem that no piece of legislation could fix on its own. Conflating the two makes for a louder complaint but a less useful one.
This article works through the specific implementation gaps behind the Act, what the evidence supports about each, and what a founder should take from that when deciding how much to rely on the Act.
For a broader assessment of how the Act functions overall, our article on what the Nigeria Startup Act delivers covers that separately, without duplicating the specific gaps this piece works through in detail.
Labelling Delays and Opacity
Our overview assessment of the Act already covers the gap between the 12,948 startups registered on the Portal as of April 2024 and the roughly 75 formally labelled as of May 2025. What that comparison does not resolve is what happens to an application in between.
NITDA has not publicly provided a breakdown showing how many labelling applications have been received, approved, rejected, or remain pending at any point in time. Nor has it clarified whether the gap reflects a genuine backlog, incomplete applications, or businesses that registered on the Portal without pursuing a full labelling application.
Without that breakdown, calling it a “backlog” goes beyond what the public record supports.
What is established is narrower: the Act itself does not fix a processing timeline, a gap our article on Nigeria Startup Act eligibility covers in the application process specifically. The public information available does not give a founder a benchmark for whether a six-week wait on their own application is normal or a sign something has gone wrong.
That absence of a clear status or processing benchmark may be a bigger practical problem than the delay itself. A founder who knew their application would take four months could plan around it. A founder with no benchmark at all has no way to tell whether following up is reasonable persistence or simply another request that may not produce a useful answer.
Interagency Coordination
Where Multiple Mandates Create Friction
The Act’s provisions cut across multiple government bodies, each with its own mandate and processes. The National Office for Technology Acquisition and Promotion (NOTAP) handles technology-transfer fee discounts, and the Corporate Affairs Commission (CAC) runs a dedicated Portal section for company transactions.
The Secretariat oversees the labelling framework, while the Coordinator handles the operational labelling process itself.
A founder does not experience these as entirely separate policy areas; when a particular benefit depends on more than one government body, a delay or mismatch in one part of the process can affect whether that benefit reaches the startup.
A startup can be correctly labelled and still find that a specific tax or licensing benefit stalls because it depends on a different agency’s own process, one the Startup Act does not directly control.
NITDA’s Own Admission
NITDA’s own leadership has acknowledged the problem directly, launching a new Regulatory Sandbox initiative in May 2026.
The agency’s Director-General said regulators typically operate independently because of separate legal mandates, making it difficult for existing rules to keep pace with a framework meant to work as one system.
That matters because the agency responsible for coordinating the framework acknowledges the difficulty, rather than it being inferred solely from outside criticism.
A separate 2026 NITDA co-creation session brought together representatives from more than 15 government institutions specifically to coordinate how incentives get delivered.
The coordination burden exists because the Act’s benefits themselves cut across trade, finance, communications, innovation, and science and technology portfolios that don’t automatically talk to each other. Closing that gap depends on agencies choosing to work together rather than anything the Act itself can force.
Domestication and Uneven State-Level Implementation
The Act is a federal legislation. It does not automatically create equivalent institutions, incentives, or legislation at the state level, so uptake depends on individual states choosing to domesticate or adapt the framework themselves.
That process has moved unevenly since 2022. Nigeria’s federal system means passing the law nationally was only the first step; startups still operate day-to-day under state-level regulations, tax authorities, and land agencies that the federal Act does not directly reach.
In June 2026, the iDICE Programme Coordination Unit within the Bank of Industry, the executing agency appointed by the Federal Government, issued a call for consultancy support specifically to help states domesticate the Act and access federal incentives.
The fact that this work was still being commissioned in June 2026 shows that state-level domestication remained an active implementation issue nearly four years after the Act became law.
Startup activity itself also skews heavily toward a small number of states, though that is a separate observation from domestication specifically. A state actively building its own tech ecosystem is not the same thing as a state that has formally adopted the federal framework, and having one does not guarantee the other.
Seed Fund Transparency and Access
The Act establishes the Nigeria Startup Investment Seed Fund, managed by the Nigeria Sovereign Investment Authority, with a statutory minimum of ₦10 billion paid in annually. The legal position is clear: the Fund is established by the Act, and our article on Nigeria Startup Act benefits covers what it is meant to do.
What is harder to establish is what happens after that. Public reporting does not show how much of the statutory minimum has been paid each year, how disbursement decisions are made, or how many labelled startups have received funding directly from it.
Separate from the statutory fund, NITDA’s innovation office has referenced a $40 million Startup Investment Seed Fund arrangement, with $20 million from Japan’s international cooperation agency matched by $20 million from the Nigeria Sovereign Investment Authority.
What the public record does not yet establish is how that $40 million arrangement maps onto the statutory Fund, how much funding has been disbursed, which labelled startups have received it, or how applicants are selected. For a founder, that makes Seed Fund access a potential source of support, not something to build a business plan around.
Gender and Founder Diversity in Funding
Women remain underrepresented among the founders of Nigerian startups receiving funding, although the scale of that gap needs to be stated carefully.
Disrupt Africa’s 2024 funding data found that eight of the 39 Nigerian startups that raised funding had at least one female co-founder, representing 20.5% of funded ventures. That was down from 22.6% in 2023.
The figure shows that women remain a minority among the founders of funded Nigerian startups. It does not, however, establish that the Startup Act is responsible for that gap, or that the Act’s implementation is making it worse.
The Act does not set gender requirements for labelled startups, nor does it direct investors on how to allocate private capital. Gender representation in startup funding is therefore better treated as a broader ecosystem issue than as an implementation failure of the Act.
The Startup Act can affect the conditions under which startups operate and access support, but it does not determine which founders investors choose to back.
What the Act Can and Cannot Fix
Not every problem facing Nigerian startups is a Startup Act implementation failure, and treating them as though they were makes the Act responsible for outcomes it was never positioned to control.
Labelling delays, opacity around processing, interagency coordination gaps, uneven state domestication, and Seed Fund disbursement are implementation problems. They sit with the Secretariat, the Coordinator, and the government bodies responsible for delivering what the Act already promises in writing.
These are the gaps where improvement would most directly reflect better implementation of the Act. A published processing dashboard, a clearer breakdown of Seed Fund disbursement, or a formal memorandum between NITDA and NOTAP would all be concrete, checkable signs that implementation is genuinely progressing rather than just being described as progressing.
Funding concentration, investor gender composition, and general market conditions are not implementation problems in the same sense. No labelling process or interagency memorandum changes an investor’s risk appetite or which sectors currently attract capital.
Our article on who’s getting funded in Nigeria’s startup ecosystem covers that broader funding landscape directly.
Startup Labelling can affect eligibility for particular incentives or support mechanisms, but it does not replace the fundamentals investors use when deciding where to put capital. Blaming the Act for these outcomes sets an unreasonable bar and obscures where the Act’s delivery genuinely falls short.
| Gap | Category | Where It Sits |
|---|---|---|
| Labelling delays and processing opacity | Implementation | The Secretariat and Coordinator |
| Interagency coordination | Implementation | The government bodies delivering each incentive |
| Uneven state-level domestication | Implementation | Individual state governments |
| Seed Fund disbursement and access | Implementation | The Fund’s management and selection process |
| Funding concentration | Ecosystem | Investor risk appetite, outside the Act |
| Investor gender composition | Ecosystem | Investor decision-making, outside the Act |
| General market conditions | Ecosystem | Macroeconomic factors, outside any single policy |
What This Means for Founders
Should a Founder Still Pursue the Label
For a genuinely eligible business, pursuing the label can still make sense in most cases. None of the implementation problems above makes the label worthless; they make it a formal credential with real but currently unreliable practical reach, not a switch that turns on funding and support automatically.
Our article on Nigeria Startup Act eligibility covers who qualifies.
The application cost, in time and paperwork, is real but bounded. The upside is open-ended: if coordination and disbursement improve, a business already labelled is positioned to benefit without having to start the labelling process later.
Our piece on what the Act’s support mechanisms deliver against what founders need weighs that broader cost-benefit question directly.
Which Benefits Not to Rely On
Anything that depends on a specific government body acting on a specific timeline sits in this category: Seed Fund disbursement, processing speed, or coordinated action across multiple agencies. These may work, but the evidence does not currently support planning a business around them as certainties.
A founder budgeting on the assumption that a specific incentive will arrive by a specific quarter is planning around a promise the Act’s own machinery has not yet demonstrated it can keep on schedule.
What to Verify Before Committing
Whether the specific incentive in question has documented cases of startups receiving it, not just being eligible for it, and whether the agency responsible has published any current guidance beyond the Act’s original text. A benefit that exists in the statute but has no clear current implementation guidance deserves more verification before a founder relies on it.
Treat the Startup Act as an additional source of eligibility and support, not as a dependency the business model needs to survive. That framing holds up regardless of how quickly, or slowly, the remaining implementation gaps close. Our article on why Nigerian startups fail covers why the underlying business fundamentals matter more than any single policy.
What a founder can control is their own operational readiness, including the systems, documentation, and compliance processes needed to take advantage of available support when it becomes accessible.
PlanetWeb Solutions helps Nigerian startups build that operational readiness. Our Startups industry page has more on how we work with founders directly. Get in touch to talk through what that could look like for your business.
