'Why startups need extra-regulatory support'
Eight countries in Africa have fully implemented Startup Acts. They include Tunisia, Senegal, Nigeria, the Democratic Republic of Congo (DRC), Côte d’Ivoire, Ethiopia, Ghana and Rwanda.
The Acts are expected to enable new businesses to exist and develop in favourable conditions.
According to Startup Graveyard, while analysing the impacts of the Acts so far in their respective countries, enacting startup Acts is a positive method of providing enabling environments for new and small businesses. However, evidence has revealed that startups require more help beyond the creation of laws.
According to the body, information campaigns about the Act’s provisions and constantly revising the laws to solve problems faced by startup founders would be a welcome effort.
Startup Graveyard listed the countries with startup acts as Tunisia, Senegal, Nigeria, the Democratic Republic of Congo (DRC), Côte d’Ivoire, Ethiopia, Ghana, and Rwanda. It disclosed that Tunisia’s Startup Nation Law came into play in April 2018, making it the first African country to do so. The latest startup act adopted in an African country was by Côte d’Ivoire in November 2023. Other countries in the process of enacting startup acts include Algeria, Egypt, Kenya, Morocco, Tanzania and Zambia.
While the laws are created by the specific needs of their respective countries, they have one theme in common: ensuring the continued establishment and growth of startups.
Commenting on Nigeria’s Startup Act, which was signed into law by former President Muhammadu Buhari in October 2022, Startup Graveyard said the core objectives include to streamline legal processes for the development of startups in the country, to provide support for the establishment and growth of startups and technology-related talents, to position Nigeria’s startup ecosystem as a leading force in Africa’s technology sector.
For Tunisia, the report said it was enacted under Habib Essid’s rule in 2018 as part of the ‘Digital Tunisia 2020’ strategy. Its core objectives are to streamline legal and administrative processes for the development of startups in Tunisia, to provide support for the creation and growth of innovative, technology-driven startups through incentives, tax benefits and a dedicated startup label, to position Tunisia’s startup ecosystem as a leading entrepreneurial and technological hub in Africa and the Middle East.
While Nigeria made $10 billion in yearly funding available, Tunisia, according to the report, provided €100 million for investment in eligible startups at different development levels.
On possible growth made with these Acts, Startup Graveyard observed that six months after Nigeria’s Startup Act was enacted, 12 states in the country had reportedly expressed interest in or domesticated the use of the law. It noted that by April 2024, the Minister for Communications, Innovation, and Digital Economy, Dr Bosun Tijani, announced the opening of the Nigeria Startup Portal for labelling. The Startup Portal had over 12,000 registered startups at the time of this announcement.
According to it, by 2023, over 900 Tunisian startups across different sectors had been labelled. It said this progress prompted the government to push for the adoption of “Startup 2.0” in 2023, aimed at strengthening the first Startup Act and positioning home-grown companies for the international market.
But there are still challenges confronting startups and the acts in some countries. For instance, the report noted that despite the initial traction Nigeria’s Startup Act gained, state-level adoption has not increased.
According to it, out of 36 states, just 12 have domesticated the law, or are in the process of doing so.
Further, it said the Startup Investment Seed Fund is assigned N10 billion yearly. However, only 12 per cent of this amount reportedly reached startups in 2023 due to unclear rules about the fund’s dispersal. Many startups are also not aware of the Act’s provisions and incentives.
Based on TLP Advisory’s Report on Nigeria’s tech space, despite the financial provisions in the Startup Act, almost 50 per cent of startups still depend on angel investors, venture capitalists and crowdfunding to scale operations.
While the policies surrounding Tunisia’s startup ecosystem remained favourable, other issues still exist in the country’s local tech ecosystem. Former founder of Split, a Tunis-based carpool startup, Ezzedine Cherif, opined that despite the Startup Act, issues such as over-regulation, misaligned investment choices, and stifled foreign exchange make it almost impossible to scale Series-A level startups from within the country.
Ahmed Hadri further elaborated on Tunisia’s unique position as the “first African country to initiate a Startup Act law, but at the same time to have a foreign exchange law that dates from the 70s.
Amid the challenges, Startup Graveyard noted that other policy frameworks support startups beyond the Startup Acts legislated by individual countries. It noted that Pan-African policies like the African Union startup policy framework and the African Continental Free Trade Area (AfCFTA) support cross-border businesses and reduce tariffs for its member states, adding that the Digital Economy for Africa Initiative (DE4A) aimed for digital inclusion for individuals, businesses and governments by 2030.
MEANWHILE, six Nigerian startups—Moniepoint, OmniRetail, PalmPay, Termii, Remedial Health, and Paga have been listed on the Financial Times’ 2024 ranking of Africa’s Fastest-Growing Companies, which features 130 high-growth firms across the continent.
The yearly FT ranking, produced in partnership with research company Statista, identifies African companies with the most rapid revenue growth between 2020 and 2023. The list benchmarked companies by compound yearly growth rate (CAGR) in revenues, while also considering headcount expansion and operational resilience amid inflation, currency fluctuations, and economic headwinds across the continent.
Recall that in 2024, five Nigerian startups—Omniretail, Moniepoint, Thrive Agric Limited, Paga and Zone – were named on the 100-company list.
The FT ranking has become a key barometer for investor interest and global visibility. At a time when African startups are navigating declining venture funding and volatile operating environments, the recognition underscores these companies’ ability to build durable businesses with wide-scale user adoption.
