A Startup Act is a set of policies and regulations for startups that are passed as an official bill in a country.
It is designed to guide the activities of a startup and most importantly encourage startups.
Startup Act Policy contains integrated policies that make it easy for startups to operate.
These policies cover different angles such as tax incentives or subsidies, regulatory exemptions, direct finance, infrastructure among others.
A startup act also signals to local entrepreneurs that their career path is respected in the country.
A well-drafted and evaluated startup act has been known to increase sustainable job creation, domestic tax revenue, exports and reduce poverty.
In Africa, startups in recent years have been emerging consistently and have received global attention in terms of funding, and as such startup acts are now a necessity.
However, only a few African countries have been able to draft and enact startup acts in their country.
The startup acts passed in Tunisia and Senegal in 2018 and 2019 respectively improved the number and sustainability of startups and increased the revenue for each country.
This has made other African countries want to implement the same.
The Innovation for Policy foundation (i4policy), a Pan African community, that helped in implementing Tunisia’s Startup Act Policy stipulated seven political reforms/branches that supported the startup ecosystem.
They include governance, funding, infrastructure, market, support, human capital, and the culture of a country.
Below are the reviews of African countries that have adopted or drafted as well as those whose startup acts are in discussion.
Startup Act Policy in Tunisia
In 2018, the first Startup Act Policy was passed into law by the Tunisian Legislature.
This act stipulated a definition for what a startup is and the maximum number of the workforce a business considered as a startup should have.
As stipulated by the Act, a startup is a company/business that is below eight years and must not have more than one hundred employees.
And for ownership, the startup founders must own up to two-thirds of the company shares.
The Tunisian Startup Act Policy also included in their policies corporate and capital tax exemption benefits, one-year state salaries for a startup with three co-founders.
Tunisia also granted startup founders the right to return to their old jobs should their startup fail.
Since the enactment of the Startup Act Policy, Tunisia has been receiving investments from foreign investors.
In 2019, over twenty-two million four hundred thousand US dollars were invested in Tunisian startups.
Startup Act Policy in Senegal
In 2019, the Startup Act Policy for Senegal was adopted and approved by the Senegalese National Assembly as part of the framework plan of digitizing the country’s economy.
The Startup draft was written in 2018 by over sixty stakeholders in the Senegalese innovation ecosystem.
The Senegal Startup Act includes tax policy recommendations and startup financing incentives.
The Act stipulated a three-year flat tax exemption, subsidized registration rates, free training for young entrepreneurs among others.
The Senegalese government’s efforts towards digitization of their economy yielded results as two years after the startup Act was adopted there has been a significant increase in the number of startups in the country despite the global pandemic.
Startups in Senegal now have favorable conditions that will aid their survival. In one year over eighteen million dollars was fundraised by Senegalese startups and the enactment of the startup act is largely a contributing factor to this.
Startup Act Policy in the DRC
The Congolese government in 2020 in collaboration with the I4policy foundation and Orange Corner is setting up a Startup Act for startups in the Democratic Republic of Congo.
The I4policy foundation working with the above-mentioned bodies used the policy hackathon methodology to draft up the Startup Act.
Sixty stakeholders in the innovation and entrepreneurial ecosystem were involved in this policy hackathon.
This method ensures adequate interaction and participation as entrepreneurs state the challenges they face at various points in developing their startup.
This way relevant policies were stipulated and drafted that are crucial to the economic development of the country.
Implementations of the Startup Act are believed to be well underway as the Congolese Ministry of SMEs presented it to the parliament and the Congolese government is seeking the best implementation process.
Startup Act Policy in Rwanda
In Rwanda, the government is championing the enactment of a Startup Act.
They want to integrate the startup Act in their national policy to spearhead policy reforms that will aid startup development in the country.
The i4policy is also helping in the Startup Act drafting through its policy Hackathon series as it has proven to be a reliable way of getting a constructive Startup policy that will guide and encourage Startup development.
The Startup Act policy in Rwanda is expected to generally improve the business environment for startups, and boost startup infrastructure growth, making it easier for an entrepreneur to go from the ideation process to having a Startup.
Startup Act Policy in Kenya
The Startup Act Policy Bill in Kenya was published in the Kenya National Gazette.
The bill which is sponsored by Johnson Sakaja, a Nairobi County Senator provides a legal framework that will aid innovation and entrepreneurship in the country.
This startup Act Policy also works to aid the establishment of incubation hubs for startups and also building a network of investors for these startups both local and foreign.
Startup Act Policy in Ghana
In 2020, the Ghanaian government also held a meeting with the I4policy foundation to discuss the development of the Startup Act Policy for startups in their country.
This Startup Act Policy is believed to create a Startup friendly environment that will help boost the Ghanaian economy despite hits from the global pandemic
Startup Act Policy in Nigeria
Nigeria currently does not have a Startup Act Policy despite having one of the largest startup ecosystems in Africa. There are over two hundred and fifty startups in Nigeria.
Yet, the country doesn’t have a clear-cut policy for startups. The startup founders have to work around regulations of other industries to either self-regulate or adapt.
This can take time and money that could be used in developing the startup.
it is believed that a Startup Act Policy is needed in the country. As the Act will provide the basis for aiding startups while also serving as an indicator for investors to know that they can invest.
Tax exemption, subsidized registration, and operational license fees, among others, are some of the benefits of the startup Act Policy if enacted in Nigeria.
Other African countries, Ethiopia, Mali, and other ten countries have also gotten into a conversation with the i4policy foundation to discuss how Startup Act Policies will be introduced in their respective countries.
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