Incentives for Startups under the Nigerian Startup Act of 2022.

Incentives for Startups under the Nigerian Startup Act of 2022

By Rotimi Owolabi · 7 March 2026

Nigeria’s startup ecosystem has expanded significantly in the past decade, producing innovative companies across sectors such as fintech, healthtech, logistics, and e-commerce. In 2025, Nigeria attracted a total of $438 million in startup funding, ranking 4th on the African continent, below South Africa, Kenya and Egypt. Recognising the importance of startups to economic growth and job creation, the Federal Government enacted the Nigerian Startup Act in 2022 to create an enabling legal and regulatory environment for Nigerian Startups.

The Act introduces a range of incentives designed to encourage innovation, attract investment, and reduce regulatory fictions. However, most of these benefits are only available to companies that obtain the Startup Label.

The Startup Label

The Startup Label is a certificate issued under the Act confirming that a company qualifies as a startup within the meaning of the law. It is issued through the Startup Support and Engagement Portal managed by the government. A company must obtain this label before it can benefit from most of the incentives provided under the Act.

Requirements for Obtaining a Startup Label [1]

1. The company must be registered as a limited liability company under the Companies and Allied Matters Act.

2. The company must have been in existence for not more than ten years from the date of incorporation.

3. The company’s objectives must involve the innovation, development, production, improvement, or commercialisation of innovative digital technology products or services.

4. The startup must demonstrate that it is leveraging technology as a core part of its business model.

5. The startup must own a proprietary technology, or a recognised innovative product process or registered software.

6. At least one-third of the shareholding must be held by Nigerians who are founders or co-founders of the startup.

Applications for the Startup Label are submitted through the Startup Support and Engagement Portal, after which the application is reviewed and if approved, the startup receives a certificate confirming its labelled status.

Key Incentives under the Nigerian Startup Act

1. Tax and Fiscal Incentives

• Pioneer Status Incentives (PSI)(Replaced by Economic Development Tax Incentives): A labelled startup operating in an industry eligible under the Pioneer Status Incentive scheme may apply to the Nigerian Investment Promotion Commission (NIPC) for expedited approval for the grant of tax reliefs and incentives under the PSI scheme. It is worthy of note that the NIPC announced that it would no longer accept applications for Pioneer Status Incentives to pave the way for the new Economic Development Tax Incentives (EDTI) under the new Tax Laws.[2] The new EDTI replaces the Pioneer Status Incentives. Hence companies previously eligible for Pioneer Status Incentives are now eligible for Economic Development Tax Incentives.

• Industrial Training Fund (ITF) Exemption: Labelled startups that conduct in-house employee training programmes are exempt from contributing to the Industrial Training Fund. [3]

• Export Incentives: Startups that export qualifying products or services may access incentives under the Export (Incentives and Miscellaneous Provisions) Act, including support from the Export Development Fund, Export Expansion Grant, and Export Adjustment Scheme Fund. [4]

• Capital Gains Tax Exemption: Capital gains tax will not be charged on gains from the disposal of startup assets by investors, provided the investment has been held in Nigeria for at least 24 months. [5]

• Crowdfunding and Alternative Financing: Labelled startups may raise capital through crowdfunding intermediaries and commodities investment platforms licensed by the Securities and Exchange Commission (SEC). [6]

• Credit Guarantee Scheme: The Act provides for the establishment of a Credit Guarantee Scheme to support startup expansion and improve entrepreneurs’ access to credit and financial information.[7]

• 30% Investment Tax Credit for Investors: Investors such as angel investors, venture capital firms, private equity funds, accelerators, and incubators may receive an investment tax credit of up to 30% of their investment, applicable to taxable investment gains.[8]

• Reduced Withholding Tax for Foreign Services: Labelled startups are allowed to deduct only 5% withholding tax from payments made to non-resident companies providing technical, consulting, professional, or management services.[9]

• Research and Development Tax Deduction: Research and development expenses incurred in Nigeria are tax deductible, and the usual restrictions under the Companies Income Tax Act do not apply to labelled startups.[10]

2. Access to Funding

The Act establishes a N10 Billion Startup Investment Seed Fund, managed by the Nigerian Sovereign Investment Authority.[11] The fund is intended to provide financial support to early-stage startups, accelerators, incubators and other ecosystem enablers.

Labelled startups may also access grants and financing programmes managed by institutions such as the Central Bank of Nigeria (CBN), the Bank of Industry (BOI), and other authorised funding institutions supporting small and medium-sized enterprises.

3. Regulatory Support and Ease of Doing Business

The Startup Act also aims to simplify interactions between startups and government agencies. Through the Startup Support and Engagement Portal, [12] startups can access government services and regulatory guidance through a single digital platform. The Act also establishes the National Council for Digital Innovation and Entrepreneurship,[13] which coordinates policy implementation and ensures that regulatory agencies work together to support the startup ecosystem.

Intellectual Property Support: The Act promotes collaboration with the Trademarks, Patents and Designs Registry and the Nigerian Copyright Commission to assist startups in protecting, commercialising, and internationalising their intellectual property rights.[14]

Simplified Corporate Registration Processes: The Startup Portal provides labelled startups with several regulatory benefits. Through the portal, labelled startups are able to carry out faster and seamless corporate processes with the Corporate Affairs Commission (CAC).[15] The portal also facilitates expedited registration and discounted fees for technology transfer registrations with the National Office for Technology Acquisition and Promotion (NOTAP).[16] In addition, fintech startups can access simplified licensing procedures with the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission (SEC) through designated channels on the portal.[17]

Technology Infrastructure and Innovation Support

The Act encourages the creation of Technology Development Zones in collaboration with relevant authorities such as the Nigeria Export Processing Zones Authority (NEPZA). Startups operating within these zones may benefit from additional incentives such as tax exemptions, customs duty waivers, and simplified regulatory procedures.[18]

Conclusion

For entrepreneurs building innovative businesses in Nigeria, the Act provides a framework of incentives designed to support growth, investment, and innovation. However, these benefits are largely tied to obtaining and maintaining the Startup label. Founders should therefore pay attention to the eligibility requirements and take advantage of the opportunities available under the Act to better position their startups for sustainable growth.

Endnotes

1. Section 13

2. https://www.nipc.gov.ng/2026/02/24/public-notice-cessation-of-pioneer-status-incentive-applications/

3. Section 25(5)

4. Section 26

5. Section 29(3)

6. Section 32

7. Section 28

8. Section 29

9. Section 25(4)

10. Section 25(3)

11. Section 19

12. Section 10

13. Section 3

14. Section 31

15. Section 30

16. Section 33

17. Section 34

18. Section 42
    

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This article is for general informational purposes only and does not constitute legal advice. For guidance specific to your circumstances, speak with a legal professional.

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