Building A StartUp Ecosystem in Nigeria Post May 29.
Category: Technology | Date: May 23, 2016
Recently, I re-read the classic by Dan senor and Saul singer ‘ The Start-up Nation”, for those who have been living under a rock (for good reason) for the last decade and who haven’t read it, the book seeks to address a trillion dollar question: how is it that Israel – a country of 7.1 million, only 60 years old, surrounded by enemies, in a constant state of war since its founding, with no natural resources – produces more start-up companies than large, peaceful, and stable nations like Japan, China, India, Korea, Canada, and the UK?
Whilst the jury is still out on exactly what made Israel the entrepreneurial miracle that it was throughout the 90’s and well into the last decade, one very important factor jumps out at me every time. The very active role played by the Government of Israel in sparking and sustaining this entrepreneurial revolution, whilst other governments adopted a less is more strategy, the Israeli government had purposeful and strategic policies that were both hands –on and ambitious in nature, but with the ultimate goal of making Israel an economic/technological powerhouse by fueling the startup culture of its people.
A lot has been said regarding creating startup ecosystems in Nigeria and how they will become the drivers of growth for the economy as well as innovative engines for producing cutting edge tech products that can be exported globally.
History has also shown that the more matured a country’s startup ecosystem is, the more successful its entrepreneurs tend to be.
There are a million and one things standing in the way of Nigeria being able to build a successful startup ecosystem and if we decide to dwell on them all, we probably might be unable to take the necessary first steps, however, I would want us to focus on the one thing that I think is critical in any ecosystem. The role the government will play.
I say this because we stand at a turning point in our nation’s history, with a new government set to be sworn in, might we continue to tread the old path or can we start laying the foundations for what can truly become Africa’s most matured startup ecosystem. One thing we already have going for us is our huge market, I believe it’s time to create the necessary local capacity to be able to service this huge market of ours’ and that in my view can only happen when our ecosystem has come of age and matured enough.
But what can the new government really do? I think a lot, a whole lot, but I want us to dwell on just one example.
In June of 2012, myself and a couple of friends Chibuzor Opara (Nigeria) of drugstoc.com, Vuyisa Qabaka (South Africa) of abaphumeleli consultants and a few other entrepreneurs across Africa started working on the framework for a bill that we wanted to pass through the legislative organs of our respective countries, a continent wide bill we termed the Pan African Youth Entrepreneurship Bill, we were then known as the Pan African Youth Entrepreneurship Network or (PAYEN).
So this was our reasoning, the most important first step to guarantee sustainability and growth of African startup ecosystems will be one that is fully entrenched in the laws of the land.
Africa is notorious as a continent with unstable governments and shortsighted government policies and we were of the opinion that the law itself must be crafted so as to protect the young entrepreneur of today as well as the unborn generations of tomorrow. Some of the finer details of that framework, called for the designation of Young Employer Status (YES) for companies that have at least two of their directors under the age of 35 at the time of business registration.
This status, then enables the government of the respective African countries to assign tax waivers, grants, access to resource clusters and percentages of government contracts in certain industries open for bidding by only companies with the (YES) designation.
Ambitious, YES!, daring, YES!, but not far fetched, after all we were entrepreneurs and risk takers and a bill by entrepreneurs must reflect a certain amount of audaciousness.
Just last week, I met up with an old friend and our discussions quickly went the way of how business was doing, he told me that things have been slow since the beginning of the year due to the elections, but that the worst part for him was that he had finally gotten around to registering close to five different businesses with YOUWIN and he was guaranteed that at least one will be nominated to receive the grant.
With the recent change in governments that dream is effectively dead and buried for him and even though I am a strong proponent of using grants as a funding vehicle to drive startup growths, startups have a high mortality rate, only grants, waivers and the likes provide the best incubation model for early stage startups, I am an even stronger proponent of making policies that are backed by law. This also underscores the very critical role that governments must play in instituting the legal framework that will help startups of their own to blossom and grow, unaffected by changes in government.
Of course, these laws will also guide policy creation and monitor its effectiveness, but more importantly, it will create a level playing field for all young entrepreneurs, irrespective of age, educational qualification, religious or ethnic background to access critical resources, grants, special waivers, mentoring and so much more that is critical to building a startup.
We still have a myriad of challenges facing young entrepreneurs in Nigeria today, not least the huge infrastructural deficits staring us in the face daily as we make our way to work, but I am of the opinion that starting from the ground and gradually working our way up will serve us best, this starting from the ground necessitates strong legal and institutional foundations as the necessary backbone to both public and private sector involvement in our startup ecosystem.
A roadmap to help build entrepreneurial capacity in young people as well as creating opportunities and employment for them will start from instituting the right legal framework that will churn out policies that can immediately act as a buffer to the effects of the infrastructural limitations we face.
New businesses create new jobs.
I wish the new economic team of the new administration Godspeed.
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