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African Startup Acts: Catalysts for Innovation and Economic Growth
By Chukwudi Ofili and Ruth Ayalew | Thu Feb 27 2025
Across the African continent, there is increased focus and interest in startups as an increasing number of countries recognize them as pivotal drivers of economic growth. Tunisia’s pioneering Startup Act, enacted in 2018, has set a precedent, inspiring nations such as Senegal, Nigeria, and Côte d'Ivoire to adopt similar frameworks.
These initiatives, which include tax incentives, simplified administrative processes and financial support, are part of a broader effort to foster local innovation. Currently, countries like Kenya, Zambia, Ethiopia and Ghana are in the process of drafting their versions of a startup law, each striving to strike an optimal balance between harnessing and empowering local talent and attracting global investment.
Common Themes
Startup Acts across Africa typically focus on fostering innovation, reducing barriers to entrepreneurship and encouraging economic growth. A closer look at these policies reveals a few key focus areas, including:
- Streamlining Bureaucratic Processes: A core theme of startup acts is simplifying and accelerating the process of registering and operating businesses. This includes reducing administrative burdens, offering one-stop-shop services and easing the procedures for obtaining permits or licenses.
- Enabling Innovative Corporate Structures: To attract international investors, many of these laws aim to accommodate corporate structures that facilitate the inflow of foreign capital. In some cases, it involves introducing relaxed rules for foreign participation and making the local steps of completing a "corporate flip” seamless. This opens startups to the prospects of (i) accessing foreign investors, (ii) expanding within the continent and (iii) securing clean exits to bigger institutional investors and global companies.
- Incentives and Tax Benefits: Many startup acts offer tax breaks, exemptions or reductions for new businesses to ease their financial burden in the early stages. These benefits often target specific areas like corporate income tax, value-added tax (VAT) and social security contributions.
- Access to Funding and Financial Support: Startups often struggle with securing capital, so some startup acts create mechanisms for funding, including grants, loans and venture capital initiatives. They may also establish government-backed investment funds or incentives to attract private investors.
- Legal Frameworks for Innovation: These acts aim to create a legal environment that supports entrepreneurial risk-taking and innovation. This might include intellectual property protections, support for tech-based businesses or frameworks that promote research and development.
- Facilitating Talent and Workforce Development: Many startup acts emphasize education and skills development to ensure a steady pipeline of talent. This includes fostering entrepreneurship education and supporting training programs for both founders and employees.
- Global Market Integration: Several startup acts aim to connect local startups with international markets by promoting exports, easing cross-border trade and facilitating access to global investors and partners.
- Regulatory Sandbox and Flexibility: Some nations, inspired by global trends, include provisions for regulatory sandboxes—controlled environments where startups can test innovative ideas without immediately facing heavy regulatory restrictions.
The African Startup Acts Journey So Far
Let’s take a look at the steps taken by African countries.
- Algeria: Has not yet implemented a Startup Act, but the Algerian Startup Fund (ASF), launched in October 2020, provides funding for innovative businesses and expanded in 2022 to support startups across all 58 provinces.
- Egypt doesn't have a singular, comprehensive startup act like some other African countries but the government has implemented several initiatives and policies aimed at supporting startups and fostering innovation within the ecosystem.
- Ethiopia: The Ethiopian Startup Act, also known as the Startup Businesses Proclamation has been in draft format for several years and is yet to be officially enacted. Recent feedback dialogues that Renew Capital has participated in indicate formal adoption may come any day.
- Ghana: The Ghanaian Innovation and Startup Bill project is a joint initiative by Ghana’s private sector and the government to enhance the startup ecosystem through co-created legislation. The bill has been drafted but is yet to be ratified.
- Kenya: The National Assembly passed the Startup Bill and it is now awaiting presidential assent to become law. Some news sources indicate that the startup community is not fully bought into everything that’s in the current draft. One example is the 100% Kenyan ownership requirement, as Kenya’s tech ecosystem owes much of its success to a blend of local expertise and foreign partnerships and investments.
- Morocco: While there have been several initiatives aiming to support startups in Morocco, there is no official startup act yet. The government is working on it as part of the Morocco Digital 2030 plan.
- Nigeria: The Nigerian Startup Act was officially signed into law by President Muhammadu Buhari in October 2022.
- Rwanda’s Startup Act was launched in 2021 with the aim of fostering innovation and entrepreneurship in the country. The law is at its final stages of completion.
- Senegal: The Senegalese Startup Act was formalized in 2020 and ratified by President Macky Sall in 2021, paving the way for innovation and encouraging high-growth startups in the country.
- South Africa: While South Africa doesn't have an official startup act yet, there's a strong movement pushing for its establishment, named The South Africa Startup Act Movement. This is being championed by a diverse set of founders, investors and policymakers who see the impact this will have in the ecosystem.
- Tanzania: The Tanzanian Startup Policy is under development, aiming to address challenges faced by startups and foster innovation.
- Tunisia: The Tunisian Startup Act, launched in April 2018, was designed to support and foster the growth of the country's startup ecosystem. In practice, challenges remain—startups struggle with foreign currency restrictions and slow regulatory processes. There’s quiet talk of a potential revamp of the act but nothing is official.
- Uganda: Startup Act Uganda is a collaborative effort between the Ugandan tech startup ecosystem, Private Sector Foundation Uganda (PSFU) and Mastercard Foundation. It is still under discussion and hasn't been drafted yet.
- Zambia: A startup bill is under development by the government, focusing on creating a supportive environment for innovation and entrepreneurial ventures.
The Big Picture
The proliferation of startup acts across Africa signifies a shift towards nurturing homegrown innovation and entrepreneurship. As nations like Kenya, Zambia, Ethiopia and Ghana work diligently to craft and implement their own startup legislations, we hope they will collectively contribute to a more conducive environment for startups to thrive.
Renew Capital is an Africa-focused impact investment firm that backs innovative companies with high-growth potential. Renew Capital manages investments made on behalf of the Renew Capital Angels, a global network of angel investors, foundations and family offices who seek financial returns and sustainable social impact. For the latest on investing in Africa, subscribe and follow us at our social links below.
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