As the Rwanda Start-up Act is currently in development, it is important to examine how similar legislation has been implemented in other countries. ALSO READ: Rwanda set to get Start-up Act to help spur tech services Start-up Acts are comprehensive legal instruments aimed at fostering the creation and development of start-ups, taking into account their particular needs. The world’s first Start-up Act was introduced by Italy in 2012, aiming to stimulate innovation and promote entrepreneurship within the country. The impact of this legislation on Italy's start-up landscape and economy served as inspiration for African nations to follow suit, with Tunisia taking the lead in 2018. ALSO READ: Nine major incentives in Rwanda’s proposed Start-up Act In contrast to conventional laws drafted solely by government representatives or parliament members, the Tunisian Start-up Act embraced a participatory approach, involving various stakeholders within the start-up ecosystem. ALSO READ: Top 10 initiatives that could change Rwanda’s start-up ecosystem in 2022 Reports indicate that entrepreneurs, investors, civil society organisations, and legislative bodies played a pivotal role, guiding and supporting the entire process, starting from the initial brainstorming phase, extending through the formulation of the measures, the deliberations and voting within legislative bodies, and culminating in the implementation of the law. In 2019, Senegal followed suit, becoming the second African country to enact a Start-up Act. In addition to Tunisia’s framework, Senegal introduced three tax-free operational years for start-ups, training for youth and female entrepreneurs, and a start-up registration platform easily accessible on a government website. The successful passage of the Start-up Acts in Tunisia and Senegal launched multiple proposals in other African countries. Thus, Nigeria and the Democratic Republic of Congo signed their start-up bills into law in 2022, with more countries – Rwanda, Ghana, Kenya, Ethiopia, and Uganda in the pipeline. According to the Ministry of Technology in Tunisia, the strategy of the Tunisian Start-up Act consists of providing financing tools to three types of actors; entrepreneurs, through the provision of an allowance given to the co-founder and shareholder to cover living expenses for one year; start-ups, via notably the creation of a €200 million fund of funds; and investors, who benefit from tax-deductible start-up investment as well as capital gains tax exemption of profits from the sale of shares in start-ups. In addition to that, Tunisian start-ups are exempted from Telecommunication Studies and Research Centre (CERT) approval and technical control procedures on import operations. Albeit indirect, a causal relationship exists between an enabling Start-up Act and economic growth – because while the Act creates a friendlier environment for start-ups to thrive, start-ups in turn generate more revenue for the economy. For example, data shows a significant increase in funding secured by tech start-ups after the Act was enacted in Tunisia – specifically between 2019 and 2021. It increased from $7 million in 2019 to $24 million in 2021. According to the Investment Climate Reform Facility (ICR) report 2021, in Senegal, the Start-up Act provides for a variety of incentives and support measures for start-ups, including the granting of tax, customs, and social benefits, the creation of a platform for capacity building and the facilitation of access to public procurement. After the enactment in 2019, Senegalese start-ups achieved a significant milestone in 2022, raising a total of $151 million, as reported by Africa: The Big Deal. The achievement contrasts with the $11 million raised in 2017, underscoring the growth and development of the start-up ecosystem in Senegal. Before the Nigerian Start-up Act was enacted in October 2022, data revealed that the tech sector in the country was already outperforming the giant oil and gas sector in revenue generation. According to the National Bureau of Statistics, the ICT sector contributed to Nigeria’s GDP by 16.20 per cent in Q1 2022 and 18.44 per cent in Q2 2022, while the contribution of the oil sector, which used to dominate the country’s GDP bottom line was 6.63 per cent in Q1 2022 and 6.33 per cent in Q2 2022. With the newly enacted Start-up Act in the country, regulatory changes across different government entities are expected, effectively enabling a broader strategy to position the country as an innovation hub.
