NITDA sets up special committee to support struggling startups

The National Information Technology Development Agency (NITDA) wants to provide an exemption for startups providing essential services during the lockdown in Nigeria. The agency created an online form on April 5 to identify essential services companies.

The move comes one week after the government announced the lockdown of Lagos, Ogun state and Abuja. Ahead of the lockdown, the government did not set up a process for companies providing essential services to apply for exemptions. Instead, it granted a blanket exemption for certain industries. 

This caused confusion for some businesses, especially logistics companies. Kobo360 said over 3,000 drivers on its platform stopped working because of the lack of clarity. Jumia’s warehouse in Lagos was temporarily closed a day after the lockdown went into effect.

NITDA is trying to correct this problem.

The move is part of a broader intervention plan for the tech ecosystem.

Coronavirus has caused havoc to the global economy and Nigeria is no exception. As consumer demand for most goods and services fail, many tech-driven businesses are struggling and many could fail. The Nigerian government is stepping in to support these companies.

April 1, NITDA set up a 10-member advisory committee to advise it on ways it can support the tech ecosystem.

Leading the committee is Tomi Davies, the Chairman of Innovation Support Network (ISN) and President of the African Business Angels Network (ABAN). Speaking to TechCabal, Davies explained that the committee aims to cushion the impact of the COVID-19 on the operations and survival of tech-driven businesses.

Other committee members include Amal Hassan, CEO, Outsource Global; Bosun Tijani, CEO, CCHub; Juliet Anammah, Head of International Affairs, Jumia Group; Kola Aina, Founder, Ventures Platform; Musa Ali Baba, CEO Teasy Pay; Iyinoluwa Aboyeji, Co-Founder Future.Africa, Andela and Flutterwave; and Collins Onuegbu, CEO Signal Alliance. Dr Kalli Zannah, Special Assistant to the Minister of Communications and Digital Economy is also a member.

“The COVID-19 economic slowdown has greatly increased challenges with access to revenue and capital funding for technology and tech-enabled ventures,” Tomi Davies told TechCabal.

“A recent report indicates that over 80% of startups are expected to fail as a result of the recession,” he said.

The new committee is “set out to elicit, review and recommend business continuity support to the emerging tech ecosystem in Nigeria,” Davies shared.

The NITDA committee has a number of tasks ahead of it.

First, it will develop strategies to provide affordable internet for businesses and individuals. Unlike many countries, telcos in Nigeria have not adjusted internet data plans to support people working remotely.

Second, it is working on a framework to improve access to finance for tech companies. 

“Even high-quality startups are already having challenges raising equity financing and the resulting lack of working capital will mean having to lay off employees,” Davies said.

A third task is to support tech hubs and help startups access hubs’ remote resources. The pandemic has had negative effects on hubs forcing many to shut down and startups to lose access to some of their resources. “To survive, they will need to develop new business models and continue to run critical operational activities remotely,” Davies explained.

And fourth, the committee will develop measures to improve the adoption of digital services for people to work from home during this period. According to Davies, “moving a significant percentage of the population online will be critical to reducing physical ways of working prone to person to person infection.”

Two days after the committee was inaugurated, it submitted a preliminary report with recommendations to the government.

“NITDA asked for a report within 48 hours,” Davies wrote on Twitter. “We delivered, jokingly requesting government do likewise with our recommendations.”

Director-General of NITDA, Kashifu Inuwa Abdullahi , has started working with the recommendation, Davies shared.

Exemption for tech-driven companies is one example. Reducing tax burdens on companies is also high on the agenda of the committee.

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