The Senegal Startup Act

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The Senegal Startup Act is a legislative framework designed to promote and support the growth and development of startups in Senegal.
What are the main aims and objectives?

The overarching goal of the Act is to create a more conducive environment for startups to thrive, thus stimulating innovation and job creation in the country. This is seen as a significant step in building a robust digital economy in Senegal, positioning the country as a leading Francophone player in tech and entrepreneurship in Africa. The objectives of the Act are multifold, firstly, it seeks to establish an incentive framework for the creation and development of startups in Senegal. It specifically targets startups that utilize creativity, innovation, and new technologies to generate high value for both the Senegalese economy and society. The Act also aims to address the unique challenges faced by startups by providing targeted incentives to encourage entrepreneurship.

How does the program work?

The Senegal Startup Act establishes an encouraging framework to boost the growth of startups. It offers benefits like tax advantages, streamlined administrative procedures, and access to public procurement to reduce the barriers entrepreneurs often face. In particular the bill provides:

  • The creation of a specific support and governance framework for startups under Senegalese law.
  • The establishment of a legal regime for the registration and labelling of Senegalese startups.
  • The creation of a resource center dedicated to supporting startups, with a particular focus on the labelling procedure as well as supporting the implementation of support mechanisms.

Any startup that registers or receives the startup label is able to benefit from incentives including:

  • Access to public procurement including a 5% preference margin for startups participating in a call for tenders for a public contract
  • Startup support programs such as incubators can benefit from incentives also
  • The support and coordination commission sets up a training and capacity building platform dedicated to legally registered startups
  • Creates an online platform, allowing startups to complete registration and labelling formalities
  • Startups are supported in accessing national and international intellectual property protection bodies
  • Customs procedures favorable to startups in accordance with the laws and regulation in force
  • Exemption from the minimum flat-rate tax for three years
  • Exemption from the lump-sum contribution payable by employers for three years
  • Abolition of the minimum collection of 500,000 FCFA (approx. $840) for the IMF
  • Reduction (from 25,000 to 10,000) (approx. $42 to $17) of registration fees for the creation of companies
  • Startups qualify for funds including loans from public and private sources

To qualify for the startup label, companies must meet the following criteria:

  • Must be innovative and agile companies
  • Legally constituted for less than eight years
  • Strong growth potential in search of a disruptive economic model
  • Possesses financing mechanisms adapted to its specificity in order to deploy exceptional value creation capacity
  • Created on Senegalese territory and at least one-third of their capital must be held by Senegalese nationals or residents or startups created by Senegalese nationals abroad in which at least 50% of the capital is owned by them.
What is the overall cost?

The Senegal Startup Act was passed without any financial cost. However, the law does provide for certain tax benefits that will likely reduce revenue in the short-term at least. Additionally, the law legislates for the creation of a resource center for which there is currently no information about the running costs.

How was it implemented?

The Act was passed into law in January 2020 and was designed to complement national policies and processes. The legislation was the culmination of 19 months of public consultation involving over 1000 citizens.

The Startup Act evolved out of the Innovation for Policy process. This can be understood as an interactive framework for policy reform which allows those directly affected by the policy to participate in the drafting of new laws alongside analysts and professional policy advisers. The government even used innovative measures such as Facebook chatbot in order to secure feedback from groups normally not engaged in the political process. They also held more than 50 co-creation meetings as part of the drafting process. 

The Act creates an Evaluation, Support and Coordination Commission, which is inclusive of all public and private stakeholders in Senegal, and which is geared towards the development of startups. The Commission is mandated to set up a platform dedicated to startups.

What impact has been measured?

There is currently no information available about the impact of the Senegal Startup Act.

What lessons can be learned?

It is worth noting that Senegalese entrepreneurship ecosystem stakeholders led the whole deliberative process of co-creating legislation and lobbying the government. This process has been credited with substantially improving the level of awareness around entrepreneurship issues amongst politicians and policymakers within government. It is also believed to have galvanized the entrepreneurship community which remains strongly committed to the enactment of the legislation.

One of the key issues is the lack of adequate infrastructure and resources to support startups. Despite the involvement of telco operators and the creation of programs like Expresso's Innovation Challenge, there is still a need for a more robust support system to facilitate growth. This could include more training programs, mentoring initiatives, and stronger networks for communication and collaboration.

Looking at the Tunisian Start-Up Act, which was passed in 2018, we can draw some contrasts with the approach taken in Senegal. The Tunisian Act included initiatives to establish an active investment ecosystem, encourage innovation in the public sector, and expand access to international markets. This comprehensive approach, combined with support mechanisms like a living stipend, government help with registration and patents, and tax cuts, could offer valuable insights for the further development of the Senegal Startup Act.

CURATED BY

Tom Hancock

Research Associate
Global Entrepreneurship Network
United Kingdom