Crowd of people in front of wall with writing "Build, ship, scale." Photo by Desola Lanre-Ologun.

Practical Steps for Successful Startup-Government Collaboration

Written By: Udokanma Georgewill

Published on: June 1, 2024

We've all heard the saying about the road to hell being paved with good intentions. This can be especially true when it comes to government regulations and support for businesses. These measures are often designed to protect consumers and create a fair playing field, but they can have unintended consequences, like putting a halt on innovation and growth.

How Harmful Policies Affect Startups

One way this happens is through overregulation or unpredictability in regulations. Too many complex and sudden rules and restrictions can stifle innovation. Starting a business is hard enough, and mountains of paperwork and long waiting periods for licenses can discourage people with great ideas from even trying. This is especially true for small businesses that don't have a lot of money or extra staff to manage the bureaucracy. 

Max.ng, a Nigerian motorbike-hailing logistics company, serves as a prime example of how the government's unpredictable policies can act as a foe for startups. While initially experiencing impressive growth, a specific policy shift significantly impacted their operations. In this instance, a pre-existing, yet rarely enforced, regulation was suddenly activated, disrupting a well-established business. This lack of clear communication and the potential for sudden policy shifts can create uncertainty for startups, hindering their ability to plan for the future. 

A collaboration with the government could have allowed Max.ng to prepare for the motorbike ban or even advocate for adjustments that ensured safety while allowing their services to continue. Despite this setback, Max.ng demonstrated the resilience often found in startups. Their continued operations in other Nigerian cities and exploration of alternative services showcase their commitment to growth.

How Collaboration Enhances the Positive Impact of Government Policies on Startups

The relationship between startups and the government can be a tricky one. Sometimes, it feels like the government throws up roadblocks with confusing rules or piles on taxes. Other times, helpful programs and funding opportunities appear. So, is the government a friend or foe? The truth is, it doesn't have to be either. The key is finding a way for startups and the government to work together by hosting spaces where government officials and startup founders regularly chat. This open dialogue would mean the government hears firsthand about the real problems young companies face. They could then write policies that address these challenges, instead of creating rules that might seem helpful on paper but cause headaches in reality.

In recent years, many African countries have been taking steps to give their economies a boost. One way they're doing this is by making it easier for new businesses, especially those with innovative ideas, to get off the ground. This includes things like:

  •  simplifying the process of registering a business

  • offering tax breaks to startups in certain industries

  • creating special centers where entrepreneurs can come together and share ideas. 

These efforts are already paying off. Companies like Flutterwave have emerged as a leading payment processing platform for businesses across Africa. They provide secure and efficient online and offline payment solutions, facilitating seamless transactions for businesses and consumers. By working with the government, they achieved significant progress in propelling the growth of the digital payments landscape in Nigeria. 

Effective Government Policy and Startup Partnerships

Two human hands painting. Photo by Claudio Schwarz.

Recognizing the potential of fintech companies like Flutterwave, the Central Bank of Nigeria (CBN) mandated that banks offer open APIs (Application Programming Interfaces), allowing fintech companies like Flutterwave to integrate with banking systems securely. This streamlined financial transactions and improved the user experience.

The CBN also introduced policies promoting cashless transactions and mobile banking adoption. This created a larger market for Flutterwave's services and accelerated their growth. Through this collaboration, both parties thrived. Flutterwave benefited from a supportive regulatory environment, access to infrastructure, and a growing market.  In turn, the CBN witnessed increased financial inclusion, innovation in the payments sector, and a boost to the Nigerian digital economy. As a result, Flutterwave processed over $15 billion in transactions in 2022, solidifying its position as a major player in African fintech.

Governments can empower startups to drive innovation and achieve shared goals by providing a supportive regulatory environment and access to resources. The Nigerian startup ecosystem presents a dynamic landscape where government policies can act as both a challenge and an opportunity. Max.ng exemplifies the disruptive nature of unpredictable regulations, while the Flutterwave and CBN collaboration showcases the immense potential of synergy between startups and policymakers. Moving forward, enabling open communication and collaborative policymaking will be crucial for harnessing the innovative power of startups and propelling Africa's economic growth.

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