In a landmark move to propel its digital economy forward, the Republic of Ivory Coast enacted the “Loi n° 2023–901 du 23 novembre 2023 portant promotion des Startups numériques” (Law №2023–901 of November 23, 2023, on the Promotion of Digital Startups). Signed into law by President Alassane Ouattara and officially published in the Journal Officiel de la République de Côte d’Ivoire on January 22, 2024, this comprehensive legislation, also known as the Ivory Coast Startup Act, marks a new era for tech entrepreneurship in the country.
The Startup Act aims to cultivate a thriving ecosystem for digital startups by addressing key challenges faced by young, innovative companies. It introduces a range of incentives and support mechanisms, including tax breaks, access to public procurement, financial assistance, and regulatory sandboxes. These measures are designed to encourage innovation, attract investment, and create a fertile ground for digital startups to flourish.
In addition to the financial and regulatory incentives, the law also emphasizes the importance of mentorship, training, and networking opportunities for startups. It aims to foster a collaborative environment where entrepreneurs can learn from each other, share knowledge, and build strong networks to drive their businesses forward.
By recognizing the pivotal role that digital startups play in driving economic growth, job creation, and technological advancement, the Ivorian government is sending a clear message: Ivory Coast is open for business and ready to embrace the digital revolution. This article will explore the specifics of this groundbreaking legislation, providing a comprehensive guide for entrepreneurs and investors interested in the burgeoning Ivorian startup scene.
How Does It Work?
- The Label Startup Numérique (Digital Startup Label): This is a distinctive label awarded to startups that fulfill specific eligibility criteria. It acts as a seal of approval, opening doors to various incentives and support mechanisms provided by the government.
- Eligibility Criteria: To qualify for the label, your startup must meet these conditions:
- Legal Registration: Be a legally constituted company under Ivorian law.
- Ownership: Have a majority of its share capital held by Ivorian nationals.
- Innovation: Demonstrate innovation through products, services, business models, technologies, or processes.
- Proof of Concept: Provide evidence of a working prototype, minimum viable product (MVP), successful market testing, or positive market feedback (e.g., awards, funding, orders).
- Growth Potential: Show strong potential for growth and development in the local and international markets.
- Socioeconomic Impact: Demonstrate potential to create jobs, wealth, and improve the quality of life for Ivorians.
- Scalability: Be able to scale operations to meet growing demand.
- Expertise: Possess the necessary expertise or resources to execute the project, or be supported by an accredited Entrepreneurial Support Structure (SAE).
Application Process:
- The application process is streamlined and fully online through the “Portail Electronique des Startups Numériques” (Electronic Portal of Digital Startups), a dedicated platform created for this purpose.
- The application form will require detailed information about your company, team, products/services, financials, growth strategy, and impact potential.
- You may need to submit additional documents like business plans, financial projections, and proof of concept.
Evaluation and Labeling Committee (Comité de Labellisation):
- A specialized committee, established under the Ministry of Digital Economy, will evaluate each application. The powers, organization, and operation of the Labeling Committee are set by decree in the Council of Ministers.
- The committee’s assessment will focus on the startup’s innovation, growth potential, socioeconomic impact, and overall adherence to the eligibility criteria.
- Decisions are made through a transparent and merit-based process.
- The Digital Startup Label is awarded by decree of the Minister in charge of the Digital Economy, after the advice of the Labeling Committee.
Pre-Label Option:
- Startups that meet the first four eligibility criteria but are still in the early stages of development can apply for a “pre-label.”
- The pre-label is valid for one year, renewable once, and allows startups to access certain support mechanisms while they work towards fulfilling all requirements for the full label.
Benefits add Incentives for Labeled Startups
Labeled startups enjoy a wide array of benefits and incentives under the new Startup Act in Ivory Coast, including:
- Tax Incentives: Exemptions or reductions in various taxes, such as corporate income tax, VAT, or customs duties.
- Public Procurement: Preferential treatment in bidding for public contracts, facilitating access to government projects.
- Financial Support: Direct public or private funding, loan guarantees, or interest rate subsidies. Labelled startups are generally eligible for the general support system of the Single Window for the Development of Small and Medium Enterprises of Côte d’Ivoire (GUDPME-CI).
- Social Security Benefits: Reduced social security contributions for employees.
- Business Development: Training programs, mentorship, networking events, and access to co-working spaces.
- Fundraising Facilitation: Assistance in securing investment from venture capitalists, angel investors, or other funding sources.
- Internationalization: Support for expanding into foreign markets.
- Regulatory Sandbox: Access to a regulatory sandbox environment for testing innovative products or services under relaxed regulations.
Obligations and Sanctions
In exchange for these benefits, labeled startups have certain obligations:
- Compliance: Adherence to the rules and regulations set forth by the Labeling Committee.
- Reporting: Regular reporting on progress, financial performance, and impact achieved.
- Transparency: Maintaining transparency in dealings with the government and investors.
Failure to comply with these obligations can result in sanctions, such as suspension or revocation of the label, as well as financial penalties.
Additional Considerations
- Duration of Label: The Label Startup Numérique is valid for a maximum of five years.
- Renewal: Startups can apply for renewal before the label expires.
- Support Structure: The Ministry of Digital Economy has a dedicated department to guide and support labeled startups.
- Guichet Unique de Développement des PME (GUDPME): Labeled startups are also eligible for support from GUDPME, the national agency for small and medium-sized enterprises.
Key Takeaways for Startup Founders
The new Startup Act represents a significant opportunity for digital startups in Ivory Coast. By securing the Label Startup Numérique, founders can unlock a wealth of resources and support to fuel their growth and contribute to the country’s digital transformation.
