The Republic of Benin has made a groundbreaking move to bolster its micro, small, and medium-sized enterprises (MSMEs) by launching a new startup labelling system under the country’s new Startup Act signed into law last year. The formal installation of the Technical Labelling Committee on Tuesday, June 25, 2024, represents a significant milestone in this process. This event, overseen by Aurélie Adam Soule Zoumarou, the Minister of Digitalization, marks the beginning of a structured approach to recognizing and supporting innovative startups in the country.

The Genesis of the Startup Labelling System

The journey towards this labelling system began in 2018 with the Benin Startup Week, an initiative aimed at understanding the landscape of innovative solutions within the country’s digital ecosystem. The insights gained from visiting various startups laid the foundation for the decree adopted in March 2023, which officially established the startup label for MSMEs. This decree was designed to address the challenges and needs of these enterprises, ensuring they are well-positioned to contribute to Benin’s economic growth.

Minister Zoumarou emphasized the importance of the committee’s role, urging its members to thoroughly acquaint themselves with the guiding documents. She expressed a strong commitment to launching the first call for applications for the startup label by September 2024. The Technical Labelling Committee now bears the responsibility of reviewing and approving MSME applications for the startup label, publishing lists of certified startups, and making revocation decisions when necessary.

A Holistic Review of the Startup Act in Benin

The Startup Act is the backbone of this new labelling system, providing a regulatory framework that supports the identification and promotion of innovative startups in Benin. This framework is part of a larger governmental strategy to foster a conducive environment for entrepreneurship, which includes the creation of a one-stop shop for MSME promotion and the provision of tailored financing mechanisms.

Composition and Role of the Technical Labelling Committee

The Technical Labelling Committee, appointed for a renewable two-year term, consists of seven key members:

1. Djabirou Amadou, Deputy Director of Cabinet, representing the Ministry of Digitalization and serving as Chairman.
2. Krishna Lokossou, Director General of La Poste Bénin SA, representing the Ministry of Economy and Finance.
3. Honorat Satoguina, Director General of ABeVRIT, representing the Ministry of Higher Education and Scientific Research.
4. Laurent Gangbes, Director General of the Agency for the Development of Small and Medium Enterprises (ADPME).
5. Régis Tade, Director of Innovative Entrepreneurship, representing Sèmè City.
6. Jean-Marie Dehou, representing the Ministry of Health.
7. Conrad Gbaguidi, Director General of MGT Conseils, designated by the Minister of Digitalization.

This committee is crucial in ensuring that only deserving startups receive the label, which serves as a gateway to various resources and opportunities, propelling these enterprises into a new era of economic development.

The Startup Act: Core Provisions and Framework

The Startup Act in Benin provides a comprehensive and structured approach to fostering innovation and supporting the growth of MSMEs. Below are the key provisions that shape this framework:

1. Definitions and Scope

The Act clearly defines what constitutes a “startup” and the type of innovation it aims to promote:

• Innovation: Defined as the creation of new value, which can be a groundbreaking product, service, or process, or an incremental improvement in existing ones. The innovation can span various sectors, including digital, health, tourism, agriculture, and technology.
• Startup: A young, innovative company with high growth potential. The company must be leveraging digital or other innovative solutions to solve societal problems and must operate primarily within the tech sector or similar fields.

2. Eligibility Criteria for the Startup Label

To qualify for the startup label, a company must meet stringent criteria:

• Age and Size: The company must be an MSME and in operation for no more than six years at the time of application.
• Innovation: The enterprise must have developed or commercialized a high-value-added product or service with a scalable business model.
• Sector Focus: The startup must operate in one of the identified innovative sectors such as digital technology, healthcare, agriculture, tourism, or other sectors highlighted in the Act.

3. Application and Evaluation Process

The Act outlines a clear and transparent process for applying for the startup label:

• Application Submission: MSMEs seeking the startup label must submit their applications online to the Technical Labelling Committee.
• Review and Decision: The committee is mandated to review applications and provide a decision within 45 days. If rejected, the committee must provide a reasoned explanation.
• Validity and Renewal: The startup label is valid for three years, with the possibility of a one-time renewal. Renewal is contingent on the startup meeting its labeling obligations during the initial period.

4. Revocation and Compliance

The Act also includes provisions for the revocation of the startup label if certain conditions are not met:

• Grounds for Revocation: The label can be revoked for reasons such as loss of MSME status, proven fraud, failure to meet obligations, or voluntary liquidation.
• Consequences: Revocation results in the loss of all benefits associated with the startup label, including tax incentives and access to specific support programs.

5. Incentives for Certified Startups

The Act offers several incentives to startups that successfully obtain the label:

• Tax Benefits: Certified startups enjoy a special tax regime designed to reduce their financial burden and promote growth.
• Prototyping Support: Startups can seek assistance with customs formalities for importing materials necessary for prototyping, with decisions provided within 30 days.
• International Promotion: The Act ensures that certified startups receive support from state agencies for promoting their products and services on an international scale.

6. Governance and Oversight

The Act establishes the Technical Labelling Committee as a key oversight body:

• Composition: The committee is composed of representatives from various ministries and agencies, ensuring a broad range of expertise.
• Decision-Making: The committee is responsible for granting the startup label, monitoring compliance, and making decisions on label revocation.
• Confidentiality and Integrity: Members are bound by strict confidentiality rules, and any breach can result in disciplinary or criminal sanctions.

The effective date for the Startup Act in the Republic of Benin is March 22, 2023. This is when the decree was signed and became legally binding, repealing all previous conflicting provisions and ensuring its publication in the Official Journal.