Lagos State is positioning itself as the epicenter of Nigeria’s tech renaissance with a groundbreaking innovation bill that promises to inject at least ₦31.07 billion ($20.26 million) into the local startup ecosystem.
The proposed Lagos Innovation Bill allocates 1.5% of the state’s massive ₦2.07 trillion ($1.35 billion) capital expenditure for 2025 toward innovation funding—a move that could fundamentally reshape how Nigeria’s commercial hub supports its thriving tech scene.
A Strategic Response to Declining Foreign Investment
This initiative arrives at a critical juncture for Nigerian tech. As foreign investments continue their downward spiral, Lagos’ homegrown funding mechanism emerges as a potential lifeline for over 600 startups and research institutions operating within the state’s borders.
The Research, Development and Innovation (RD&I) Fund represents a significant evolution from the fragmented approach of previous years. Unlike the limited ₦1 billion Lagos State Science Research and Innovation Council (LASRIC) fund, this new framework promises sustainability and scale, with provisions to potentially increase allocations to 2% of the annual capital budget within the next decade.
Diversified Funding Architecture
The fund’s sophisticated structure draws from multiple revenue streams including government allocations, private donations, grants, innovation bonds, royalties, and other income sources. This diversified approach reduces dependency on any single funding source while creating multiple pathways for capital injection.
Zero-Tolerance Approach to Mismanagement
Lagos isn’t taking any chances with fund integrity. The bill implements stringent compliance measures with severe penalties for misappropriation—offenders face fines worth three times the misused amount, minimum three-year prison sentences, or both. Research falsification triggers immediate blacklisting and potential full refunds.
Inclusive Innovation Focus
Recognizing the importance of demographic diversity in innovation, the bill reserves 20% of innovation grants specifically for women and youth-led initiatives. The legislation also extends special support to diaspora founders and researchers returning to Nigeria, addressing brain drain concerns that have long plagued the ecosystem.
Beneficiaries gain access through the Lagos Science Research and Innovation Portal, unlocking grants, tax waivers, low-interest financing, and reimbursements covering up to 70% of R&D expenses.
Professional Governance Structure
The fund’s oversight falls under a newly established Commission governed by a board requiring minimum 20-year private sector or tech industry experience. This board will craft Lagos’ five-year R&D strategy while maintaining independence and collaborating with the Ministry of Science, Innovation and Technology.
Fund management responsibilities lie with licensed professionals—also requiring two decades of experience—who must invest portions into private equity and venture capital firms committed to allocating at least 30% of their capital to Lagos-based startups.
Ecosystem-Wide Impact
The bill’s reach extends beyond traditional startups to encompass innovation hubs, research institutions, universities, and technology parks. Additional provisions include tax incentives, doctoral research sponsorships, procurement preferences for local innovators, and commercialization programs for scalable inventions.
Building on Existing Momentum
Lagos’ tech ecosystem demonstrated resilience in 2024, with LASRIC distributing $330,000 across more than 40 startups while the broader ecosystem attracted over $252 million in funding. The new bill builds on this foundation while adapting the federal Nigeria Startup Act to local realities, joining over 10 other states in customizing the national framework.
Next Steps
The draft legislation currently undergoes public review before advancing to the state’s executive council, House of Assembly, and governor for final approval. If enacted, Lagos could establish itself as Nigeria’s definitive innovation capital, potentially influencing other states to follow suit with similar comprehensive funding mechanisms.
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