Why Lagos wants to fix innovation, not just fund startups

Lagos, Nigeria’s tech capital, is trying to redesign how innovation happens within its borders, not just how startups are funded. The proposed Lagos Innovation Bill is the state’s most ambitious attempt yet to do that, according to Olatunbosun Alake, the state commissioner for Innovation, Science and Technology.

Rather than treating startups as isolated ventures that occasionally receive support, the bill aims to build an innovation pipeline where ideas can move from research to experimentation and, eventually, to market. The goal, Alake says, is to make tertiary institutions, research institutions, private companies, and founders into a single system for problem-solving and original invention.

“It is not really about money or funding,” he told TechCabal in an interview. “It is about proper ecosystem building, you know, bridging the gap between research and development, the universities, and foreign investors. It is trying to build the whole ecosystem.”

Lagos is home to over 900 startups, and funding to Nigerian startups, largely domiciled in the state, fell by 17% to $343 million in 2025. Despite this tightening of venture capital, the bill is a shift in how the state thinks about innovation: away from episodic support for startups and toward building the underlying structures that make innovation repeatable and scalable.

To support this vision, the bill earmarks between 1.5% and 2% of the state’s annual capital expenditure for innovation. While this provision draws attention to the funding Lagos-based startups could access, Alake insists money is not the bill’s core focus.

According to Startupblink, a global startup ecosystem research centre, government policies that focus on selective funding often create dependency and misaligned incentives, while a broader, data-driven approach fosters long-term growth.

“By prioritising ecosystem-wide improvements, reducing bureaucratic barriers, and promoting innovation-friendly policies, governments can create an environment where startups thrive based on market demand rather than artificial incentives,” the organisation noted in a report on the impact of government policy on startups.

Under the bill’s framework, innovation is meant to begin long before a company is incorporated. Universities are expected to function as centres of experimentation, while private companies are incentivised to invest in research and adopt locally developed solutions. Startups, in this framing, are not the starting point of innovation but one of its outcomes.

The bill’s funding provisions are designed as part of a broader system rather than standalone interventions.

Lagos-based startups could have had access to at least ₦35 billion ($24.61 million) in fresh funding in 2026 after the state signed its ₦4.4 trillion ($3.09 billion) 2026 budget into law. The budget allocates ₦2.34 trillion ($1.65 billion) to capital expenditure and ₦2.11 trillion ($1.48 billion) to recurrent spending.

Applying the bill’s innovation allocation, that capital budget would have unlocked funding for grants, risk capital, and research support. For Alake, even this scale of funding does little to address the deeper issue his ministry is trying to fix.

“The greatest problem in our ecosystem is not funding,” he said. “It is development, the lines of connectivity, the pipeline of the ecosystem. Just throwing money at the same situation will not get us to a proper development ethos. You have to build the entire pipeline.”

Lagos already operates the ₦1 billion ($703,200) Lagos State Science Research and Innovation Council (LASRIC) fund, which has disbursed ₦803 million ($564,670) to more than 100 startups. But without stronger connective structures between research and industry, the state risks continuing a cycle where startups are funded but not fully formed, according to Alake.

Under the proposed bill, LASRIC would be consolidated into a broader research, development, and innovation (RD&I) fund, aligning public funding with longer-term research and commercialisation goals.

However, the bill is still in the public review phase, which was scheduled to run from June 15 to August 31, 2025. According to a public tracker, the bill still needs to pass through the Lagos State Executive Council, the House of Assembly committee review, and a full legislative debate and vote before it can be signed into law.

“The bill is currently being reviewed by tertiary institutions in the state and Lagos’s Ministry of Justice,” Alake said.

The Ministry of Justice will codify the legal and funding framework, while universities are expected to assess how they can adapt their structures to support research-led innovation.

“The way universities think has to change,” Alake said. “Most startups should be coming from universities, so they need to understand the structures required for this bill to be effective.”

The innovation fund has been in the works since 2024, when Lagos announced plans to develop its own version of the Nigeria Startup Act, tailored to the realities of innovation within the state. While timelines for the passage remain complex, Alake told The PUNCH, Nigeria’s most widely read newspaper, in October 2025, “We are targeting Q2 or Q3 next year for its passage.”

Beyond funding, the bill proposes tax and fiscal incentives to encourage private-sector participation, sponsorship for doctoral and postdoctoral research, procurement preferences for local innovators, and a commercialisation programme.

About 20% of innovation grants would be reserved for women- and youth-led initiatives, with additional support for returning founders and researchers from abroad.

Lagos’s Innovation Bill paints an ambitious picture, but its success will ultimately depend on whether the state can overcome structural constraints beyond the bill itself. Digital connectivity remains uneven, with network coverage concentrated in urban centres, limiting innovation to a handful of city clusters.

While Lagos has made progress through the  Lagos State Infrastructure Maintenance and Regulatory Agency (LASIMRA), which has laid over 6,000 km of metro fibre to close the connectivity gap, a research-to-market pipeline cannot function effectively if large parts of the state remain poorly connected.