Lagos, Nigeria’s tech hub, is reengineering not only how startups are financed, but also how innovation happens within its borders. The proposed Lagos Innovation Bill is the most ambitious endeavor the state has ever undertaken, said Olatunbosun Arake, the state Commissioner for Innovation, Science and Technology.
Rather than treating startups as isolated ventures that receive occasional support, the bill aims to create an innovation pipeline that allows ideas to move from research to experimentation and ultimately to market. The goal, Alake said, is to bring higher institutions, research institutions, private companies and founders together into a single system for problem-solving and creative invention.
“It’s not really about money or funding,” he said in an interview with TechCabal. “It’s about building the right ecosystem, bridging the gap between R&D, universities and foreign investors. We’re trying to build an entire ecosystem.”
Lagos is home to more than 900 startups, and funding to Nigerian startups based in the state fell by 17% to $343 million in 2025. Despite this stranglehold on venture capital, this bill shifts the state’s thinking about innovation, moving away from temporary support for startups and toward building the foundational structures that make innovation repeatable and scalable.
To support this vision, the bill dedicates 1.5% to 2% of the state’s annual capital expenditures to innovation. Although this provision draws attention to the funds that Lagos-based startups will have access to, Alake insists that money is not the central focus of the bill.
According to Startupblink, a global startup ecosystem research center, government policies focused on selective funding often create dependencies and unbalanced incentives, but a broader data-driven approach fosters long-term growth.
“By prioritizing overall ecosystem improvements, reducing bureaucratic barriers, and promoting innovation-friendly policies, governments can create an environment in which startups can thrive based on market demand rather than artificial incentives,” the group said in a report on the impact of government policies on startups.
Under the framework of this bill, innovation is to begin long before a company is established. Universities are expected to act as experiment centers, while private companies are encouraged to invest in research and adopt locally developed solutions. In this framework, startups 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 a standalone intervention.
Lagos-based startups could get at least 35 billion pounds ($24.61 million) in new funding in 2026 after the state signed a 2026 budget of 4.4 trillion pounds ($3.09 billion). The budget allocates £2.34 trillion ($1.65 billion) for capital expenditure and £2.11 trillion ($1.48 billion) for recurrent spending.
Applying the bill’s innovation allocation, the capital budget would free up funds for grants, risk capital, and research support. For Arak, even funding of this size does little to address the serious problems the department is trying to solve.
“The biggest issue in our ecosystem is not funding,” he said. “It’s development, it’s a connection line, it’s an ecosystem pipeline. You can’t just throw money at the same situation and get the right development mentality. You have to build the whole 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 linkages between research and industry, Alake says the state risks continuing a cycle in which startups are funded but never fully formed.
Under the proposed legislation, LASRIC would be integrated into the broader Research, Development and Innovation (RD&I) Fund to align public funding with long-term research and commercialization goals.
However, the bill is still in the public review stage, which was scheduled to run from June 15 to August 31, 2025. According to the official tracker, the bill will need to pass the Lagos State Executive Council, House of Assembly committee review, and full legislative deliberation and vote before it can be signed into law.
“The bill is currently being considered by the state higher authorities and the Lagos Ministry of Justice,” Arake said.
The Ministry of Justice will codify the legal and funding frameworks, and universities are expected to assess how they can adapt their structures to support research-led innovation.
“The way we think about universities has to change,” Alake said. “Most startups will come from universities, so they need to understand the structure this bill needs to be effective.”
The Innovation Fund has been in operation since 2024, when Lagos State announced plans to develop its own version of the Nigeria Start-up Act tailored to the realities of innovation in the state. Although the timeline for passage remains complicated, Arake told The Punch, Nigeria’s most widely read newspaper, in October 2025: “We are targeting passage in the second or third quarter of next year.”
Beyond funding, the bill proposes tax and financial incentives to encourage private sector participation, sponsorship of doctoral and postdoctoral research, priority procurement for local innovators, and commercialization programs.
Approximately 20% of the innovation grants will be earmarked for women and youth-led initiatives, including additional support for founders and researchers returning from overseas.
The Lagos 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, network coverage is concentrated in urban centers, and innovation is limited to a few urban clusters.
Although Lagos State has made progress through the Lagos State Infrastructure Maintenance and Regulatory Authority (LASIMRA), which has installed over 6,000 kilometers of metro fiber to bridge the connectivity gap, the research-to-market pipeline cannot function effectively if large parts of the state remain poorly connected.
