Startups, innovation hubs, accelerators, researchers, and individuals or businesses building innovative products may soon have access to at least ₦31.07 billion ($20.26 million) in new funding as Lagos plans to spend 1.5% of its annual capital budget on innovation, according to the draft Lagos Innovation Bill. The amount is drawn from the state’s ₦2.07 trillion ($1.35 billion) capital expenditure in its 2025 budget.
The proposed research and development innovation (RD&I) fund would finance research, finance innovation hubs and tech parks, provide risk capital to businesses, and more, while drawing on donations, grants, innovation bonds, royalties, and other revenue sources. The allocation could rise to 2% of Lagos’ capital spending in future years.
“The Lagos state government shall allocate no less than 1.5% of its annual budget to the RD&I Fund and the development of science, technology, research, and development annually, rising to 2% within ten years of the enactment of this bill,” the draft bill read.
By allocating at least 1.5% of its annual capital budget, Lagos may be moving away from fragmented pools like the ₦1 billion Lagos State Science Research and Innovation Council (LASRIC) fund towards a more substantial pooled investment vehicle. This approach aims to provide a crucial lifeline to its over 600 startups and research institutions, especially amidst declining foreign investments.
However, accessing this fund will require strict compliance. Anyone who misuses the fund may face a fine of three times the received amount, or at least three years in prison, or both. Mismanagement and falsification of research could also lead to blacklisting, disqualification, or a full refund.
“Any person who misappropriates funding provided under this bill commits an offence and is liable, on conviction, to a fine not less than three times the amount misappropriated or to imprisonment for a term of not less than three years, or to both such fines and imprisonment,” the document read.
In 2024, Lagos announced it was developing its version of the Nigeria Startup Act, tailoring the provisions to suit the realities of building tech startups within its borders.
“The Bill won’t only develop startups but also encourage large companies to drive innovation,” said Tubosun Alake, the state’s commissioner for science, innovation, and technology, at a stakeholders’ engagement.
The bill represents an effort by the state government to grow and actively participate in its tech ecosystem, which attracted over $252 million in 2024. As of December 2024, it had disbursed $330,000 through LASRIC to support more than 40 startups. The bill’s ambitions extend beyond startups, encompassing technology parks, innovation hubs, research institutions, higher academic institutions, and businesses developing innovative technologies. It favours research, aiming to establish the state as a hub for scalable scientific inventions.
It includes tax and fiscal incentives, sponsorship of doctoral and post-doctoral research, procurement preferences for local innovators, and a commercialisation programme. About 20% of innovation grants are allocated to women and youth-led initiatives, with support for returning founders and researchers from abroad.
Beneficiaries must register on the Lagos Science Research and Innovation Portal to qualify for grants, waivers, low-interest financing, and reimbursement of up to 70% of research and development costs.
The bill will be overseen by a Commission led by a governing board headed by a chairman with private-sector or tech experience of at least 20 years. This board will also set Lagos’ five-year research and development plan, ensuring the state builds capacity in frontier technologies.
While the commission will operate independently from the state’s ministry of technology, the ministry will collaborate closely to ensure policy alignment and implementation.
The RD&I fund will be managed by a licensed fund manager—under the board’s supervision—with at least 20 years of experience. Beyond grants and risk capital, the manager will invest part of the fund into private equity and venture capital firms that allocate at least 30% of their funds to local startups.
The bill includes provisions to encourage support from the private sector. It is currently in its draft stage, undergoing public review before submission to the state’s executive council, House of Assembly, and the governor for approval.
Through this bill, Lagos is signalling its intent to adapt the Nigerian Startup Act—following the lead of over 10 states—to its realities, allowing room for its ecosystem nuance.
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