On October 19, 2022, Nigeria’s former President Muhammadu Buhari signed the National Startup Act. It was a landmark moment for Nigeria’s budding tech ecosystem. The Startup Act, a collaborative effort between Nigeria’s tech startup ecosystem and the presidency at the time, aimed to harness the digital economy’s potential through co-created regulations. The bill provided a council for digital innovation and entrepreneurship chaired by the president, a startup support portal, an investment seed fund, training programs, tax incentives for stakeholders, regulatory support, accelerators, incubators, and innovation zones.

However, shortly after the Act was signed, individual states started looking for ways to domesticate the Act. Kaduna State was the first to do this following the signing of a law for the Development of Tech-Enabled Startups in the state. In December 2023, Rivers State followed suit when Governor Siminalayi Fubara, approved the state’s adoption of the Nigeria Startup Act. Recently, the Lagos State Government announced it is drafting its version of the Nigeria Startup Act, known as the Lagos Innovation Bill. This bill aims to adapt the national provisions to fit Lagos’ unique environment, ensuring that the policy framework aligns with the state’s specific needs and dynamics. The bill includes a research and innovation fund, registration of research and innovation institutions, tax and fiscal incentives, accelerators and incubators, and capacity development programs. So far, 13 states have indicated an interest in domesticating the Startup Act. While the National Startup Act provides a robust framework for innovation nationwide, this trend of domesticating the startup bill may well be on the cusp of something significant.

Nigeria is a large country with 36 states. Each state has distinct economic conditions, infrastructural capabilities, and social dynamics. For instance, Lagos, Nigeria’s economic powerhouse, is home to over 500 startups. Akwa Ibom, another notable tech ecosystem has approximately, 120 active startups. It is not far-fetched for each state to want to have a policy framework that directly addresses its unique tech ecosystem dynamics. While states in Northern Nigeria may need to focus on addressing infrastructural deficits and skill gaps. States like Lagos might prioritize fostering high-tech startups and attracting venture capital.

Also, tailoring the National Startup Act to local contexts can ensure states implement more effective and relevant solutions. Take the proposed Lagos bill for example. It is designed to foster continuous innovation investment beyond startups. The state has become home to more than startups. Hence, one of its two-part strategies is to go beyond simply nurturing startups and actively encourage innovation in already existing large and small businesses. Moreover, state-level adaptations can develop more suitable and stable conditions for startups to thrive. Tailored adaptations live out ambiguity and help create an environment where a state’s rules, support systems, and incentives are clear and reliable, making it easier for startups to plan, operate, and grow in the particular state. As a result, this predictability and support can attract targeted investments, both from within the country and internationally. Currently, Lagos attracts the most amount for startup funding in Nigeria. In 2022 alone, Lagos attracted over $1.5 billion in startup funding. The state currently receives approximately 70% to 80% of all innovation funding in the country.

Different countries have successfully activated national startup frameworks through regional adaptations. In India, the state of Karnataka has its startup policy that simply complements the national framework. Karnataka is home to Bangalore, a city that is sometimes referred to as the Silicon Valley of India because it is the nation’s leading information technology exporter. However, domesticating the National Startup Act comes with challenges. For instance, less economically developed states may struggle to allocate sufficient funding or attract the necessary technical expertise. Domesticating the Startup Act also runs the risk of fragmentation. This leaves room for inconsistencies and disparities in the implementation of the Act across the country. Nigeria doesn’t have the best reputation for aligning rules consistently across its regions. While only 13 of Nigeria’s 36 states have shown interest in domesticating the Startup Act, trends like this often gain momentum. Last year, we discussed the need for these startup acts in Nigeria. Perhaps, the true potential of these acts may be realized when individual states adopt and implement them to address their unique needs.

Elsewhere on Ventures

Triangle arrow