Four years after the passage of the Startup Act in Nigeria, the country's innovation ecosystem is facing a significant challenge. The law, enacted in 2022, aimed to streamline regulations, introduce tax incentives, and provide a predictable framework for innovation-driven businesses. However, the law's success is being hindered by the lack of adoption by states, with fewer than a quarter of states fully embracing the legislation.
Startups in Nigeria face uncertainty due to inconsistent regulations and tax authorities across different states. Investors are also cautious about investing in startups that operate in states that have not adopted the law. The law's promise of a nationwide, innovation-friendly environment remains uneven at best. Tracy Okoro Isaac, a partner at DigitA, notes that state-level engagement is critical to ensuring the law delivers meaningful impact beyond policy intent.
Only three states, Kaduna, Osun, and Abia, have formally adopted the Act. Others, including Kano, Ondo, and Anambra, are still considering legislation, while several states remain in consultation phases. Lagos, the commercial hub, is pursuing a broader approach through its proposed Innovation Bill, which aims to allocate up to 2 percent of annual capital expenditure to innovation.
Efforts to close the adoption gap have intensified, with engagements across several states bringing together founders, investors, and policymakers to define practical pathways for implementation. Oswald Osaretin Guobadia, a leading ecosystem advisor, notes that the real work lies in building systems, coordination frameworks, and institutional capacity required to make the law function effectively at the state level.
Nigeria's Startup Act is at a crossroads, with the country's innovation economy hanging in the balance. The law's success will depend on the willingness of states to adopt and implement its provisions. The lack of coordination across states risks leaving much of the country's innovation potential untapped. Lagos dominates fintech, while states like Kano and Kaduna are emerging as hubs for agricultural technology and logistics solutions. The Act's federal incentives are a good start, but broader state adoption is crucial to unlocking local grants, targeted investment programmes, and innovation incentives that can expand opportunities for founders outside major hubs.
