Nigeria’s Startup Act struggles to take root as states lag behind

Four years after Nigeria passed its landmark Startup Act, the country’s innovation ecosystem is at risk of fragmentation. With fewer than a quarter of states fully adopting the law, startups face uncertainty, investors are cautious, and the promise of a nationwide, innovation-friendly environment remains uneven at best.

Enacted in 2022, the Startup Act was designed to streamline regulations, introduce tax incentives, and provide a predictable framework for innovation-driven businesses. The legislation followed a continental shift that began in 2018 when Tunisia became one of Africa’s first countries to pass a dedicated startup framework, signalling the importance of policies tailored to digital economies.

However, in Nigeria’s federal system, passing the law at the national level is only the first step. Subnational adoption is crucial because startups operate daily under state-level regulations, tax authorities, land agencies, and other local institutions. Without coordinated implementation across states, the Act risks remaining largely symbolic.

“State-level engagement is critical to ensuring the Startup Act delivers meaningful impact beyond policy intent,” said Tracy Okoro Isaac, partner at DigitA, which has been working with the ONE Campaign and government stakeholders.

“The law provides a strong foundation, but unless states actively implement its provisions, the benefits for startups will remain limited.”

So far, only 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, Nigeria’s commercial hub, is pursuing a broader approach through its proposed Innovation Bill, which not only aligns with the Startup Act but also plans to allocate up to 2 percent of annual capital expenditure to innovation.

“Passing the law was only the beginning. The real work lies in building systems, coordination frameworks, and institutional capacity required to make it function effectively at the state level,” said Oswald Osaretin Guobadia, a leading ecosystem advisor and former senior special assistant on digital transformation.

“Without active state adoption, the Act risks remaining a strong national framework on paper with uneven impact on the ground,” Guobadia added.

Efforts to close the adoption gap have intensified. In 2023, engagements across Kwara, Ondo, Osun, Kano, Plateau, and Oyo brought together founders, investors, and policymakers to define practical pathways for implementation, with Kaduna becoming the first state to formalise adoption.

In 2025, GIZ/DTC commissioned DigitA to support state-level adoption through the Participatory Policy Implementation Framework (PPIF), developed with the National Information Technology Development Agency (NITDA). A study tour to Tunisia later that year exposed Nigerian policymakers to structured approaches to startup governance, financing, and institutional coordination.

Nigeria’s innovation economy is inherently uneven. Lagos dominates fintech, while states such as Kano and Kaduna are emerging as hubs for agricultural technology and logistics solutions. Flexible, state-driven implementation allows each region to leverage its comparative advantage rather than attempting to replicate Lagos’ model.

While the Startup Act’s federal incentives, including the Startup Label, provide funding and regulatory support, broader state adoption could unlock local grants, targeted investment programmes, and innovation incentives, expanding opportunities for founders outside major hubs.

As Nigeria races to establish itself as a continental innovation leader, stakeholders say the Act’s success will depend not on its existence, but on its execution. Without wider adoption across states, the law risks leaving much of the country’s innovation potential untapped.