Nigeria’s startup story is often told as a tale of fast money, louder headlines, and the clout of a megacity that attracts talent and capital. But beneath that skyline, across the South-East and South-South where I report and live, entrepreneurs are building for real problems, hubs are forming around universities and markets, and founders who want to scale without leaving home. For these efforts to last, state governments must stop treating tech as a buzzword and start treating it like public infrastructure. Here’s what state governments can actually do, through policy, procurement, financing and culture, to create sustainable environments where startups and investors thrive.

The case for urgency

Startups need three things: customers, talent, and predictable costs. Nigeria has a customer base, and mobile and internet adoption keep growing, but access and predictability are brittle. The official telecom and national statistics show internet subscriptions running into the hundreds of millions (164 million active internet subscriptions reported in Q1 2024), a clear sign of demand but also of uneven access by region.

Meanwhile, funding flows remain concentrated. National-level figures show that Nigerian startups raised significant capital in recent years, but investment dry spells and a shrinking investor pool have made follow-on financing harder for early-stage founders outside Lagos. Reports tracking African tech funding also record a decline in the number of active investors between 2023 and 2024, a trend that makes local public-sector support even more important.

Those two realities, big demand and fragile funding, set the frame: states can either watch talent and startups drift away, or they can build the scaffolding that keeps them rooted, growing and hiring locally.

Four concrete policy levers for state governments

Build predictable, public digital infrastructure (not just promises)

Startups suffer more from bad power and flaky connectivity than from competition. States can invest in public-private mini-grids for business districts, municipal broadband pilots, and “last-mile” fibre partnerships with telcos. Crucially, states should budget for maintenance and long-term operating models, not one-off donor projects. Create an open data portal for zoning, procurement, and business registration datasets that alone reduces friction for many digital startups.

Make the state an early adopter

Procurement is a lever often ignored. If state ministries and parastatals are required to set aside a small percentage of ICT procurement for local startups and MSMEs, founders win customers and validation. Implement innovation procurement pilots (pay-for-performance for digital services, timed grants for civic tech) so startups can test and iterate on meaningful, paying contracts. This is cheaper in the long run than large, failed IT projects tendered to unfamiliar vendors.

Create state-backed seed and matching funds

When Lagos set aside seed funding and moved to formalise an innovation bill, it signalled that a state could institutionalise support for founders. Lagos’ recent moves from seed allocations to proposals for an RD&I fund are useful precedent: states can create modest but catalytic funds (seed + matching grant lines) guided by clear governance, transparent eligibility, and strict anti-misuse rules. Public funds should de-risk private co-investment rather than crowd it out. Examples of hubs and state efforts in places like Enugu and Delta show that the ecosystem responds when there’s a mix of funds, space, and programming.

Invest in people where they live: talent pipelines and university partnerships

Fixing the talent drain is less glamorous than writing a fund cheque, but it’s more durable. States should fund coding academies, paid internships inside state agencies, and fellowships that pair recent graduates with startups (with stipends to keep the cost of living realistic). Partner with universities to create industry-aligned curricula and commercialisation offices so university research feeds local ventures. When states sponsor hackathons focused on local problems, agriculture in Delta, logistics in Enugu, creative tech across the South-South, they signal both demand and opportunity.

Keep governance and regulation simple

Policy can either speed startups up or slow them to a crawl. States should simplify business registration via a single online portal (with branch offices for those without reliable internet), fast-track licensing for small digital firms, and offer time-bound tax relief for registered early-stage ventures. Protecting creators matters too: state support for local IP clinics, basic, low-cost legal help for coders, designers and founders will encourage commercialisation and investor confidence.

But simplification must be accompanied by accountability. Any state innovation fund needs transparent audits, clear reporting, and civic oversight to build trust. Lagos’ innovation policy conversations show what institutionalisation looks like, but they also highlight why strict rules against misuse are necessary if funds are to survive political transitions.

Align tech with local comparative advantage

State policy should not mirror a Lagos playbook. Each region must play to its strengths:

• South-South states can drive tech in energy services, logistics for oil-adjacent supply chains, and creative industries (film, music, digital media).
• South-East states with robust manufacturing and trade networks can support industrial IoT, e-commerce logistics, and fintech that serve traders and artisans.
• Agricultural tech should be a priority where commercial farming is strong, where states can underwrite satellite warehouses, off-taker contracts and digital aggregation platforms that make smallholder integration profitable.

Policy must be vertically integrated: training people, enabling seed capital, guaranteeing pilot customers, and building logistics to scale products into real markets.

Money matters, but so does investor confidence

Private capital will follow predictable markets. If states demonstrate steady rule-sets, transparent procurement, and visible early successes, local and diaspora investors will be more likely to co-invest. National reports show that Nigeria still leads West Africa in startup funding share, even if that lead has narrowed, a reminder that policy at the state level can amplify national assets by making non-Lagos regions investable.

At the same time, the ecosystem felt the squeeze of 2023–24 when the number of active investors fell; states that move now can fill the gap with de-risked, catalytic instruments that entice private capital back.

checklist for state policymakers

1. Pass a simple “State Innovation Framework”, not a heavy law, but a package: one-stop registration, procurement set-aside (even 2–5%), seed matching fund, and annual reporting.
2. Allocate a line in the capital budget for RD&I (start small: a pilot year is fine).
3. Launch a broadband-plus-power pilot for one tech corridor (town + hub).
4. Partner with universities for paid internships and commercialisation offices.
5. Create an open procurement pilot that requires at least one digital microcontract per ministry to go to local startups.
6. Set up an independent advisory board with founders, investors, academics, and civil society to avoid capture.

Risks to avoid

• Don’t create funds without governance: money without transparency breeds corruption and kills investor interest.
• Don’t overpromise tax breaks that create legal uncertainty later; clarity and predictability beat headline tax holidays.
• Don’t centralise programming in a capital city only; regional hubs are the lifeblood of national resilience.

An urgent call to action

If you are a governor, commissioner, or legislative leader reading this, policy is not a cosmetic exercise. You can supercharge jobs, diversify your local economy, and keep talent in your state by making three commitments this year: (1) pass a light innovation framework that institutionalizes seed support and procurement set-asides; (2) allocate a modest, transparent RD&I line in your capital budget; and (3) sign partnership MOUs with at least one university and two private hubs in your state to run talent pipelines and pilot procurement.

If you are an investor or philanthropist, target states with operational plans and demand guarantees. Co-invest in pilot funds that require private leverage and independent audits. If you are a founder, engage your state government, show them the problems you solve and propose pilot projects where they are the first buyer.

The manifesto is simple; states that taking action now will not just keep startups alive, they will also create resilient ecosystems that sustain jobs, retain talent, and unlock local solutions to local problems. The alternative is talent drain, missed opportunity, and another decade where innovation is shouted about in Lagos but felt unevenly across Nigeria.

We have the demand, the talent, and the beginnings of the infrastructure. What we need now is the policy muscle and the political will to turn that potential into sustained growth, in Asaba, Enugu, Bayelsa, Port Harcourt and beyond. Let state governments be the architects of that future, not mere spectators.

---

Read Also: https://techsudor.com/what-the-next-decade-of-subnational-innovation-should-look-like/

---