The government of Lagos State has unveiled strategies aimed at increasing the contribution of the tech ecosystem to its gross domestic product (GDP) from the current 3% to 10%. This is part of the State’s 30-year development plan released by the government on Wednesday.
According to the document sighted by Nairametrics, one of the strategies the state government would be adopting is to make Lagos a preferred destination for investors and innovators. While noting that winning in the future is almost impossible without the intervention of technology and innovation, the government says it would create a fund-of-funds for the state to co-invest with corporate venture capitals (VCs) in Lagos-based tech startups with the option to buy out the state’s share within 3-5 years.
According to the document, Lagos is a top destination for tech and digital investment in Africa, with about $ 1.5 billion in equity funding over five years (2016-2020).
A recent study by Disrupt Africa as reported by Nairametrics also confirmed that Lagos is the hub of Nigeria’s startup ecosystem and has a claim to being the leading startup city on the continent, alongside the likes of Cape Town and Nairobi. The study also revealed that no fewer than 425 (88.4%) of the Nigerian tech startups tracked were based in Lagos.
What they are saying
Highlighting the strategies to achieve its objective of a 10% contribution to GDP by the tech ecosystem, the state government said it would capitalise on the existing momentum to enable innovation and technology to support economic sectors in generating highly productive jobs with higher labour productivity.
“As a key objective in this effort, Lagos State will work to drive the tech ecosystem value to about 10% of Lagos State’s GDP as an enabler to drive the growth of the economic sectors. The Lagos State start-up ecosystem is the most valuable in Africa. However, it has much ground to cover when compared to other emerging markets and global peers and the idea is to get to the same level. The rise of tech-based entrepreneurship and funding capital creates the foundation for building innovative ecosystem clusters across Lagos State,” it stated in the document.
In terms of regulation and policies, the state government said it would “introduce policies to attract and incentivize local and angel investors, including capital gain tax exemptions for early-stage start up funding, propose to the federal government a review of the threshold of the Pioneer status regulations for qualifying companies for the income tax “holiday” for up to five years; and Streamline and digitalize processes to fast-track licenses, register startups, and provide State.”
Financial incentives
- Aside from the creation of a Fund to invest in startups, the government said it will also roll-out other financial incentives, which include:
- Facilitating and derisking investment through seed funding/ grant opportunities into sector verticals that have demonstrated momentum (e.g.: AgriTech, E-Commerce…)
- Introducing incentives to drive R&D spending and innovation through grants and patent protection
- Providing tax breaks for losses on invested capital in ventures owned by the same company
- Earmark financing for locally trained Lagosian entrepreneurs in tech who are less likely to get funding from VCs and international donors
- Providing personal tax incentives for founders of startups in Lagos State and corporate tax incentives for startups moving their headquarters to Lagos
Lagos is Nigeria’s Silicon Valley