Lagos State is charting an ambitious path towards becoming a trillion-dollar economy by 2052, with its current Gross Domestic Product (GDP) at $259 billion based on Purchasing Power Parity (PPP). To drive this vision, the state government recently unveiled the 2025 Lagos Economic Development Update (LEDU), a strategic roadmap providing a data-driven analysis of economic performance and policy directions for sustainable growth, ADAKU ONYENUCHEYA writes.
Lagos State’s recent achievement of a Gross Domestic Product (GDP) of $259 billion has positioned it as the second-largest economy in Africa, trailing only Cairo, the Egyptian capital.
This feat, accomplished through Purchasing Power Parity (PPP) after years of strategic planning and hard work by the state government, has reinforced Lagos as a top economic hub in Africa, driving economic activities across West Africa.
According to data from the National Bureau of Statistics (NBS) and the Lagos Bureau of Statistics (LBS), Nigeria’s national GDP stood at N234.43 trillion in 2023, with Lagos contributing N43.06 trillion, representing 18.38 per cent of the national economy.
In the first half of 2024, the national economy recorded a GDP of N122.51 trillion, with Lagos accounting for N27.39 trillion, representing 22.36 per cent of Nigeria’s GDP.
Owing to the state’s fiscal responsibility and well-defined development agenda, global investors are increasingly turning to Lagos as a prime destination for foreign capital.
The improved business environment and the exceptional resourcefulness of the Lagos workforce have further cemented the state’s status as Nigeria’s leading economic powerhouse.
As the country’s commercial hub, Lagos has consistently attracted a significant share of foreign investments, playing a pivotal role in shaping Nigeria’s broader economic trajectory.
Budgetary Performance, Revenue Growth
According to the Lagos Economic Development Update (LEDU) 2025 report, the state has demonstrated consistent and commendable budgetary performance over 10 consecutive quarters.
Capital importation in the first quarter of 2024 increased by an impressive 110.59 per cent year-on-year, underscoring the resilience of Lagos State’s economy despite quarterly fluctuations.
Revenue performance, which stood at 79.5 per cent in 2021, declined slightly to 77.8 per cent in 2022. However, it rebounded significantly, reaching 85.8 per cent in 2023 and 106.6 per cent in 2024.
This improvement is attributed to key initiatives such as the implementation of the Lagos Revenue Portal, frequent updates to the tax register, and increased federal transfers following the removal of fuel subsidies.
On the expenditure side, performance followed a more variable trajectory, declining from 84.8 per cent in 2021 to 72.7 per cent in 2022 before improving to 86.8 per cent in 2023 and later dropped to 78.3 per cent in 2024.
Despite these fluctuations, the report highlights the strong revenue performance in Q3 2024 as a testament to the effectiveness of the state’s revenue enhancement strategies.
According to the report, the steady improvement in revenue collection reflects the impact of strategic fiscal reforms, including digitised revenue collection and increased transparency.
The 2024 fiscal year has seen the implementation of numerous interventions, policies, and projects aligned with the state’s budget. Building on the achievements of 2023, the budget prioritises key economic sectors, including transportation, security, food security, housing, youth employment, entertainment, health, education, public order and safety, energy and social protection.
Lagos State remains committed to its long-term economic vision, as outlined in the Lagos State Development Plan (LSDP), which targets an economic size of $800 billion to $1 trillion by 2052.
The state continues to progress towards this goal through sustained economic expansion and policy-driven growth initiatives.
Economic Outlook
Over the past four years, the state has witnessed substantial expansion across key economic sub-sectors, including trade, transport, information and communication, arts, entertainment, recreation, financial services and insurance.
According to the LEDU report, the state’s economy is projected to grow from N43.06 trillion in 2023 to N54.77 trillion in 2024 and N66.47 trillion in 2025. This upward trend is primarily driven by the continued expansion of the services sector, with additional contributions from the agriculture and industrial sectors.
The services sector remains the dominant driver of the state’s economy, with over 100 technology hubs and startups, reinforcing its status as the commercial hub of Nigeria and West Africa.
In the second quarter of 2024, the sector’s share of the state’s total real GDP increased to 91.57 per cent, up from 90.29 per cent in Q1 2024. With Lagos emerging as a hub for digital innovation and technology-driven startups, the services sector is expected to further strengthen its contribution to nominal GDP.
The report also highlighted that the industrial sector, largely driven by manufacturing, has experienced steady growth over the past four years. Lagos also maintains its position as Nigeria’s financial hub, with all major banks headquartered in the state. Additionally, Lagos accounts for over 80 per cent of Nigeria’s foreign trade flows and generates more than 70 per cent of port revenues.
For trade, it increased commercial activities and consumer demand led to a rise in its contribution from 51.8 per cent in Q1 2024 to 53.1 per cent in Q2 2024, while information and communication sector accounted for 24.81 per cent of GDP in Q2 2024, up from 22.4 per cent in Q1 2024.
The report stated that this expansion is expected to continue through 2024 and into 2025, supported by ongoing infrastructure development across the state. Meanwhile, several major infrastructure projects were completed in 2024, including the commissioning of the Red Rail Line and the ongoing expansion of the Blue Rail Line.
These public investments are anticipated to enhance productivity in the manufacturing sector, further boosting Lagos’s economic trajectory.
Sustainable Economic Development
The Lagos Economic Development Update 2025, themed, ‘Lagos Economic Outlook: Charting a Resilient Path Towards a Sustainable Future’, was officially launched last week to provide a data-driven assessment of the state’s economic performance and outline strategic policy directions for sustainable growth.
Speaking at the launch, the Commissioner for Economic Planning and Budget, Ope George, emphasised that the report is designed to position Lagos as a 21st-century economy.
The key focus areas include revenue mobilisation, economic diversification and fiscal sustainability. George said these strategic initiatives aim to enhance economic growth, improve living standards, and reduce poverty among Lagos residents.
He highlighted that the report reflects the Lagos State government’s commitment to transparency, evidence-based policymaking, and sustainable economic growth.
George further reiterated that Lagos remains the economic nerve centre of Nigeria and a hub for innovation, investment, and opportunities in Africa.
He stated that to maintain this leadership position, the state must adopt forward-thinking policies, anticipate global trends, and mitigate risks in an ever-evolving economy.
The report provides actionable insights on sectoral performance, fiscal sustainability, social protection and the labour market, capital importation, inflation, and macroeconomic outlook.
Additionally, the 2025 edition emphasises the need to build resilience against potential economic vulnerabilities, including food insecurity, climate change, revenue gaps, energy deficits, and skills shortages.
George stated that by addressing these critical challenges, Lagos State aims to create a more resilient, inclusive, and sustainable economic future. He said the report serves as a blueprint for policymakers, investors, and stakeholders to drive long-term prosperity and ensure that Lagos remains at the forefront of Africa’s economic development.
Sustaining Data-driven Policies
The state Governor, Babajide Sanwo-Olu, emphasised the state’s economic growth and leadership, highlighting that its GDP of $259 billion based on Purchasing Power Parity (PPP) solidifies its position as Africa’s second-largest city economy. He noted that economic indicators like PPP are crucial in showcasing real economic strength, competitiveness, and the cost-of-living advantage.
According to Sanwo-Olu, Lagos is driving sustainable growth across key sectors, including infrastructure, technology, tourism and manufacturing, positioning itself at the forefront of Africa’s economic transformation.
“This milestone is more than just a number; it reflects the strength of our economy, the resilience of our people, and our city’s role as a hub for investment, trade, and opportunity,” he stated.
The Permanent Secretary of the Ministry of Economic Planning and Budget, Mrs. Olayinka Ojo, underscored the importance of data-driven policy decisions in shaping Lagos’s economic trajectory.
She stressed that as Nigeria’s economic nerve centre, Lagos must navigate global and national economic complexities with foresight and strategic planning. Ojo noted that the 2025 LEDU report provides critical insights into fiscal sustainability, labour market dynamics, and revenue generation. She emphasised that the state’s future prosperity depends on collective efforts to enhance fiscal governance, strengthen revenue mobilisation, and create an enabling environment for businesses to thrive.
Bridging Revenue Gap
Delivering the keynote address titled, ‘Bridging the Revenue Gap in Lagos: Innovative Pathways to Enhanced Revenue Mobilisation’, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, emphasised the urgent need for innovative and transformative strategies to bridge the state’s revenue gap.
He noted that while Lagos remains Nigeria’s economic powerhouse, its current revenue generation of less than two per cent of GDP lags behind comparable economies worldwide. Oyedele stated that despite its size and economic influence, the state is not generating enough revenue to match its ambitions.
“Lagos is big, but its revenue is small, collecting less than two per cent of GDP. While some progress has been made, there is still significant room for improvement, and the time to change this narrative is now,” Oyedele stated.
He outlined three key pathways for boosting revenue mobilisation, starting with property taxation. Oyedele highlighted that cities like Bogotá, Colombia, generate over $1 billion yearly from property tax, whereas Lagos, despite having one of the most valuable real estate markets in the world, collects far less. He attributed this gap to inefficiencies in land titling, property valuation, and enforcement.
To address this, he proposed reforms aimed at improving land titling processes, incentivising compliance and ensuring a transparent property valuation system. Oyedele’s second pathway focused on expanding personal income tax collection by leveraging technology to capture high-income earners who should be contributing more to the system.
Oyedele underscored the need to formalise the informal sector, particularly Lagos’s booming digital and creative industries, ensuring that entrepreneurs, event planners, content creators, and entertainers contribute fairly without being overburdened. He advocated for a fair presumptive tax regime that allows small businesses to grow before being subjected to heavy taxation on their successes.
