Lagos State has further strengthened its standing as one of Africa’s premier economic powerhouses, with its Gross Domestic Product (GDP) hitting an impressive $259 billion based on purchasing power parity (PPP). This development places Lagos as the second-largest economy on the continent, only behind Cairo, Egypt.
The milestone was announced during the official launch of the Lagos Economic Development Update (LEDU) 2025 on Wednesday. According to the report, Lagos ranks as Africa’s second-largest city economy by PPP, underscoring its central role in the region’s economic landscape.
Lagos has demonstrated notable economic resilience, with the state’s GDP reaching approximately $259.75 billion in 2023. In the first half of 2024, the economy recorded remarkable growth, expanding to N27.38 trillion, a substantial increase from N19.65 trillion in 2023. This growth reflects Lagos’s continued economic dynamism amid significant infrastructural investments and ongoing economic reforms.
Despite these positive trends, the state’s tax-to-GDP ratio remains relatively low at 2.3%, signaling the need for more robust efforts in revenue generation.
2025 Budget Projections and Expectations
Looking ahead, the Lagos State government has set ambitious goals for the 2025 fiscal year. The state’s GDP is projected to grow from N54.77 trillion in 2024 to N66.47 trillion in 2025, with real GDP growth anticipated to range between 5.02% and 6.49%. Growth will be driven primarily by the service sector, which is expected to continue expanding, alongside improvements in agriculture and industrial production.
Key assumptions for 2025 include:
- Inflation: Headline inflation is forecasted at 34.2%, with food inflation slightly higher at 34.9%.
- Revenue: The state government anticipates generating N2.79 trillion in revenue, emphasizing fiscal discipline and the diversification of revenue sources to enhance economic sustainability.
- Sectoral Focus: Economic stability is expected to be bolstered by factors like a decline in petrol prices and a stable naira/dollar exchange rate.
Opportunities for Investors
Lagos remains an attractive destination for both local and international investors, with opportunities spanning across infrastructure development, technology, real estate, and manufacturing. The state’s ongoing economic expansion, supported by strategic policies, offers immense potential for businesses and investors to capitalize on Nigeria’s vibrant economic landscape.
However, experts highlight that challenges such as high inflation, foreign exchange volatility, and infrastructure deficits must be addressed to ensure sustained long-term growth.
Rebasing Nigeria’s GDP
As part of efforts to update its economic data, the National Bureau of Statistics (NBS) plans to rebase Nigeria’s GDP this year, moving from the 2010 base year to 2019. This new approach will include broader economic activities, particularly focusing on the digital economy, emerging sectors like modular refineries and pension fund administrators, and social programs like the National Health Insurance Scheme (NHIS) and the Nigerian Social Insurance Trust Fund (NSITF).
With these updates and continued investment, Lagos is poised to maintain its status as one of Africa’s foremost economic centers, contributing significantly to Nigeria’s overall growth trajectory.
