Key points:
- Lagos GDP reaches $259 billion
- Second-largest economy in Africa
- Key sectors attract investors
NIGERIA’S Lagos State has strengthened its position as one of Africa’s most dynamic economies, with its Gross Domestic Product (GDP) hitting an impressive $259.75bn in 2023, measured by purchasing power parity (PPP). This achievement ranks Lagos as the second-largest city economy on the African continent, second only to Cairo, Egypt.
The milestone was announced during the official release of the Lagos Economic Development Update (LEDU) 2025. The report highlights Lagos’ economic resilience and growing role as Nigeria’s commercial and financial capital.
Lagos ranks second in Africa’s city economies
According to the report, Lagos has secured its place as Africa’s second-largest city economy by PPP. The state’s GDP of $259.75bn reflects not only its vibrant commercial activity but also the success of strategic reforms aimed at fostering sustainable growth.
Lagos’ economic expansion has been supported by massive infrastructure development, steady investments in technology, and robust private sector participation. These factors have helped the state to weather global economic uncertainties and domestic challenges.
Strong economic growth continues in 2024
Lagos posted substantial growth in the first half of 2024, with its economy expanding to N27.38 trillion (about $18.25bn), up from N19.65 trillion in 2023. This surge demonstrates the effectiveness of ongoing reforms and infrastructure projects.
Despite this strong performance, the state’s tax-to-GDP ratio remains relatively low at 2.3 percent. Economic experts emphasise the importance of enhancing revenue mobilisation efforts to sustain the current growth trajectory and reduce dependence on federal allocations.
Projections for 2025 signal continued expansion
The Lagos State Government has set out ambitious plans for 2025. The state’s GDP is projected to grow from N54.77 trillion in 2024 to N66.47 trillion in 2025. Real GDP growth is forecast to range between 5.02 percent and 6.49 percent.
Key sector outlooks for 2025
- Services sector: expected to lead economic growth, driven by digital services, fintech, and e-commerce.
- Agriculture and industry: set to experience moderate growth, contributing to food security and job creation.
- Macroeconomic stability: supported by an anticipated decline in petrol prices and a stable naira/dollar exchange rate.
Inflation and revenue expectations
- Inflation rate: headline inflation is projected at 34.2 percent, with food inflation slightly higher at 34.9 percent.
- Revenue generation: Lagos aims to generate N2.79 trillion in 2025, focusing on diversifying revenue streams and enforcing fiscal discipline.
Investment opportunities in Lagos’ expanding economy
Lagos remains one of the most attractive destinations for investors in Africa. Its continued economic growth, strategic policy reforms, and expanding infrastructure make it a prime location for investment.
Key sectors presenting opportunities include infrastructure development, technology, real estate, and manufacturing. Lagos’ large consumer base and improving business climate further enhance its appeal to both local and international investors.
However, challenges such as high inflation, foreign exchange volatility, and infrastructure gaps persist. Addressing these issues will be crucial for maintaining investor confidence and supporting long-term economic stability.
Nigeria’s GDP rebasing underway to reflect new realities
Nigeria is in the process of updating its national GDP calculations. The National Bureau of Statistics (NBS) is rebasing Nigeria’s GDP to use 2019 as the new base year, replacing the 2010 base year that has been in use for the past 15 years.
The rebasing aims to provide a more accurate and comprehensive picture of the country’s economy by incorporating new and emerging sectors. These include:
- Digital economy: capturing activities in fintech, e-commerce, and online services.
- Emerging industries: including data from modular refineries, pension fund administrators, and quarrying.
- Social Programmes: adding contributions from the National Health Insurance Scheme (NHIS) and the Nigerian Social Insurance Trust Fund (NSITF).
This update is expected to improve the accuracy of economic data and inform better policy decisions at both the state and national levels.
Lagos powers ahead as an African economic giant
With a GDP of $259.75bn, Lagos has firmly cemented its place as one of Africa’s top economic hubs. Its diverse economy, strategic reforms, and growing investor interest position the state for even greater achievements in the years ahead.
As Lagos continues to attract investments and implement forward-looking policies, it remains central to Nigeria’s quest for economic stability and growth. However, sustaining this momentum will require addressing inflationary pressures, ensuring currency stability, and closing infrastructure gaps.
For investors and businesses, Lagos offers vast opportunities across key sectors. With continued commitment to reform and development, Lagos is on track to maintain its status as Africa’s economic powerhouse.
