Lagos state has cemented its position as one of Africa’s economic powerhouses, with its Gross Domestic Product (GDP) reaching an impressive $259 billion based on purchasing power parity (PPP).
This milestone places Lagos as the second-largest economy on the continent, trailing only Cairo, Egypt.
This was made known during the official launch of the Lagos Economic Development Update (LEDU) 2025 on Wednesday.
According to the report, the state ranks as Africa’s second-largest city economy by purchasing power parity (PPP), following Cairo.
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The report reveals that the state’s Gross Domestic Product (GDP) stood at US$259.75 billion in 2023.
Economic Growth and Performance
- The Lagos economy recorded significant growth in the first half of 2024, expanding to N27.38 trillion, a substantial increase from N19.65 trillion in 2023.
- This growth highlights the resilience of Nigeria’s commercial capital amid economic reforms and ongoing infrastructural investments.
- Despite this growth, the tax-to-GDP ratio remains low at 2.3%, reflecting the need for enhanced revenue mobilization efforts.
Key 2025 Budget Assumptions
Looking ahead, the Lagos State government has set ambitious projections for the 2025 fiscal year, with expectations for further economic expansion and stability. The key assumptions include:
- GDP Growth: The state’s GDP is projected to grow from N54.77 trillion in 2024 to N66.47 trillion in 2025. Real GDP growth is expected to range between 5.02% and 6.49%.
- Sectoral Growth: The service sector will continue its expansion, complemented by improvements in agriculture and industrial production. Economic stability is expected to be aided by a decline in PMS (petrol) prices and a stable naira/dollar exchange rate.
- Inflation Forecast: Headline inflation is projected to be 34.2%, with food inflation slightly higher at 34.9%.
- Revenue Projections: The Lagos State Government anticipates generating N2.79 trillion in revenue for 2025, emphasizing the need for increased fiscal discipline and diversification of revenue sources.
Implications for Investors and Businesses
Lagos remains a key destination for investors looking to tap into Nigeria’s vibrant economic landscape.
The state’s continued economic expansion, coupled with strategic policy interventions, presents opportunities in infrastructure development, technology, real estate, and manufacturing.
However, observers note that while Lagos enjoys a large economy, challenges such as high inflation, foreign exchange volatility, and infrastructure deficits must be addressed to sustain long-term growth.
More insights
The National Bureau of Statistics (NBS) is set to rebase Nigeria’s Gross Domestic Product (GDP) this year, using 2019 as the new base year instead of 2010.
The base year for GDP calculations is being updated from 2010, which has been in use for the past 15 years, to 2019.
The rebasing process includes extensive updates in the scope of economic activities captured, with particular focus on:
- Digital Economic Activities: Inclusion of e-commerce, fintech, and other online services.
- Emerging Sectors: Data from modular refineries, pension fund administrators, and quarrying industries.
- Social Programs: Activities from the National Health Insurance Scheme (NHIS) and the Nigerian Social Insurance Trust Fund (NSITF).
