Lagos State has officially emerged as Africa’s second-largest city economy, with its Gross Domestic Product (GDP) reaching approximately $259.75 billion in 2023, based on purchasing power parity (PPP).
This significant milestone was announced during the launch of the Lagos Economic Development Update (LEDU) 2025, highlighting the state’s robust economic growth and resilience amid ongoing reforms and infrastructural investments.
Key Takeaways
- Lagos’s GDP reached $259.75 billion in 2023, making it the second-largest city economy in Africa, following Cairo.
- The economy expanded to ₦27.38 trillion in the first half of 2024, up from ₦19.65 trillion in 2023.
- The tax-to-GDP ratio remains low at 2.3%, indicating a need for improved revenue mobilization.
- Projections for 2025 include GDP growth from ₦54.77 trillion to ₦66.47 trillion, with real growth expected between 5.02% and 6.49%.
Economic Growth and Resilience
The Lagos economy has shown remarkable resilience, with significant growth recorded in the first half of 2024.
The expansion from ₦19.65 trillion in 2023 to ₦27.38 trillion underscores the effectiveness of ongoing economic reforms and infrastructural investments.
Despite this growth, the low tax-to-GDP ratio of 2.3% highlights the urgent need for enhanced revenue generation strategies.
2025 Budget Projections
Looking ahead, the Lagos State government has set ambitious targets for the 2025 fiscal year:
- GDP Growth: Expected to rise from ₦54.77 trillion in 2024 to ₦66.47 trillion in 2025.
- Real GDP Growth: Anticipated to range between 5.02% and 6.49%.
- Sectoral Expansion: Continued growth in the service sector, alongside improvements in agriculture and industrial production.
- Inflation Forecast: Headline inflation projected at 34.2%, with food inflation slightly higher at 34.9%.
- Revenue Generation: The government aims to generate ₦2.79 trillion in revenue, emphasizing fiscal discipline and diversification of revenue sources.
Investment Opportunities
Lagos remains a prime destination for both local and international investors, offering numerous opportunities across various sectors, including:
- Infrastructure Development: Ongoing projects aimed at improving transportation and utilities.
- Technology: Growth in the digital economy, including e-commerce and fintech.
- Real Estate: Expanding housing and commercial developments to accommodate the growing population.
- Manufacturing: Increased production capabilities to meet local and international demand.
However, challenges such as high inflation, foreign exchange volatility, and infrastructure deficits must be addressed to ensure sustainable long-term growth.
National GDP Rebasing
In a significant move, the National Bureau of Statistics (NBS) plans to rebase Nigeria’s GDP this year, updating the base year from 2010 to 2019.
This rebasing will include a broader range of economic activities, particularly focusing on:
- Digital Economy: Incorporating e-commerce and other online services.
- Emerging Sectors: Data from modular refineries and pension fund administrators.
- Social Programs: Activities from the National Health Insurance Scheme (NHIS) and the Nigerian Social Insurance Trust Fund (NSITF).
This comprehensive update is expected to enhance economic planning and provide a clearer understanding of Nigeria’s economic structure and performance, further solidifying Lagos’s position as a key economic player in Africa.