Lagos, Nigeria – Lagos State has solidified its reputation as a major economic hub in Africa, with its Gross Domestic Product (GDP) surging to an impressive $259 billion based on purchasing power parity (PPP). This milestone places Lagos as the continent’s second-largest city economy, following Cairo, Egypt.
The announcement was made during the official launch of the Lagos Economic Development Update (LEDU) 2025, where economic analysts highlighted the state’s impressive growth trajectory and strategic economic outlook.
The Lagos economy has demonstrated remarkable resilience, recording substantial growth in the first half of 2024. The state’s GDP expanded to N27.38 trillion, a significant leap from N19.65 trillion in 2023. This growth underscores Lagos’ position as Nigeria’s commercial nerve center, benefiting from ongoing economic reforms and infrastructural investments.
Despite the impressive expansion, the report pointed out that the tax-to-GDP ratio remains relatively low at 2.3%, indicating a pressing need to strengthen revenue collection mechanisms.
Projections for 2025: Key Economic Assumptions
Looking ahead, the Lagos State Government has outlined ambitious projections for the 2025 fiscal year, focusing on sustained economic growth and stability. The key expectations include:
- GDP Expansion: The state’s GDP is forecast to grow from N54.77 trillion in 2024 to N66.47 trillion in 2025, with real GDP growth projected to range between 5.02% and 6.49%.
- Sectoral Performance: The service sector is expected to continue its strong performance, alongside improvements in agriculture and industrial production. Economic stability is anticipated due to a projected decline in petrol prices and a more stable naira/dollar exchange rate.
- Inflation Outlook: Headline inflation is estimated at 34.2%, with food inflation slightly higher at 34.9%.
- Revenue Projections: The Lagos State Government aims to generate N2.79 trillion in revenue in 2025, emphasizing fiscal discipline and the diversification of income streams.
As the largest economy in West Africa, Lagos continues to attract both local and foreign investors eager to capitalize on its dynamic business environment. Sectors such as infrastructure development, technology, real estate, and manufacturing are expected to benefit from the state’s economic expansion and policy-driven initiatives.
However, analysts caution that while Lagos enjoys a strong economic standing, inflationary pressures, exchange rate fluctuations, and infrastructural deficits remain key challenges that must be addressed to ensure sustained growth.
Nigeria’s GDP Reassessment and Economic Reforms
Meanwhile, the National Bureau of Statistics (NBS) is set to rebase Nigeria’s GDP this year, shifting the base year from 2010 to 2019. This process aims to provide a more accurate reflection of the country’s economic activities by incorporating emerging industries and digital advancements.
Key areas of focus in the rebasing process include:
- Digital Economy: The inclusion of sectors such as e-commerce, fintech, and online services.
- Expanding Industries: Data from modular refineries, pension fund administrators, and quarrying operations.
- Social Programs: Contributions from the National Health Insurance Scheme (NHIS) and the Nigerian Social Insurance Trust Fund (NSITF).
The rebasing exercise is expected to offer a clearer picture of Nigeria’s economic landscape and enhance policy formulation for sustainable growth.
Lagos’ continued economic advancement reaffirms its role as a leading financial center in Africa, but policymakers and investors alike must navigate the evolving economic realities to sustain this momentum.
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