Lagos emerges as Africa’s 2nd-largest city economy as GDP hits $259 billion

Lagos State has solidified its status as a leading economic force in Africa, with its Gross Domestic Product (GDP) reaching approximately $259.75 billion in 2023, based on purchasing power parity (PPP).

• Lagos State’s GDP reached approximately $259.75 billion in 2023, making it the continent’s second-largest economy
• Lagos’s economy expanded to ₦27.38 trillion in the first half of 2024, demonstrating significant resilience and growth
• The National Bureau of Statistics (NBS) plans to rebase Nigeria’s GDP in 2019, aiming to provide a more accurate reflection of the current economic landscape

This remarkable achievement positions Lagos as the continent’s second-largest economy, surpassed only by Cairo, Egypt. citeturn0search32

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In the first half of 2024, Lagos’s economy demonstrated significant resilience and growth, expanding to ₦27.38 trillion, up from ₦19.65 trillion in 2023. This substantial increase underscores the state’s robust economic framework amidst ongoing reforms and infrastructural investments. However, the tax-to-GDP ratio remains low at 2.3%, indicating a pressing need for enhanced revenue mobilisation strategies.

2025 Budget Projections

Looking ahead, the Lagos State government has outlined ambitious projections for the 2025 fiscal year:

• GDP Growth: The state’s GDP is anticipated to rise from ₦54.77 trillion in 2024 to ₦66.47 trillion in 2025, with real GDP growth projected between 5.02% and 6.49%.
• Sectoral Expansion: The services sector is expected to continue its expansion, complemented by advancements in agriculture and industrial production. Economic stability is projected to benefit from declining petrol prices and a stable naira-to-dollar exchange rate.
• Inflation Forecast: Headline inflation is projected at 34.2%, with food inflation slightly higher at 34.9%.
• Revenue Projections: The Lagos State Government aims to generate ₦2.79 trillion in revenue for 2025, emphasising the necessity for increased fiscal discipline and diversification of revenue sources.

Lagos continues to be a prime destination for investors seeking opportunities within Nigeria’s dynamic economic landscape. The state’s ongoing economic expansion, coupled with strategic policy interventions, presents lucrative prospects in infrastructure development, technology, real estate, and manufacturing sectors. However, challenges such as high inflation, foreign exchange volatility, and infrastructure deficits must be addressed to ensure sustainable long-term growth.

In a significant national development, the National Bureau of Statistics (NBS) plans to rebase Nigeria’s GDP this year, updating the base year from 2010 to 2019. This rebasing aims to provide a more accurate reflection of the current economic landscape, incorporating substantial growth in various sectors since the last update in 2014.

The rebasing process will encompass emerging sectors such as the marine and blue economy, arts, culture, tourism, information and communication technology (ICT), and e-commerce, ensuring these rapidly growing industries are accurately represented in the new GDP framework.

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This comprehensive update is expected to enhance economic planning and policy formulation, providing a more precise understanding of Nigeria’s economic structure and performance. The previous rebasing in 2014 had established Nigeria as Africa’s largest economy, and this forthcoming update is anticipated to further elucidate the nation’s economic dynamics.

Lagos State’s impressive economic growth and Nigeria’s forthcoming GDP rebasing underscore the nation’s evolving economic landscape. These developments highlight the importance of strategic planning and investment in emerging sectors to sustain and enhance economic growth across the continent.