Lagos becomes Africa's 2nd-largest city economy as GDP hits $259 billion

Nigeria's commercial capital, Lagos, has made another economic leap, as its Gross Domestic Product (GDP) rose to US$259.75 billion based on Purchasing Power Parity (PPP), cementing the state's position as one of Africa's economic forces.

The new economic milestone was announced during the official launch of the Lagos Economic Development Update (LEDU) 2025 on Wednesday, March 12.

The report stated that Lagos has become the second-largest economy on the continent, only behind the Egyptian capital, Cairo, due to its impressive development.

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According to the report, the state's Gross Domestic Product (GDP) stood at US$259.75 billion in 2023.

It also noted that Lagos's economy witnessed significant growth in the first half of 2024, expanding to N27.38 trillion, representing a substantial increase from N19.65 trillion in 2023.

This growth highlights the robustness of Nigeria's commercial capital, which has continued to show resilience amid economic reforms and ongoing infrastructural investments.

However, the growth reflected a need for enhanced revenue mobilisation efforts, as shown in the tax-to-GDP ratio, which was unimpressive at 2.3%.

Lagos economic outlook

Looking into the future, Governor Babajide Sanwo-Olu-led Lagos State government has set ambitious projections for the 2025 fiscal year to bring economic expansion and stability.

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The government expects the GDP to grow from N54.77 trillion in 2024 to N66.47 trillion in 2025, while the projection for the real GDP is between 5.02% and 6.49%.

The service sector will continue on its expansion trajectory, with improvements in agriculture and industrial production complementing the success. Also, the continued decline in the prices of Petroleum Motor Spirit (PMS), popularly known as petrol, and a stable naira/dollar exchange rate are expected to aid economic stability.

At the same time, the forecast puts headline inflation at 34.2%, with food inflation slightly higher at 34.9%.

For revenue projection, the state government also anticipates generating N2.79 trillion in revenue for 2025, stressing the need for increased fiscal discipline and diversification of revenue sources.