- Lagos has become the second-largest economy in Africa with $259.75 billion Gross Domestic Product
- Taiwo Oyedele stressed the need for Lagos to expand its internally generated revenue
- Lagos made key assumptions for economic growth in its 2025 budget
Lagos State has become the second-largest economy in Africa as its Gross Domestic Product (GDP) reached $259.75 billion in 2023 based on purchasing power parity (PPP).
The GDP growth means Lagos is second only to Cairo, Egypt, in terms of city economy.
This was disclosed on Wednesday, March 12, during the official launch of the Lagos Economic Development Update (LEDU) 2025, with the theme, ‘Lagos Economic Outlook: Charting a Resilient Path Towards a Sustainable Future.’
The document, executed under the Ministry of Economic Planning and Budget (MEPB), highlighted strategies for economic resilience, fiscal sustainability, and revenue mobilisation.
Speaking at the presentation of the report, the Commissioner for MEPB, Ope George, emphasised that the 2025 LEDU provides critical insights to guide policy decisions.
The report also disclosed that Lagos economy expanded in the first half of 2024 to N27.38 trillion, up from N19.65 trillion recorded in 2023.
Lagos needs to increase its revenue generation – Oyedele
In a keynote address titled, ‘Bridging the Revenue Gap in Lagos: Innovative Pathways to Enhanced Revenue Mobilisation,’ Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, stressed the importance of Lagos increasing its revenue generation to match its economic ambitions.
He said with bold actions, Lagos has the potential to become a global success story like Dubai and Singapore.
Oyedele highlighted three key strategies for Lagos to improve revenue collection: property taxation, expansion of the personal income tax base, particularly by leveraging technology to capture high-income earners, and tax harmonisation.
“Lagos is big, but its revenue is small, collecting less than two per cent of GDP. While some progress has been made, we still have a big room for improvement, and the time to change this narrative is now.
“A better approach to taxation is not to tax the seed, but the fruit. Let businesses grow, and tax them fairly on their successes.
“With the right reforms, Lagos can generate up to N5 trillion annually in Internally Generated Revenue (IGR),” Oyedele said.
Key assumption of Lagos budget for 2025
For the 2025 fiscal year, the Lagos State government budgeted N3.37 trillion, making it the state with the highest budget in 2025, with expectations for further economic expansion and stability.
The key assumptions of the state’s 2025 budget include a projected GDP growth from N54.77 trillion in 2024 to N66.47 trillion in 2025, while real GDP growth is expected to range between 5.02 per cent and 6.49 per cent.
The state also forecasts headline inflation to be 34.2 per cent, which is higher than the projection of experts for the nation and the Federal Government’s 15 per cent inflation rate target for the year.
Lagos also projected food inflation to be slightly higher at 34.9 per cent.
The Lagos State government anticipates generating N2.79 trillion in revenue for 2025, stressing the need for increased fiscal discipline and diversification of revenue sources.
It also projects that the service sector will continue to expand, complemented by improvements in agriculture and industrial production.
The state’s economic stability is expected to be supported by a drop in petrol prices and a stable exchange rate.
Gov. Sanwo-Olu celebrates milestone
Following the report, Lagos State governor, Babajide Sanwo-Olu, celebrated the economic milestone on his X handle.
Sanwo-Olu stressed the state’s role as a powerhouse for investment, trade, and development, noting that economic indices such as PPP are significant as they reflect real economic strength and competitiveness.
“Lagos is not just growing; we are leading. With a GDP of $259 billion based on purchasing power parity (PPP), we have cemented our place as Africa’s second-largest city economy.
“This milestone is more than a number; it reflects the strength of our economy, the resilience of our people, and our city’s role as a hub for investment, trade, and opportunity.
“Economic indices like PPP are crucial. They highlight real economic strength, competitiveness, and the cost-of-living advantage.
“From infrastructure to technology, tourism to manufacturing, we are driving sustainable growth.
"Lagos remains at the forefront of Africa’s economic transformation, and the best is yet to come,” the governor stated.
FG targets 7% annual GDP growth in 2025, beyond projected 4.6%
Meanwhile, TheRadar earlier reported that the Federal Government said it targets an annual Gross Domestic Product (GDP) growth rate of seven per cent in 2025, above the projected 4.6 per cent.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the government’s seven per cent target is to reduce poverty and drive economic transformation.
