Lagos State has solidified its position as one of Africa’s leading economic hubs, with its Gross Domestic Product (GDP) reaching an estimated $259 billion based on Purchasing Power Parity (PPP).
The milestone was revealed on Wednesday during the official launch of the Lagos Economic Development Update (LEDU) 2025, which highlighted the state’s remarkable economic growth. Lagos now ranks as Africa’s second-largest city economy, trailing only Cairo, Egypt.
The report credited this achievement to the strategic policies implemented by Governor Babajide Sanwo-Olu’s administration, aimed at driving economic expansion and improving financial performance.
According to the LEDU report:
“The Lagos economy recorded significant growth in the first half of 2024, expanding to N27.38 trillion, which is a substantial increase from N19.65 trillion in 2023.”
Despite this progress, the report pointed out that the state’s tax-to-GDP ratio remains low at 2.3%, highlighting the need for enhanced revenue mobilization efforts.
Delivering the 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 need for Lagos to increase its revenue collection to match its economic ambitions.
“Lagos is big, but its revenue is small, collecting less than 2 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,” Oyedele opined.
He outlined three key strategies to improve revenue generation: increasing property taxation, expanding the personal income tax base especially by leveraging technology to capture high-income earners and tax harmonization.
“A better approach to taxation is not to tax the seed, but the fruit. Let businesses grow, and tax them fairly on their successes,” he stated
Oyedele also advocated for formalizing the informal sector, particularly digital entrepreneurs, content creators, and event planners, to capture untapped revenue.
Drawing comparisons with global success stories like Dubai and Singapore, he urged bold reforms, asserting that with the right strategies, Lagos could generate up to N5 trillion annually in Internally Generated Revenue (IGR).
Looking ahead, the Lagos State Government has set ambitious economic projections in its 2025 fiscal budget. The state’s GDP is expected to increase from N54.77 trillion in 2024 to N66.47 trillion in 2025, with real GDP growth anticipated to range between 5.02% and 6.49%.
These projections reinforce the state’s commitment to maintaining Lagos as a top investment destination. With continued economic expansion and strategic policy interventions, Lagos presents vast opportunities for investors in infrastructure, technology, real estate, and manufacturing.