Lagos is on a bold journey to a $1tn economy by 2052, leveraging policy reforms, infrastructure expansion, and foreign investment to cement its place as Africa’s economic powerhouse, analysts tell JUSTICE OKAMGBA how to make this target feasible
Nigeria’s commercial powerhouse, Lagos, is setting an ambitious goal to become a $1tn economy by 2052. Home to over 20 million residents, the city-state has long been the country’s economic engine, contributing significantly to national Gross Domestic Product. Now, with a mix of policy reforms, infrastructure expansion, and investment-driven growth, Lagos, under the leadership of Governor Babajide Sanwo-Olu, is positioning itself for a transformative leap. With a current GDP of $259bn based on Purchasing Power Parity, Lagos ranks as Africa’s second-largest economy, trailing only Cairo.
The state government recently released the Lagos Economic Development Update 2025, which outlined key strategies for long-term expansion. These include attracting foreign direct investment, reforming fiscal policies, and prioritising large-scale infrastructure projects. Analysts believe that the state has the potential to achieve its ambitious target provided it stays on the right developmental path.
Lagos accounted for N43.06tn, or 18.38 per cent of Nigeria’s total Gross Domestic Product in 2023, according to data from the National Bureau of Statistics and Lagos Bureau of Statistics. By the first half of 2024, its share had risen to 22.36 per cent, reflecting its growing dominance in the country’s economic landscape. Governor Babajide Sanwo-Olu, at the launch of the report, stated that the mega city is not just growing but also leading. “With a GDP of $259bn based on Purchasing Power Parity, we have cemented our place as Africa’s second-largest city economy.”
According to him, the milestone is more than a number; “it reflects the strength of our economy, the resilience of our people, and the city’s role as a hub for investment, trade, and opportunity.” The governor added, “Economic indices like PPP are crucial. They highlight real economic strength, competitiveness, and the cost-of-living advantage. From infrastructure to technology and 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.”
A developmental economist, Illias Aliyu, said, “Lagos must leverage its coastal economy, expand trade partnerships, and improve infrastructure to achieve its goal of becoming a $1tn economy by 2052.” Aliyu told The PUNCH that the state’s maritime sector, bolstered by the creation of the Marine and Blue Economy Ministry, offers significant growth opportunities.
“The new Minister of Marine and Blue Economy, Adegboyega Oyetola, appointed by President Bola Tinubu in August 2023, has a crucial role in driving investment in ports and inland waterways,” he said. “Strengthening these sectors will boost trade, create jobs, and accelerate economic growth.”
The Commissioner for Economic Planning and Budget, Ope George, said the government is focused on economic diversification, revenue mobilisation, and infrastructure development to sustain this trajectory. “Lagos remains the economic nerve centre of Nigeria and a hub of innovation, investment, and opportunities within Africa. In a rapidly evolving global economy, maintaining this leadership position requires forward-thinking policies, a deep understanding of emerging trends, and the ability to anticipate and mitigate risks,” he said.
“This update provides actionable insights into key economic developments, including sectoral performance, fiscal sustainability, social protection, and the labour market, while highlighting the policies driving progress and the challenges that require our urgent attention.”
Foreign investments
One of the key drivers of Lagos’ economic expansion is its ability to attract foreign capital. In Q3 2024, the state recorded a 110.59 per cent increase in capital importation, marking a significant boost amid Nigeria’s broader economic challenges. The Lekki Free Zone and the recently commissioned Lekki Deep Seaport have played a crucial role in attracting investments, positioning Lagos as a major player in West Africa’s transshipment and trade networks.
Aliyu said Lagos’ manufacturing sector and export potential were also critical to economic growth. He noted that expanding the state’s airport cargo capacity—similar to Chicago’s O’Hare International Airport—would facilitate the export of agricultural produce and petroleum products.
“Improved air logistics would be a game-changer for Lagos’ trade prospects,” he said, adding that stronger trade partnerships with other states would help increase exports and expand economic cooperation. He also said Lagos, as Africa’s second-largest economy, could further solidify its position with targeted investments in the blue economy.
Revenue generation
While Lagos remains the highest revenue-generating state in Nigeria, its collection potential remains largely untapped. In 2023, the state generated N651bn in internally generated revenue, the highest in the country. However, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, said Lagos’ revenue collection was still below two per cent of its GDP, despite its economic size.
He noted that optimising property taxation alone could generate at least N1tn annually, as many high-value properties remain undervalued or untaxed, limiting the government’s ability to maximize revenue collection.
“Lagos is big, but its revenue is small, collecting less than 2 percent of GDP. While some progress has been made, there is still significant room for improvement, and the time to change this narrative is now,” Oyedele said.
He outlined three key pathways for revenue mobilization. First, he highlighted property taxation, noting that cities such as Bogotá, Colombia, generate over $1bn annually from property taxes, while Lagos, despite having one of the world’s most valuable real estate markets, collects significantly less. He attributed this gap to inefficiencies in land titling, property valuation, and enforcement.
The tax expert recommended reforms such as streamlining land titling processes, incentivizing compliance, and ensuring transparent property valuation systems, which could help Lagos generate at least N1trn annually.
The second pathway focused on expanding personal income tax, leveraging technology to capture high-income earners who should be contributing more.
Oyedele emphasised the need to formalise the informal sector, particularly within Lagos’ thriving digital and creative industries.
He said entrepreneurs, event planners, content creators, and entertainers should contribute fairly to the tax system without facing excessive burdens. He advocated for a fair presumptive tax regime, allowing small businesses to grow before facing heavy taxation.
Last year, the Special Adviser to the Lagos State Government on Public-Private Partnerships, Bukola Odoe, said improving ease of payment would enhance revenue generation and encourage greater participation in the tax system.
“We need to optimise our collection process—make it simpler and easier—so that people can access and pay their taxes seamlessly using just an Android phone,” Odoe said at the Annual Workshop/Awards of the Commerce and Industry Correspondents Association of Nigeria.
To address these concerns, the Lagos Internal Revenue Service has introduced digital tax systems to improve compliance and expand the tax net. However, a large portion of the informal sector remains untaxed.
Experts suggest that the government should implement policies that encourage voluntary tax compliance while ensuring that revenue generation does not place excessive burdens on businesses and individuals.
Meanwhile, Aliyu urged the Federal Government to establish a dedicated Minister of Trade and Industrial Investment to develop policies that enhance Nigeria’s trade competitiveness.
Infrastructure
Infrastructure development will play a critical role in determining whether Lagos can achieve its $1tn economy goal by 2052, according to a report by the Lagos Economic Development Unit.
The LEDU report projects that Lagos’ economy will expand from N43.06tn in 2023 to N54.77tn in 2024 and N66.47tn in 2025, driven by services, trade, transport, IT, and finance. Transport infrastructure has been a key focus for the Lagos State Government. The launch of the Blue and Red Rail Lines is expected to reduce commuting times, ease traffic congestion, and improve business efficiency.
Lagos’ notorious traffic congestion has long been a challenge, with businesses losing billions in productivity due to delays. Analysts say the expansion of the rail system, alongside planned road network upgrades, could help mitigate these losses and enhance mobility across the state.
The manufacturing sector is also projected to expand, supported by industrial hubs and export-processing zones. However, experts say unreliable electricity supply remains a major constraint despite independent power projects.
Lagos receives only about 1,000 megawatts from the national grid, far below its estimated demand of 9,000 to 12,000MW. This shortfall forces businesses and residents to rely on costly and polluting generators, driving up operational expenses.
According to the LEDU report, Lagos’ reliance on generators adds N5.3 tn annually to business and household costs, reducing disposable incomes and limiting economic investments. Experts warn that this financial burden could erode government revenue by impacting business productivity and consumer spending.
To address this, analysts have called for greater investment in energy security, including renewables and decentralized power solutions, to provide a more sustainable and cost-effective electricity supply.
Policy, innovation, and job creation
Reaching a $1tn economy will require more than just infrastructure investment, experts say. Policy consistency, economic stability, and targeted industrialisation will be crucial to sustaining long-term growth.
Analysts emphasize that Lagos must leverage technology and innovation to enhance productivity across key sectors. The state government has also been urged to prioritize job creation, particularly for its growing youth population.
While Lagos is home to some of Nigeria’s largest employers, unemployment remains a pressing issue. Stakeholders have called for initiatives that support SMEs, promote digital skills development, and expand industrial output to tackle this challenge. The real estate sector is another area with significant economic potential, as housing demand rises alongside Lagos’ growing population.
However, land acquisition challenges, high property costs, and inadequate mortgage financing have slowed sector growth. Experts suggest that regulatory reforms and public-private partnerships could unlock new opportunities and drive economic expansion.
Conclusion
To sustain its trajectory, Lagos will need to focus on policy consistency, economic stability, and industrialisation, according to analysts. They emphasise the importance of technology and innovation in driving productivity, as well as job creation initiatives to address youth unemployment.
While the city is already a magnet for fintech, trade, and investment, sustaining long-term growth will require bold reforms and targeted investments in critical sectors. Whether Lagos can truly become a $1tn economy by 2052 will depend on how well it tackles these structural challenges in the years ahead.