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Reuters/Akintunde Akinleye
The Lagos hustle and bustle is second to none.
LASGIDI

Lagos is Africa’s 7th largest economy and is about to get bigger with its first oil finds

By Yomi Kazeem

With growth driven by vital reforms in state service—taxation, transport services and waste management—Lagos state remains the economic hub of Nigeria twenty five years after it was replaced as the country’s official capital. The state’s potential to generate revenue has now been boosted even further by confirmation of oil production. Targeted investment is expected to follow the state’s oil production activities and under the terms of Nigeria’s resource control, as an oil-producing state, Lagos will become entitled to a 13% cut of revenues generated by Nigeria’s government through its oil and potentially earning millions of dollars.

Lagos’ success has set it apart as a benchmark for other states in Nigeria. Internally generated revenue (IGR), mainly through taxes stood at $1.3 billion in 2015—three times more than the state with the second most IGR and 39% of the total IGR by Nigeria’s 36 states. But Lagos’ success looks even better compared to other African nations.

With GDP in 2014 pegged at $90 billion, Lagos’ economy stands as the 7th largest in Africa- bigger than Cote d’Ivoire and Kenya, two of the continent’s most promising economies.

A finely tuned IGR model and a growing economy has made Lagos into Africa’s leading city and one of the world’s fastest growing megacities. Now with oil production, it will grow even quicker. Remarkably, Lagos’ immense commercial potential belies its size. The smallest state out of Nigeria’s 36, Lagos’s size area is dwarfed in comparison with Africa’s biggest economies.

While its newly found oil will earn Lagos more revenue, it also presents dangers of environmental effects of oil especially as the state is very densely populated with over 20 million people. A reminder of those dangers lies in Nigeria’s south coast where Ogoniland has been set back by decades of pollution through multiple oil spills. Cleaning up the region is estimated to cost billions of dollars over the next three decades.