Lagos IGR hits record N1.87tn as tax reforms, business activity boost revenue

Lagos State’s internally generated revenue rose to a record N1.87 trillion in 2025, driven by stronger tax collection, improved compliance enforcement, and increased economic activity across Nigeria’s commercial capital, according to experts

The state generated N2.6 trillion in total revenue in 2025, up from N2.3 trillion in 2024, while internally generated revenue rose 18.5 percent from N1.58 trillion, according to Abayomi Oluyomi, commissioner for finance.
Oluyomi disclosed the figures during a ministerial press briefing in Alausa, Ikeja, as part of activities marking the seventh anniversary of Governor Babajide Sanwo-Olu’s administration.

Analysts say the rise reflects not only improvements in tax administration but also the broader scale of economic activity in Lagos.
“Lagos has always been the leader in terms of internally generated revenue. The increase is due largely to improvements in the tax collection approach and the introduction of payment options,” said Oluwasegun Osundina, a tax consultant.

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He added that while Lagos has widened its revenue base, improved tax collection continues to account for a significant portion of the increase.
The state government attributed part of the growth to reforms at the Lagos Internal Revenue Service, including upgrades to the e-tax platform, digital filing integration, and expansion of payment channels across online platforms, USSD, point-of-sale terminals and mobile systems.

Michael Kolade, a tax expert, said Lagos’ performance reflects deeper structural advantages beyond digital tax collection.
“Lagos’ success is not driven by digitalisation alone. It benefits from strong political will to enforce compliance and prosecute offenders, access to richer taxpayers and economic intelligence, and a high concentration of major companies, multinationals, and corporate headquarters that naturally expand its tax base,” Kolade said.

According to him, Lagos also benefits from a large formal economy, stronger administrative capacity, digital infrastructure, and policy continuity, giving it a revenue advantage over most subnational governments.
He noted that while states such as Abuja, Rivers, Ogun, and Kaduna can improve internally generated revenue by adopting parts of Lagos’ approach, replicating the model fully may prove difficult.
“The focus should be on adapting Lagos’ model to local realities rather than copying it wholesale,” he said.

For economists, the revenue growth also mirrors broader shifts in Lagos’ economy.

Dumebi Oluwole, lead economist at Stears, said stronger port activities, changing customs patterns, technology adoption, population growth, real estate expansion, and growth in the creative and startup ecosystems likely contributed to the increase.

“With the Dangote refinery, changes to ports and customs supporting import and export transactions, the use of technology, and continued population growth, it makes sense why revenue would increase between 2024 and 2025,” Oluwole said.
She added that activity from the “Detty December” tourism season, short-let apartments, serviced real estate, and Lagos’ growing startup ecosystem may also have supported revenue expansion.

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Oluwole noted that exchange rate movements may also have amplified government revenue and said a deeper analysis of state-level revenue data would be needed to determine the exact contribution of each driver.

Beyond stronger fiscal performance, she said the increase suggests the state has more resources to fund infrastructure and public spending, which could support short-term economic growth through higher consumption and continued project execution.
However, she warned that rising rents, flooding, infrastructure strain, and insecurity could pose risks to Lagos’ growth if left unmanaged.
“Lagos remains the hub of economic activity in Nigeria, so it is not surprising that IGR is increasing. But the state also has to manage the pressures that come with that growth,” she said.

The state government also said it maintained prudent debt management despite continued borrowing to finance infrastructure.

Oluyomi said Lagos raised a N230 billion bond at a fixed rate of 16.25 percent to fund projects across transportation, healthcare, housing, agriculture, science and technology, and environmental sustainability.
Major projects financed include the Opebi Link Bridge, Blue Line Rail Phase II, Massey Children’s Hospital, Lagos HOMS housing schemes, Alaba Rago International Market redevelopment, and a 280-bed multi-specialist hospital in Ojo.
For analysts, Lagos’ latest revenue performance underscores how tax reforms, enforcement capacity, and expanding economic activity are combining to strengthen the state’s fiscal position, even as questions remain over how sustainable that growth will be amid mounting urban pressures.