Lagos State’s service sector is the leading contributor to the state’s economy, accounting for the largest share of its GDP in 2024.
Compared to other key sectors such as agriculture, finance, insurance, and the industrial sector, the service sector contributed the most to the overall economic output of the state.
This is according to a new report by the Lagos State Ministry of Planning and Budget titled “The Lagos Economic Development Update (LEDU) 2025”.
The service sector dominated as the primary contributor to Lagos State’s total real Gross Domestic Product (GDP) in Q2 2024, rising from 90.29% in Q1 2024 to 91.57% in Q2.
“The service sector continues to dominate the economic landscape of Lagos State, contributing the largest share to the state’s GDP in 2024. In the second quarter of 2024, the sector accounted for 91.57 percent of real GDP, a slight increase from 90.29 percent recorded in the first quarter,” the report stated.
Growth drivers
Trade, information and communication, transportation, accommodation and food services, and storage contributed to the growth.
- Trade, a major driver of the sector, experienced a surge in commercial activities and consumer demand, leading to an increase in its contribution from 51.8% in Q1 2024 to 53.1% in Q2 2024.
“Trade, as a key component of the sector, saw its contribution rise from 51.8 percent in 2024Q1 to 53.1 percent in 2024Q2,” the report stated.
- The information and communication subsector also experienced notable growth, highlighting the sector’s increasing relevance driven by rising internet penetration, digital transformation, and growing demand for telecom services. Its contribution rose from 22.4% in Q1 to 24.81% in Q2.
“This was followed by the information and communication subsector, which accounted for 24.81 percent in 2024Q2, up from 22.4 percent in 2024Q1,” the report stated.
The accommodation and food services subsector experienced significant growth, driven by a surge in tourism and increased activity in the hospitality industry. Similarly, the transportation and storage sector expanded, supported by enhanced logistics infrastructure and growing demand for both freight and passenger services.
Decline in financial and insurance sector
The financial and insurance sub-sector saw a decline, with its contribution dropping from 10.1% in Q1 2024 to 9.
“However, the financial and insurance sub-sector experienced a decline, with its contribution decreasing from 10.1 percent in the first quarter to 9.26 percent in the second quarter of 2024,” the report stated.
Overall, the service sector saw a significant improvement in its real growth rate, increasing from 1.8% in Q1 to 6.76% in Q2.
More insights
The agriculture sector in Lagos State saw slight growth, contributing 0.55% to the state’s GDP in Q2 2024, up from 0.50% in Q1. This remains lower than the 0.62% recorded in the same period last year, but the sector showed a strong recovery, bouncing back from a -0.84% contraction in Q1 to an impressive 16.95% growth in Q2.
- This growth was driven by improvements in crop production, livestock, forestry, and fishing, with the fishing sub-sector seeing the highest jump at 70.71%. Government support, including the Lagos Agripreneurship Programme and increased investment in farming technology, played a key role in this rebound.
- Meanwhile, the industrial sector struggled in Q2, with its GDP contribution dropping from 9.22% in Q1 to 7.88%. It also recorded a -10.03% decline in real growth, a sharp contrast to the 24.4% growth seen in Q1.
The manufacturing sub-sector, a key part of the industrial sector, was hit the hardest due to rising production costs, supply chain disruptions, and a challenging business environment.
