Peter Obi, El-Rufai, and Daily Trust Got It Wrong: Investing in Lagos Benefits Every Nigerian State
Investing in the Goose That Lays the Golden Eggs: Why Strengthening Lagos Means Boosting All of Nigeria
A Critical Perspective on Skewed Narratives
In recent days, a chorus of political commentators and media platforms—including Peter Obi, Nasir el-Rufai, the African Democratic Congress (ADC), and Daily Trust—have leveled criticisms against the Federal Government’s sizable investments in Lagos, asserting that such funding unfairly favors the state at the expense of others. But is the critique grounded in sound economics—or political rhetoric?
To cut through the noise, let's fact-check and analyze the data:
1. VAT Contribution and Allocation: Lagos Leads—and Gets Less Back
Lagos accounted for a remarkable 54% of total state-generated VAT in 2024, contributing ₦2.75 trillion into the national pool.
However, Lagos received just ₦460.11 billion in return—only 16.74% of what it contributed.
This disparity means Lagos, the top contributor, is a net contributor—subsidizing less economically active states such as Anambra or Zamfara, which reportedly receive multiple times their own VAT contributions.
2. “Detty December”: Lagos Fueling National Economic Momentum
The festive period popularly known as “Detty December” generated an impressive $71.6 million for Lagos’s economy in December 2024.
Hotels alone contributed $44 million
Short-let apartments added $13 million
The “Ember season” festivals—from Rhythm Unplugged to African Fashion Week, Mrs. Universe Africa, and Spotify Wrapped Concert—attracted crowds of both Nigerians and diaspora visitors, reinforcing Lagos’s centrality in tourism and entertainment.
Additional revenue streams include nightclubs (₦4.32 billion or ~$2.7 million) and luxury short-lets averaging ₦120,000 nightly for nearly 6,000 bookings.
In essence, these earnings—from remittance-driven consumption to hospitality, events, and entertainment—translate into VAT revenue for the Federal Government, which is then redistributed across the 36 states. Lagos’s growth thus benefits all.
3. MMIA Expansion: A Smart Return on Investment
Nigeria is considering a $400 million expansion of Murtala Muhammed International Airport (MMIA)—boosting its capacity from 6.5 million to 20 million passengers annually. This is a transformative investment with broad implications:
By facilitating more inbound tourists, diaspora travelers, and business visitors—especially during high-yield periods like Detty December—the airport’s expansion will grow incoming foreign exchange, uplift hospitality, and generate additional VAT.
If Detty December alone generated $71.6 million, then increased arrivals could elevate this to $180 million annually—effectively tripling returns.
Even without precise official projections, the multiplier effect is obvious: more visitors → more spending → higher VAT generation → wider benefit across all states. Essentially, the airport would pay for itself in under five years through increased economic throughput.
4. Economic Illiteracy in Political Rhetoric
Critics—politicians and media alike—who denounce FG investments in Lagos as biased fail to recognize:
That 75% or more of Lagos’s VAT contributions are redistributed elsewhere, making the state a net contributor.
That the economic engine of Lagos—powering tourism, entertainment, finance, and remittances—underpins the broader national economy.
That strategic infrastructure investments (like MMIA expansion) deliver high-value returns for all Nigerian states through increased VAT generation and economic activity.
Dismissing these initiatives is, therefore, not only economically unsound—it is pernicious political rhetoric that undermines long-term growth.
5. Debunking the Myth: “Lagos Wins, Others Lose” Narratives
Let’s be clear:
Lagos continues to be Nigeria’s No. 1 VAT contributor, but receives a fraction in return—yet still delivers billions back to the federation.
During Detty December, Nigeria benefits from increased tourism inflows and spending, regardless of where the receipts are finally distributed.
Investing in Lagos infrastructure—including MMIA—multiplies economic activity, expanding VAT generation not just for Lagos, but for the Federal Government and recipient states.
To reverse this dynamic—by refusing to invest in Lagos—is to punish the goose that lays the golden VAT eggs. That’s economic suicide cloaked in political grievance.
6. Historic and Structural Context
The current VAT allocation formula (split in part by derivation, population, and equal share) has been under review. The FG’s proposed reform increases derivation share from 20% to 60%, reducing population-based share—spurring resistance from less economically productive states.
This highlights the broader tension: Should wealth generation be rewarded—or equalized? The answer to sustainable development lies in balancing equitable support with rewarding productivity.
Lagos as the Economic Engine—Not the Enemy
Yes, Lagos contributed ₦2.75 trillion in VAT (54%) in 2024—but received only ₦460 billion (16.74%). It is very much a net contributor.
Yes, Detty December brought $71.6 million into the Lagos economy—fueling national VAT generation.
Yes, investing $400 million in airport expansion could generate $180 million annually from tourism—paying for itself within five years. Projection grounded in Detty December data.
Without such investment—particularly in the infrastructure that sustains Lagos’s productivity—we risk undermining the VAT foundation that benefits every state.
Blaming President Tinubu for supporting Lagos is akin to blaming a power plant for powering the nation—it is simply senseless. Far from bias, these steps are prudent and strategic, with national returns that far outweigh costs.
This blog post aims to elevate public conversation by rooting analysis in data—not rhetoric. Let me know if you’d like to expand further on historical VAT trends, diaspora remittances, or alternate investment scenarios!
0 Comments