17/05/2025
LAGOS INTERNATIONAL FINANCIAL CENTRE AS AFRICA’S RISING FINANCIAL BEACON
Kehinde Akinfenwa
Over recent decades, global prosperity has been enhanced by increased trade and investment across borders, with international trade hitting a record $33 trillion in 2024, expanding 3.7% ($1.2 trillion). The latest Global Trade Update by UN Trade and Development (UNCTAD) indicates that in 2024, developing economies outpaced developed nations, with imports and exports rising 4% for the year and 2% in the fourth quarter, driven mainly by Africa, East and South Asia.
The 37th edition of the Global Financial Centres Index (GFCI 37) underscores a growing trend of decentring global finance. While traditional hubs in Europe and North America retain influence, emerging markets are becoming the epicentres of growth. At the heart of this world economic realignment is the compelling undertakings of International Financial Centres - a jurisdictions that facilitate the seamless flow of capital, enables investments to thrive, and influences economic decisions globally. These centres transcend their geographical boundaries; they are dynamic ecosystems that intricately connect businesses, investors, and financial institutions.
Unequivocally, a financial hub is a strategically positioned city or region within the financial industry with the concentration of various financial sector participants, including banks, trading companies, stock exchanges, and other institutions, in one locale. The city embodies a dynamic epicentre for financial activity, distinguished by robust infrastructure, stable regulatory and political environments, attractive taxation policies, and abundant opportunities that drive trade and business growth.
The entrance of Lagos State into this elite league of intercontinental cities creates a defining crux in the global financial sphere. As a symbol of the city’s prominence in financial evolution, the arrival of Lagos in this distinguished network is enticed by its socio-economic opulence and its commitment to enliven Africa’s economic and development growth.
Despite its relatively small size, Lagos is Africa’s most powerful brand. At the nucleus of Africa’s largest economy, Lagos stands synonymous with unparalleled financial prowess, notably housing Nigeria’s Stock Exchange—the second-largest and best-performing stock market in Africa by market capitalization.
Serving as the epicentre of many of Africa’s most influential investment banks, financial giants, venture capital firms, and private equity funds, the city anchors regional financial leadership and innovation. A gateway to West Africa’s commercial enterprise, Lagos' booming start-up ecosystem is palpable in its fast-paced technological advancement and entrepreneurial dynamism.
Recent socio-economic indices highlight the city's rising global influence with a GDP of $259 billion, making it the second-largest city economy in Africa, just behind Cairo. These indices accentuate the real economic strength, competitiveness, and the cost-of-living advantage that dignifies the profile of Lagos state.
Year in, year out, the deliberate efforts of the state government towards fiscal sustainability, economic diversification, and inclusive development have strengthened the resilience of Lagos' economy, reflecting the city's ability to adapt and thrive through a comprehensive business ecosystem that operates with the highest standards of integrity. Anchored on a T.H.E.M.E.S Plus agenda that is multidimensional in focus, the state’s economic portfolio reeks of nascent opportunities across diverse sectors.
The city’s large population and strong local economy, coupled with the influx of investment into sectors such as real estate, entertainment, technology, and finance has been a major driver of its sustainable development. Lagos influence as a strong base of resources and expertise attract large number of talented professionals from around the world, making the city a hub for innovation in finance and technology.
A Symbol of Boundless Potential
An international financial centre is more than a hub of high-rise industrial and commercial towers—it is a catalyst of global capital, a nerve centre of economic intelligence, and a curator of sovereign and private wealth.
Thus, this eminent attainment of Lagos goes beyond positioning it alongside cities like New York, London, Singapore, Dubai, and others that are fulcrums of international commerce and capital flows. It represents a dynamic ecosystem that attracts and fosters investment to drive entrepreneurial endeavours and economic growth across industries and communities.
Renowned for its ease of doing business across the Sub-Saharan region, the city has emerged as a strong economic hub, showcasing substantial investment potential and an enviable quality of life.
A combination of favourable tax policies for both businesses and individuals has further catalysed growth, while key trends such as the increasing adoption of technology, the rise of a burgeoning middle class, and significant strides in digital development and financial innovation have drawn the attention of foreign investors.
Within Africa’s dynamic economic landscape, the city possesses highly specialized financial infrastructure, tailored to facilitate trillions of international transactions and a regulatory framework that ensures blended finance is accompanied by public funding.
Lagos has built a strong narrative around its strategic positioning as a thriving economic centre. The city’s stable political and economic environment provides a solid foundation for catering to the needs of international commerce, attracting high-net-worth investments.
As a member of the global economic system that is contributing to the increase of wealth and prosperity in both developed and developing economies, the interconnectedness of opportunities with sustained financial innovation continues to redefine the city’s role as a catalyst for inclusive growth and cross-border investment.
For a city that boasts a high infrastructural strength with an extensive metro system, well-developed road networks, highways, and public transport, booming tech ecosystem, a rich endowment of natural resources, a growing population and ongoing renewable energy projects the growing integration of its economies into the global marketplace and trade network is pivotal to driving inclusive growth and fostering shared prosperity.
The Lagos Financial Centre will serve as a cluster of excellence in economic and financial services, dedicated to driving inclusive and sustainable development. Leveraging a multicultural, interdisciplinary faculty and streamlined, integrated systems, the Centre will facilitate major domestic and cross-border transactions. Its operations will contribute significantly to advancing financial inclusion, strengthening human capital, and delivering broader benefits to the public.
On a stronger growth trajectory, the centre is expected to increase support for the continent’s private sector, delivering solutions to challenges ranging from small start-ups seeking seed funding to large companies looking to expand into new markets.
As global dynamics evolve and the world’s economies continue to move closer together, developing economies are increasing their share of world trade, becoming key players in global value chains. Current global tension of geo-economic fragmentation, propelled by competing blocs led by the US, China, and the EU, has intensified the search for neutral, high-yielding, policy-stable investment environments. And as the city of Lagos is innovating its path to strategically align with and capitalize on this shifting global alliance, it is emerging as a pivotal player in the new economic order.
From Vision to Velocity
The Lagos International Financial Centre is Africa’s response to the call for economic sovereignty and competitive integration into the global order. It is a declaration that Africa will no longer merely receive capital—it will direct it. It is also a statement that financial centres can and should serve inclusive and sustainable development, rather than exacerbate inequalities.
As the world recalibrates in the face of economic shocks, climate finance needs, and digital disruption, the LIFC will be a strategic pivot point for global investors, development financiers, multinationals, and local entrepreneurs alike. Its rise affirms a deeper truth: Africa is not the future—it is the now. And Lagos is its financial capital.
With international development institutions like the World Bank, IFC, and AfDB expanding their presence, Lagos now offers investors a sophisticated ecosystem for both impact-driven and high-yield portfolios.
As emerging markets prove to be the most dynamic and rewarding locations for investment and growth, the Lagos International Finance Centre (LIFC) will serve as a strategic platform for blended finance, green bonds, diaspora investments, and public-private partnerships, creating a robust environment for sustainable and profitable investment opportunities.
Reforming the Global Financial System
Rising debt burdens are forcing developing governments into tough trade-offs as they are currently locked into cycles of unsustainable borrowing. In 2023, developing countries’ external debt hit a record $11.4 trillion – equal to 99% of their export earnings. These debt challenges are growing in scale and complexity, with existing tools falling short. Stronger global cooperation and innovative debt management solutions are needed to break the cycle of unsustainable debt and build a more resilient, inclusive future.
Renewed calls for the reform of the international financial architecture have emerged in response to the potential $4.3 trillion annual financing gap for sustainable development, including $1.8 trillion for climate needs faced by developing countries, according to the UN Conference on Trade and Development (UNCTAD).
Meanwhile, the highlight of the just-concluded 14th International Debt Management Conference, held in Geneva, Switzerland, emphasized the urgent need to reform the global financial system so that debt can support, not hinder, development.
A roll call of reforms that are critical to International Financial Centres (IFCs) endeavours has been pushed forward. One of the primary areas of focus is the governance and lending practices of Multilateral Development Banks (MDBs), which must undergo significant changes to expand concessional lending and better address the financing needs of developing countries.
There is also an urgent need to tap into underutilized private capital to unlock substantial investments, facilitated by improved risk-sharing mechanisms. A critical aspect of this is climate finance, which must focus on developing new, lasting solutions that not only mitigate the impacts of climate change but also enhance resilience.
Concrete strategies are required to close financing gaps, address unsustainable debt levels, and unlock new resources for both development and climate resilience. Scaling innovative financial mechanisms such as debt swaps and blended finance can provide much-needed flexibility.
In addition to this, attracting private capital will be essential, with de-risking strategies and regulatory reforms acting as key enablers. To ensure long-term success, climate finance must be additional and directed toward supporting sustainable, long-term adaptation efforts in vulnerable regions.
Akinfenwa is of the Public Affairs Unit, Lagos Office of SDGs, State House, Alausa, Ikeja.
