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Lagos was conquered in 1851 and then subsequently became a crown colony after the British waded into a succession crisis/war for the throne of the fishing town between Obas Kosoko and Akintoye. The town grew rapidly under British rule and as the colonizers conquered more territory in what would become Nigeria. When Nigeria was forged from the southern and northern protectorates in 1914, Lagos was the natural choice for capital. It would stay this way until 1960 when the country became independent.
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When Yakubu Gowon created twelve states in 1967 right in the middle of the crisis that would lead to the Nigerian Civil War, the city of Lagos and its metropolitan area plus even farther outlying territories that had previously been within the jurisdiction of the Western Region at the time. Places like Epe, Badagry and Ikorodu fell within that definition. At the time of creation, the urban agglomeration we now call the island or Lagos Island was the area known as Lagos town and was governed by the City Council of Lagos which now fell under the Lagos State government. The city hence was the natural and de-facto capital of the country, state and municipality. City Hall which has now been repurposed was the seat of power. This would be the case until 1976 when the city council was dissolved and the capital was moved to the more central Ikeja which was originally planned as an industrial area for the old Western Region.
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