One May evening last year, as a tropical downpour lashed Lagos, Nigerian drug enforcement agents received the tipoff that would lead to a game-changing bust. Hours earlier, Baez Benitez Milan, a car dealer from Paraguay, had entered the country, telling airport officials that this, one of Africa's most notoriously gridlocked, chaotic cities, was ideal for plying his motor trade.

Instead, he drove to an unfinished, weed-choked building on the deserted outskirts of town, and holed up there for weeks. When agents eventually stormed the building, they found an amphetamine-producing factory capable of churning out 25kg of white crystal meth powder, or "ice", every few hours. Benitez Milan was, in fact, a Colombian drug runner named Gonzalo Osorio, whose skills in the rapid setup of clandestine laboratories commanded a $38,000 (£25,000) weekly fee. The factory, one of an intended three, was among the earliest to be discovered in west Africa, and signalled a disturbing new chapter in the regional drug trade.

For the past decade, west Africa's creek-lined coast has been a pipeline for trafficking South American cocaine to Europe and Asia. About $1.25bn of illicit trade has passed through annually, responsible in part for destabilising huge swathes of the region, from Mali's recent turmoil to the narco-state of Guinea-Bissau. But now homegrown criminal syndicates that previously earned cuts by providing mules for Latin American cartels are cooking up their own slice of the global drug pie. Their narcotic of choice is methamphetamine, a highly profitable powder concocted using readily available and legal ingredients.

"This is the next niche for criminal groups in west Africa because you can easily cook it at home, and you can easily adjust it for supply and demand. It is slowly but surely spreading in the region," said Pierre Lapaque, head of the United Nations office on drugs and crime in west Africa, whose latest report highlights the rising trade.

Four large-scale crystal meth labs have been discovered in Nigeria. Shipments of precursor chemicals have been seized in neighbouring Benin and Togo and in Guinea officials discovered huge vats used to cook MDMA, a similar synthetic drug.

Bola, a lanky drug baron with twitching hands who is based in downtown Lagos, said only local wrestlers bought synthetic drugs when he started peddling eight years ago. "It was difficult to sell. Now the guys selling [meth] to big boys and foreigners in the VIP dens can no longer come to areas like this because they will be robbed. Everybody knows they make big money," he said.

Behind Bola's stifling, corrugated iron shop selling dusty cartons of soft drinks is a warren of cramped brick-walled rooms barely high enough to stand up in. Ghoulish in the occasional shard of sunlight piercing through the haze, dealers and glassy-eyed users slump on wooden benches, hunch over chessboards or incessantly chop and wrap mounds of crystalline powder.

Most international orders come from South Africa and more recently Asia "because many people are afraid to go. The punishment there if they should catch you … " Bola mimed a knife across his throat, indicating the death penalty.

A kilo of meth exported to south-east Asia, where some countries have reported a 250% increase in traffickers from west Africa arrested over five years, brings in $45,000. In Bola's den, poorer users pay $1.20 for a single hit.

Crystal meth was traditionally brewed by US biker gangs but laws were tightened in 2005, curbing production. Thousands of miles away, there was unintended fallout. "Cocaine trafficking was falling because we were making record seizures. Suddenly we started making more and more interceptions of methamphetamine leaving the country, but nothing at all was coming in. We realised criminals had started making it within our borders," said Mitchell Ofojeyu, an official at the heavily guarded headquarters of Nigeria's drug enforcement agency.

Some worry the effects of this new trade will spill over into local communities, raising the spectre of rising crime and health problems.

"The warning signals are there that this really is a problem that could run amok in years ahead if comparable resources aren't devoted to the human consumption side," said Alan Doss, a senior adviser at the Geneva-based Kofi Annan Foundation.

For now, widespread unfamiliarity among the local population has sometimes got in the way of curbing the trade. When Nigerian officials discovered their first meth factory, they wanted to storm the site immediately.

"We didn't realise the chemicals were so poisonous. It was our international partners who told us: 'Look, you basically have to kit yourself up as if you're going to the moon'," said Ofojeyu.