Fitch rating: Sanwo-Olu thanks Lagosians as State gets upgrade, three States to stable 

April 28, 2025

The internationally renowned rating Agency has upgraded the Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) of Lagos, Kaduna, Kogi, and Oyo states from ‘B-’ to ‘B’.

According to a statement on Monday by the State government, this is a big boost for investors’ confidence and a testimony to the strength of Governor Babajide Sanwo-Olu’s T.H.E.M.E.S Plus Agenda – the six-pillar economic plan of the Governor’s administration.

According to information posted on the Agency’s website, the outlook for all four states remains stable. The rating follows the upgrade of Nigeria’s sovereign rating to ‘B’ from ‘B-’ on April 11, 2025, reflecting improved macroeconomic stability and policy reforms.

Fitch, in line with its rating criteria, mirrored the sovereign upgrade in the affected States, given the predominant role of the federal government in Nigeria’s intergovernmental fiscal system.

The remarkable rating comes two days after Mr. Sanwo-Olu told a group of Harvard students of the great potential of the State for investments.

The information on Fitch’s website reads, “We consider the Federal Government’s role predominant in intergovernmental relations, as it controls the equalisation mechanism enacted through a system of transfers to States.

Therefore, the upgrade of sovereign IDRs is mirrored in the upgrade of those of Lagos, Kaduna, Kogi, and Oyo, as their Standalone Credit Profiles (SCPs) align with or are above the ratings of Nigeria,” Fitch noted.

The Agency noted that by the end of Y2023, 50% of Lagos State’s direct debt was denominated in foreign currencies, highlighting a notable exposure to currency fluctuations.

However, despite this, Fitch projects Lagos’s payback ratio to remain strong at around five times by the end of Y2028.

The Agency stated unequivocally that Lagos’s fiscal resilience is underpinned by its exceptional Internally Generated Revenue (IGR), which accounts for 75% of its total operating revenue, far exceeding the national average of 25%.

“Supported by this strong revenue base, Lagos is also expected to record a budget surplus in Y2024”, it added.

It must be emphasised that the current rating underpins the State’s strong capacity to service its financial obligations owing to its stronger operating performance driven by IGR, which makes Lagos an outlier in the national context.

Of the rating, Governor Sanwo-Olu said:”It is a good verdict on our performance – in terms of policy decisions and projects execution. It is also a call for us to be more active; we will be in every sector. I thank Lagosians for their support.”