Lagos State has received a significant boost to its economic reputation, as Fitch Ratings upgraded its Long-Term Foreign and Local-Currency Issuer Default Ratings (IDRs) from ‘B-’ to ‘B’.
In a statement released on the state government’s Facebook page on Monday, three other states – Kaduna, Kogi, and Oyo – also benefitted from the upgrade.
According to the statement, the internationally renowned rating agency announced that the outlook for all four states remains stable, in line with the recent upgrade of Nigeria’s sovereign rating from ‘B-’ to ‘B’ on 11 April 2025.
According to Fitch, the improved sovereign rating reflects greater macroeconomic stability and progress in policy reforms.
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Per its criteria, Fitch mirrored the sovereign upgrade in the affected states, noting the predominant role of the federal government in Nigeria’s intergovernmental fiscal system.
This development is a major endorsement of Governor Babajide Sanwo-Olu’s T.H.E.M.E.S Plus Agenda — the six-pillar economic plan of his administration — and is expected to further bolster investor confidence in Lagos.
The announcement comes just two days after Governor Babajide Sanwo-Olu addressed a group of Harvard students, where he highlighted Lagos’s strong investment potential.
In its statement, Fitch said: “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 further observed that by the end of 2023, 50 per cent of the state’s direct debt was denominated in foreign currencies, exposing it to currency fluctuation risks.
Nevertheless, the agency projects that Lagos’s payback ratio will remain strong, at around five times, by the end of 2028.
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The report also highlighted Lagos’s fiscal resilience, underpinned by its exceptional Internally Generated Revenue (IGR), which accounts for 75 per cent of its total operating revenue — far exceeding the national average of 25 per cent.
Fitch expects the state to record a budget surplus in 2024.
The upgraded rating underscored Lagos’s strong capacity to meet its financial obligations, driven by robust operating performance and a resilient revenue base, distinguishing it as an outlier within Nigeria’s fiscal landscape.
Reacting to the news, Sanwo-Olu said: “It is a good verdict on our performance — in terms of policy decisions and project execution. It is also a call for us to be more active; we will be in every sector. I thank Lagosians for their support.”
