Sanwo-Olu’s economic agenda pays off as Fitch upgrades Lagos, 3 other states

Lagos has received a significant boost to its economic standing as the international ratings agency, Fitch Ratings, upgraded the state’s Long-Term Foreign- and Local-Currency Issuer Default Ratings from ‘B-’ to ‘B’.

The announcement, posted on Fitch’s website on Friday, also confirmed similar upgrades for Kaduna, Kogi, and Oyo states, with the outlook for all four rated as stable.

This positive development, observers say, is a strong vote of confidence in the leadership of Governor Babajide Sanwo-Olu and the effectiveness of his T.H.E.M.E.S Plus Agenda — a six-pillar blueprint designed to drive Lagos’ economic and social growth.

‘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’, Sanwo-Olu said in reaction to the rating.

Fitch’s review follows the upgrade of Nigeria’s sovereign rating from ‘B-’ to ‘B’ on 11 April 2025, reflecting an improvement in macroeconomic stability and the impact of ongoing policy reforms.

The rating agency explained its decision, stating, ‘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’.

Lagos’ robust financial standing played a crucial role in the positive evaluation. Fitch highlighted that by the end of 2023, about 50% of the State’s direct debt was denominated in foreign currencies, suggesting exposure to currency volatility. Nonetheless, the Agency forecasted Lagos’s payback ratio would remain strong, estimating it at around five times by 2028.

The report also emphasised Lagos’ remarkable Internally Generated Revenue performance.

‘Supported by this strong revenue base, Lagos is also expected to record a budget surplus in Y2024′, Fitch disclosed.

‘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%’, the Agency added.

The timing of this international endorsement is notable, coming just two days after Sanwo-Olu addressed Harvard students about Lagos’s vast investment opportunities.