Lagos has got a clean bill of health on its economy — courtesy of Fitch Ratings.
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’.
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+ Agenda — the six-pillar economic plan of the administration.
As a city positioned as one of Africa’s economic powerhouses with it’s Gross Domestic Product (GDP) reaching an impressive $259 billion, based on Purchasing Power Parity (PPP), this rating follows the upgrade of Nigeria’s sovereign rating to ‘B’ from ‘B-‘ on 11 April 2025, reflecting improved macroeconomic stability and policy reforms.
In line with its rating criteria, Fitch 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 Sanwo-Olu told a group of Harvard students of the great potential of the state for investments.
It wasn’t a stroll in the park after the Y2023 end showed 50% of the state’s direct debt was denominated in foreign currencies, highlighting a notable exposure to currency fluctuations which could be economically turbulent for a state with so much financial obligations to lenders.
However, Fitch projects Lagos’ payback ratio to remain strong at around five times by the end of Y2028 because of the State’s economic growth and performance as Lagos economy recorded significant growth in the first half of 2024, expanding to N27.38 trillion, a substantial increase from N19.65 trillion in 2023.
The growth highlights the resilience of Nigeria’s commercial capital amid economic reforms and ongoing infrastructure investment.
Despite this growth, the tax-to-GDP ratio remains low at 2.3%, reflecting the need for enhanced revenue mobilisation effort which has shown in the record breaking performance of the Lagos Internal Revenue Service for 2024, posting an internally generated revenue of over N1 trillion, which accounts for 75% of its total operating revenue, far exceeding the national average of 25%.
A financially stable and independent state driven by an inspirational leadership, the governor Sanwo-Olu though his THEMES+ agenda is accelerating the diversification of the state’s economy through infrastructure development, partnerships in agriculture and food security, revamping tax system, building fiscal profile, establishing political bonds, collaborating with developmental agencies, developing industrial park to boost the manufacturing sector and empowering the SMEs, which are the life blood of the economy which is translating to an expansive GDP.
Initiatives in the transport sector like the Bus Rapid Transport terminals and services, Blue and Red rail lines, acquisition of boats and building of jetties and the opening up of the state blue economy and expanding into untapped prospects.
All these economic activities are going on without the exclusion of those who require social welfare interventions as there are poverty alleviation programmes and sustainable development goals project catering to the under-served population which is why the THEMES+ agenda is well crafted not to leave anyone behind.
Of the rating, 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’.
Lagos keeps stepping higher and higher in a postive way.