Fitch Ratings has upgraded the Long-Term Foreign- and Local-Currency Issuer Default Ratings of Kaduna, Kogi, Lagos, and Oyo states from ‘B-’ to ‘B.’.
The upgrade reflects improved macroeconomic stability and recent policy reforms in Nigeria.
The global ratings agency, Fitch, announced the development on its website at the weekend, noting that the outlook for all four states remains stable.
According to Fitch, the rating action follows the upgrade of Nigeria’s sovereign credit rating from ‘B-’ to ‘B’ on April 11, 2025.
The agency explained that in line with its rating criteria, the sovereign rating upgrade has been mirrored in the states, given the predominant role of the federal government in Nigeria’s intergovernmental fiscal framework.
“We consider the federal government’s role to be 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 Kaduna, Kogi, Lagos, and Oyo, as their Standalone Credit Profiles align with or are above the ratings of Nigeria,” Fitch stated.
The agency identified several key drivers behind the revised projections for the four states, including a steeper depreciation of the naira, expected to exceed N1,500 to the dollar between 2024 and 2028, and a trend of high but gradually declining inflation, which stood at 24.23 percent in March.
It also noted an increase of over 20 percent in federal VAT and oil-related transfers to the states in 2024, providing critical financial support.
In reaction, the governor of Lagos State, Babajide Sanwo-Olu, lauded the recent upgrade of Lagos State’s credit rating by Fitch Ratings, describing it as a testament to the strength of his administration’s policies and execution.
“This 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.
