LAGOS — A new report by DataPro Limited says falling revenues, poor asset quality, and tight cash flow are the main reasons companies are struggling to pay their debts.

‎The rating agency said in its September 2026 brief, “Understanding Rating Downgrade,” that banks are also feeling the pressure. It flagged rising Non-Performing Loans, or NPLs, and heavy impairment charges that are weakening banks’ capital and liquidity.

DataPro said a credit downgrade rarely happens because of one bad quarter. Instead, it comes from a slow build-up of financial problems that wear down a company’s ability to manage risk. The agency added that too much debt can hurt companies when earnings and cash flow don’t grow with it, and when interest payments become too heavy to handle.

Governments face the same problem. DataPro said rising public debt and high debt-service costs are limiting budgets and making it harder to borrow. It added that economic slowdowns, high inflation, high interest rates, and a weak naira often trigger downgrades.

‎The report said companies that depend on one product or one market are most at risk. It also warned that poor management, legal issues, and global shocks can quickly lead to a downgrade.

‎DataPro said having strong cash reserves and manageable debt helps companies survive tough times. But firms with little financial room are exposed to market swings. It noted that a company can still be profitable but struggle to pay bills if cash is low or funding is hard to get.

‎The agency said a downgrade does not automatically mean default. It is a signal for management, investors, and lenders to review the company’s finances and plans.

‎DataPro concluded that what matters most is what changed, why it changed, and what happens next. Understanding that, it said, helps businesses and investors make better decisions.