States’ debt hits N4.36trn, 10 lead with N2.96trn

By Uche Usim

Nigeria’s subnational debt burden deepened in 2025. This highlights mounting fiscal pressures across states as governments leaned more heavily on borrowing to sustain spending and plug revenue shortfalls.

Fresh data from the Debt Management Office show that the combined debt stock of the 36 states and the Federal Capital Territory (FCT) climbed to N4.36 trillion, up from N3.97 trillion in 2024.

The N392.41 billion increase represents a 9.89 per cent year-on-year rise and reflects a combination of new borrowings, exchange rate pressures on external obligations and the persistent struggle of states to boost internally generated revenue.

For many subnational governments, debt has become a critical tool for financing infrastructure projects, meeting salary obligations, and cushioning the effects of a still-fragile macroeconomic environment.

A closer look at the data reveals a clear concentration of debt among a handful of economically dominant states. The top 10 most indebted states accounted for N2.96 trillion, nearly 68 per cent of the total, highlighting the uneven fiscal landscape across the federation.

The concentration suggests that larger, more industrialised states are not only borrowing more but are also more exposed to debt sustainability risks.

Even more telling is the dominance of a small cluster of states. Lagos, Rivers, Delta, Ogun, and the FCT together account for roughly N2.26 trillion, more than half of the total subnational debt stock. This reinforces concerns about structural imbalances, where a few states drive both economic activity and debt accumulation.

Lagos remains firmly at the top of the debt ladder, with a total debt profile of N1.04 trillion. This figure alone represents 27.97 per cent of the entire subnational debt stock, meaning the state carries more than a quarter of all state-level obligations. While Lagos’ borrowing is often tied to its expansive infrastructure ambitions and megacity demands, the scale of its debt continues to draw scrutiny over sustainability and repayment capacity.

Amid the broad upward trend, Benue State emerged as a notable outlier. It was the only state among the top 10 to reduce its debt stock, cutting it by 12.52 per cent from N122.58 billion in 2024 to N107.23 billion in 2025. This decline points to deliberate fiscal tightening, whether through aggressive debt servicing, limited new borrowing, or restructuring of existing liabilities.

However, the reduction also raises important questions. While fiscal consolidation improves debt metrics, it may come at the cost of reduced capital expenditure, potentially slowing infrastructure development and economic growth.

Overall, the data paints a picture of rising fiscal strain at the subnational level, with increasing reliance on debt and a growing imbalance between states. Without stronger revenue mobilisation and disciplined borrowing, analysts warn that Nigeria’s states could face heightened debt vulnerabilities in the years ahead.