At least 10 Nigerian states — Rivers, Enugu, Niger, Taraba, Bauchi, Benue, Gombe, Edo, Kwara, and Nasarawa — collectively increased their domestic debt by N417.7 billion between Q1 2024 and Q1 2025, despite benefiting from significant increases in federal revenue allocations, a detailed review of official figures from the Debt Management Office (DMO) has shown.
The combined domestic debt stock of these 10 states jumped from N884.9 billion in Q1 2024 to N1.30 trillion in Q1 2025, representing a 47.2% year-on-year increase, raising red flags over fiscal responsibility and long-term debt sustainability at the subnational level.
This debt accumulation comes despite a fiscal environment buoyed by higher FAAC disbursements, driven by rising oil prices, naira devaluation gains, and savings from petrol subsidy removal.
Breakdown of the States’ Debt Rise:
- Rivers: Up by N131.82bn to N364.39bn — highest in actual value among the 10.
- Enugu: Rose by N105.95bn to N188.42bn — largest percentage rise at 128.4%.
- Niger: Debt grew by N57.68bn to N143.75bn (67% increase).
- Taraba: Surged by N50.29bn to N82.93bn — biggest percentage spike at 154.1%.
- Bauchi: Increased by N34.01bn to N142.40bn (31.4% growth).
- Benue: Rose by N13.09bn to N129.82bn (11.2% increase).
- Gombe: Up by N12.85bn to N83.66bn (18.1%), though it dropped quarter-on-quarter.
- Edo: Added N10.02bn to reach N82.40bn — but saw a sharp N30.60bn cut quarter-on-quarter.
- Kwara: Increased marginally by N1.03bn to N60.10bn.
- Nasarawa: Rose by N968m to N24.73bn, yet down quarter-on-quarter by N1.87bn.
Altogether, these 10 states now account for 33.67% of the N3.87tn total domestic debt stock of Nigeria’s 36 states and the FCT as of Q1 2025 — a jump from 21.8% in Q1 2024.
Experts warn that the continued reliance on debt, despite improved revenue inflows, is unsustainable, especially for states with weak Internally Generated Revenue (IGR). In Q1 2025, seven states — Bayelsa, Adamawa, Benue, Niger, Kogi, Taraba, and Bauchi — reportedly spent an average of 190% of their IGR on debt servicing.
Macroeconomic analysts, including Teslim Shitta-Bey and Adewale Abimbola, have cautioned against the growing fiscal fragility among states. They recommend improved IGR strategies, asset monetisation, investment in state-specific economic strengths, and enhanced political will to pursue real reforms.
As borrowing costs rise and federal allocations face global headwinds, experts say the window for proactive subnational debt reform is narrowing fast.
