10 states borrow N417bn despite higher allocations

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At least 10 Nigerian states collectively increased their domestic debt by N417.7bn year-on-year, despite a significant rise in revenue allocations from the Federation Account Allocation Committee, a review of official data has shown.

An analysis of the Debt Management Office’s quarterly reports on subnational debt reveals that Rivers, Enugu, Niger, Taraba, Bauchi, Benue, Gombe, Edo, Kwara, and Nasarawa raised their combined debt stock from N884.9bn in Q1 2024 to N1.3tn in Q1 2025.

This represents a 47.2 per cent year-on-year increase, raising questions about fiscal prudence and the long-term sustainability of borrowing at the state level.

The data also shows that the 10 states’ combined domestic debt increased quarter-on-quarter, from N1.26tn in Q4 2024 to N1.30tn in Q1 2025, an additional N42.3bn, representing a 3.4 per cent increase in just three months.

This rise in indebtedness comes at a time when FAAC disbursements to states have improved considerably, fuelled by rising oil prices, gains from naira devaluation, and revenue freed up from petrol subsidy removal.

However, the figures suggest that rather than leveraging these inflows to reduce debt, some states are borrowing even more. Rivers State topped the list with a domestic debt stock of N364.39bn as at Q1 2025, the highest among the 10 states.

While the figure remained unchanged from Q4 2024, it marked a year-on-year increase of N131.82bn or 56.7 per cent, compared to N232.58bn in Q1 2024.

Enugu State’s debt rose from N82.48bn in Q1 2024 to N188.42bn in Q1 2025, indicating a rise of N105.95bn or 128.4 per cent. Enugu also posted the most significant quarterly growth, adding N69.14bn between December 2024 and March 2025.

Niger State followed with an increase of N57.68bn year-on-year, moving from N86.07bn to N143.75bn, a 67 per cent rise. The state also saw a quarter-on-quarter rise of N3.02bn.

Taraba State more than doubled its domestic debt from N32.64bn to N82.93bn, indicating a year-on-year rise of N50.29bn or 154.1 per cent. Taraba’s quarterly debt also rose slightly by N1.54bn.

Bauchi State raised its debt stock from N108.39bn to N142.40bn, representing a year-on-year increase of N34.01bn or 31.4 per cent. However, quarter-on-quarter, Bauchi recorded a slight decline of N1.55bn.