A detailed analysis of recent Debt Management Office figures reveals that ten Nigerian states have ramped up their domestic borrowing by N417.7 billion over the past year, despite enjoying a significant boost in federal allocations. The states—Rivers, Enugu, Niger, Taraba, Bauchi, Benue, Gombe, Edo, Kwara, and Nasarawa—collectively saw their debt stock rise from N884.9 billion in Q1 2024 to N1.3 trillion in Q1 2025.
This 47.2 percent year-on-year leap comes at a time when FAAC disbursements have been buoyed by favorable oil prices and fiscal reforms. Yet, the additional funds have not translated into reduced borrowing. Instead, the states’ combined debt rose by N42.3 billion in just three months, highlighting persistent fiscal pressures.
Rivers State remains the most indebted among the ten, with N364.39 billion in domestic debt as of March 2025—a figure unchanged from the previous quarter but up 56.7 percent year-on-year. Enugu State recorded the sharpest annual increase, with its debt more than doubling to N188.42 billion.
While some states, such as Edo and Gombe, have managed to cut their debts quarter-on-quarter, the overall trend points to growing reliance on borrowing. Analysts warn that this could jeopardize future fiscal stability, especially if the current revenue surge proves temporary.
Experts, including Teslim Shitta-Bey and Adewale Abimbola, have called for more prudent debt management and a shift towards policies that foster economic viability and investment. They stress that states must harness their unique strengths and improve the business environment to attract private sector participation.
The concentration of debt among a handful of states, now accounting for over a third of total subnational domestic debt, underscores the need for more balanced fiscal strategies across the federation.