Nigerian states experienced a substantial increase in foreign debt servicing payments during the first half of 2025, spending approximately N235.58 billion, marking a 68.4 percent rise from the previous year’s N139.92 billion. This rise is largely attributed to the naira’s depreciation, which inflates the local currency cost of repaying dollar-denominated obligations.
January 2025 saw the highest single-month outflow at N40.09 billion, over three times the January 2024 figure. Subsequent months maintained elevated payments, with a notable consistency in the second quarter.
Lagos State continues as the major contributor, disbursing nearly N50 billion, more than doubling several other states due to its heavy investment in infrastructure through external borrowing. Rising repayments also affected Rivers, Kaduna, Ogun, and Edo states.
States with smaller foreign debt portfolios recorded marked increases, highlighting how exchange rate effects permeate fiscal operations nationwide.
Economists caution that these rising debt obligations are consuming large parts of states’ internally generated revenues, undermining developmental expenditure and fiscal stability. Teslim Shitta-Bey of Proshare emphasized the need for improved debt management and suggested alternative long-term financing mechanisms.